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EXHIBIT 4(E)
EXECUTION VERSION
REVOLVING CREDIT
AND
SECURITY AGREEMENT
PNC BANK, NATIONAL ASSOCIATION
(AS LENDER, ADMINISTRATIVE AGENT AND LEAD ARRANGER);
KEYBANK NATIONAL ASSOCIATION
(AS LENDER
AND SYNDICATION AGENT); AND
THE OTHER LENDERS PARTY HERETO
WITH
LESCO, INC.;
LESCO SERVICES, INC.;
LESCO TECHNOLOGIES, LLC;
AND
AIM LAWN & GARDEN PRODUCTS, INC.;
(BORROWERS)
December 30, 2003
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TABLE OF CONTENTS
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I.
DEFINITIONS.........................................................................................
1
1.1.
Accounting
Terms..................................................................
1
1.2.
General
Terms.....................................................................
1
1.3.
Uniform Commercial Code
Terms.....................................................
17
1.4.
Certain Matters of
Construction...................................................
17
II. ADVANCES,
PAYMENTS..................................................................................
18
2.2.
Procedure for Borrowing
Advances..................................................
18
2.3.
Disbursement of Advance
Proceeds..................................................
20
2.4.
[Intentionally
Omitted.]..........................................................
21
2.5.
Maximum
Advances..................................................................
21
2.6.
Repayment of
Advances.............................................................
21
2.7 Repayment
of Excess
Advances......................................................
21
2.8 Statement
of
Account..............................................................
21
2.9.
Letters of
Credit.................................................................
22
2.10
Issuance of Letters of
Credit.....................................................
22
2.11
Requirements For Issuance of Letters of
Credit.................................... 23
2.12.
Additional
Payments...............................................................
24
2.13.
Manner of Borrowing and
Payment...................................................
24
2.14.
[Intentionally
Omitted.]..........................................................
26
2.15. Use
of
Proceeds...................................................................
26
2.16.
Defaulting
Lender.................................................................
26
III. INTEREST AND
FEES...................................................................................
27
3.1.
Interest..........................................................................
27
3.2.
Letter of Credit
Fees.............................................................
27
3.3.
Facility
Fee......................................................................
28
3.4.
[Intentionally
Omitted.]..........................................................
28
3.5.
Computation of Interest and
Fees.................................................. 28
3.6.
Maximum
Charges...................................................................
29
3.7.
Increased
Costs...................................................................
29
3.8.
Basis For Determining Interest Rate Inadequate or
Unfair.......................... 30
3.9.
Capital
Adequacy..................................................................
30
3.10.
Gross Up for
Taxes................................................................
31
3.11.
Withholding Tax
Exemption.........................................................
31
IV.
COLLATERAL: GENERAL
TERMS..........................................................................
32
4.1.
Security Interest in the
Collateral...............................................
32
4.2.
Perfection of Security
Interest...................................................
32
4.3.
Disposition of
Collateral.........................................................
33
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4.4.
Preservation of
Collateral........................................................
33
4.5.
Ownership of
Collateral...........................................................
33
4.6.
Defense of Agent's and Lenders'
Interests......................................... 34
4.7.
Books and
Records.................................................................
34
4.8.
Financial
Disclosure..............................................................
34
4.9.
Compliance with
Laws..............................................................
35
4.10.
Inspection of
Premises............................................................
35
4.11.
Insurance.........................................................................
35
4.12.
Failure to Pay
Insurance..........................................................
36
4.13.
Payment of
Taxes..................................................................
36
4.14.
Payment of Leasehold
Obligations..................................................
37
4.15.
Receivables.......................................................................
37
(a) Nature of
Receivables....................................................
37
(b) Solvency
of Customers....................................................
37
(c) Locations
of Borrower....................................................
37
(d) Collection
of Receivables................................................
38
(e)
Notification of Assignment of
Receivables................................ 38
(f) Power of
Agent to Act on Borrowers' Behalf...............................
38
(g) No
Liability.............................................................
39
(h)
Establishment of a Lockbox Account, Dominion
Account..................... 39
(i)
Adjustments..............................................................
40
4.16.
Inventory.........................................................................
40
4.17.
Maintenance of
Equipment..........................................................
40
4.18.
Exculpation of
Liability..........................................................
40
4.19.
Environmental
Matters.............................................................
40
4.20.
Financing
Statements..............................................................
42
V.
REPRESENTATIONS AND
WARRANTIES......................................................................
42
5.1.
Authority.........................................................................
43
5.2.
Formation and
Qualification.......................................................
43
5.3.
Survival of Representations and
Warranties........................................ 43
5.4.
Tax
Returns.......................................................................
43
5.5.
Financial
Statements..............................................................
44
5.6.
Corporate
Name....................................................................
45
5.7.
O.S.H.A. and Environmental
Compliance.............................................
45
5.8. Solvency; No
Litigation, Violation, Indebtedness or
Default....................... 45
5.9.
Patents, Trademarks, Copyrights and
Licenses...................................... 46
5.10.
Licenses and
Permits..............................................................
47
5.11.
Default of
Indebtedness...........................................................
47
5.12. No
Default........................................................................
47
5.13. No
Burdensome
Restrictions........................................................
47
5.14. No
Labor
Disputes.................................................................
47
5.15.
Margin
Regulations................................................................
48
5.16.
Investment Company
Act............................................................
48
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5.17.
Disclosure........................................................................
48
5.18.
[Intentionally
Omitted.]..........................................................
48
5.19.
Swaps.............................................................................
48
5.20.
Conflicting
Agreements............................................................
48
5.21.
Application of Certain Laws and
Regulations....................................... 48
5.22.
Business and Property of
Borrowers................................................
48
5.23.
Section 20
Subsidiaries...........................................................
48
5.24
Anti-Terrorism
Laws...............................................................
49
(a)
General..................................................................
49
(b) Executive
Order No. 13224................................................
49
VI.
AFFIRMATIVE
COVENANTS...............................................................................
50
6.1.
Payment of
Fees...................................................................
50
6.2 Conduct of
Business and Maintenance of Existence and
Assets....................... 50
6.3.
Violations........................................................................
50
6.4.
Government
Receivables............................................................
50
6.5.
[Intentionally
Omitted.]..........................................................
50
6.6.
Fixed Charge Coverage
Ratio.......................................................
50
6.7.
Additional Mortgage; Title
Insurance..............................................
50
6.8.
Landlord's
Waivers................................................................
51
6.9.
Execution of Supplemental
Instruments.............................................
51
6.10.
Payment of Indebtedness, Including Taxes,
Etc..................................... 51
6.11.
Standards of Financial
Statements.................................................
51
6.12.
Inventory
Appraisals..............................................................
52
6.13
Field
Examinations................................................................
52
6.14
Anti-Terrorism
Laws...............................................................
52
6.15
Tax Shelter
Provisions............................................................
52
VII. NEGATIVE
COVENANTS..................................................................................
52
7.1.
Merger, Consolidation, Acquisition and Sale of
Assets............................. 53
7.2.
Creation of
Liens.................................................................
53
7.3.
Guarantees........................................................................
53
7.4.
Investments.......................................................................
53
7.5.
Loans.............................................................................
53
7.6.
[Intentionally
Omitted.]..........................................................
53
7.7.
Dividends.........................................................................
53
7.8.
Indebtedness......................................................................
54
7.9.
Nature of
Business................................................................
54
7.10.
Transactions with
Affiliates......................................................
54
7.11.
Leases............................................................................
54
7.12.
Subsidiaries......................................................................
54
7.13.
Fiscal Year and Accounting
Changes................................................
54
7.14.
Pledge of
Credit..................................................................
54
7.15.
Amendment of Articles of Incorporation,
By-Laws................................... 54
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7.16.
Compliance with
ERISA.............................................................
55
7.17.
Prepayment
of
Indebtedness........................................................
55
7.18.
Other
Agreements..................................................................
55
VIII. CONDITIONS
PRECEDENT................................................................................
55
8.1.
Conditions to Initial
Advances....................................................
55
(a) Note;
Other Documents....................................................
55
(b) Filings,
Registrations and Recordings....................................
55
(c) Corporate
Proceedings of Borrowers.......................................
56
(d) Incumbency
Certificates of Borrowers.....................................
56
(e)
[Intentionally
Omitted.].................................................
56
(f)
[Intentionally
Omitted.].................................................
56
(g)
Certificates.............................................................
56
(h) Good
Standing
Certificates...............................................
56
(i) Legal
Opinion............................................................
56
(j) No
Litigation............................................................
56
(k) Financial
Condition Certificates.........................................
57
(l) Collateral
Examination...................................................
57
(m)
Fees.....................................................................
57
(n) Pro Forma
Financial Statements...........................................
57
(o) Payment of
Existing Indebtedness.........................................
57
(p) Accounts
Sales Agreement.................................................
57
(q)
Insurance................................................................
57
(r) Title
Insurance..........................................................
57
(s)
Environmental
Reports....................................................
57
(t) Payment
Instructions.....................................................
58
(u)
Projections..............................................................
58
(v)
Consents.................................................................
58
(w) No Adverse
Material Change...............................................
58
(x) Leasehold
Agreements.....................................................
58
(y)
Mortgage.................................................................
58
(z) Contract
Review..........................................................
58
(aa)
Closing
Certificate......................................................
58
(bb)
Borrowing
Base...........................................................
58
(cc)
Undrawn
Availability.....................................................
58
(dd)
Other....................................................................
59
8.2.
Conditions to Each
Advance........................................................
59
(a)
Representations and
Warranties........................................... 59
(b) No
Default...............................................................
59
(c) Maximum
Advances.........................................................
59
IX.
INFORMATION AS TO
BORROWER..........................................................................
59
9.1.
Disclosure of Material
Matters....................................................
59
9.2.
Borrowing Base;
Schedules.........................................................
59
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9.4.
Litigation........................................................................
60
9.5.
Material
Occurrences..............................................................
60
9.6.
Government
Receivables............................................................
60
9.7.
Annual Financial
Statements.......................................................
60
9.8.
Quarterly Financial
Statements....................................................
61
9.9.
Monthly Financial
Statements......................................................
61
9.10.
Other
Reports.....................................................................
62
9.11.
Additional
Information............................................................
62
9.12.
Projected Operating
Budget........................................................
62
9.13.
Variances From Operating
Budget...................................................
62
9.14.
Notice of Suits, Adverse
Events...................................................
62
9.15.
ERISA Notices and
Requests........................................................
63
9.16.
Additional
Documents..............................................................
63
9.17. Tax
Shelter
Provisions............................................................
63
X.
EVENTS OF
DEFAULT...................................................................................
64
XI. LENDERS'
RIGHTS AND REMEDIES AFTER
DEFAULT..........................................................
66
11.1
Rights and
Remedies...............................................................
66
11.2.
Agent's
Discretion................................................................
67
11.3.
Setoff............................................................................
67
11.4.
Rights and Remedies not
Exclusive.................................................
67
11.5.
Allocation of Payments After Event of
Default..................................... 67
XII. WAIVERS AND
JUDICIAL
PROCEEDINGS....................................................................
68
12.1.
Waiver of
Notice..................................................................
68
12.2.
Delay.............................................................................
68
12.3. Jury
Waiver.......................................................................
68
XIII. EFFECTIVE DATE AND
TERMINATION......................................................................
69
13.1.
Term..............................................................................
69
13.2.
Termination.......................................................................
69
XIV. REGARDING
AGENT.....................................................................................
69
14.1.
Appointment, Intercreditor
Agreement..............................................
69
14.2. Nature of
Duties....................................................................................
70
14.3. Lack
of Reliance on Agent and
Resignation......................................... 70
14.5.
Certain Rights of
Agent...........................................................
71
14.5.
Reliance..........................................................................
71
14.6.
Notice of
Default.................................................................
71
14.7.
Indemnification...................................................................
71
14.8.
Agent in its Individual
Capacity..................................................
72
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14.9.
Delivery of
Documents.............................................................
72
14.10.
Borrowers' Undertaking to
Agent...................................................
72
14.11. No
Reliance on Agent's Customer Identification
Program............................ 72
XV. BORROWING
AGENCY....................................................................................
72
15.1.
Borrowing Agency
Provisions.......................................................
72
15.2.
Waiver of
Subrogation.............................................................
73
XVI.
MISCELLANEOUS.......................................................................................
73
16.1.
Governing
Law.....................................................................
73
16.2.
Entire
Understanding..............................................................
74
16.3.
Successors and Assigns; Participations; New
Lenders............................... 76
16.4
Application of Payments, Overadvances for GE Capital
Proceeds..................... 77
16.5.
Indemnity.........................................................................
78
16.6.
Notice............................................................................
78
16.7
Survival..........................................................................
80
16.8.
Severability......................................................................
81
16.9.
Expenses..........................................................................
81
16.10.
Injunctive
Relief.................................................................
81
16.11.
Consequential
Damages.............................................................
81
16.12.
Captions..........................................................................
81
16.13.
Counterparts; Telecopied
Signatures...............................................
81
16.14.
Construction......................................................................
81
16.15
Confidentiality; Sharing
Information..............................................
82
16.16. PNC
Consent.......................................................................
82
16.17.
Publicity.........................................................................
83
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REVOLVING
CREDIT
AND
SECURITY AGREEMENT
Revolving Credit and Security Agreement (this "Agreement") dated as
of
December 30, 2003, among LESCO, INC., a
corporation organized under the laws of
the State of Ohio ("LESCO"), LESCO
SERVICES, INC., a corporation organized under
the laws of the State of Ohio ("LSI"),
LESCO TECHNOLOGIES, LLC, a limited
liability company organized under the laws
of the State of Nevada
("Technologies"), and AIM LAWN & GARDEN
PRODUCTS, INC., a corporation organized
under the laws of the State of Ohio
("AIM"), each a "Borrower" and collectively
"Borrowers"), the financial institutions
which are now or which hereafter become
a party hereto (collectively, the "Lenders"
and individually a "Lender"),
KEYBANK NATIONAL ASSOCIATION, as
syndication agent, and PNC BANK, NATIONAL
ASSOCIATION ("PNC"), as agent for Lenders
(PNC, in such capacity, the "Agent").
IN CONSIDERATION of the mutual covenants and undertakings
herein
contained, Borrowers, Lenders and Agent
hereby agree as follows:
I.
DEFINITIONS.
1.1.
Accounting Terms. As used in this Agreement, the Note, or any
certificate, report or other document made
or delivered pursuant to this
Agreement, accounting terms not defined in
Section 1.2 or elsewhere in this
Agreement and accounting terms partly
defined in Section 1.2 to the extent not
defined, shall have the respective meanings
given to them under GAAP; provided,
however, whenever such accounting terms are
used for the purposes of determining
compliance with financial covenants in this
Agreement, such accounting terms
shall be defined in accordance with GAAP as
applied in preparation of the
audited financial statements of Borrowers
for the fiscal year ended December 31,
2002.
1.2.
General Terms. For purposes of this Agreement the following
terms shall have the following
meanings:
"Accountants" shall have the meaning set forth in Section 9.7
hereof.
"Accounts Sales Agreement" shall mean that certain Portfolio
Purchase and Sale Agreement dated as of
December 16, 2003 by and among Borrowers
and GE Capital pursuant to which GE Capital
is purchasing certain Receivables of
LESCO.
"ACH Transactions" shall mean any cash management or related
services including the automated clearing
house transfer of funds by the Agent
for the account of any Borrower pursuant to
agreement or overdrafts.
"Advances" shall mean and include the Revolving Advances and
Letters of Credit and GE Proceeds
Advances.
"Affiliate" of any Person shall mean (a) any Person which,
directly or indirectly, is in control of,
is controlled by, or is under common
control with such Person, or (b) any
Person
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who is a director or officer (i) of such
Person, (ii) of any Subsidiary
of such Person or (iii) of any Person
described in clause (a) above. For
purposes of this definition, control of a
Person shall mean the power, direct or
indirect, (x) to vote 5% or more of the
securities having ordinary voting power
for the election of directors of such
Person, or (y) to direct or cause the
direction of the management and policies of
such Person whether by contract or
otherwise.
"Agent" shall have the meaning set forth in the preamble to
this Agreement and shall include its
successors and assigns.
"Alternate Base Rate" shall mean, for any day, a rate per
annum equal to the higher of (i) the Base
Rate in effect on such day and (ii)
the Federal Funds Open Rate in effect on
such day plus 1/2 of 1%.
"Anti-Terrorism Laws" shall mean any Applicable Law relating
to terrorism or money laundering, including
Executive Order No. 13224, the USA
Patriot Act, the Laws comprising or
implementing the Bank Secrecy Act, and the
Laws administered by the United States
Treasury Department's Office of Foreign
Asset Control (as any of the foregoing Laws
may from time to time be amended,
renewed, extended, or replaced).
"Applicable Law" shall mean all laws, rules and regulations
applicable to the person, conduct,
transaction, covenant, Other Document or
contract in question, including all
applicable common law and equitable
principles; all provisions of all
applicable state, federal and foreign
constitutions, statutes, rules, regulations
and orders of any Governmental Body,
and all orders, judgments and decrees of
all courts and arbitrators.
"Applicable Margin" shall mean, as applicable:
(A) the
percentage spread to be added to the Alternate
Base Rate at the indicated level of Fixed
Charge Coverage Ratio in the pricing
grid on Schedule 1.2(a) below the heading
"Alternate Base Rate Spread," or
(B) the
percentage spread to be added to the Eurodollar
Rate at the indicated level of Fixed Charge
Coverage Ratio in the pricing grid
on Schedule 1.2(a) below the heading
"Eurodollar Rate Spread."
The Applicable Margin shall be computed in accordance with the
parameters set forth on Schedule
1.2(a).
"Authority" shall have the meaning set forth in Section
4.19(d).
"Bank Products" shall mean any one or more of the following
types of services or facilities extended to
any Borrower by the Agent or any
Lender, or any Affiliate of the Agent or
any Lender in reliance on the Agent's
or such Lender's agreement, respectively,
to indemnify such Affiliate: (a)
credit cards, (b) ACH Transactions, (c)
Interest Rate Protection Agreements, and
(d) foreign exchange contracts.
"Bank Products Reserves" shall mean all reserves which the
Agent from time to time establishes in its
sole discretion for the Bank Products
then provided or outstanding.
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"Base Rate" shall mean the base commercial lending rate of PNC
as publicly announced to be in effect from
time to time, such rate to be
adjusted automatically, without notice, on
the effective date of any change in
such rate. This rate of interest is
determined from time to time by PNC as a
means of pricing some loans to its
customers and is neither tied to any external
rate of interest or index nor does it
necessarily reflect the lowest rate of
interest actually charged by PNC to any
particular class or category of
customers of PNC.
"Blocked Accounts" shall have the meaning set forth in Section
4.15(h).
"Blocked Person" shall have the meaning assigned to such term
in Section 5.24.
"Borrower" or "Borrowers" shall have the meaning set forth in
the preamble to this Agreement and shall
extend to all permitted successors and
assigns of such Persons.
"Borrowing Base
Certificate" shall mean a certificate duly
executed by an officer of Borrowing Agent
appropriately completed and in
substantially the form of Exhibit A
hereto.
"Borrowers on a consolidated basis" shall mean LESCO, LSI,
Technologies, and AIM.
"Borrowers' Account" shall have the meaning set forth in
Section 2.8.
"Borrowing Agent" shall mean LESCO.
"Business Day" shall mean any day other than Saturday or
Sunday or a legal holiday on which
commercial banks are authorized or required
by law to be closed for business in East
Brunswick, New Jersey and, if the
applicable Business Day relates to any
Eurodollar Rate Loans, such day must also
be a day on which dealings are carried on
in the London interbank market.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Sections 9601 et
seq.
"Certificates of Deposit" shall mean the following
certificates of deposit issued by PNC to
LESCO, and any extensions, renewals or
replacements thereof: (a) Certificate No.
31700218617 purchased September 14,
2001, in the amount of $472,500, and (b)
Certificate No. 31300222218 purchased
December 10, 2001, in the amount of
$472,500.
"Change of Control" shall mean (a) the occurrence of any event
(whether in one or more transactions) which
results in a transfer of control of
any Borrower to a Person who is not an
Original Owner or (b) any merger or
consolidation of or with any Borrower or
sale of all or substantially all of the
property or assets of any Borrower. For
purposes of this definition, "control of
Borrower" shall mean the power, direct or
indirect (x) to vote 50% or more of
the securities having ordinary voting power
for the election of directors of any
Borrower or (y) to direct or cause the
direction of the management and policies
of any Borrower by contract or
otherwise.
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"Change of Ownership" shall mean (a) 50% or more of the common
stock or other ownership interests of any
Borrower is no longer owned or
controlled by (including for the purposes
of the calculation of percentage
ownership, any shares of common stock or
other ownership interests into which
any capital stock or other ownership
interests of any Borrower held by any of
the Original Owners is convertible or for
which any such shares of the capital
stock or other ownership interests of any
Borrower or of any other Person may be
exchanged and any shares of common stock or
other ownership interests issuable
to such Original Owners upon exercise of
any warrants, options or similar rights
which may at the time of calculation be
held by such Original Owners) a Person
who is an Original Owner or (b) any merger,
consolidation or sale of
substantially all of the property or assets
of any Borrower.
"Charges" shall mean all taxes, charges, fees, imposts, levies
or other assessments, including, without
limitation, all net income, gross
income, gross receipts, sales, use, ad
valorem, value added, transfer,
franchise, profits, inventory, capital
stock, license, withholding, payroll,
employment, social security, unemployment,
excise, severance, stamp, occupation
and property taxes, custom duties, fees,
assessments, liens, claims and charges
of any kind whatsoever, together with any
interest and any penalties, additions
to tax or additional amounts, imposed by
any taxing or other authority, domestic
or foreign (including, without limitation,
the Pension Benefit Guaranty
Corporation or any environmental agency or
superfund), upon the Collateral, or
any of the Borrowers.
"Closing Date" shall mean December 30, 2003 or such other date
as may be agreed to by the parties
hereto.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and the
regulations promulgated thereunder.
"Collateral" shall mean and include:
(a) all
Receivables;
(b) all
Equipment;
(c) all
General Intangibles;
(d) all
Inventory;
(e) all
Investment Property;
(f) all Real
Property subject to the Mortgages;
(g) the
Leasehold Interests;
(h) all of
each Borrower's right, title and interest in
and to (i) its respective goods and other
property including, but not limited
to, all merchandise returned or rejected by
Customers, relating to or securing
any of the Receivables; (ii) all of each
Borrower's rights as a consignor, a
consignee, an unpaid vendor, mechanic,
artisan, or other lienor, including
stoppage in transit, setoff, detinue,
replevin, reclamation and repurchase;
(iii) all additional amounts due to
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any Borrower from any Customer relating to
the Receivables; (iv) other property,
including warranty claims, relating to any
goods securing this Agreement; (v)
all of each Borrower's contract rights,
rights of payment which have been earned
under a contract right, instruments
(including promissory notes), documents,
chattel paper (including electronic chattel
paper), warehouse receipts, deposit
accounts, letters of credit, the
Certificates of Deposit and money; (vi) all
commercial tort claims (whether now
existing or hereafter arising); (vii) if and
when obtained by any Borrower, all real and
personal property of third parties
in which such Borrower has been granted a
lien or security interest as security
for the payment or enforcement of
Receivables; and (viii) any other goods,
personal property or real property now
owned or hereafter acquired in which any
Borrower has expressly granted a security
interest or may in the future grant a
security interest to Agent hereunder, or in
any amendment or supplement hereto
or thereto, or under any other agreement
between Agent and any Borrower;
(i) all of
each Borrower's ledger sheets, ledger cards,
files, correspondence, records, books of
account, business papers, computers,
computer software (owned by any Borrower or
in which it has an interest),
computer programs, tapes, disks and
documents relating to (a), (b), (c), (d),
(e), (f), (g) or (h) of this Paragraph;
and
(j) all
proceeds and products of (a), (b), (c), (d), (e),
(f), (g), (h) and (i) in whatever form,
including, but not limited to: cash,
deposit accounts (whether or not comprised
solely of proceeds), certificates of
deposit, insurance proceeds (including
hazard, flood and credit insurance),
negotiable instruments and other
instruments for the payment of money, chattel
paper, security agreements, documents,
eminent domain proceeds, condemnation
proceeds and tort claim proceeds.
"Commitment Percentage" of any Lender shall mean the
percentage set forth below such Lender's
name on the signature page hereof as
same may be adjusted upon any assignment by
a Lender pursuant to Section 16.3(b)
hereof.
"Commitment Transfer Supplement" shall mean a document in the
form of Exhibit 16.3 hereto, properly
completed and otherwise in form and
substance satisfactory to Agent by which
the Purchasing Lender purchases and
assumes a portion of the obligation of
Lenders to make Advances under this
Agreement.
"Consents" shall mean all filings and all licenses, permits,
consents, approvals, authorizations,
qualifications and orders of governmental
authorities and other third parties,
domestic or foreign, necessary to carry on
any Borrower's business, including, without
limitation, any Consents required
under all applicable federal, state or
other applicable law.
"Controlled Group" shall mean all members of a controlled
group of corporations and all trades or
businesses (whether or not incorporated)
under common control which, together with
any Borrower, are treated as a single
employer under Section 414 of the Code.
"Customer" shall mean and include the account debtor with
respect to any Receivable and/or the
prospective purchaser of goods, services or
both with respect to any contract or
contract right, and/or any party who enters
into or proposes to enter into any
contract
-5-
<PAGE>
or other arrangement with any Borrower,
pursuant to which such Borrower is to
deliver any personal property or perform
any services.
"Customs" shall have the meaning set forth in Section 2.11(c)
hereof.
"Default" shall mean an event which, with the giving of notice
or passage of time or both, would
constitute an Event of Default.
"Default Rate" shall have the meaning set forth in Section 3.1
hereof.
"Defaulting Lender" shall have the meaning set forth in
Section 2.16(a) hereof.
"Depository Accounts" shall have the meaning set forth in
Section 4.15(h) hereof.
"Disputanta Sales Agreement" shall mean that certain Asset
Purchase Agreement dated October 24, 2002,
between the Disputanta Purchaser as
purchaser and LESCO as seller.
"Disputanta Note" shall mean that certain promissory note
dated November 4, 2002, made by the
Disputanta Purchaser in favor of LESCO in
the stated principal amount of
$1,850,000.
"Disputanta Purchaser" shall mean KPAC Holdings, Inc., a
Virginia corporation.
"Documents" shall have the meaning set forth in Section 8.1(c)
hereof.
"Dollar" and the sign "$" shall mean lawful money of the
United States of America.
"Domestic Rate Loan" shall mean any Advance that bears
interest based upon the Alternate Base
Rate.
"Earnings Before Interest and Taxes" shall mean for any period
the sum of (i) net income (or loss) of
Borrowers on a consolidated basis for
such period, plus (ii) all interest expense
of Borrowers on a consolidated basis
for such period, plus (iii) all charges
against income of Borrowers on a
consolidated basis for such period for
federal, state and local taxes.
"EBITDA" shall mean for any period the sum of (i) Earnings
Before Interest and Taxes for such period
plus (ii) depreciation expenses for
such period, plus (iii) amortization
expenses for such period; provided however,
the effect of the following items shall be
excluded from the calculation of
EBITDA to the extent that such items are
included in EBITDA in the first
instance: (a) expenses of terminating or
hedging any Interest Rate Protection
Agreement entered into pursuant to the
Existing Loan Agreement, (b) acceleration
of expenses in connection with the
Borrowers' restructuring effected in January,
2002, (c) nonrecurring fees charged by the
Agent and the Lenders under this
Agreement, or (d) fees payable to GE
Capital under the Accounts Sales Agreement
and/or the GE Program Agreement which are
payable on the Closing Date and
charges taken by the Borrowers with respect
to the accounts sold by the
Borrowers to GE Capital, the foregoing not
in excess of $5,000,000 in the
aggregate. To the extent that (A) Borrowers
establish bad debt reserves for
their accounts and such reserves are later
reversed, and
-6-
<PAGE>
(B) the Borrowers reverse charges taken
with respect to the Account Sales
Agreement and/or the GE Program Agreement,
then the amount of such reserves and
charges which are reversed shall be
subtracted from EBITDA.
"Eligible Inventory" shall mean and include Inventory
excluding work in process, with respect to
each Borrower valued at the lower of
cost (average cost method) or market value,
which is not, in Agent's reasonable
opinion, obsolete, slow moving or
unmerchantable and which Agent, in its sole
reasonable discretion, shall not deem
ineligible Inventory, based on such
considerations as Agent may from time to
time deem appropriate including,
without limitation, whether the Inventory
is subject to a perfected, first
priority security interest in favor of
Agent and whether the Inventory conforms
to all standards imposed by any
governmental agency, division or department
thereof which has regulatory authority over
such goods or the use or sale
thereof. Any Inventory located on a leased
premises for which the Agent has not
received a satisfactory landlord's or
warehouseman's agreement within ninety
(90) days after the Closing Date shall be
excluded from Eligible Inventory
unless such Inventory is subject to a
reserve in an amount established by the
Agent in it sole reasonable discretion (but
in the case of leased premises, in
no event more than three months of rental
payments for such premises) . Eligible
Inventory shall exclude all Inventory
in-transit; provided however, (i)
Stores-on-Wheels Inventory which meets the
other criteria set forth above and
for which title has passed to a Borrower
and which is insured to the full value
thereof shall be included in Eligible
Inventory, and (ii) Inventory in transit
by common carrier from one of the
Borrowers' locations set forth on Schedule 4.5
to another of the Borrower's locations set
forth on Schedule 4.5 and which is
insured to the full value thereof shall be
included in Eligible Inventory,
subject to applicable reserves established
by the Agent with respect to unpaid
freight charges related to such in-transit
Inventory.
"Environmental Complaint" shall have the meaning set forth in
Section 4.19(d) hereof.
"Environmental Laws" shall mean all federal, state and local
environmental, land use, zoning, health,
chemical use, safety and sanitation
laws, statutes, ordinances and codes
relating to the protection of the
environment and/or governing the use,
storage, treatment, generation,
transportation, processing, handling,
production or disposal of Hazardous
Substances and the rules, regulations,
policies, published guidelines, written
interpretations, decisions, orders and
directives of federal, state and local
governmental agencies and authorities with
respect thereto.
"Equipment" shall mean and include as to each Borrower all of
such Borrower's goods (other than
Inventory) whether now owned or hereafter
acquired and wherever located including,
without limitation, all equipment,
machinery, apparatus, motor vehicles,
fittings, furniture, furnishings,
fixtures, parts, accessories and all
replacements and substitutions therefor or
accessions thereto.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time and
the rules and regulations promulgated
thereunder.
-7-
<PAGE>
"Eurodollar Rate" shall mean for any Eurodollar Rate Loan for
the then current Interest Period relating
thereto the interest rate per annum
determined by PNC by dividing (the
resulting quotient rounded upwards, if
necessary, to the nearest 1/100th of 1% per
annum) (a) the rate of interest
determined by PNC in accordance with its
usual procedures (which determination
shall be conclusive absent manifest error)
to be the average of the London
interbank offered rates for U.S. Dollars
quoted by the British Bankers'
Association as set forth on Moneyline
Telerate (or appropriate successor or, if
British Banker's Association or its
successor ceases to provide such quotes, a
comparable replacement determined by Agent)
display page 3750 (or such other
display page on Moneyline Telerate Service
as may replace display page 3750) two
(2) Business Days prior to the first day of
such Interest Period for an amount
comparable to such Eurodollar Rate Loan and
having a borrowing date and a
maturity comparable to such Interest Period
by (b) a number equal to 1.00 minus
the Reserve Percentage. The Eurodollar Rate
may also be expressed by the
following formula:
<TABLE>
<S>
<C>
Average of London interbank offered rates quoted by BBA as shown
on
Eurodollar Rate =Moneyline Telerate display
page 3750 or appropriate successor / 1.00 - Reserve Percentage
</TABLE>
"Eurodollar Rate Loan" shall mean an Advance at any time that
bears interest based on the Eurodollar
Rate.
"Event of Default" shall mean the occurrence of any of the
events set forth in Article X hereof.
"Executive Order No. 13224" shall mean the Executive Order No.
13224 on Terrorist Financing, effective
September 24, 2001, as the same has
been, or shall hereafter be, renewed,
extended, amended or replaced.
"Existing Loan Agreement" shall mean that certain Revolving
Credit, Term Loan and Security Agreement
dated January 14, 2002, as amended,
among the Borrowers, PNC Bank, National
Association, as administrative agent,
and the other lenders for which PNC Bank
serves as administrative agent.
"Federal Funds Effective Rate" for any day shall mean the rate
per annum (based on a year of 360 days and
actual days elapsed and rounded
upward to the nearest 1/100 of 1%)
announced by the Federal Reserve Bank of New
York (or any successor) on such day as
being the weighted average of the rates
on overnight federal funds transactions
arranged by federal funds brokers on the
previous trading day, as computed and
announced by such Federal Reserve Bank (or
any successor) in substantially the same
manner as such Federal Reserve Bank
computes and announces the weighted average
it refers to as the "Federal Funds
Effective Rate" as of the date of this
Agreement; provided, if such Federal
Reserve Bank (or its successor) does not
announce such rate on any day, the
"Federal Funds Effective Rate" for such day
shall be the Federal Funds Effective
Rate for the last day on which such rate
was announced.
"Federal Funds Open Rate" shall mean the rate per annum
determined by the Agent in accordance with
its usual procedures (which
determination shall be conclusive absent
manifest error) to be the open rate for
federal funds transactions as of the
opening of business for federal funds
transactions among members of the Federal
Reserve System arranged by federal
-8-
<PAGE>
funds brokers on such day, as quoted by
Garvin Guybutler, any successor entity
thereto, or any other broker selected by
the Bank, as set forth on the
applicable Telerate display page; provided,
however; that if such day is not a
Business Day, the Federal Funds Open Rate
for such day shall be the Open Rate on
the immediately preceding Business Day, or
if no such rate shall be quoted by a
Federal funds broker at such time, such
other rate as determined by the Agent in
accordance with its usual procedures.
"Fee Letter" shall mean the fee letter dated December 30,
2003, among Borrowers and PNC.
"Fixed Charge Coverage Ratio" shall mean and include, with
respect to any fiscal period, the ratio of
(a) EBITDA minus Non-Financed Capital
Expenditures, minus income taxes expensed
on a consolidated basis (but excluding
any non-recurring tax adjustments related
to any of the exclusions set forth in
items (a), (b) or (c) in the definition of
"EBITDA" herein), minus cash
dividends on and redemptions of capital
stock from and after the Closing Date
(other than redemptions of or with respect
to shares of LESCO's Series B
preferred stock which occur prior to March
31, 2004), all the foregoing during
such period to (b) Fixed Charges during
such period.
"Fixed Charges" shall mean the sum of consolidated interest
expense of the Borrowers on a consolidated
basis, Senior Debt Payments,
principal on other Indebtedness for
borrowed money, and payments under
capitalized leases, the foregoing all as
determined in conformity with GAAP.
"Formula Amount" shall have the meaning set forth in Section
2.1(a).
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from
time to time.
"GE Capital" shall mean GE Capital Financial Inc., a Utah
industrial loan corporation.
"GE Capital Proceeds" shall mean proceeds of any of the
Borrowers' accounts receivable purchased by
GE Capital pursuant to the Account
Sales Agreement or payments due under the
GE Program Agreement from customers of
any of the Borrowers.
"GE Proceeds Advance" shall have the meaning set forth in
Section 16.4(b).
"General Intangibles" shall mean and include as to each
Borrower all of such Borrower's general
intangibles, whether now owned or
hereafter acquired including, without
limitation, all payment intangibles,
choses in action, causes of action,
corporate or other business records,
inventions, designs, patents, patent
applications, equipment formulations,
manufacturing procedures, quality control
procedures, trademarks, service marks,
trade secrets, goodwill, copyrights, design
rights, software, computer
information, source codes, codes, records
and dates, registrations, licenses,
franchises, customer lists, tax refunds,
tax refund claims, computer programs,
all claims under guaranties, security
interests or other security held by or
granted to such Borrower to secure payment
of any of the Receivables by a
Customer (other than to the
-9-
<PAGE>
extent covered by Receivables) all rights
of indemnification and all other
intangible property of every kind and
nature (other than Receivables).
"GE Program Agreement" shall mean that certain Private Label
Business Credit Program Agreement dated as
of December 16, 2003 by and among
Borrowers and GE Capital.
"Governmental Body" shall mean any nation or government, any
state or other political subdivision
thereof or any entity exercising the
legislative, judicial, regulatory or
administrative functions of or pertaining
to a government.
"Hazardous Discharge" shall have the meaning set forth in
Section 4.19(d) hereof.
"Hazardous Substance" shall mean, without limitation, any
flammable explosives, radon, radioactive
materials, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls,
petroleum and petroleum products,
methane, hazardous materials, Hazardous
Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the
Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801,
et seq.), RCRA, or any other
applicable Environmental Law and in the
regulations adopted pursuant thereto.
"Hazardous Wastes" shall mean all wastes subject to regulation
under CERCLA, RCRA or applicable state law,
and any other applicable Federal and
state laws now in force or hereafter
enacted relating to hazardous waste
disposal.
"Indebtedness" of a Person at a particular date shall mean all
obligations of such Person which in
accordance with GAAP would be classified
upon a balance sheet as liabilities (except
capital stock and surplus earned or
otherwise) and in any event, without
limitation by reason of enumeration, shall
include all indebtedness, debt and other
similar monetary obligations of such
Person whether direct or guaranteed, and
all premiums, if any, due at the
required prepayment dates of such
indebtedness, and all indebtedness secured by
a Lien on assets owned by such Person,
whether or not such indebtedness actually
shall have been created, assumed or
incurred by such Person. Any indebtedness of
such Person resulting from the acquisition
by such Person of any assets subject
to any Lien shall be deemed, for the
purposes hereof, to be the equivalent of
the creation, assumption and incurring of
the indebtedness secured thereby,
whether or not actually so created, assumed
or incurred.
"Industrial Revenue Bonds" shall mean the Industrial Revenue
Bonds (LESCO, Inc. Project) issued by the
County of Belmont, Ohio in a principal
amount of $5,875,000 and supported by,
inter alia, the IRB Letter of Credit.
"IRB Letter of Credit" shall mean that certain Letter of
Credit No. A-304726 dated March 1, 1993, as
amended by that Irrevocable Letter
of Credit No. S304726PGH dated October 23,
1998, and as further amended, issued
by PNC Bank, National Association in favor
of The Bank of New York, successor to
Irving Trust Company, in its capacity as
Trustee under the Indenture of Trust
dated as of January 1, 1988, between the
Trustee and the County of Belmont,
Ohio, for the account of LESCO, Inc. in the
face amount of $6,230,720.
"IRB Mortgage" shall mean that certain Open-End Shared
Mortgage and Security Agreement, dated as
of January 1, 1988, from LESCO, Inc.
(as the Mortgagor) to the Director of
-10-
<PAGE>
Development of the State of Ohio and Irving
Trust Company (in its capacity as
Trustee under the Indenture of Trust dated
as of January 1, 1988) and Irving
Trust Company (as Issuer of a Letter of
Credit), recorded on January 28, 1988 in
Mortgage Volume 548, Page 139 of the
Belmont County, Ohio, Records.
"IRB Mortgage Assignment" shall mean that certain First
Amendment to and Assignment of Open-End
Shared Mortgage and Security Agreement
dated January 13, 1993 by and among LESCO,
Inc. (as the Mortgagor), the Director
of Development of the State of Ohio, The
Bank of New York, successor to Irving
Trust Company (in its capacity as Trustee
under the Indenture of Trust dated as
of January 1, 1988) and Pittsburgh National
Bank recorded on February 13, 1993
in Mortgage Volume 598, Page 98 of the
Belmont County, Ohio, Records.
"Ineligible Security" shall mean any security which may not be
underwritten or dealt in by member banks of
the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12
U.S.C. Section 24, Seventh), as
amended.
"Intercreditor
Agreement" shall mean that certain
Intercreditor Agreement between GE Capital
and the Agent with respect to (i) the
rights of GE Capital in the Receivables and
related property sold by LESCO to GE
Capital under the Accounts Sales Agreement
and in payments due under the GE
Program Agreement from customers of any of
the Borrowers, and (ii) the rights of
the Agent, for the benefit of the Lenders,
in the Collateral, together with that
certain Consent and Agreement executed by
each Borrower for the benefit of the
Agent and GE Capital, all in substantially
the form of Exhibit 14.1.
"Interest Period" shall mean the period provided for any
Eurodollar Rate Loan pursuant to Section
2.2(b).
"Interest Rate Protection Agreements" shall mean documentation
for interest rate swaps in a standard
International Swap Dealer Association
Agreement or such other form as is
acceptable to the Agent which provide for the
method of calculating the reimbursable
amount of the provider's credit exposure
in a reasonable and customary basis.
"Inventory" shall mean and include as to each Borrower all of
such Borrower's now owned or hereafter
acquired goods, merchandise and other
personal property, wherever located, to be
furnished under any consignment
arrangement, contract of service or held
for sale or lease, all raw materials,
work in process, finished goods and
materials and supplies of any kind, nature
or description which are or might be used
or consumed in such Borrower's
business or used in selling or furnishing
such goods, merchandise and other
personal property, and all documents of
title or other documents representing
them.
"Inventory Advance Rates" shall have the meaning set forth in
Section 2.1(a)(y)(i) hereof.
"Investment Property" shall mean and include as to each
Borrower, all of such Borrower's now owned
or hereafter acquired securities
(whether certificated or uncertificated),
securities entitlements, securities
accounts, commodities contracts and
commodities accounts.
-11-
<PAGE>
"Issuer" shall mean any Person who issues a Letter of Credit
and/or accepts a draft pursuant to the
terms hereof.
"Leasehold Interests" shall mean all of each Borrower's right,
title and interest in and to the leasehold
interests under ground leases
identified on Schedule 4.19 hereto.
"Lender" and "Lenders" shall have the meaning ascribed to such
term in the preamble to this Agreement and
shall include each Person which
becomes a transferee, successor or assign
of any Lender.
"Letter of Credit Fees" shall have the meaning set forth in
Section 3.2.
"Letters of Credit" shall have the meaning set forth in
Section 2.9.
"LFI" shall mean LESCO Funding, Inc., a Delaware corporation
and a wholly-owned subsidiary of LESCO.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, security
interest, lien (whether statutory or
otherwise), Charge, claim or encumbrance,
or preference, priority or other
security agreement or preferential
arrangement held or asserted in respect of
any asset of any kind or nature whatsoever
including, without limitation, any
conditional sale or other title retention
agreement, any lease having
substantially the same economic effect as
any of the foregoing, and the filing
of, or agreement to give, any financing
statement under the Uniform Commercial
Code or comparable law of any
jurisdiction.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the condition, operations, assets,
business or prospects of the
Borrowers, taken as a whole, (b) the
Borrowers' ability to pay the Obligations
in accordance with the terms thereof, (c)
the value of the Collateral, or
Agent's Liens on the Collateral or the
priority of any such Lien or (d) the
practical realization of the benefits of
Agent's and each Lender's rights and
remedies under this Agreement and the Other
Documents.
"Maximum Revolving Advance Amount" shall mean $50,000,000.
"Monthly Advances" shall have the meaning set forth in Section
3.1 hereof.
"Mortgage" shall mean with respect to Real Property owned by
any Borrower, or leased by a Borrower
pursuant to a ground lease, and located in
Avon Lake, Ohio, Hatfield, Massachusetts,
Martins Ferry, Ohio, and Sebring,
Florida (but excluding the real property
owned by LESCO and located in
Wellington, Ohio, Stockton, California and
Windsor, New Jersey), a mortgage on
such Real Property or the Borrower's
Leasehold Interests in such ground lease
securing the original principal amount of
up to $50,000,000 together with all
extensions, renewals, amendments,
supplements, modifications, substitutions and
replacements thereto and thereof.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Sections 3(37) and 4001(a)(3) of
ERISA.
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<PAGE>
"Net Worth" at a particular date, shall mean all amounts which
would be included under shareholders'
equity on a balance sheet of LESCO on a
consolidated basis determined in accordance
with GAAP as at such date.
"Non-Financed Capital Expenditures" shall mean capital
expenditures of the Borrowers which are not
financed by any third party lender
but shall include capital expenditures
which are financed with Revolving
Advances.
"Note" shall mean the Revolving Credit Note.
"Note Pledge Agreement" shall mean the Note Pledge Agreement
with respect to the Disputanta Note
executed and delivered by LESCO to the Agent
for the benefit of the Lenders.
"Obligations" shall mean and include any and all loans,
advances, debts, liabilities, obligations,
covenants and duties owing by
Borrowers to Lenders or Agent or any
Affiliate of Agent or any Lender of any
kind or nature, present or future
(including, without limitation, any interest
accruing thereon after maturity, or after
the filing of any petition in
bankruptcy, or the commencement of any
insolvency, reorganization or like
proceeding relating to any Borrower,
whether or not a claim for post-filing or
post-petition interest is allowed in such
proceeding), whether or not evidenced
by any note, guaranty or other instrument,
whether arising under any agreement,
instrument or document, (including, without
limitation, this Agreement and the
Other Documents) whether or not for the
payment of money, whether arising by
reason of an extension of credit, opening
of a letter of credit, loan, equipment
lease or guarantee, under any interest or
currency swap, future, option or other
similar agreement (including the Interest
Rate Protection Agreement) entered
into with the Agent or any Lender or any of
their respective Affiliate[s], or in
any other manner, whether arising out of
overdrafts or deposit or other accounts
or electronic funds transfers (whether
through automated clearing houses or
otherwise) or out of the Agent's or any
Lender's or any of their respective
Affiliate's non-receipt of or inability to
collect funds or otherwise not being
made whole in connection with depository
transfer check or other similar
arrangements, whether direct or indirect
(including those acquired by assignment
or participation), absolute or contingent,
joint or several, due or to become
due, now existing or hereafter arising,
contractual or tortious, liquidated or
unliquidated, regardless of how such
indebtedness or liabilities arise or by
what agreement or instrument they may be
evidenced or whether evidenced by any
agreement or instrument, including, but not
limited to, any and all of any
Borrower's Indebtedness and/or liabilities
under this Agreement, the Other
Documents or under any other agreement
between Agent or Lenders or any of their
respective Affiliates and any Borrower and
any amendments, extensions, renewals
or increases and all costs and expenses of
Agent and any Lender or any of their
respective Affiliates incurred in the
documentation, negotiation, modification,
enforcement, collection or otherwise in
connection with any of the foregoing,
including but not limited to reasonable
attorneys' fees and expenses and all
obligations of any Borrower to Agent or
Lenders to perform acts or refrain from
taking any action.
"Original Owners" shall mean the shareholders of LESCO as of
the Closing Date.
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<PAGE>
"Other Documents" shall mean the Mortgage, the Note, the
Patent, Trademark and Copyright Security
Agreement, the Note Pledge Agreement
and any and all other agreements,
instruments and documents, including, without
limitation, guaranties, pledges, powers of
attorney, consents, and all other
writings heretofore, now or hereafter
executed by any Borrower and/or delivered
to Agent or any Lender in respect of the
transactions contemplated by this
"Parent" of any Person shall mean a corporation or other
entity owning, directly or indirectly at
least 50% of the shares of stock or
other ownership interests having ordinary
voting power to elect a majority of
the directors of the Person, or other
Persons performing similar functions for
any such Person.
"Participant" shall mean each Person who shall be granted the
right by any Lender to participate in any
of the Advances and who shall have
entered into a participation agreement in
form and substance satisfactory to
such Lender.
"Patent, Trademark and Copyright Security Agreement" shall
mean the Patent, Trademark and Copyright
Security Agreement executed and
delivered by each of the Borrowers to the
Agent for the benefit of the Lenders.
"Payment Office" shall mean initially Two Tower Center
Boulevard, Eighth Floor, East Brunswick,
New Jersey 08816; thereafter, such
other office of Agent, if any, which it may
designate by notice to Borrowing
Agent and to each Lender to be the Payment
Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" shall mean (a) Liens in favor of
Agent for the benefit of Agent and Lenders;
(b) Liens for taxes, assessments or
other governmental charges not delinquent
or being contested in good faith and
by appropriate proceedings and with respect
to which proper reserves have been
taken by Borrowers; provided, that, the
Lien shall have no effect on the
priority of the Liens in favor of Agent or
the value of the assets in which
Agent has such a Lien and a stay of
enforcement of any such Lien shall be in
effect; (c) matters of record disclosed on
the title insurance commitments
obtained pursuant to Section 8.1(r), (d)
Liens disclosed in the financial
statements or notes thereto referred to in
Section 5.5, the existence of which
Agent has consented to in writing; (e)
deposits or pledges to secure obligations
under worker's compensation, social
security or similar laws, or under
unemployment insurance; (f) deposits or
pledges to secure bids, tenders,
contracts (other than contracts for the
payment of money), leases, statutory
obligations, surety and appeal bonds and
other obligations of like nature
arising in the ordinary course of any
Borrower's business; (g) judgment Liens
that have been stayed or bonded and
mechanics', workers', materialmen's or other
like Liens arising in the ordinary course
of any Borrower's business with
respect to obligations which are not due or
which are being contested in good
faith by the applicable Borrower; (h) Liens
placed upon fixed assets hereafter
acquired to secure a portion of the
purchase price thereof, provided that (x)
any such lien shall not encumber any other
property of the Borrowers and (y) the
aggregate amount of Indebtedness secured by
such Liens incurred as a result of
such purchases during any fiscal year shall
not exceed the amount provided for
in Section 7.6; (i) growers' and other
statutory
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Liens on grass seed, (j) Liens which
individually or in the aggregate do no
encumber Collateral having a value in
excess of $500,000; and (k) Liens
disclosed on Schedule 1.2(p).
"Person" shall mean any individual, sole proprietorship,
partnership, corporation, business trust,
joint stock company, trust,
unincorporated organization, association,
limited liability company,
institution, public benefit corporation,
joint venture, entity or government
(whether Federal, state, county, city,
municipal or otherwise, including any
instrumentality, division, agency, body or
department thereof).
"Plan" shall mean any employee benefit plan within the meaning
of Section 3(3) of ERISA, maintained for
employees of Borrowers or any member of
the Controlled Group or any such Plan to
which any Borrower or any member of the
Controlled Group is required to contribute
on behalf of any of its employees.
"Pro Forma Balance Sheet" shall have the meaning set forth in
Section 5.5(a) hereof.
"Pro Forma Financial Statements" shall have the meaning set
forth in Section 5.5(b) hereof.
"Projections" shall have the meaning set forth in Section
5.5(b) hereof.
"Purchasing Lender" shall have the meaning set forth in
Section 16.3 hereof.
"RCRA" shall mean the Resource Conservation and Recovery Act,
42 U.S.C. Sections 6901 et seq., as
amended.
"Real Property" shall mean all of each Borrower's right, title
and interest in and to owned premises and
premises leased pursuant to a ground
lease, all the foregoing as identified on
Schedule 4.19 hereto.
"Receivables" shall mean and include, as to each Borrower, all
of such Borrower's accounts, contract
rights, instruments (including those
evidencing indebtedness owed to Borrowers
by their Affiliates), documents,
chattel paper (including electronic chattel
paper), general intangibles relating
to accounts, drafts and acceptances, credit
card receivables, and all other
forms of obligations owing to such Borrower
arising out of or in connection with
the sale or lease of Inventory or the
rendition of services, all supporting
obligations, guarantees and other security
therefor, whether secured or
unsecured, now existing or hereafter
created, and whether or not specifically
sold or assigned to Agent hereunder.
"Reimbursement Agreement" shall mean that certain
Reimbursement Agreement dated as of March
1, 1993, as amended, between LESCO and
PNC (formerly known as Pittsburgh National
Bank) relating to the IRB Letter of
Credit.
"Release" shall have the meaning set forth in Section
5.7(c)(i) hereof.
"Reportable Event" shall mean a reportable event described in
Section 4043(b) of ERISA or the regulations
promulgated thereunder.
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"Required Lenders" shall mean Lenders holding at least
fifty-one percent (51%) of the Advances
and, if no Advances are outstanding,
shall mean Lenders holding at least
fifty-one percent (51%) of the Commitment
Percentages.
"Reserve Percentage" shall mean the maximum effective
percentage in effect on any day as
prescribed by the Board of Governors of the
Federal Reserve System (or any successor)
for determining the reserve
requirements (including, without
limitation, supplemental, marginal and
emergency reserve requirements) with
respect to eurocurrency funding.
"Revolving Advances" shall mean Advances made other than
Letters of Credit.
"Revolving Credit Note" shall mean, collectively, the
promissory notes referred to in Section
2.1(a) hereof.
"Revolving Interest Rate" shall mean an interest rate per
annum equal to (a) the sum of the Alternate
Base Rate plus the Applicable Margin
with respect to Domestic Rate Loans and (b)
the sum of the Eurodollar Rate plus
the Applicable Margin with respect to
Eurodollar Rate Loans.
"Section 20 Subsidiary" shall mean the Subsidiary of the bank
holding company controlling PNC, which
Subsidiary has been granted authority by
the Federal Reserve Board to underwrite and
deal in certain Ineligible
Securities.
"Senior Debt Payments" shall mean and include all cash
actually expended by Borrowers to make (a)
interest payments on any Advances
hereunder, plus, (b) payments for all fees,
commissions and charges set forth
herein and with respect to any Advances,
plus (c) capitalized lease payments,
plus (d) payments with respect to any other
Indebtedness for borrowed money,
plus (e) to the extent not included in
EBITDA, recurring fees paid to GE Capital
with respect to the Accounts Sales
Agreement and/or the GE Program Agreement;
provided, Senior Debt Payments shall not
include nonrecurring fees charged by
the Agent and the Lenders under this
Agreement or by GE Capital under the
Accounts Sales Agreement and/or the GE
Program Agreement which are payable on or
before the Closing Date.
"Settlement Date" shall mean the Closing Date and thereafter
Wednesday of each week unless such day is
not a Business Day in which case it
shall be the next succeeding Business
Day.
"Stores-on-Wheels Inventory" shall mean Inventory which is
located on motor vehicles owned or leased
by a Borrower and from which such
Borrower sells such Inventory to its
Customers in the ordinary course of
business.
"Subsidiary" shall mean a corporation or other entity of whose
shares of stock or other ownership
interests having ordinary voting power (other
than stock or other ownership interests
having such power only by reason of the
happening of a contingency) to elect a
majority of the directors of such
corporation, or other Persons performing
similar functions for such entity, are
owned, directly or indirectly, by such
Person.
"Term" shall have the meaning set forth in Section 13.1
hereof.
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"Termination Event" shall mean (i) a Reportable Event with
respect to any Plan or Multiemployer Plan;
(ii) the withdrawal of any Borrower
or any member of the Controlled Group from
a Plan or Multiemployer Plan during a
plan year in which such entity was a
"substantial employer" as defined in
Section 4001(a)(2) of ERISA; (iii) the
providing of notice of intent to
terminate a Plan in a distress termination
described in Section 4041(c) of
ERISA; (iv) the institution by the PBGC of
proceedings to terminate a Plan or
Multiemployer Plan; (v) any event or
condition (a) which might constitute
grounds under Section 4042 of ERISA for the
termination of, or the appointment
of a trustee to administer, any Plan or
Multiemployer Plan, or (b) that may
result in termination of a Multiemployer
Plan pursuant to Section 4041A of
ERISA; or (vi) the partial or complete
withdrawal within the meaning of Sections
4203 and 4205 of ERISA, of any Borrower or
any member of the Controlled Group
from a Multiemployer Plan.
"Toxic Substance" shall mean and include any material present
on the Real Property or the Leasehold
Interests which has been shown to have
significant adverse effect on human health
or which is subject to regulation
under the Toxic Substances Control Act
(TSCA), 15 U.S.C. Sections 2601 et seq.,
applicable state law, or any other
applicable Federal or state laws now in force
or hereafter enacted relating to toxic
substances. "Toxic Substance" includes
but is not limited to asbestos,
polychlorinated biphenyls (PCBs) and lead-based
paints.
"Transactions" shall have the meaning set forth in Section 5.5
hereof.
"Transferee" shall have the meaning set forth in Section
16.3(b) hereof.
"Undrawn Availability" at a particular date shall mean an
amount equal to (a) the lesser of (i) the
Formula Amount plus outstanding
Letters of Credit or (ii) the Maximum
Revolving Advance Amount, minus (b) the
sum of (i) the outstanding amount of
Advances plus (ii) all amounts due and
owing to Borrowers' trade creditors which
are outstanding beyond sixty (60) days
from the due date, plus (iii) fees and
expenses for which Borrowers are liable
but which have not been paid or charged to
Borrowers' Account.
"USA
Patriot Act" shall mean the Uniting and Strengthening
America by Providing Appropriate Tools
Required to Intercept and Obstruct
Terrorism Act of 2001, Public Law 107-56,
as the same has been, or shall
hereafter be, renewed, extended, amended or
replaced.
"Week" shall mean the time period commencing with the opening
of business on a Wednesday and ending on
the end of business the following
Tuesday.
1.3.
Uniform Commercial Code Terms. All terms used herein and
defined in the Uniform Commercial Code as
adopted in the State of Ohio from time
to time shall have the meaning given
therein unless otherwise defined herein. To
the extent the definition of any category
or type of Collateral is expanded by
any amendment, modification or revision to
the Uniform Commercial Code, such
expanded definition will apply
automatically as of the date of such amendment,
modification or revision.
1.4.
Certain Matters of Construction. The terms "herein", "hereof"
and "hereunder" and other words of similar
import refer to this Agreement as a
whole and not to any particular section,
paragraph or subdivision. Any pronoun
used shall be deemed to cover all
genders.
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Wherever appropriate in the context, terms
used herein in the singular also
include the plural and vice versa. All
references to statutes and related
regulations shall include any amendments of
same and any successor statutes and
regulations. Unless otherwise provided, all
references to any instruments or
agreements to which Agent is a party,
including, without limitation, references
to any of the Other Documents, shall
include any and all modifications or
amendments thereto and any and all
extensions or renewals thereof.
II. ADVANCES,
PAYMENTS.
2.1.
(a) Revolving
Advances. Subject to the terms and
conditions set forth in this Agreement,
each Lender, severally and not jointly,
will make Revolving Advances to Borrowers
in aggregate amounts outstanding at
any time equal to such Lender's Commitment
Percentage of the lesser of (x) the
Maximum Revolving Advance Amount less the
aggregate amount of outstanding
Letters of Credit and GE Proceeds Advances
or (y) an amount equal to the sum of:
(i) up to the
lesser of (A) 53.7%,
subject to the provisions of Section 2.1(c) hereof,
during the period from October 1 through February 29
of any calendar year and 60%, subject to the
provisions of Section 2.1(c) hereof, during the
period from March 1 through September 30 of any
calendar year ("Inventory Advance Rates"), of the
value of Eligible Inventory, or (B) $50,000,000,
minus
(ii)
the amount by which the
availability for Revolving Advances based upon
Stores-on-Wheels Inventory under item (i) above
exceeds $4,000,000; minus
(iii) the
aggregate amount of outstanding
Letters of Credit and GE Proceeds Advances, minus
(iv)
the Bank Products Reserves and such
other reserves as Agent may reasonably deem proper
and necessary from time to time.
The amount derived from (x) Section 2.1(a)(y)(i) minus the sum of
(y)
Sections 2.1 (a)(y)(ii), (iii) and (iv) at
any time and from time to time shall
be referred to as the "Formula Amount". The
Revolving Advances shall be
evidenced by one or more secured promissory
notes (collectively, the "Revolving
Credit Note") substantially in the form
attached hereto as Exhibit 2.1(a).
(b)
[Intentionally Omitted.]
(c)
Discretionary Rights. Subject to Section 16.2, the
Inventory Advance Rates may be increased or
decreased by Agent at any time and
from time to time in the exercise of its
reasonable discretion. Each Borrower
consents to any such increases or decreases
and acknowledges that decreasing the
Inventory Advance Rates or increasing the
reserves may limit or restrict
Advances requested by Borrowing Agent.
2.2.
Procedure for Borrowing Advances.
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(a) Borrowing
Agent on behalf of any Borrower may notify
Agent prior to 11:00 a.m. on a Business Day
of a Borrower's request to incur, on
that day, a Revolving Advance hereunder.
Should any amount required to be paid
as interest hereunder, or as fees or other
charges under this Agreement or any
Other Document, or with respect to any
other Obligation, become due, same shall
be deemed a request for a Revolving Advance
as of the date such payment is due,
in the amount required to pay in full such
interest, fee, charge or Obligation
under this Agreement or any other agreement
with Agent or Lenders, and such
request shall be irrevocable.
(b)
Notwithstanding the provisions of (a) above, in the
event any Borrower desires to obtain a
Eurodollar Rate Loan, Borrowing Agent
shall give Agent at least three (3)
Business Days' prior written notice,
specifying (i) the date of the proposed
borrowing (which shall be a Business
Day), (ii) the type of borrowing and the
amount on the date of such Advance to
be borrowed, which amount shall be in a
minimum amount of $1,000,000 and in
integral multiples of $500,000 thereafter,
and (iii) the duration of the first
Interest Period therefor. Interest Periods
for Eurodollar Rate Loans shall be
for one, two or three months; provided, if
an Interest Period would end on a day
that is not a Business Day, it shall end on
the next succeeding Business Day
unless such day falls in the next
succeeding calendar month in which case the
Interest Period shall end on the next
preceding Business Day. No Eurodollar Rate
Loan shall be made available to Borrower
during the continuance of a Default or
an Event of Default.
(c) Each
Interest Period of a Eurodollar Rate Loan shall
commence on the date such Eurodollar Rate
Loan is made and shall end on such
date as Borrowing Agent may elect as set
forth in subsection (b)(iii) above
provided that the exact length of each
Interest Period shall be determined in
accordance with the practice of the
interbank market for offshore Dollar
deposits and no Interest Period shall end
after the last day of the Term.
Borrowing Agent shall elect the initial Interest Period
applicable to a Eurodollar Rate Loan by its
notice of borrowing given to Agent
pursuant to Section 2.2(b) or by its notice
of conversion given to Agent
pursuant to Section 2.2(d), as the case may
be. Borrowing Agent shall elect the
duration of each succeeding Interest Period
by giving irrevocable written notice
to Agent of such duration not less than
three (3) Business Days prior to the
last day of the then current Interest
Period applicable to such Eurodollar Rate
Loan. If Agent does not receive timely
notice of the Interest Period elected by
Borrowing Agent, Borrowers shall be deemed
to have elected to convert to a
Domestic Rate Loan subject to Section
2.2(d) hereinbelow.
(d) Provided
that no Event of Default shall have occurred
and be continuing, any Borrower may, on the
last Business Day of the then
current Interest Period applicable to any
outstanding Eurodollar Rate Loan, or
on any Business Day with respect to
Domestic Rate Loans, convert any such loan
into a loan of another type in the same
aggregate principal amount provided that
any conversion of a Eurodollar Rate Loan
shall be made only on the last Business
Day of the then current Interest Period
applicable to such Eurodollar Rate Loan.
If a Borrower desires to convert a loan,
Borrowing Agent shall give Agent not
less than three (3) Business Days' prior
written notice to convert from a
Domestic Rate Loan to a Eurodollar Rate
Loan or one (1) Business Day's prior
written notice to convert from a Eurodollar
Rate Loan to a Domestic Rate Loan,
specifying the date of such conversion, the
loans to be converted and if the
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conversion is from a Domestic Rate Loan to
any other type of loan, the duration
of the first Interest Period therefor.
After giving effect to each such
conversion, there shall not be outstanding
more than five (5) Eurodollar Rate
Loans, in the aggregate.
(e)
[Intentionally Omitted.]
(f) Each
Borrower shall indemnify Agent and Lenders and
hold Agent and Lenders harmless from and
against any and all losses or expenses
that Agent and Lenders may sustain or incur
as a consequence of any prepayment,
conversion of or any default by any
Borrower in the payment of the principal of
or interest on any Eurodollar Rate Loan or
failure by any Borrower to complete a
borrowing of, a prepayment of or conversion
of or to a Eurodollar Rate Loan
after notice thereof has been given,
including, but not limited to, any interest
payable by Agent or Lenders to lenders of
funds obtained by it in order to make
or maintain its Eurodollar Rate Loans
hereunder. A certificate as to any
additional amounts payable pursuant to the
foregoing sentence submitted by Agent
or any Lender to Borrowing Agent shall be
conclusive absent manifest error.
(g)
Notwithstanding any other provision hereof, if any
applicable law, treaty, regulation or
directive, or any change therein or in the
interpretation or application thereof,
shall make it unlawful for any Lender
(for purposes of this subsection (g), the
term "Lender" shall include any Lender
and the office or branch where any Lender
or any corporation or bank controlling
such Lender makes or maintains any
Eurodollar Rate Loans) to make or maintain
its Eurodollar Rate Loans, the obligation
of Lenders to make Eurodollar Rate
Loans hereunder shall forthwith be
cancelled and Borrowers shall, if any
affected Eurodollar Rate Loans are then
outstanding, promptly upon request from
Agent, either pay all such affected
Eurodollar Rate Loans or convert such
affected Eurodollar Rate Loans into loans
of another type. If any such payment
or conversion of any Eurodollar Rate Loan
is made on a day that is not the last
day of the Interest Period applicable to
such Eurodollar Rate Loan, Borrowers
shall pay Agent, upon Agent's request, such
amount or amounts as may be
necessary to compensate Lenders for any
loss or expense sustained or incurred by
Lenders in respect of such Eurodollar Rate
Loan as a result of such payment or
conversion, including (but not limited to)
any interest or other amounts payable
by Lenders to lenders of funds obtained by
Lenders in order to make or maintain
such Eurodollar Rate Loan. A certificate as
to any additional amounts payable
pursuant to the foregoing sentence
submitted by Lenders to Borrowing Agent shall
be conclusive absent manifest error.
2.3.
Disbursement of Advance Proceeds. All Advances shall be
disbursed from whichever office or other
place Agent may designate from time to
time and, together with any and all other
Obligations of Borrowers to Agent or
Lenders, shall be charged to Borrowers'
Account on Agent's books. During the
Term, Borrowers may use the Revolving
Advances by borrowing, prepaying and
reborrowing, all in accordance with the
terms and conditions hereof. The
proceeds of each Revolving Advance
requested by Borrowers or deemed to have been
requested by Borrowers under Section 2.2(a)
hereof shall, with respect to
requested Revolving Advances to the extent
Lenders make such Revolving Advances,
be made available to the applicable
Borrower on the day so requested by way of
credit to such Borrower's operating account
at PNC, or such other bank as
Borrowing Agent may designate following
notification to Agent, in immediately
available federal funds or other
immediately available funds or, with
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respect to Revolving Advances deemed to
have been requested by any Borrower, be
disbursed to Agent to be applied to the
outstanding Obligations giving rise to
such deemed request.
2.4.
[Intentionally Omitted.]
2.5.
Maximum Advances. The aggregate balance of Revolving Advances
outstanding at any time shall not exceed
the lesser of (a) Maximum Revolving
Advance Amount less outstanding Letters of
Credit, or (b) the Formula Amount.
2.6.
Repayment of Advances.
(a) The
Revolving Advances shall be due and payable in
full on the last day of the Term subject to
earlier prepayment as herein
provided.
(b) Each
Borrower recognizes that the amounts evidenced
by checks, notes, drafts or any other items
of payment relating to and/or
proceeds of Collateral may not be
collectible by Agent on the date received. In
consideration of Agent's agreement to
conditionally credit Borrowers' Account as
of the Business Day on which Agent receives
those items of payment, each
Borrower agrees that, in computing the
charges under this Agreement, all items
of payment shall be deemed applied by Agent
on account of the Obligations one
(1) Business Day after the Business Day
Agent receives such payments via wire
transfer or electronic depository check.
Agent is not, however, required to
credit Borrowers' Account for the amount of
any item of payment which is
unsatisfactory to Agent in the Agent's
reasonable discretion, and Agent may
charge Borrowers' Account for the amount of
any item of payment which is
returned to Agent unpaid.
(c) All
payments of principal, interest and other amounts
payable hereunder, or under any of the
Other Documents shall be made to Agent at
the Payment Office not later than 1:00 P.M.
(New York Time) on the due date
therefor in lawful money of the United
States of America in federal funds or
other funds immediately available to Agent.
Agent shall have the right to
effectuate payment on any and all
Obligations due and owing hereunder by
charging Borrowers' Account or by making
Advances as provided in Section 2.2
hereof.
(d) Borrowers
shall pay principal, interest, and all
other amounts payable hereunder, or under
any related agreement, without any
deduction whatsoever, including, but not
limited to, any deduction for any
setoff or counterclaim.
2.7.
Repayment of Excess Advances. The aggregate balance of
Advances outstanding at any time in excess
of the maximum amount of Advances
permitted hereunder shall be immediately
due and payable without the necessity
of any demand, at the Payment Office,
whether or not a Default or Event of
Default has occurred.
2.8.
Statement of Account. Agent shall maintain, in accordance with
its customary procedures, a loan account
("Borrowers' Account") in the name of
Borrowers in which shall be recorded the
date and amount of each Advance made by
Agent and the date and amount of each
payment in respect thereof; provided,
however, the failure by Agent to record the
date and amount of any Advance shall
not adversely affect Agent or any Lender.
Each month, Agent shall send to
Borrowing Agent a statement showing the
accounting for the Advances made,
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payments made or credited in respect
thereof, and other transactions between
Agent and Borrowers, during such month. The
monthly statements shall be deemed
correct and binding upon Borrowers in the
absence of manifest error and shall
constitute an account stated between
Lenders and Borrowers unless Agent receives
a written statement of Borrowers' specific
exceptions thereto within thirty (30)
days after such statement is received by
Borrowing Agent. The records of Agent
with respect to the loan account shall be
conclusive evidence absent manifest
error of the amounts of Advances and other
charges thereto and of payments
applicable thereto.
2.9.
Letters of Credit. Subject to the terms and conditions hereof
and upon prior request by Borrowing Agent
to Agent by 10:00 a.m. on the date
which is five (5) Business Days prior to
the proposed issuance thereof, Agent
shall issue or cause the issuance of
Letters of Credit ("Letters of Credit") on
behalf of any Borrower; provided, however,
that Agent will not be required to
issue or cause to be issued any Letters of
Credit to the extent that the face
amount of such Letters of Credit would then
cause the sum of (i) the outstanding
Revolving Advances plus (ii) outstanding
Letters of Credit and GE Proceeds
Advances to exceed the lesser of (x) the
Maximum Revolving Advance Amount or (y)
the Formula Amount. The maximum amount of
outstanding Letters of Credit shall
not exceed $20,000,000 in the aggregate at
any time. All disbursements or
payments related to Letters of Credit shall
be deemed to be Domestic Rate Loans
consisting of Revolving Advances and shall
bear interest at the Revolving
Interest Rate for Domestic Rate Loans;
Letters of Credit that have not been
drawn upon shall not bear interest. The
term "Letters of Credit" shall include,
subject to Section 2.11(e) hereof, the IRB
Letter of Credit and the other
Letters of Credit set forth on Schedule
2.9, each of which shall be deemed to be
issued pursuant to this Agreement as of the
date hereof.
2.10.
Issuance of Letters of Credit.
(a) Borrowing
Agent, on behalf of Borrowers, may request
Agent to issue or cause the issuance of a
Letter of Credit by delivering to
Agent at the Payment Office, Agent's form
of Letter of Credit Application (the
"Letter of Credit Application") completed
to the satisfaction of Agent; and,
such other certificates, documents and
other papers and information as Agent may
reasonably request. Borrowing Agent, on
behalf of Borrowers, also has the right
to give instructions and make agreements
with respect to any application, any
applicable letter of credit and security
agreement, any applicable letter of
credit reimbursement agreement and/or any
other applicable agreement, any letter
of credit and the disposition of documents,
disposition of any unutilized funds,
and to agree with Agent upon any amendment,
extension or renewal of any Letter
of Credit.
(b) Each
Letter of Credit shall, among other things, (i)
provide for the payment of sight drafts or
acceptances of usance drafts when
presented for honor thereunder in
accordance with the terms thereof and when
accompanied by the documents described
therein and (ii) have an expiry date not
later than twelve (12) months after such
Letter of Credit's date of issuance and
in no event later than the last day of the
Term. Each Letter of Credit shall be
subject to the Uniform Customs and Practice
for Documentary Credits (1993
Revision), International Chamber of
Commerce Publication No. 500, and any
amendments or revision thereof adhered to
by the Issuer and, to the extent not
inconsistent therewith, the laws of the
State of New York.
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(c) Agent
shall use its reasonable efforts to notify
Lenders of the request by Borrowing Agent
for a Letter of Credit hereunder.
2.11.
Requirements For Issuance of Letters of Credit.
(a) In
connection with the issuance of any Letter of
Credit, Borrowers shall indemnify, save and
hold Agent, each Lender and each
Issuer harmless from any loss, cost,
expense or liability, including, without
limitation, payments made by Agent, any
Lender or any Issuer and expenses and
reasonable attorneys' fees incurred by
Agent, any Lender or Issuer arising out
of, or in connection with, any Letter of
Credit to be issued or created for any
Borrower other than due to Agent's,
Lender's or Issuer's gross negligence or
willful misconduct. Borrowers shall be
bound by Agent's or any Issuer's
regulations and good faith interpretations
of any Letter of Credit issued or
created for Borrowers' Account, although
this interpretation may be different
from its own; and, neither Agent, nor any
Lender, nor any Issuer nor any of
their correspondents shall be liable for
any error, negligence, or mistakes,
whether of omission or commission, in
following Borrowing Agent's or any
Borrower's instructions or those contained
in any Letter of Credit or of any
modifications, amendments or supplements
thereto or in issuing or paying any
Letter of Credit, except for Agent's, any
Lender's, any Issuer's or any of such
correspondent's gross negligence or willful
misconduct.
(b) Borrowing
Agent shall authorize and direct any Issuer
to name the applicable Borrower as the
"Applicant" or "Account Party" of each
Letter of Credit. If Agent is not the
Issuer of any Letter of Credit, Borrowing
Agent shall authorize and direct the Issuer
to deliver to Agent all instruments,
documents, and other writings and property
received by the Issuer pursuant to
the Letter of Credit and to accept and rely
upon Agent's instructions and
agreements with respect to all matters
arising in connection with the Letter of
Credit, the application therefor.
(c) In
connection with all Letters of Credit issued or
caused to be issued by Agent under this
Agreement, each Borrower hereby appoints
Agent, or its designee, as its attorney,
with full power and authority (i) to
sign and/or endorse such Borrower's name
upon any warehouse or other receipts,
letter of credit applications and
acceptances; (ii) to sign such Borrower's name
on bills of lading; (iii) to clear
Inventory through the United States of
America Customs Department ("Customs") in
the name of such Borrower or Agent or
Agent's designee, and to sign and deliver
to Customs officials powers of
attorney in the name of such Borrower for
such purpose; and (iv) to complete in
such Borrower's name or Agent's, or in the
name of Agent's designee, any order,
sale or transaction, obtain the necessary
documents in connection therewith, and
collect the proceeds thereof. Neither Agent
nor its attorneys will be liable for
any acts or omissions nor for any error of
judgment or mistakes of fact or law,
except for Agent's or its attorney's gross
negligence or willful misconduct.
This power, being coupled with an interest,
is irrevocable as long as any
Letters of Credit remain outstanding.
(d) Each
Lender shall to the extent of the percentage
amount equal to the product of such
Lender's Commitment Percentage times the
aggregate amount of all unreimbursed
reimbursement obligations arising from
disbursements made or obligations incurred
with respect to the Letters of Credit
be deemed to have irrevocably purchased an
undivided participation in each such
unreimbursed reimbursement obligation. In
the event that at
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the time a disbursement is made the unpaid
balance of Revolving Advances exceeds
or would exceed, with the making of such
disbursement, the lesser of the Maximum
Revolving Advance Amount or the Formula
Amount, and such disbursement is not
reimbursed by Borrowers within two (2)
Business Days, Agent shall promptly
notify each Lender and upon Agent's demand
each Lender shall pay to Agent such
Lender's proportionate share of such
unreimbursed disbursement together with
such Lender's proportionate share of
Agent's unreimbursed costs and expenses
relating to such unreimbursed disbursement.
Upon receipt by Agent of a repayment
from any Borrower of any amount disbursed
by Agent for which Agent had already
been reimbursed by Lenders, Agent shall
deliver to each Lender that Lender's pro
rata share of such repayment. Each Lender's
participation commitment shall
continue until the last to occur of any of
the following events: (A) Agent
ceases to be obligated to issue or cause to
be issued Letters of Credit
hereunder; (B) no Letter of Credit issued
hereunder remains outstanding and
uncancelled or (C) all Persons (other than
the applicable Borrower) have been
fully reimbursed for all payments made
under or relating to Letters of Credit.
(e) Each
Borrower, the Agent and each Lender hereby
acknowledge and agree that from and after
the Closing Date, the IRB Letter of
Credit shall be deemed to be a Letter of
Credit subject to the terms and
conditions of this Agreement, including,
without limitation, Sections 2.9
through 2.11 and Section 3.2; provided
however, that (i) the fees payable by the
Borrowers with respect to the IRB Letter of
Credit are hereby amended to be
equal to the Letter of Credit Fees, which
fees shall be payable to the Lenders
ratably based upon the respective
Commitment Percentage of each Lender and at
the times provided for in Section 3.2(a)
hereof, (ii) the Reimbursement
Agreement and pledge agreement in favor of
PNC Bank with respect to the IRB
Letter of Credit shall be deemed to be in
favor of the Agent for the benefit of
the Lenders, and (iii) each of the
Borrowers other than LESCO acknowledges and
agrees that it is receiving valuable
consideration and a direct benefit from the
continuation of the IRB Letter of Credit
and waive any defense to payment of the
reimbursement obligation with respect to
the IRB Letter of Credit. The rights
and remedies of the Agent and the Lenders
under this Agreement and under the
Reimbursement Agreement and pledge
agreement related to the IRB Letter of Credit
shall be cumulative and may be exercised
successively or concurrently.
2.12.
Additional Payments. Any sums expended by Agent or any Lender
due to any Borrower's failure to perform or
comply with its obligations under
this Agreement or any Other Document
including, without limitation, any
Borrower's obligations under Sections 4.2,
4.4, 4.12, 4.13, 4.14 and 6.1 hereof,
may be charged to Borrowers' Account as a
Revolving Advance and added to the
Obligations.
2.13.
Manner of Borrowing and Payment.
(a) Each
borrowing of Revolving Advances shall be
advanced according to the applicable
Commitment Percentages of Lenders.
(b) Each
payment (including each prepayment) by Borrowers
on account of the principal of and interest
on the Revolving Advances, shall be
applied to the Revolving Advances pro rata
according to the applicable
Commitment Percentages of Lenders. Except
as expressly provided herein, all
payments (including prepayments) to be made
by any Borrower on account of
principal, interest and fees shall be made
without set off or counterclaim and
shall be
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made to Agent on behalf of the Lenders to
the Payment Office, in each case on or
prior to 1:00 P.M., New York time, in
Dollars and in immediately available
funds.
(c) (i)
Notwithstanding anything to the contrary
contained in Sections 2.13(a) and (b)
hereof, commencing with the first Business
Day following the Closing Date, each
borrowing of Revolving Advances shall be
advanced by Agent and each payment by any
Borrower on account of Revolving
Advances shall be applied first to those
Revolving Advances advanced by Agent.
On or before 1:00 P.M., New York time, on
each Settlement Date commencing with
the first Settlement Date following the
Closing Date, Agent and Lenders shall
make certain payments as follows: (I) if
the aggregate amount of new Revolving
Advances made by Agent during the preceding
Week (if any) exceeds the aggregate
amount of repayments applied to outstanding
Revolving Advances during such
preceding Week, then each Lender shall
provide Agent with funds in an amount
equal to its applicable Commitment
Percentage of the difference between (w) such
Revolving Advances and (x) such repayments
and (II) if the aggregate amount of
repayments applied to outstanding Revolving
Advances during such Week exceeds
the aggregate amount of new Revolving
Advances made during such Week, then Agent
shall provide each Lender with funds in an
amount equal to its applicable
Commitment Percentage of the difference
between (y) such repayments and (z) such
Revolving Advances.
(ii) Each
Lender shall be entitled
to earn interest at the applicable Revolving Interest
Rate on outstanding Advances which it has funded.
(iii)
Promptly following each Settlement
Date, Agent shall submit to each Lender a certificate
with respect to payments received and Advances made
during the Week immediately preceding such Settlement
Date. Such certificate of Agent shall be conclusive
in the absence of manifest error.
(d) If any
Lender or Participant (a "benefitted Lender")
shall at any time receive any payment of
all or part of its Advances, or
interest thereon, or receive any Collateral
in respect thereof (whether
voluntarily or involuntarily or by set-off)
in a greater proportion than any
such payment to and Collateral received by
any other Lender, if any, in respect
of such other Lender's Advances, or
interest thereon, and such greater
proportionate payment or receipt of
Collateral is not expressly permitted
hereunder, such benefitted Lender shall
purchase for cash from the other Lenders
a participation in such portion of each
such other Lender's Advances, or shall
provide such other Lender with the benefits
of any such Collateral, or the
proceeds thereof, as shall be necessary to
cause such benefitted Lender to share
the excess payment or benefits of such
Collateral or proceeds ratably with each
of the other Lenders; provided, however,
that if all or any portion of such
excess payment or benefits is thereafter
recovered from such benefitted Lender,
such purchase shall be rescinded, and the
purchase price and benefits returned,
to the extent of such recovery, but without
interest. Each Lender so purchasing
a portion of another Lender's Advances may
exercise all rights of payment
(including, without limitation, rights of
set-off) with respect to such portion
as fully as if such Lender were the direct
holder of such portion.
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(e)
Unless
Agent shall have been notified by telephone,
confirmed in writing, by any Lender that
such Lender will not make the amount
which would constitute its applicable
Commitment Percentage of the Advances
available to Agent, Agent may (but shall
not be obligated to) assume that such
Lender shall make such amount available to
Agent on the next Settlement Date
and, in reliance upon such assumption, make
available to Borrowers a
corresponding amount. Agent will promptly
notify Borrowers of its receipt of any
such notice from a Lender. If such amount
is made available to Agent on a date
after such next Settlement Date, such
Lender shall pay to Agent on demand an
amount equal to the product of (i) the
daily average Federal Funds Effective
Rate (computed on the basis of a year of
360 days) during such period as quoted
by Agent, times (ii) such amount, times
(iii) the number of days from and
including such Settlement Date to the date
on which such amount becomes
immediately available to Agent. A
certificate of Agent submitted to any Lender
with respect to any amounts owing under
this paragraph (e) shall be conclusive,
in the absence of manifest error. If such
amount is not in fact made available
to Agent by such Lender within three (3)
Business Days after such Settlement
Date, Agent shall be entitled to recover
such an amount, with interest thereon
at the rate per annum then applicable to
such Revolving Advances hereunder, on
demand from Borrowers; provided, however,
that Agent's right to such recovery
shall not prejudice or otherwise adversely
affect Borrowers' rights (if any)
against such Lender.
2.14.
[Intentionally Omitted.]
2.15. Use
of Proceeds. Borrowers shall apply the proceeds of
Advances to provide for their working
capital needs, to pay fees and expenses
relating to this transaction and the
transactions contemplated by the Accounts
Sales Agreement, for capital expenditures
and for general corporate purposes of
the Borrowers.
2.16.
Defaulting Lender.
(a)
Notwithstanding anything to the contrary contained
herein, in the event any Lender (x) has
refused (which refusal constitutes a
breach by such Lender of its obligations
under this Agreement) to make available
its portion of any Advance or (y) notifies
either Agent or Borrowing Agent that
it does not intend to make available its
portion of any Advance (if the actual
refusal would constitute a breach by such
Lender of its obligations under this
Agreement) (each, a "Lender Default"), all
rights and obligations hereunder of
such Lender (a "Defaulting Lender") as to
which a Lender Default is in effect
and of the other parties hereto shall be
modified to the extent of the express
provisions of this Section 2.16 while such
Lender Default remains in effect.
(b) Advances
shall be incurred pro rata from Lenders (the
"Non-Defaulting Lenders") which are not
Defaulting Lenders based on their
respective Commitment Percentages, and no
Commitment Percentage of any Lender or
any pro rata share of any Advances required
to be advanced by any Lender shall
be increased as a result of such Lender
Default. Amounts received in respect of
principal of any type of Advances shall be
applied to reduce the applicable
Advances of each Lender pro rata based on
the aggregate of the outstanding
Advances of that type of all Lenders at the
time of such application; provided,
that, such amount shall not be applied to
any Advances of a Defaulting Lender at
any time when, and to the extent that,
the
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aggregate amount of Advances of any
Non-Defaulting Lender exceeds such
Non-Defaulting Lender's Commitment
Percentage of all Advances then outstanding.
(c) A
Defaulting Lender shall not be entitled to give
instructions to Agent or to approve,
disapprove, consent to or vote on any
matters relating to this Agreement and the
Other Documents. All amendments,
waivers and other modifications of this
Agreement and the Other Documents may be
made without regard to a Defaulting Lender
and, for purposes of the definition
of "Required Lenders", a Defaulting Lender
shall be deemed not to be a Lender
and not to have Advances outstanding.
(d) Other than
as expressly set forth in this Section
2.16, the rights and obligations of a
Defaulting Lender (including the
obligation to indemnify Agent) and the
other parties hereto shall remain
unchanged. Nothing in this Section 2.16
shall be deemed to release any
Defaulting Lender from its obligations
under this Agreement and the Other
Documents, shall alter such obligations,
shall operate as a waiver of any
default by such Defaulting Lender
hereunder, or shall prejudice any rights which
any Borrower, Agent or any Lender may have
against any Defaulting Lender as a
result of any default by such Defaulting
Lender hereunder.
(e) In the
event a Defaulting Lender retroactively cures
to the satisfaction of Agent the breach
which caused a Lender to become a
Defaulting Lender, such Defaulting Lender
shall no longer be a Defaulting Lender
and shall be treated as a Lender under this
Agreement.
III. INTEREST AND
FEES.
3.1.
Interest. Interest on Revolving Advances shall be payable in
arrears on the first day of each month with
respect to Domestic Rate Loans and,
with respect to Eurodollar Rate Loans, at
the end of each Interest Period.
Interest charges shall be computed on the
actual principal amount of Advances
outstanding during the month (the "Monthly
Advances") at a rate per annum equal
to the applicable Revolving Interest Rate.
Whenever, subsequent to the date of
this Agreement, the Alternate Base Rate is
increased or decreased, the
applicable Revolving Interest Rate for
Domestic Rate Loans shall be similarly
changed without notice or demand of any
kind by an amount equal to the amount of
such change in the Alternate Base Rate
during the time such change or changes
remain in effect. The Eurodollar Rate shall
be adjusted with respect to
Eurodollar Rate Loans without notice or
demand of any kind on the effective date
of any change in the Reserve Percentage as
of such effective date. Upon and
after the occurrence of an Event of
Default, and during the continuation
thereof, the Obligations shall bear
interest at the applicable Revolving
Interest Rate plus two percent (2%) per
annum (the "Default Rate").
3.2.
Letter of Credit Fees.
(a) Borrowers
shall pay (x) to Agent, for the benefit of
Lenders, fees for each Letter of Credit for
the period from and excluding the
date of issuance of same to and including
the date of expiration or termination,
equal to the average daily face amount of
each outstanding Letter of Credit
multiplied by the applicable letter of
credit fee per annum set forth on
Schedule 1.2(a) under the heading "Letter
of Credit Fees", such fees to be
calculated on the basis of a 360-day year
for the actual number of days elapsed
and to be payable monthly in arrears on the
first
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day of each month and on the last day of
the Term and (y) to the Issuer, for its
own account, fees for each Letter of Credit
for the period from and excluding
the date of issuance of same to and
including the date of expiration or
termination, equal to the average daily
face amount of each outstanding Letter
of Credit multiplied by the applicable
letter of fee per annum set forth on
Schedule 1.2(a) under the heading "Letter
of Credit Issuance Fee", such fees to
be calculated on the basis of a 360-day
year for the actual number of days
elapsed and to be payable monthly in
arrears on the first day of each month and
on the last day of the Term, and (z) to the
Issuer, for its own account any and
all fees and expenses as agreed upon by the
Issuer and the Borrowing Agent in
connection with any Letter of Credit,
including, without limitation, in
connection with the opening, amendment or
renewal of any such Letter of Credit
and any acceptances created thereunder and
shall reimburse Agent for any and all
fees and expenses, if any, paid by Agent to
the Issuer (all of the foregoing
fees, the "Letter of Credit Fees"). All
such charges shall be deemed earned in
full on the date when the same are due and
payable hereunder and shall not be
subject to rebate or proration upon the
termination of this Agreement for any
reason. Any such charge in effect at the
time of a particular transaction shall
be the charge for that transaction,
notwithstanding any subsequent change in the
Issuer's prevailing charges for that type
of transaction. All Letter of Credit
Fees payable hereunder shall be deemed
earned in full on the date when the same
are due and payable hereunder and shall not
be subject to rebate or proration
upon the termination of this Agreement for
any reason.
Upon request of the Agent following the occurrence of an Event
of Default, Borrowers will cause cash to be
deposited and maintained in an
account with Agent, as cash collateral, in
an amount equal to one hundred and
five percent (105%) of the outstanding
Letters of Credit, and each Borrower
hereby irrevocably authorizes Agent, in its
discretion, on such Borrower's
behalf and in such Borrower's name, to open
such an account and to make and
maintain deposits therein, or in an account
opened by such Borrower, in the
amounts required to be made by such
Borrower, out of the proceeds of Receivables
or other Collateral or out of any other
funds of such Borrower coming into any
Lender's possession at any time. Agent will
invest such cash collateral (less
applicable reserves) in such short-term
money-market items as to which Agent and
such Borrower mutually agree and the net
return on such investments shall be
credited to such account and constitute
additional cash collateral. No Borrower
may withdraw amounts credited to any such
account except upon payment and
performance in full of all Obligations and
termination of this Agreement.
3.3.
Facility Fee. If, for any month during the Term, the average
daily unpaid balance of the sum of the
Revolving Advances plus Letters of Credit
outstanding for each day of such month does
not equal the Maximum Revolving
Advance Amount, then Borrowers shall pay to
Agent for the ratable benefit of
Lenders a fee at a rate equal to the
applicable facility fee per annum set forth
on Schedule 1.2(a) under the heading
"Facility Fee" on the amount by which the
Maximum Revolving Advance Amount exceeds
such average daily unpaid balance of
Revolving Advances plus Letters of Credit
outstanding. Such fee shall be payable
to Agent in arrears on each January 1,
April 1, July 1 and October 1.
3.4.
[Intentionally Omitted.]
3.5.
Computation of Interest and Fees. Interest and fees hereunder
shall be computed on the basis of a year of
365 or 366 days, as the case may be,
and for the actual number of days
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elapsed. If any payment to be made
hereunder becomes due and payable on a day
other than a Business Day, the due date
thereof shall be extended to the next
succeeding Business Day and interest
thereon shall be payable at the applicable
Revolving Interest Rate during such
extension.
3.6.
Maximum Charges. In no event whatsoever shall interest and
other charges charged hereunder exceed the
highest rate permissible under law.
In the event interest and other charges as
computed hereunder would otherwise
exceed the highest rate permitted under
law, such excess amount shall be first
applied to any unpaid principal balance
owed by Borrowers, and if the then
remaining excess amount is greater than the
previously unpaid principal balance,
Lenders shall promptly refund such excess
amount to Borrowers and the provisions
hereof shall be deemed amended to provide
for such permissible rate.
3.7.
Increased Costs. In the event that any applicable law, treaty
or governmental regulation, or any change
therein or in the interpretation or
application thereof, or compliance by any
Lender (for purposes of this Section
3.7, the term "Lender" shall include Agent
or any Lender and any corporation or
bank controlling Agent or any Lender) and
the office or branch where Agent or
any Lender (as so defined) makes or
maintains any Eurodollar Rate Loans with any
request or directive (whether or not having
the force of law) from any central
bank or other financial, monetary or other
authority, shall:
(a) subject
Agent or any Lender to any tax of any kind
whatsoever with respect to this Agreement
or any Other Document or change the
basis of taxation of payments to Agent or
any Lender of principal, fees,
interest or any other amount payable
hereunder or under any Other Documents
(except for changes in the rate of tax on
the overall net income of Agent or any
Lender by the jurisdiction in which it
maintains its principal office);
(b) impose,
modify or hold applicable any reserve,
special deposit, assessment or similar
requirement against assets held by, or
deposits in or for the account of, advances
or loans by, or other credit
extended by, any office of Agent or any
Lender, including (without limitation)
pursuant to Regulation D of the Board of
Governors of the Federal Reserve
System; or
(c) impose on
Agent or any Lender or the London interbank
Eurodollar market any other condition with
respect to this Agreement or any
Other Document;
and the result of any of the foregoing is
to increase the cost to Agent or any
Lender of making, renewing or maintaining
its Advances hereunder by an amount
that Agent or such Lender deems to be
material or to reduce the amount of any
payment (whether of principal, interest or
otherwise) in respect of any of the
Advances by an amount that Agent or such
Lender reasonably deems to be material,
then, in any case Borrowers shall promptly
pay Agent or such Lender, upon its
demand, such additional amount as will
compensate Agent or such Lender for such
additional cost or such reduction, as the
case may be, provided that the
foregoing shall not apply to increased
costs which are reflected in the
Eurodollar Rate. Agent or such Lender shall
certify the amount of such
additional cost or reduced amount to
Borrowers, and such certification shall be
conclusive absent manifest error.
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3.8.
Basis For Determining Interest Rate Inadequate or Unfair. In
the event that Agent or any Lender shall
have reasonably determined that:
(a) reasonable
means do not exist for ascertaining the
Eurodollar Rate for any Interest
Period;
(b) Dollar
deposits in the relevant amount and for the
relevant maturity are not available in the
London interbank Eurodollar market,
with respect to an outstanding Eurodollar
Rate Loan, a proposed Eurodollar Rate
Loan, or a proposed conversion of a
Domestic Rate Loan into a Eurodollar Rate
Loan,
then Agent shall give Borrowing Agent
prompt written, telephonic or telegraphic
notice of such determination. If such
notice is given, (i) any such requested
Eurodollar Rate Loan shall be made as a
Domestic Rate Loan, unless Borrowing
Agent shall notify Agent no later than
10:00 a.m. (New York City time) two (2)
Business Days prior to the date of such
proposed borrowing, that its request for
such borrowing shall be cancelled or made
as an unaffected type of Eurodollar
Rate Loan, (ii) any Domestic Rate Loan or
Eurodollar Rate Loan which was to have
been converted to an affected type of
Eurodollar Rate Loan shall be continued as
or converted into a Domestic Rate Loan, or,
if Borrowing Agent shall notify
Agent, no later than 10:00 a.m. (New York
City time) two (2) Business Days prior
to the proposed conversion, shall be
maintained as an unaffected type of
Eurodollar Rate Loan, and (iii) any
outstanding affected Eurodollar Rate Loans
shall be converted into a Domestic Rate
Loan, or, if Borrowing Agent shall
notify Agent, no later than 10:00 a.m. (New
York City time) two (2) Business
Days prior to the last Business Day of the
then current Interest Period
applicable to such affected Eurodollar Rate
Loan, shall be converted into an
unaffected type of Eurodollar Rate Loan, on
the last Business Day of the then
current Interest Period for such affected
Eurodollar Rate Loans. Until such
notice has been withdrawn, Lenders shall
have no obligation to make an affected
type of Eurodollar Rate Loan or maintain
outstanding affected Eurodollar Rate
Loans and no Borrower shall have the right
to convert a Domestic Rate Loan or an
unaffected type of Eurodollar Rate Loan
into an affected type of Eurodollar Rate
Loan.
3.9.
Capital Adequacy.
(a) In the
event that Agent or any Lender shall have
determined that any applicable law, rule,
regulation or guideline regarding
capital adequacy, or any change therein, or
any change in the interpretation or
administration thereof by any governmental
authority, central bank or comparable
agency charged with the interpretation or
administration thereof, or compliance
by Agent or any Lender (for purposes of
this Section 3.9, the term "Lender"
shall include Agent or any Lender and any
corporation or bank controlling Agent
or any Lender) and the office or branch
where Agent or any Lender (as so
defined) makes or maintains any Eurodollar
Rate Loans with any request or
directive regarding capital adequacy
(whether or not having the force of law) of
any such authority, central bank or
comparable agency, has or would have the
effect of reducing the rate of return on
Agent or any Lender's capital as a
consequence of its obligations hereunder to
a level below that which Agent or
such Lender could have achieved but for
such adoption, change or compliance
(taking into consideration Agent's and each
Lender's policies with respect to
capital adequacy) by an amount deemed by
Agent or any Lender to be material,
then, from time to time, Borrowers shall
pay upon demand to Agent or
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such Lender such additional amount or
amounts as will compensate Agent or such
Lender for such reduction. In determining
such amount or amounts, Agent or such
Lender may use any reasonable averaging or
attribution methods. The protection
of this Section 3.9 shall be available to
Agent and each Lender regardless of
any possible contention of invalidity or
inapplicability with respect to the
applicable law, regulation or
condition.
(b) A
certificate of Agent or such Lender setting forth
such amount or amounts as shall be
necessary to compensate Agent or such Lender
with respect to Section 3.9(a) hereof when
delivered to Borrowers shall be
conclusive absent manifest error.
3.10.
Gross Up for Taxes. If any Borrower shall be required by
Applicable Law to withhold or deduct any
taxes from or in respect of any sum
payable under this Agreement or any of the
Other Documents, (a) the sum payable
to Agent or such Lender shall be increased
as may be necessary so that, after
making all required withholding or
deductions, Agent or such Lender (as the case
may be) receives an amount equal to the sum
it would have received had no such
withholding or deductions been made, (b)
such Borrower shall make such
withholding or deductions, and (c) such
Borrower shall pay the full amount
withheld or deducted to the relevant
taxation authority or other authority in
accordance with Applicable Law.
3.11.
Withholding Tax Exemption. Each Lender or assignee or
participant of a Lender that is not
incorporated under the Laws of the United
States of America or a state thereof (and,
upon the written request of Agent,
each other Lender or assignee or
participant of a Lender) agrees that it will
deliver to each Borrower and Agent two (2)
duly completed appropriate valid
Withholding Certificates (as defined under
Section 1.1441-1(c)(16) of the Income
Tax Regulations (the "Regulations"))
certifying its status (i.e. U.S. or foreign
person) and, if appropriate, making a claim
of reduced, or exemption from, U.S.
withholding tax on the basis of an income
tax treaty or an exemption provided by
the Code. The term "Withholding
Certificate" means a Form W-9; a Form W-8BEN; a
Form W-8ECI; a Form W-8IMY and the related
statements and certifications as
required under Section 1.1441-1(e)(2)
and/or (3) of the Regulations; a statement
described in Section 1.871-14(c)(2)(v) of
the Regulations; or any other
certificates under the Code or Regulations
that certify or establish the status
of a payee or beneficial owner as a U.S. or
foreign person. Each Lender,
assignee or participant required to deliver
to each Borrower and Agent a
Withholding Certificate pursuant to the
preceding sentence shall deliver such
valid Withholding Certificate as follows:
(A) each Lender which is a party
hereto on the Closing Date shall deliver
such valid Withholding Certificate at
least five (5) Business Days prior to the
first date on which any interest or
fees are payable by any Borrower hereunder
for the account of such Lender; (B)
each assignee or participant shall deliver
such valid Withholding Certificate at
least five (5) Business Days before the
effective date of such assignment or
participation (unless Agent in its sole
reasonable discretion shall permit such
assignee or participant to deliver such
valid Withholding Certificate less than
five (5) Business Days before such date in
which case it shall be due on the
date specified by Agent). Each Lender,
assignee or participant which so delivers
a valid Withholding Certificate further
undertakes to deliver to each Borrower
and Agent two (2) additional copies of such
Withholding Certificate (or a
successor form) on or before the date that
such Withholding Certificate expires
or becomes obsolete or after the occurrence
of any event requiring a change in
the most recent Withholding Certificate so
delivered by it, and such amendments
thereto or extensions or renewals thereof
as may be reasonably requested by any
Borrower or Agent. Notwithstanding the
submission of a Withholding Certificate
claiming a
-31-
<PAGE>
reduced rate of or exemption from U.S.
withholding tax, Agent shall be entitled
to withhold United States federal income
taxes at the full 30% withholding rate
if in its reasonable judgment it is
required to do so under the due diligence
requirements imposed upon a withholding
agent under Section 1.1441-7(b) of the
Regulations. Further, Agent is indemnified
under Section 1.1461-1(e) of the
Regulations against any claims and demands
of any Lender or assignee or
participant of a Lender for the amount of
any tax it deducts and withholds in
accordance with regulations under Section
1441 of the Code.
Each Bank or assignee or participant of a Bank that is not
incorpo
