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AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

Security Agreement

AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT | Document Parties: STONERIDGE INC | NATIONAL CITY BANK | NATIONAL CITY BUSINESS CREDIT, INC | PNC BANK, NATIONAL ASSOCIATION | STONERIDGE CONTROL DEVICES, INC | STONERIDGE ELECTRONICS, INC | STONERIDGE, INC You are currently viewing:
This Security Agreement involves

STONERIDGE INC | NATIONAL CITY BANK | NATIONAL CITY BUSINESS CREDIT, INC | PNC BANK, NATIONAL ASSOCIATION | STONERIDGE CONTROL DEVICES, INC | STONERIDGE ELECTRONICS, INC | STONERIDGE, INC

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Title: AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
Governing Law: Ohio     Date: 10/28/2010
Industry: Auto and Truck Parts     Law Firm: Baker Hostetler;Squire Sanders;Burns Levinson     Sector: Consumer Cyclical

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Exhibit 10.1

 

EXECUTION COPY

 

AMENDED AND RESTATED CREDIT AND SECURITY

AGREEMENT

 

PNC BANK, NATIONAL ASSOCIATION

(AS LENDER, ISSUER AND AGENT)

 

and

 

SUCH OTHER LENDERS WHICH ARE NOW OR HEREAFTER A PARTY HERETO

 

and

 

STONERIDGE, INC.,

(AS BORROWER),

 

SUCH OTHER BORROWERS WHICH ARE NOW OR HEREAFTER A PARTY
HERETO

 

and

 

SUCH GUARANTORS WHICH ARE NOW OR HEREAFTER A PARTY HERETO

 

and

 

PNC BANK, NATIONAL ASSOCIATION

(AS LEAD ARRANGER AND BOOK RUNNER)

 

Dated as of September 20, 2010

 


 

TABLE OF CONTENTS

 

I. RESTATEMENT, DEFINITIONS AND CONSTRUCTION.

 

1

1.1 Restatement of Credit Facility.

 

1

1.2 Accounting Terms.

 

1

1.3 Uniform Commercial Code Terms.

 

2

1.4 General Terms.

 

2

1.5 Certain Matters of Construction.

 

31

1.6 Currency Equivalents.

 

32

1.7 Addition of Borrowers.

 

32

1.8 Joinder Amendments.

 

32

1.9 Classification of New Bolton as a Non-Subsidiary.

 

33

1.10 Time References.

 

33

 

 

 

II. ADVANCES; PAYMENTS.

 

33

2.1 Revolving Advances to Borrowers.

 

33

2.2 Requests For Revolving Advances.

 

34

2.3 Interest Elections; Conversions of Advances.

 

36

2.4 Disbursement of Proceeds of Advances.

 

37

2.5 Repayment of Advances.

 

37

2.6 Increase in Revolving Commitments.

 

38

2.7 Voluntary and Mandatory Prepayments; Reduction of Commitments.

 

39

2.8 Statement of Account.

 

41

2.9 Letters of Credit.

 

41

2.10 Funding of Advances by Lenders; Sharing of Payments; Settlement.

 

44

2.11 Defaulting Lender.

 

45

2.12 Funding by Lending Installations.

 

46

2.13 Use of Proceeds.

 

46

 

 

 

III. INTEREST; FEES; YIELD PROTECTION.

 

46

3.1 Interest.

 

46

3.2 Applicable Margins.

 

47

3.3 Default Rate.

 

47

3.4 Letter of Credit Fees.

 

48

3.5 Unused Facility Fees.

 

48

3.6 Computation of Interest and Fees.

 

48

3.7 Maximum Charges.

 

48

3.8 Increased Costs.

 

49

3.9 Non-Ascertainable Libor Rate; Unavailable Deposits.

 

49

3.10 Libor Rate Loan Losses.

 

50

3.11 Capital Adequacy.

 

50

3.12 Illegality.

 

51

3.13 Taxes; Withholding; Tax Indemnification.

 

51

 

 

 

IV. COLLATERAL: GENERAL TERMS.

 

53

4.1 Security Interest in the Collateral.

 

53

4.2 Perfection of Security Interest.

 

53

4.3 Disposition of Collateral.

 

54

4.4 Preservation of Collateral.

 

54

4.5 Ownership of Collateral.

 

54

4.6 Defense of Agent’s and Lenders’ Interests.

 

54

4.7 Books and Records.

 

55

 


 

4.8 Financial Disclosure.

 

55

4.9 Compliance with Laws.

 

55

4.10 Inspection of Premises.

 

56

4.11 Insurance.

 

56

4.12 Failure to Pay Insurance.

 

57

4.13 Payment of Leasehold Obligations.

 

57

4.14 Receivables; Investments, Cash Management.

 

58

4.15 Maintenance of Equipment.

 

61

4.16 Exculpation of Liability.

 

62

4.17 Environmental Matters.

 

62

4.18 Financing Statements.

 

63

4.19 Material Recovery Event.

 

63

4.20 Partial Release of Liens.

 

64

 

 

 

V. REPRESENTATIONS AND WARRANTIES.

 

64

5.1 Authority.

 

64

5.2 Formation and Qualification/Subsidiaries.

 

65

5.3 Officers, Directors, Shareholders, Capitalization.

 

65

5.4 Survival of Representations and Warranties.

 

65

5.5 FEINs/Tax Returns.

 

65

5.6 Financial Statements.

 

66

5.7 Corporate Names.

 

66

5.8 O.S.H.A. and Environmental Compliance.

 

66

5.9 Solvency; No Litigation, Violation of Laws.

 

67

5.10 ERISA Compliance.

 

68

5.11 Patents, Trademarks, Copyrights and Licenses.

 

68

5.12 Licenses and Permits.

 

69

5.13 No Burdensome Restrictions.

 

69

5.14 No Default Under 2002 Note Indenture or 2010 Note Indenture.

 

69

5.15 No Labor Disputes.

 

69

5.16 Margin Regulations.

 

69

5.17 Investment Company Act.

 

70

5.18 Disclosure.

 

70

5.19 Hedging Contracts.

 

70

5.20 Conflicting Agreements.

 

70

5.21 Application of Certain Laws and Regulations; Bulk Sales.

 

70

5.22 Business and Property.

 

71

5.23 Locations.

 

71

5.24 [Reserved.]

 

71

5.25 Disclosure of Material Business Agreements.

 

71

5.26 Anti-Terrorism Laws.

 

71

 

 

 

VI. AFFIRMATIVE COVENANTS.

 

72

6.1 Taxes.

 

72

6.2 Conduct of Business and Maintenance of Existence and Assets.

 

72

6.3 Violations.

 

73

6.4 Fixed Charge Coverage Ratio.

 

73

6.5 Execution of Supplemental Instruments.

 

73

6.6 Standards of Financial Statements.

 

73

6.7 Payoff of 2002 Notes.

 

73

6.8 Mortgage on Real Property other than the Sarasota Property.

 

73

6.9 Mortgage on Sarasota Property.

 

73

 

ii


 

VII. NEGATIVE COVENANTS.

 

74

7.1 Merger, Consolidation, Acquisition and Sale of Assets.

 

74

7.2 Creation of Liens.

 

78

7.3 Guarantees.

 

78

7.4 Investments.

 

79

7.5 Extensions of Credit.

 

79

7.6 Capital Expenditures.

 

79

7.7 Dividends and Distributions; Grants.

 

79

7.8 Indebtedness.

 

80

7.9 Nature of Business.

 

80

7.10 Transactions with Affiliates.

 

80

7.11 Leases.

 

81

7.12 Subsidiaries.

 

81

7.13 Fiscal Year and Accounting Changes.

 

81

7.14 Pledge of Credit.

 

81

7.15 Amendment of Organizational Documents.

 

81

7.16 Compliance with ERISA.

 

81

7.17 Repayment or Prepayment of Indebtedness.

 

82

7.18 Bailee Documents of Title.

 

82

7.19 Modification of Material Business Agreements.

 

82

7.20 Modification of 2010 Note Indenture.

 

82

7.21 Anti-Terrorism Laws.

 

83

 

 

 

VIII. CONDITIONS PRECEDENT.

 

83

8.1 Conditions to Effectiveness of this Amended and Restated Credit Agreement.

 

83

8.2 Conditions to Each Advance.

 

87

 

 

 

IX. NOTICE AND DISCLOSURE REQUIREMENTS.

 

88

9.1 Disclosure of Material Matters.

 

88

9.2 Schedules; Collateral Reporting Information; Borrowing Base Certificate.

 

88

9.3 Environmental Reports.

 

89

9.4 Litigation.

 

89

9.5 Material Occurrences.

 

89

9.6 Government Receivables.

 

89

9.7 Annual Financial Statements.

 

90

9.8 Quarterly Financial Statements.

 

90

9.9 Securities Filings.

 

90

9.10 Additional Information.

 

91

9.11 Projected Operating Budget.

 

91

9.12 Notice of Suits, Adverse Events.

 

91

9.13 ERISA Notices and Requests.

 

92

9.14 Notices Regarding 2002 Note Documents or 2010 Note Documents.

 

92

9.15 Certified Copies of the New Bolton Loan Documents.

 

92

9.16 Additional Documents.

 

92

 

 

 

X. EVENTS OF DEFAULT.

 

92

10.1 Payment of Obligations.

 

93

10.2 Misrepresentations.

 

93

10.3 Failure to Furnish Information.

 

93

10.4 Liens Against Assets.

 

93

10.5 Breach of Covenants.

 

93

10.6 Judgment.

 

93

 

iii


 

10.7 Insolvency and Related Proceedings.

 

94

10.8 Cessation of Operations.

 

94

10.9 Material Adverse Effect.

 

94

10.10 Loss of Priority Lien.

 

94

10.11 Breach of Material Agreements.

 

94

10.12 Cross Default; Cross Acceleration.

 

94

10.13 Default Under 2002 Note Indenture or 2010 Note Indenture.

 

95

10.14 Termination of Guaranty.

 

95

10.15 Change of Control.

 

95

10.16 Invalidity of Credit Agreement.

 

95

10.17 Loss of Material Intellectual Property.

 

95

10.18 Forfeiture of Assets.

 

95

10.19 Business Interruption.

 

96

10.20 ERISA Events.

 

96

 

 

 

XI. LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT

 

96

11.1 Rights and Remedies.

 

96

11.2 [Reserved]

 

97

11.3 Setoff.

 

97

11.4 Letter of Credit Collateral Account.

 

97

11.5 Appointment of Receiver.

 

97

11.6 Rights and Remedies not Exclusive; Non-Waiver.

 

98

11.7 Allocation of Payments After Event of Default.

 

98

 

 

 

XII. EFFECTIVE DATE; TERMINATION

 

99

12.1 Effective Date.

 

99

12.2 Termination.

 

99

 

 

 

XIII. AGENCY PROVISIONS.

 

100

13.1 Appointment.

 

100

13.2 Nature of Duties.

 

100

13.3 Lack of Reliance on Agent and Resignation.

 

101

13.4 Certain Rights of Agent.

 

101

13.5 Reliance.

 

101

13.6 Notice of Default.

 

102

13.7 Posting to an Approved Electronic Platform.

 

102

13.8 Indemnification of Agent and Issuer.

 

103

13.9 Agent in its Individual Capacity.

 

103

13.10 Delivery of Documents.

 

103

13.11 No Reliance on Agent’s Customer Identification Program.

 

103

13.12 Agent May File Proofs of Claim.

 

103

13.13 Collateral and Guaranty Matters.

 

104

13.14 No Independent Action.

 

105

 

 

 

XIV. BORROWING AGENCY; BORROWERS AND OTHER LOAN PARTIES JOINTLY AND SEVERALLY LIABLE.

 

105

14.1 Borrowing Agency Provisions.

 

105

14.2 Cross-Obligations of Loan Parties.

 

106

14.3 Rights of Subrogation.

 

107

 

 

 

XV. MISCELLANEOUS.

 

108

15.1 Governing Law.

 

108

15.2 Entire Understanding.

 

108

15.3 Amendments.

 

108

 

iv


 

15.4 Special and Protective Agent Advances.

 

109

15.5 Transfers and Assignments; Replacement of Certain Lenders.

 

110

15.6 Application of Payments.

 

113

15.7 Indemnity.

 

113

15.8 Notice.

 

113

15.9 Notice by Approved Electronic Communications.

 

115

15.10 Survival.

 

115

15.11 Severability.

 

115

15.12 Expenses.

 

115

15.13 Injunctive Relief.

 

116

15.14 Consequential Damages.

 

116

15.15 Captions.

 

116

15.16 Counterparts; Telecopied Signatures.

 

116

15.17 Construction.

 

116

15.18 Confidentiality.

 

117

15.19 No Sharing of Information Without Consent.

 

117

15.20 USA Patriot Act.

 

117

15.21 Publicity.

 

117

15.22 Judgment Currency.

 

118

15.23 Waiver of Jury Trial and Submission to Non-Exclusive Jurisdiction.

 

118

 

v


 

LIST OF SCHEDULES AND EXHIBITS

 

All Schedules to the Credit and Security Agreement:

 

Schedule 2.9

 

Existing Letters of Credit

Schedule 4.1

 

Commercial Tort Claims

Schedule 4.14(c)

 

Chief Executive Offices

Schedule 4.14(g)

 

Lockboxes; Bank Accounts

Schedule 4.14(j)

 

Securities Accounts

Schedule 5.2

 

Incorporation/Organization/Qualification

Schedule 5.3

 

Officers, Directors, Shareholders, Capitalization

Schedule 5.5

 

FEINS/Tax Returns

Schedule 5.7

 

Corporate Names

Schedule 5.8

 

O.S.H.A. and Environmental Compliance

Schedule 5.9(b)

 

Litigation

Schedule 5.10

 

ERISA Plans

Schedule 5.11

 

Patents, Trademarks, Copyrights and Licenses

Schedule 5.15

 

Labor Contracts

Schedule 5.22

 

Business Activities

Schedule 5.23

 

Locations

Schedule 5.25

 

Material Business Agreements

Schedule 7.1

 

Sale of Assets

Schedule 7.2

 

Permitted Encumbrances

Schedule 7.3

 

Permitted Guarantees

Schedule 7.4

 

Permitted Investments

Schedule 7.5

 

Extensions of Credit

Schedule 7.8

 

Permitted Indebtedness

 

All Exhibits to the Credit and Security Agreement:

 

Exhibit A

 

Closing Agenda

Exhibit B

 

Form of Revolving Note

Exhibit C

 

Form of Revolving Advance Request for Libor Rate Loans

Exhibit D

 

Form of Borrowing Base Certificate

Exhibit E

 

Form of Compliance Certificate

Exhibit F

 

Form of Financial Condition Certificate

Exhibit G-1

 

Form of Landlord Waiver

Exhibit G-2

 

Form of Processor/Bailee Waiver

Exhibit G-3

 

Form of Mortgagee Waiver

Exhibit G-4

 

Form of Consignee Waiver

Exhibit H

 

Projections

Exhibit I

 

Form of Assignment and Assumption

Exhibit J

 

Form of Borrower Joinder Agreement

Exhibit K

 

Form of Guarantor Joinder Agreement

 

vi


 

AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

 

This AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT (this “ Agreement ”), is dated as of September 20, 2010, by and among STONERIDGE, INC. , an Ohio corporation (the “ Parent ”), STONERIDGE ELECTRONICS, INC. , a Texas corporation (“ Electronics ”), STONERIDGE CONTROL DEVICES, INC. , a Massachusetts corporation (“ Controls ”), and such other Persons as are from time to time parties hereto as Borrowers, other Persons as are from time to time parties hereto, as Guarantors, the financial institutions which are now or which hereafter become a party to this Agreement (the “Lenders” ), PNC BANK, NATIONAL ASSOCIATION , a national banking association (“ PNC Bank ”) as successor to both NATIONAL CITY BANK , as Lead Arranger and the Issuer (as hereinafter defined), and NATIONAL CITY BUSINESS CREDIT, INC. , as administrative agent and collateral agent (the “Agent” ).

 

IN CONSIDERATION of the mutual covenants and undertakings herein contained, the receipt and sufficiency of which are hereby acknowledged, the Loan Parties (as hereinafter defined), the Lenders, the Issuer and the Agent hereby agree as follows:

 

I.

  RESTATEMENT, DEFINITIONS AND CONSTRUCTION .

 

 

1.1

Restatement of Credit Facility .

 

This Agreement amends and restates that certain Credit and Security Agreement, dated as of November 2, 2007, that certain Amendment No. 1 to Credit and Security Agreement, that certain Amendment No. 2 to Credit and Security Agreement, that certain Amendment No. 3 to Credit and Security Agreement, and that certain Amendment No. 4 to Credit and Security Agreement (the “Original Credit Agreement”).  This Agreement is an amendment and restatement, but not a novation or refinancing, of the Original Credit Agreement.  This Agreement does not evidence or effect a release or relinquishment of the priority of the Agent, for the benefit of itself, the Lenders and any Issuer, in any Collateral.  The promissory notes which presently evidence the Obligations of the Borrowers to the Lenders hereunder are those certain Revolving Notes in favor of each Lender executed by each of the Borrowers as of November 2, 2007.  The Other Loan Documents and other deliverables delivered pursuant to the requirements of Section 8.1 of the Original Credit Agreement remain effective.

 

 

1.2

Accounting Terms .

 

As used in this Agreement and the Other Loan Documents, accounting terms not defined in Section 1.4 or elsewhere in this Agreement and accounting terms partly defined in Section 1.4 to the extent not defined shall have the respective meanings given to them under GAAP; provided , however , to the extent accounting terms not defined or only partly defined herein are used for the purposes of determining compliance with financial covenants in this Agreement, such accounting terms shall be defined or partly defined in accordance with GAAP.  All financial computations to be made under this Agreement shall, unless otherwise specifically provided herein, be made in accordance with GAAP applied on a basis consistent in all material respects with the financial statements delivered to the Agent and the Lenders on or prior to the Closing Date.

 


 

 

1.3

Uniform Commercial Code Terms .

 

To the extent used in this Agreement and the Other Loan Documents, terms defined in the Uniform Commercial Code shall have the meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined) ascribed to such terms in the Uniform Commercial Code.  Such terms shall include: “Account”, “Account Debtor”, “Certificated Security”, “Chattel Paper”, “Commercial Tort Claim”, “Commodities Account”, “Deposit Account”, “Document”, “Equipment”, “Farm Products”, “Financial Asset”, “Fixture”, “General Intangible”, “Instrument”, “Inventory”, “Investment Property”, “Lease”, “Lessor”, “Letter-of-Credit Rights”, “money”, “Payment Intangibles”, “Proceeds”, “Product”, “Record”, “Secured Party”, “Securities Account”, “Securities Intermediary”, “Security”, “Security Entitlement”, “Security Interest” and “Supporting Obligation”.  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

General Terms .

 

As used in this Agreement or any Other Loan Document, the following terms shall have the meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined) set forth below:

 

Acquired Entity ” shall mean any Person acquired pursuant to a Permitted Acquisition or proposed to be acquired pursuant to a Proposed Acquisition, as applicable.

 

Activation Notice ” shall mean a notice in writing from the Agent to the Borrowing Agent that either (i) an Event of Default has occurred and is continuing or (ii) the Undrawn Availability is less than Twenty-Five Million Dollars ($25,000,000).

 

Administrative Questionnaire ” shall mean an Administrative Questionnaire in a form supplied by the Agent to the Lenders and each assignee thereof.

 

Advances ” shall mean the Revolving Advances.

 

Advance Rates ” shall have the meaning set forth in Section 2.1(a).

 

Affiliate ” shall mean, with respect to a specified Person, any other Person: (a) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with such specified Person, (b) which beneficially owns or holds with power to vote ten percent (10%) or more of any class of the voting stock of such specified Person, (c) ten percent (10%) or more of the voting stock of which other Person is beneficially owned or held by such specified Person, or (d) who is an executive officer or director of such specified Person.  The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

Agent ” shall have the meaning set forth in the preamble.

 

Agent’s Fee Letter ” shall mean the Agent’s fee letter dated as of July 13, 2007 , between Parent and the Agent.

 

Agreement ” shall have the meaning set forth in the preamble.

 

Alternate Base Rate ” shall mean, for any period, a fluctuating interest rate per annum equal from time to time to the higher of: (a) the rate of interest which is established from time to time by PNC Bank at its principal office in Pittsburgh, Pennsylvania as its “prime rate” or “base rate” in effect, such rate to be adjusted automatically, without notice, as of the opening of business on the effective date of any change in such rate (it being acknowledged that: (i) such rate is not necessarily the lowest rate of interest then available from PNC Bank on fluctuating rate loans and (ii) such rate may be established by PNC Bank by public announcement or otherwise) and (b) the Federal Funds Effective Rate in effect on such day plus 0.50%.

 

2


 

Alternate Base Rate Loan ” shall mean any Advance, in Dollars, during any period in which such Advance bears interest based upon the Alternate Base Rate.

 

Alternative Currency ” shall mean and include any lawful currency other than Dollars which (i) is readily and freely transferable and convertible into Dollars and (ii) is acceptable to the Lenders and the Issuer.

 

Alternative Currency Sublimit ” shall mean Fifty Million Dollars ($50,000,000) (determined at the equivalent amount in Dollars for each Borrowing denominated in Alternative Currency).

 

Anti-Terrorism Laws ” shall mean any laws 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.

 

Applicable Base Rate Margin ” shall be determined pursuant to Section 3.2.

 

Applicable Letter of Credit Fee Percentage ” shall be determined pursuant to Section 3.2.

 

Applicable Libor Rate Margin ” shall be determined pursuant to Section 3.2.

 

Applicable Period ” shall have the meaning set forth in Section 3.2.

 

Applicable Unused Facility Fee Percentage ” shall be determined pursuant to Section 3.2.

 

“Approved Electronic Communication” shall mean each notice, demand, communication, information, document and other material transmitted, posted or otherwise made or communicated by e-mail, E-Fax, the StuckyNet System, any Approved Electronic Platform or any other equivalent electronic service, whether owned, operated or hosted the Agent, any Lender, any of their Affiliates or any other Person, that any party is obligated to, or otherwise chooses to, provide to the Agent pursuant to this Agreement or any Other Loan Document, including any financial statement, financial and other report, notice, request, certificate and other information material; provided that Approved Electronic Communications shall not include any notice, demand, communication, information, document or other material that the Agent specifically instructs a Person to deliver in physical form.

 

Approved Electronic Platform ” shall have the meaning specified in Section 13.7.

 

Approved Fund ” shall mean any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

Approved Securities Intermediary ” shall mean a Securities Intermediary approved by the Agent in its Permitted Discretion and with respect to which the Borrowing Agent has delivered to the Agent an executed Securities Account Control Agreement.

 

3


 

Assignment and Assumption ” shall mean an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 15.5), and accepted by the Agent, in substantially the form of Exhibit I or any other form approved by the Agent.

 

Assignment of Claims Act ” shall mean the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.).

 

Augmenting Revolving Lender ” shall have the meaning specified in Section 2.6(a)

 

Bank Services ” shall mean each and any bank service provided to any Loan Party by the Agent, any Lender or any direct or indirect Subsidiary or Affiliate of the Agent or any Lender, including the following: (a) commercial credit cards, (b) stored value cards, and (c) cash management or treasury administration services (including controlled disbursement, automatic clearinghouse transactions, electronic funds transfers, returned items, overdrafts and interstate depositary network services).

 

Blocked Account Agreement ” shall have the meaning set forth in Section 4.14(g).

 

Blocked Person ” shall have the meaning assigned to such term in Section 5.26(b).

 

Borrower ” and “ Borrowers ” shall mean the Parent, Controls and Electronics, and each other Person added to this Agreement as a Borrower through a Borrower Joinder Agreement.

 

Borrower Joinder Agreement ” shall mean a Borrower joinder agreement, substantially in the form of Exhibit J .

 

“Borrowing” shall mean a Revolving Borrowing.

 

" Borrowing Agent " shall mean the Parent.

 

Borrowing Base Certificate ” shall mean a certificate duly executed by an officer (or other Person duly designated by the Board of Directors of the Borrowing Agent) of the Borrowing Agent appropriately and separately completed by the Borrowers, and in substantially the form of Exhibit D hereto.

 

“Business Day” shall mean (i) for all purposes other than as covered by clause (ii) below, any day excluding Saturday, Sunday and any day which is, in the city in which the Payment Office is located, a legal holiday or a day on which banking institutions are authorized by law or other governmental actions to close and (ii) with respect to all notices and determinations in connection with, and payments of principal and interest on, Libor Rate Loans, any day which is a Business Day described in clause (i) and which is also a day for trading by and between banks in Dollar deposits or Alternative Currency in the interbank Eurocurrency market.

 

Capital Expenditures ” shall mean any expenditure made or liability incurred which is, determined in accordance with GAAP, treated as a capital expenditure and not as an expense item for the year in which it was made or incurred, as the case may be, excluding (to the extent otherwise included) expenditures made with respect to repair or replacement of property necessitated by a Material Recovery Event for which the Borrowing Agent has notified the Agent of the applicable Loan Party’s intent to invest the proceeds of such Material Recovery Event and is otherwise in compliance with Section 4.19.

 

4


 

Capitalized Leases ” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.

 

Cash Concentration Account ” shall mean, with respect to the Borrowers, at the discretion of the Agent, either: (i) any of those certain commercial deposit accounts at PNC Bank in the name of the Agent, designated as “PNC Bank (for the benefit of itself and the Issuer) Borrowing Agent Cash Concentration Account” pursuant to a Cash Concentration Account Agreement (a “ Non-Borrower Titled Cash Concentration Account ”); or (ii) such other depository accounts as may be established and maintained by any of the Borrowers, the Borrowing Agent or any other applicable Obligor at PNC Bank from time to time, pursuant to a Deposit Account Agreement and/or a Blocked Account Agreement, each of which, in either case, shall be: (a) without liability by the Agent or PNC Bank, as depositary bank, to pay interest thereon, (b) the funds within which shall immediately become the sole and exclusive property of the Agent for the pro rata benefit of the Secured Creditors and subject to the sole and exclusive control off the Agent, and (c) from which account the Agent shall have the irrevocable and exclusive right to withdraw funds.

 

Cash Concentration Account Agreement ” shall mean an agreement entered into by the Agent and PNC Bank, as depositary bank, with respect to each Non-Borrower Titled Cash Concentration Account, in form and substance satisfactory to the Agent and acknowledged by the Borrowers, the Borrowing Agent or other Obligor, as applicable, whereby PNC Bank will agree to maintain the Non-Borrower Titled Cash Concentration Account on behalf of the Agent.

 

Cash Equivalents ” shall mean (a) obligations issued or guaranteed by the United States or any agency thereof, (b) commercial paper with maturities of not more than one hundred and eighty (180) days and a published rating of not less than A-1 by Standard & Poor’s or P-1 by Moody’s Investors Services, Inc. (or the equivalent rating), (c) Dollar denominated time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is a Lender or (B) is organized under the laws of the United States of America, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States of America, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (b) above and (iii) has combined capital and surplus of at least Five Hundred Thousand Dollars ($500,000), in each case with maturities of not more than one hundred and eighty (180) days from the date of acquisition thereof, (d) repurchase agreements maturing within one hundred and eighty (180) days from the date of issuance thereof entered into with a commercial bank of the type described in clause (c) above, (e) U.S. money market funds (i) rated AAA by Standard & Poor’s, Inc. or with an equivalent rating from Moody’s Investors Service, Inc., or (ii) that invest solely in obligations issued or guaranteed by the United States or an agency thereof, or (f) short-term marketable securities.

 

CERCLA ” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 et seq.

 

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Change of Control ” shall mean and include any of the following:

 

(a)           during any period of two consecutive calendar years, individuals who at the beginning of such period constituted the Parent’s Board of Directors (together with any new directors whose (x) election by the Parent’s Board of Directors or (y) nomination for election by the Parent’s shareholders was (prior to the date of the proxy or consent solicitation relating to such nomination) approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved), cease for any reason to constitute a majority of the directors then in office;

 

(b)           any person or group (as such term is defined in section 13(d)(3) of the 1934 Act), other than the Parent, any trustee or other fiduciary holding securities under an employee benefit plan of the Parent or any members of the Current Holder Group, acquires, directly or indirectly, beneficial ownership (within the meaning of Rule 13d-3 and 13d-5 of the 1934 Act) of 50% or more, on a fully diluted basis, of the economic or voting interest in the Parent’s capital stock;

 

(c)           the shareholders of the Parent approve a merger or consolidation of the Parent with any other Person, other than a merger or consolidation which would result in the voting securities of the Parent outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted or exchanged for voting securities of the surviving or resulting entity) more than 75% of the combined voting power of the voting securities of the Parent or such surviving or resulting entity outstanding after such merger or consolidation;

 

(d)           the shareholders of the Parent approve a plan of complete liquidation of the Parent or an agreement or agreements for the sale or disposition by the Parent of all or substantially all of the Parent’s assets;

 

(e)           any “change in control” or any similar term, as defined in (a) the 2002 Note Documents or the 2010 Note Documents or (b) any of the indentures, credit agreements or other instruments governing any Indebtedness of the Parent or any of its Subsidiaries with an outstanding principal amount, or providing for commitments to lend in an outstanding principal amount, of at least Ten Million Dollars ($10,000,000) (or the equivalent amount in any other currency); provided , however ; with respect to the 2002 Note Documents, such “change in control” shall have occurred prior to payment in full of all Indebtedness or other obligations owing pursuant to any of the 2002 Note Documents;

 

(f)           any merger or consolidation of or with the Parent in which the Parent is not the surviving party or sale of all or substantially all of the property or assets of any of the Parent or any first-tier Subsidiary of the Parent.

 

As used in this definition, the term “Current Holder Group” shall mean (i) members of the Draime family, (ii) those other persons who are officers or directors of the Parent at the Closing Date, (iii) the spouses, heirs, legatees, descendants and blood relatives to the third degree of consanguinity of any such person, (iv) the executors and administrators of the estate of any such person, and any court appointed guardian of any such person, and (v) any trust, family partnership or similar investment entity for the benefit of any such person referred to in the foregoing clauses (i), (ii) or (iii) or any other persons (including for charitable purposes), so long as one or more members of the Current Holder Group has the exclusive or a joint right to control the voting and disposition of securities held by such trust, family partnership or other investment entity.

 

Charges ” shall mean all taxes, charges, fees, imposts, levies or other assessments, including 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, together with any interest and any penalties, additions to tax or additional amounts, imposed by any taxing or other similar Governmental Body, domestic or foreign (including the Pension Benefit Guaranty Corporation or any environmental agency or superfund), upon the Collateral, any Loan Party or any of its Subsidiaries.

 

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CIP Regulations ” shall have the meaning set forth in Section 13.11.

 

Closing Agenda ” shall mean the closing agenda attached hereto as Exhibit A .

 

Closing Date ” shall mean the date upon which all the conditions set forth in Section 8.1 shall have been satisfied.

 

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, with respect to a Person, such Person’s:

 

(a)           Accounts;

 

(b)           Inventory;

 

(c)           Equipment and Fixtures;

 

(d)           all other Goods;

 

(e)           General Intangibles, Payment Intangibles and Intellectual Property;

 

(f)           Investment Property and Security Entitlements;

 

(g)           Deposit Accounts, any and all monies credited by or due from any financial institution or any other depository;

 

(h)           rights as a consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in transit, setoff, detinue, replevin, reclamation and repurchase;

 

(i)           Instruments, Letter of Credit Rights, Supporting Obligations, Documents (including documents of title), policies and certificates of insurance, choses in action, Chattel Paper;

 

(j)           Commercial Tort Claims, to the extent described on Schedule 4.1 and all future Commercial Tort Claims in which a security interest is granted to the Agent pursuant to Section 4.1;

 

(k)           accessions to, substitutions for, and all replacements, Products and Proceeds of the herein above-referenced property including proceeds of insurance policies insuring such property, and proceeds of any insurance, indemnity, warranty or guaranty;

 

(l)           books, records, and other property (including credit files, programs, printouts, computer software (owned by such Person or in which it has an interest), and disks, magnetic tape and other magnetic media, and other materials and records) pertaining to any such above-referenced property; and

 

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(m)           to the extent not otherwise included above, all other tangible and intangible personal property of such Person;

 

in each case, other than Excluded Property of such Person.

 

Collateral shall also mean the Real Property in which a security interest or Lien is granted to the Agent pursuant to this Agreement or any Other Loan Document.

 

Collection Account ” shall have the meaning set forth in Section 4.14(g).

 

“Commitment” shall mean, with respect to any Lender, such Lender’s Revolving Commitment.

 

Compliance Certificate ” shall mean the certificate executed by the any officer of the Borrowing Agent authorized by the Board of Directors of the Borrowing Agent to so execute on the basis of and in connection with the financial statements delivered pursuant to Section 9.7 or 9.8 substantially in the form of Exhibit E and otherwise satisfactory to the Agent.

 

Consents ” shall mean all filings and all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Bodies and other third parties, domestic or foreign, necessary to carry on any Person’s business, including any Consents required under all applicable federal, state or other applicable law.

 

Consolidated EBITDA ” shall mean, for any period, Consolidated Net Income for such period plus (a) without duplication and to the extent deducted in determining such Consolidated Net Income, the sum of (i) Consolidated Interest Expense for such period, (ii) consolidated income tax expense for such period, (iii) all amounts attributable to depreciation and amortization for such period and (iv) any non-cash charges (other than the write-down of current assets) for such period (provided that to the extent that all or any portion of the income of any person is excluded from Consolidated Net Income pursuant to the definition thereof for all or any portion of such period any amounts set forth in the preceding clauses (i) through (iv) that are attributable to such person shall not be included for purposes of this definition for such period or portion thereof), and minus (b) without duplication (i) all cash payments made during such period on account of reserves, restructuring charges and other non-recurring non-cash charges added to Consolidated Net Income pursuant to clause (a)(iv) above in a previous period and (ii) to the extent included in determining such Consolidated Net Income, any non-cash extraordinary gains and all non-recurring non-cash items of income for such period, all determined on a consolidated basis in accordance with GAAP; provided that for purposes of calculating Consolidated EBITDA for any period (A) the Consolidated EBITDA of any Acquired Entity acquired by Parent or any Subsidiary of Parent pursuant to a Permitted Acquisition during such period shall be included on a pro forma basis for such period (assuming the consummation of such acquisition and the incurrence or assumption of any Indebtedness in connection therewith occurred as of the first day of such period) and (B) the Consolidated EBITDA of any person or line of business sold or otherwise disposed of by Parent or any Subsidiary of any Loan Party during such period shall be excluded for such period (assuming the consummation of such sale or other disposition and the repayment of any Indebtedness in connection therewith occurred as of the first day of such period).

 

Consolidated Equity ” shall mean, with respect to any date, the net equity of the Parent and its Subsidiaries as of such date determined on a consolidated basis in accordance with GAAP.

 

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Consolidated Fixed Charges ” shall mean, with respect to any fiscal period, the sum of: (a) Consolidated Interest Expense paid in cash of the Parent and its Subsidiaries determined on a consolidated basis with respect to such period and (b) scheduled principal payments on the Advances and other Indebtedness of the Parent and its Subsidiaries determined on a consolidated basis with respect to such period.

 

Consolidated Interest Expense ” shall mean, for any period, the sum of (a) the interest expense (including imputed interest expense in respect of Capital Lease Obligations and Synthetic Lease Obligations) of the Parent and its Subsidiaries for such period (including all commissions, discounts and other fees and charges owed by the Borrower and the Subsidiaries with respect to letters of credit and bankers’ acceptance financing), net of interest income, in each case determined on a consolidated basis in accordance with GAAP, plus (b) any interest accrued during such period in respect of Indebtedness of the Parent or any Subsidiary that is required to be capitalized rather than included in consolidated interest expense for such period in accordance with GAAP.  For purposes of the foregoing, interest expense shall be determined after giving effect to any net payments made or received by the Parent or any Subsidiary with respect to interest rate Hedging Contracts.

 

Consolidated Net Income ” shall mean, for any period, the net income or loss of the Parent and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP.

 

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 Person, are treated as a single employer under Section 414 of the Code.

 

Copyright Security Agreement ” shall mean a copyright security agreement, executed and delivered by a Loan Party in connection with this Agreement, in form and substance satisfactory to the Agent.

 

Customs ” shall have the meaning set forth in Section 2.9(j).

 

Deemed Credit Request ” shall have the meaning set forth in Section 2.2(d).

 

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 3.3.

 

Defaulting Lender ” shall have the meaning set forth in Section 2.11.

 

Deposit Account Agreement ” shall have the meaning set forth in Section 4.14(g).

 

Dollar ” and the sign “ $ ” shall mean lawful money of the United States of America.

 

Domestic Subsidiary ” shall mean any direct or indirect Subsidiary of a Person that is organized under the laws of the United States, any state thereof or the District of Columbia (other than an indirect Subsidiary of a Person which is a direct or indirect Subsidiary of another Subsidiary which is not organized under such laws).

 

“E-Fax” shall mean any system used to receive or transmit faxes electronically.

 

“E-Signature” shall mean the process of attaching to or logically associating with an Approved Electronic Communication an electronic symbol, encryption, digital signature or process (including the name or an abbreviation of the name of the party transmitting the Approved Electronic Communication) with the intent to sign, authenticate or accept such Approved Electronic Communication.

 

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Eligible Assignee ” shall mean any of the following Persons: (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person (other than a natural person) approved by (i) the Agent, (ii) in the case of any assignment of a commitment to make Revolving Advances hereunder, the Issuer, and (iii) unless an Event of Default has occurred and is continuing, the Borrowing Agent (each such approval not to be unreasonably withheld or delayed); provided , however, that, notwithstanding the foregoing, “Eligible Assignee” shall not include any Loan Party or any Loan Party’s Affiliates or Subsidiaries and; provided , further , that, notwithstanding the foregoing, a Person shall only be an “Eligible Assignee” if (i) such Person shall have complied with the requirements of Section 3.13 regarding delivery of Withholding Certificates and (ii) the assignment to or participation of such Person shall not constitute a “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code).

 

Eligible Inventory ” shall mean, with respect to each Borrower, Inventory of such Borrower which the Agent, in the exercise of its Permitted Discretion, shall deem to be Eligible Inventory, based on such considerations as the Agent may from time to time deem appropriate in its Permitted Discretion.  No Inventory of such Borrower shall be Eligible Inventory if such Inventory:

 

(a)           is excess, obsolete, unsalable, shopworn, unmerchantable or unfit for sale, or is slow-moving (other than with respect to replacement parts constituting finished goods held for sale to customers in the ordinary course of the business),

 

(b)           is not subject to an enforceable perfected, first priority security interest in favor of the Agent,

 

(c)           is not owned by such Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure such Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lenders, and other Permitted Encumbrances (subject to reserves for such other Permitted Encumbrances established by the Agent in accordance with the terms of this Agreement);

 

(d)           is work-in-process or any other Inventory which is not raw material or finished goods held for resale;

 

(e)           except for Inventory which is described pursuant to subclauses (i) or (ii) of clause (f) below and which is otherwise Eligible Inventory hereunder, is: (i) not located in the United States or Mexico, and, if located in Mexico, not located on premises with respect to which a Person in charge or control of such premises has taken constructive possession acting as a depository of the Inventory on the premises for the benefit of the Agent for purposes of perfecting a pledge of such Inventory satisfactory to the Agent, in its Permitted Discretion, or (ii) not located on premises owned by such Borrower and disclosed on Schedule 5.23 unless such Inventory is described in subclauses (iii) or (iv) of this clause (e), or (iii) located on premises leased by such Borrower, unless such location is disclosed on Schedule 5.23 (or such other location appearing on any subsequent amendments to Schedule 5.23 consented to by the Agent in accordance with Section 15.3) and (A) a landlord waiver substantially in the form of Exhibit G-1 (or such other form reasonably satisfactory to the Agent) has been received by the Agent or (B) reserves reasonably satisfactory to the Agent have been established by the Agent with respect thereto, or (iv) stored with a warehouseman, processor or other bailee by such Borrower, unless such location is disclosed on Schedule 5.23 (or such other location appearing on any subsequent amendments to Schedule 5.23 consented to by the Agent in accordance with Section 15.3) and (A) a bailee waiver substantially in the form of Exhibit G-2 (or such other form reasonably satisfactory to the Agent) has been received by the Agent or (B) reserves reasonably satisfactory to the Agent have been established by the Agent with respect thereto, or (v) located at a location owned by such Borrower that is subject to a mortgage in favor of a Person other than the Agent unless such location is disclosed on Schedule 5.23 (or such other location appearing on any subsequent amendments to Schedule 5.23 consented to by the Agent in accordance with Section 15.3) and (A) a mortgagee waiver substantially in the form of Exhibit G-3 (or such other form reasonably satisfactory to the Agent) has been received by the Agent or (B) reserves reasonably satisfactory to the Agent have been established by the Agent with respect thereto;

 

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(f)           is in transit, unless such Inventory is otherwise Eligible Inventory and is: (i) in transit from a domestic location owned by such Borrower or a domestic location otherwise identified on Schedule 5.23 (or such other location appearing on any subsequent amendments to Schedule 5.23 consented to by the Agent in accordance with Section 15.3) to another domestic location identified on Schedule 5.23 (or such other location appearing on any subsequent amendments to Schedule 5.23 consented to by the Agent in accordance with Section 15.3) or (ii) Inventory for which title has passed to such Borrower, which is insured to the full value thereof and with respect to which (A) all negotiable bills of lading shall be properly endorsed and in the Agent’s possession, (B) all non-negotiable bills of lading shall be issued in the Agent’s name, in each case, free and clear of all Liens except those in favor of the Agent and (C) the value of which, to the extent in transit on water, does not exceed Ten Million Dollars ($10,000,000);

 

(g)           is: (i) evidenced by a negotiable document of title, unless such Document has been delivered to the Agent with all necessary endorsements, free and clear of all Liens except those in favor of the Agent or (ii) subject to a non-negotiable warehouse receipt or other non-negotiable document of title unless such non-negotiable Document is issued to or for the account of the Agent and such Document is delivered to the Agent;

 

(h)           is placed on consignment (or is being held pursuant to a consignment agreement);

 

(i)           consists of goods which have been returned by the customer, excluding goods returned for reprocessing in the ordinary course of business;

 

(j)           consists of display items or packing or shipping materials, manufacturing supplies or replacement parts (other than replacement parts constituting finished goods held for sale to customers in the ordinary course of business);

 

(k)           is not of a type held for sale in the ordinary course of such Borrower’s business;

 

(l)           breaches any of the representations or warranties pertaining to Inventory of such Borrower set forth in this Agreement or in any of the Other Loan Documents;

 

(m)           consists of any costs associated with “freight-in” charges;

 

(n)           consists of any gross profit mark-up in connection with the sale and distribution thereof to any division of such Borrower or to any Affiliate of such Borrower;

 

(o)           consists of Hazardous Substances or goods that can be transported or sold only with licenses that are not readily available;

 

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(p)           is not covered by casualty insurance reasonably acceptable to the Agent as required by the terms of this Agreement;

 

(q)           was produced in violation of the Fair Labor Standards Act and subject to the “hot goods” provision contained in Title 29 U.S.C. Section 215(a)(1);

 

(r)           failed to conform in all material respects to all standards imposed by any Governmental Body, division or department thereof which has regulatory authority over such Inventory or the use or sale thereof;

 

(s)           contains or bears any Intellectual Property rights licensed to such Borrower by any Person unless the Agent is reasonably satisfied that it may sell or otherwise dispose of such Inventory without (i) infringing the rights of such licensor, (ii) violating any contract with such licensor, or (iii) incurring any liability with respect to payment of royalties other than royalties incurred pursuant to sale of such Inventory under the current licensing agreement relating thereto; or

 

(t)           is not otherwise satisfactory to the Agent as determined in the exercise of its Permitted Discretion.

 

Eligible Receivables ” shall mean, with respect to each Borrower, each Receivable of such Borrower which the Agent, in the exercise of its Permitted Discretion, shall deem to be an Eligible Receivable, based on such considerations as the Agent may from time to time deem appropriate in its Permitted Discretion.  No Receivable of such Borrower shall be an Eligible Receivable if:

 

(a)           such Receivable is not subject to the Agent’s enforceable first priority perfected security interest or is subject to any other Lien except the Liens in favor of the Agent, on behalf of itself and the Lenders and other Permitted Encumbrances (subject to reserves for such other Permitted Encumbrances established by the Agent in accordance with the terms of this Agreement);

 

(b)           such Receivable arises out of a sale made by such Borrower to an Affiliate of such Borrower or to a Person controlled by an Affiliate of such Borrower;

 

(c)           such Receivable is due and unpaid more than ninety (90) days after its original due date or is due more than one hundred fifty (150) days after the original invoice date;

 

(d)           fifty percent (50%) or more of the aggregate Receivables owing from the applicable Account Debtor to a Borrower are not deemed Eligible Receivables hereunder;

 

(e)           such Receivable does not arise in the ordinary course of such Borrower’s business;

 

(f)           any covenant, representation or warranty contained in this Agreement with respect to such Receivable has been breached;

 

(g)           other than with respect to (i) Receivables owing from Delphi Corp. in an aggregate amount not to exceed Three Million Dollars ($3,000,000) at any time with respect to all of the Borrowers collectively, and (ii) Receivables owing from any other Account Debtor which is a debtor-in-possession deemed acceptable to the Agent, in its Permitted Discretion, the Account Debtor with respect to such Receivable shall: (A) apply for, suffer, or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or call a meeting of its creditors, (B) admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (C) make a general assignment for the benefit of creditors, (D) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (E) be adjudicated a bankrupt or insolvent, (F) file a petition seeking to take advantage of any other law providing for the relief of debtors, (G) acquiesce to, or fail to have dismissed, any petition which is filed against it in any involuntary case under such bankruptcy laws, or (H) take any action for the purpose of effecting any of the foregoing;

 

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(h)           the sale giving rise to such Receivable is to an Account Debtor domiciled outside the United States unless (i) such Receivable is owed by an Account Debtor domiciled in Canada or the United Kingdom and the Agent has an enforceable first priority perfected Lien in such Receivable satisfactory to the Agent in its Permitted Discretion or (ii) such Receivable is guaranteed by a letter of credit, guaranty or acceptance terms, in each case acceptable to the Agent in its Permitted Discretion;

 

(i)           the sale giving rise to such Receivable is to an Account Debtor on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment or any other repurchase or return basis;

 

(j)           the sale giving rise to such Receivable is to an Account Debtor on a cash on delivery (i.e. COD) basis or the Account Debtor with respect to such Receivable is an employee of any Loan Party or any Subsidiary thereof;

 

(k)           the Agent believes, in the exercise of its Permitted Discretion, that collection of such Receivable is insecure or that such Receivable may not be paid by reason of the applicable Account Debtor’s financial inability to pay;

 

(l)           the Account Debtor with respect to such Receivable is the United States or any state, or any department, agency or instrumentality of any of them, unless such Borrower: (i) has assigned its right to payment of such Receivable to the Agent pursuant to the Assignment of Claims Act or has otherwise complied with other applicable state or local statutes or ordinances and (ii) has taken all steps reasonably necessary to protect the Agent’s interest in such Collateral under the Assignment of Claims Act or other applicable state or local statutes or ordinances;

 

(m)           the goods giving rise to such Receivable have not been shipped to or at the direction of the applicable Account Debtor or the services giving rise to such Receivable have not been performed by such Borrower or the Receivable otherwise does not represent a final sale;

 

(n)           such Receivable, together with the aggregate Receivables of (i) the Account Debtor other than Navistar International Inc. with respect to Receivables owing to the Borrowers exceeds twenty percent (20%) of the aggregate amount of all Receivables of the Borrowers, and (ii) Navistar International Inc. with respect to Receivables owing the Borrowers exceeds thirty-five percent (35%) of the aggregate amount of all Receivables of the Borrowers; provided however, in each case, that only that portion of the Receivables of such Account Debtor exceeding such applicable percentage shall be excluded from Eligible Receivables on account of this clause (n);

 

(o)           such Receivable is subject to any offset, deduction, defense, dispute, or counterclaim, or is owed by an Account Debtor that is also a creditor or supplier of such Borrower (but only to the extent of such Borrower’s obligations to such Account Debtor from time to time) or such Receivable is contingent in any respect or for any reason;

 

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(p)           such Borrower has made any agreement with the applicable Account Debtor with respect to such Receivable for any discount, allowance or other deduction from the amount owing on such Receivable, except for discounts or allowances made in the ordinary course of business for prompt payment, all of which discounts or allowances are reflected in the calculation of the face value of each respective invoice related thereto;

 

(q)           any return, rejection or repossession of the merchandise sold has occurred or the rendition of services has been disputed;

 

(r)           such Receivable is not evidenced by an invoice or other documentary evidence satisfactory to the Agent, in its Permitted Discretion;

 

(s)           such Receivable is not payable to such Borrower;

 

(t)           the applicable Account Debtor with respect to such Receivable is located in New Jersey, Minnesota, or any other state denying creditors access to its courts in the absence of a Notice of Business Activities Report or other similar filing, unless such Borrower is incorporated under the laws of such state or has either qualified as a foreign corporation authorized to transact business in such state or has filed a Notice of Business Activities Report or similar filing with the applicable state agency for the then current year; or

 

(u)           such Receivable is not otherwise satisfactory to the Agent as determined in the exercise of its Permitted Discretion.

 

Environmental Laws ” shall mean all federal, state and local environmental, land use, zoning, occupational health, chemical use, safety and sanitation laws, statutes, ordinances and codes relating to the protection of the environment or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances and the rules, regulations, policies, decisions, orders and directives of federal, state and local Governmental Bodies.

 

Environmental Permits ” shall mean all permits, approvals, certificates, notifications, identification numbers, licenses and other authorizations required under any applicable Environmental Laws or necessary for the conduct of business.

 

ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time and the rules and regulations promulgated thereunder.

 

Eurocurrency Reserve Percentage ” shall mean, for any Interest Period in respect of any Libor Rate Loan, as of any date of determination, the aggregate of the then stated maximum reserve percentages (including any marginal, special, emergency or supplemental reserves), expressed as a decimal, applicable to such Interest Period (if more than one such percentage is applicable, the daily average of such percentages for those days in such Interest Period during which any such percentages shall be so applicable) by the Board of Governors of the Federal Reserve System, any successor thereto, or any other banking authority, domestic or foreign, to which any Lender may be subject in respect to euro-currency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Federal Reserve Board) or in respect of any other category of liabilities including deposits by reference to which the interest rate on Libor Rate Loans is determined or any category of extension of credit or other assets that include the Libor Rate Loans.  For purposes hereof, such reserve requirements shall include those imposed under Regulation D of the Federal Reserve Board and the Libor Rate Loans shall be deemed to constitute Eurocurrency Liabilities subject to such reserve requirements without benefit of credits for pro-ration, exceptions or offsets which may be available from time to time to the Agent under said Regulation D.

 

 

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Event of Default ” shall have the meaning specified in Article X.

 

Excluded Property ” shall mean:

 

(a)           any permit, lease or license held by any Person or any Loan Party (in each case as otherwise permitted by this Agreement) that validly prohibits the creation by such Person or such Loan Party of a security interest therein;

 

(b)           any contract or agreement to which any Person or any Loan Party is a party or any of such Person’s or Loan Party’s rights or interests thereunder if and only for so long as the grant by such Person or Loan Party of a security interest pursuant to this Agreement in its right, title and interest in such contract, agreement, right or interest thereunder shall result in an effective default thereunder pursuant to effective and enforceable contractual provisions entered into by such Person or Loan Party in the ordinary course of business and existing on the date hereof (other than to the extent that any such term would be rendered ineffective pursuant to applicable law or Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions));

 

but in the case of clauses (a) and (b) above, only to the extent, and for so long as, such permit, lease, license, contract or other agreement, validly prohibits the creation of a Lien in such property in favor of the Agent or for so long as the consequences specified in clause (b) above shall exist, and all of such property shall automatically become collateral and become subject to the Liens granted under this Agreement or the Other Loan Documents at such time as such valid prohibition or consequences exist.

 

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 Letters of Credit ” shall mean trade or standby letters of credit issued by National City Bank, PNC Bank or JPMorgan Chase Bank, N.A. prior to the Closing Date and listed on Schedule 2.9 which will continue in effect after the Closing Date.

 

Facility Termination Date ” shall mean November 1, 2012 or earlier if pursuant to the terms of this Agreement, as applicable, the obligations of the Lenders to make Revolving Advances are terminated or if the obligation of the Borrowers to repay the Advances is accelerated.

 

Federal Funds Effective Rate ” shall mean, for any day, the rate per annum (rounded upwards, if necessary, to the nearest one hundredth of one percent (1/100th of 1%) equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided, however , that: (a) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Effective Rate for such day shall be such a rate on such transactions on the immediately preceding Business Day as so published on the next succeeding Business Day and (b) if such rate is not so published for any Business Day, the Federal Funds Effective Rate for such Business Day shall be the average of quotations for such day on such transactions received by the Agent from three federal funds brokers of recognized standing selected by the Agent.

 

 

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Fixed Charge Coverage Ratio ” shall mean, with respect to any fiscal period, the ratio of: (a) Consolidated EBITDA minus the sum of (i) Capital Expenditures not specifically financed by Indebtedness (other than Revolving Advances) of the Parent and its Subsidiaries on a consolidated basis with respect to such period, (ii) cash payments of taxes of the Parent and its Subsidiaries on a consolidated basis with respect to such period and (iii) dividends and distributions made in cash of the Parent and its Subsidiaries on a consolidated basis with respect to such period to (b) Consolidated Fixed Charges.

 

Foreign Lender ” shall mean any Lender that is organized under the laws of a jurisdiction other than that in which a Borrower is resident for tax purposes.  For purposes of this definition, the United States, each state thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

 

Foreign Subsidiary ” shall mean any direct or indirect Subsidiary of the Parent that is organized under the laws of a jurisdiction other than the United States, any state thereof or the District of Columbia.

 

Formula Amount ” shall have the meaning set forth in Section 2.1(a).

 

Fund ” shall mean any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

 

GAAP ” shall mean generally accepted accounting principles in the United States in effect from time to time.

 

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.

 

“Guarantor” shall mean, as of the Closing Date, any Domestic Subsidiary which is not a Borrower as of the Closing Date, and thereafter any Person who may guarantee payment or performance of the whole or any part of the Obligations, whether pursuant to this Agreement through the execution of a Guarantor Joinder Agreement or in a separate Guaranty.

 

Guarantor Joinder Agreement ” shall mean a Guarantor joinder agreement, substantially in the form of Exhibit K .

 

Guaranty ” shall mean any guaranty of the Obligations of any Borrower, executed by a Guarantor.

 

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, waste materials, 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.), the Toxic Substances Control Act, as amended (15 U.S.C. Sections 2601, et seq.), RCRA or any other applicable Environmental Law and in the regulations adopted pursuant thereto.

 

Hedging Contracts ” shall mean any foreign exchange contract, currency swap agreement, futures contract, commodities hedge agreement, interest rate protection agreement, interest rate futures agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, option agreement, or any similar hedging agreement or arrangement, in each case, to the extent entered into by a Person in the ordinary course of business and not for speculative purposes.

 

 

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Hedging Obligations ” shall mean all net obligations of a Person on a marked-to-market basis under any Hedging Contracts.

 

Incentive Pricing Effective Date ” shall be each December 1, March 1, June 1 and September 1, commencing with December 1, 2010.

 

Increasing Revolving Lender ” shall have the meaning specified in Section 2.6(a)

 

Incremental Revolving Advance Amount ” shall mean, at any time, the excess, if any, of (a) Fifty Million Dollars ($50,000,000) over (b) the aggregate increase in Revolving Commitments established prior to such time pursuant to Section 2.6.

 

Indebtedness ” shall mean, with respect to a Person at any date of determination, any and all indebtedness, obligations or liabilities (whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, or joint or several) of such Person for or in respect of: (a) borrowed money, (b) amounts raised under or liabilities in respect of any note purchase or acceptance credit facility, (c) reimbursement obligations (contingent or otherwise) under any letter of credit, (d) Hedging Obligations, (e) any other transaction (including forward sale or purchase agreements, capitalized leases and conditional sales agreements) having the commercial effect of a borrowing of money entered into by such Person to finance its operations or capital requirements (but not including trade payables and accrued expenses incurred in the ordinary course of business which are not represented by a promissory note or other evidence of indebtedness and which are not more than ninety (90) days past due), (f) any guaranty of Indebtedness for borrowed money, and (g) 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.

 

Intellectual Property ” shall mean (a) all utility and design patents of any Person, together with any extensions, reexaminations and reissues of such patents, patents of addition, patent applications, divisions, continuations, continuations-in-part, (b) all trademarks, service marks, trade names, trade dress or other indicia of trade origin of such Person, whether registered or unregistered, trademark and service mark registrations and applications for trademark or service mark registrations and any extension, modification or renewal thereof, whether now existing or hereinafter acquired, and (c) all original works of authorship fixed in a tangible medium, published or unpublished, and any copyrights, and registrations thereof and applications therefor, including all renewals and extensions thereof, of such Person, in each case, whether now existing or hereafter acquired.

 

Interest Election Request ” shall have the meaning set forth in Section 2.3.

 

Interest Period ” shall mean, for each Advance comprising a single Borrowing of Libor Rate Loans, the period commencing on the date of such Libor Rate Loans or the date of the conversion or continuation of any Advance into such Libor Rate Loans and ending on the numerically corresponding day of the period selected by the Borrowing Agent pursuant to the provisions hereof and each subsequent period commencing on the last day of the immediately preceding Interest Period in respect of such Libor Rate Loans and ending on the last day of the period selected by the Borrowing Agent pursuant to the provisions hereof; provided , however , that the duration of each such Interest Period shall be one (1), two (2), three (3) or six (6) months, in each case as the Borrowing Agent may select by delivery to the Agent of a Revolving Advance Request therefor in accordance with Section 2.2(a), an Interest Election Request in accordance with Section 2.3(a) or, in each case, any other notice acceptable to the Agent; provided , further , that:

 

 

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(i)

the Interest Period for each Borrowing of Libor Rate Loans shall be of the same duration;

 

 

(ii)

whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day; provided , however , that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the immediately preceding Business Day;

 

 

(iii)

if the Interest Period commences on a Business Day for which there is no numerical equivalent in the calendar month in which the Interest Period is to end, such Interest Period shall end on the last Business Day of that calendar month; and

 

(iv)          with respect to Revolving Advances consisting of Libor Rate Loans, no Interest Period with respect to such Libor Rate Loans may end on a date later than the Facility Termination Date.

 

Inventory Sublimit ” shall have the meaning set forth in Section 2.1(a)(ii).

 

IP Rights ” shall have the meaning set forth in Section 5.11.

 

“IP Security Agreement” shall mean a Copyright Security Agreement, Patent Security Agreement or Trademark Security Agreement, as applicable.

 

ISP ” shall have the meaning set forth in Section 2.9(d).

 

Issuer ” shall mean, with respect to any Letter of Credit, the issuer of such Letter of Credit and shall be, (i) with respect to Letter of Credit No. CPC5-853803 issued by JPMorgan Chase Bank, N.A. on July 30, 2010 in the amount of $770,000 for the benefit of China Merchants Bank-Suzhou Branch, (ii) with respect to any other Letter of Credit hereunder, PNC Bank, or each other Lender (or Affiliate of a Lender) that is requested by the Agent to act as an Issuer, and each of their successors and assigns (and which may be replaced at the sole discretion of the Agent).

 

Joinder Amendment ” shall have the meaning set forth in Section 1.8.

 

Lead Arranger ” shall mean PNC Bank.

 

Lender ” shall have the meaning ascribed to such term in the preamble.

 

“Lender Default” shall have the meaning set forth in Section 2.11(a).

 

Lending Installation ” shall mean, with respect to a Lender, the branch, Subsidiary or Affiliate of such Lender specified under the name of such Lender on the signature pages hereto or as otherwise selected by such Lender pursuant to Section 2.12, or such other branch, Subsidiary or Affiliate as such Lender may from time to time specify in writing to the Borrowing Agent, the Agent and the Lenders as its Lending Installation.  With respect to Revolving Advances denominated in any Alternative Currency, any Lender may, by written notice to the Agent, designate a branch, affiliate or correspondent office as its applicable branch, Subsidiary or Affiliate with respect to Revolving Advances denominated in that Alternative Currency.

 

 

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Letter of Credit ” shall mean (i) the trade or standby letters of credit to be issued pursuant to Section 2.9 and (ii) the Existing Letters of Credit.

 

Letter of Credit Application ” shall have the meaning set forth in Section 2.9(c).

 

Letter of Credit Collateral Account ” shall have the meaning specified in Section 11.4.

 

Letter of Credit Exposure ” shall mean, at any time of determination, the sum of: (a) the aggregate undrawn amount of all Letters of Credit outstanding at such time, and (b) the aggregate amount that has been drawn under such Letters of Credit for which the Issuer has not at such time been reimbursed by the Borrowers.

 

Letter of Credit Fees ” shall have the meaning set forth in Section 3.4.

 

Libor Rate ” shall mean, for any Interest Period with respect to a Libor Rate Loan, the quotient (rounded upwards, if necessary, to the nearest one sixteenth of one percent (1/16th of 1%) of: (x) the per annum rate of interest, determined by the Agent in accordance with its usual procedures (which determination shall be conclusive absent manifest error) as of approximately 12:00 noon (London time) two (2) Business Days prior to the beginning of such Interest Period pertaining to such Libor Rate Loan, as provided by Bloomberg’s or Reuters (or any other similar company or service that provides rate quotations comparable to those currently provided by such companies as the rate in the London interbank market), as determined by the Agent from time to time for purposes of providing quotations of interest rates applicable to deposits in Dollars or in an Alternative Currency in the London interbank market) as the rate in the London interbank market for deposits in Dollars or in an Alternative Currency in immediately available funds with a maturity comparable to such Interest Period divided by (y) a number equal to 1.00 minus the Eurocurrency Reserve Percentage.  In the event that such rate quotation is not available for any reason, then the rate (for purposes of clause (x) hereof) shall be the rate, determined by the Agent as of approximately 12:00 noon (London time) two (2) Business Days prior to the beginning of such Interest Period pertaining to such Libor Rate Loan, to be the average (rounded upwards, if necessary, to the nearest one sixteenth of one percent (1/16th of 1%)) of the per annum rates at which deposits in Dollars or in an Alternative Currency in immediately available funds in an amount comparable to such Libor borrowing and with a maturity comparable to such Interest Period are offered to the prime banks by leading banks in the London interbank market.  The Libor Rate shall be adjusted automatically on and as of the effective date of any change in the Eurocurrency Reserve Percentage.

 

Libor Rate Loan ” shall mean an Advance during any period in which such Advance bears interest based on the Libor Rate.

 

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 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 claiming to reflect an interest in any of the foregoing.

 

Loan Account ” shall have the meaning set forth in Section 2.8.

 

 

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“Loan Party” or “Loan Parties” shall mean, singularly or collectively, as the context may require, each Borrower and each Guarantor.

 

“Lockbox” shall mean a post office box rented by and in the name of the Borrowing Agent (or any other Borrower acceptable to the Agent) as required by this Agreement and as to which only the applicable Lockbox Bank and the Agent have access pursuant to the requirements of this Agreement and which cannot be closed by the applicable Lockbox Bank without the consent of the Agent pursuant to the applicable Blocked Account Agreement.

 

Lockbox Agreement ” shall have the meaning set forth in Section 4.14(g).

 

Lockbox Bank ” shall mean PNC Bank, any other Lender, and any other financial institution acceptable to the Agent, in its sole discretion.

 

Material Adverse Effect ” shall mean a material adverse effect on (a) the financial condition, results of operations or business of any Loan Party, (b) the financial condition, results of operations or business of the Loan Parties and their respective Subsidiaries, taken as a whole, (c) the value of the assets or property of any Loan Party or the Collateral, or the Agent’s Liens on the Collateral or, subject to Permitted Encumbrances, the priority of any such Lien or (d) the practical realization of the benefits of the Agent’s and each Lender’s rights and remedies under this Agreement and the Other Loan Documents; provided , however , with respect to clauses (a), (b) and (c), such material adverse effect, calculated as of any date, must result in or be reasonably expected to result in a reduction in Consolidated Net Income or Consolidated Net Equity in an amount greater than or equal to ten percent (10%) of the Formula Amount as of such date.

 

Material Business Agreement ” shall mean (a) each contract not made in the ordinary course of business which is material to the Parent and its Subsidiaries, on a consolidated basis, and to which the Parent or any of its Subsidiaries is a party which is a contract to which directors, officers, promoters, voting trustees, security holders of the Parent named in any registration statement or report, underwriters with respect to the Parent or any of its Subsidiaries are parties other than contracts involving only the purchase or sale of current assets having a determinable market price and are purchased or sold at such market price, (b) each contract which is material to the Parent and its Subsidiaries, on a consolidated basis, and to which the Parent or any of its Subsidiaries is a party which (i) is a contract upon which the business of the Parent and its Subsidiaries, on a consolidated basis, is substantially dependent, as in the case of continuing contracts to sell the major part of the products or services of the Parent and its Subsidiaries, on a consolidated basis, or to purchase the major part of the requirements of goods, services or raw materials of the Parent and its Subsidiaries, on a consolidated basis, or any franchise or license or other agreement to use a patent, formula, trade secret, process or trade name upon which the business of the Parent and its Subsidiaries, on a consolidated basis, depends to a material extent, (ii) is a contract calling for the acquisition or sale of any property, plant or equipment for a consideration exceeding fifteen percent (15%) of the fixed assets of the Parent and its Subsidiaries, on a consolidated basis, (iii) is a material lease under which a part of any property of the Parent or any of its Subsidiaries which is described in any filing or registration statement with the Securities and Exchange Commission is held, (iv) is a management contract or any compensatory plan, contract or arrangement, including but not limited to plans relating to options, warrants or rights, pension, retirement or deferred compensation or bonus, incentive or profit sharing in which any director or any of the named executive officers of the Parent or any of its Subsidiaries, participates, (v) is a management contract or any other compensatory plan, contract, or arrangement in which any other executive officer of the Parent or any of its Subsidiaries participates which is not immaterial in amount or significance, (vi) is a compensatory plan, contract or arrangement adopted without the approval of security holders of the Parent pursuant to which equity may be awarded, including, but not limited to, options, warrants or rights, to which any employee participates which is not immaterial in amount or significance; provided however, none of the preceding management contracts or any other compensatory plans, contracts or arrangements shall be considered a Material Business Agreement: (A) ordinary purchase and sales agency agreements, (B) agreements with managers of stores in a chain organization or similar organization, (C) contracts providing for labor or salesmen's bonuses or payments to a class of security holders of the Parent, as such, (D) any compensatory plan, contract or arrangement which pursuant to its terms is available to employees, officers or directors generally and which in operation provides for the same method of allocation of benefits between management and non-management participants, and (E) any compensatory plan, contract or arrangement if the registrant is a foreign private issuer, (vii) is a contract for Indebtedness of the Parent or any of its Subsidiaries equal to or in excess of Five Million Dollars ($5,000,000), (viii) is a Plan of the Parent or any of its Subsidiaries, or (ix) is a collective bargaining agreement of the Parent or any of its Subsidiaries.

 

 

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Material IP Rights ” shall have the meaning set forth in Section 5.11.

 

Material Recovery Event ” shall mean: (a) any casualty loss in respect of assets of a Loan Party covered by casualty insurance, (b) any compulsory transfer or taking under threat of compulsory transfer of any asset of a Loan Party by any agency, department, authority, commission, board, instrumentality or political subdivision of the United States, any state or municipal government and (c) any recovery in good funds by a Loan Party by reason of a nonappealable judgment against any other Person to the full extent thereof; provided , however that no such loss, transfer or recovery will constitute a Material Recovery Event unless the proceeds therefrom exceed One Million Dollars $1,000,000 in the aggregate for any calendar year.

 

Material Recovery Prepayment Date ” shall mean, with respect to any Material Recovery Event that results in Net Proceeds, the earlier of: (a) the date occurring ninety (90) days after the occurrence of such Material Recovery Event and (b) the date that is five Business Days after the date on which the Borrowing Agent shall have notified the Agent of the applicable  Loan Party’s determination not to acquire replacement assets useful in such Loan Party’s business (or, in the case of property loss, not to effect repairs) with all or any portion of such Net Proceeds.

 

Material Subsidiary ” shall mean, at any time, with reference to any Loan Party, any Subsidiary of such Loan Party (i) that has assets at such time comprising five percent (5%) or more of the consolidated Assets of the Parent and its Subsidiaries, or (ii) whose operations in the current fiscal year are expected to, or whose operations in the most recent fiscal year did (or would have if such person had been a Subsidiary for such entire fiscal year), represent five percent (5%) or more of the Consolidated EBITDA of the Parent and its Subsidiaries for such fiscal year.

 

Maximum Revolving Advance Amount ” shall mean One Hundred Million Dollars ($100,000,000) as such amount may be adjusted from time to time in accordance with this Agreement.

 

Mexican Security Documents ” shall mean the pledges on Inventory located in Mexico to be entered into among each Borrower, respectively, the Agent and the party acting as the respective depositary with respect to certain identified inventory, for the benefit of the Agent.

 

Mortgages ” shall mean the respective mortgages among the respective Loan Parties that own any of the Real Property, and the Agent, in substantially the same form as the corresponding mortgages used to secure the 2010 Note Collateral Agent for the benefit of the 2010 Noteholders.

 

 

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Multiemployer Plan ” shall mean a “multiemployer plan” as defined in Sections 3(37) and 4001(a)(3) of ERISA.

 

National City Bank ” shall have the meaning set forth in the preamble.

 

Net Orderly Liquidation Value ” shall mean, the orderly liquidation value (net of costs and expenses estimated to be incurred in connection with such liquidation) of the Borrowers’ Inventory that is estimated to be recoverable in an orderly liquidation of such Inventory expressed as a percentage of the net book value thereof, such percentage to be as determined from time to time by reference to the most recent Inventory appraisal completed by a qualified third-party appraisal company (approved by the Agent in its Permitted Discretion) delivered to the Agent.

 

Net Proceeds ” shall mean: (a) the cash proceeds (including cash proceeds subsequently received in respect of non-cash consideration initially received) from any sale, lease, transfer, dissolution or other disposition of assets of a Loan Party to a Person (other than collections in respect of Receivables) received by such Loan Party, including cash payments in respect of Inventory sales or leases (other than sales or leases of Inventory in the ordinary course of business), payments in respect of other dispositions of Collateral and any other assets or property of any Loan Party (net of (x) selling expenses including any reasonable broker’s fees or commissions, costs of discontinuing operations associated with such assets and sales, transfer and similar taxes and (y) the repayment of any Indebtedness secured by a purchase money Lien on such assets that is permitted under this Agreement), (b) the cash proceeds of any tax refund, (c) the cash proceeds from the issuance or sale of equity securities or debt securities of a Loan Party pursuant to any public offering or private placement, net of transaction costs (in each case, net of customary fees, costs and expenses including underwriters’ or placement agents’ discounts and commissions and transfer and similar taxes and legal and accounting fees and expenses) and (d) the cash proceeds from any Material Recovery Event.

 

New Bolton ” shall mean Bolton Conductive Systems, LLC, a Michigan limited liability company.

 

New Bolton Acquisition ” shall mean the transaction consummated on the  New Bolton Acquisition Date, whereby the Parent acquired, pursuant to the terms and conditions of the New Bolton Acquisition Documents, (i) fifty-one percent (51%) of all of the outstanding membership interest of New Bolton, and (ii) an option, exercisable on or after January 1, 2013, but not later than December 31, 2013, to acquire forty-nine percent (49%) of the outstanding membership interest of New Bolton from Bolton Conductive Systems, LLC.

 

New Bolton Acquisition Agreement ” shall mean the Asset Purchase and Contribution Agreement among the Parent, Bolton Conductive Systems, LLC, Martin Kochis, Joseph Malecke, Bolton Investments, LLC, a Michigan limited liability company, William Bolton and New Bolton, as in existence as of the New Bolton Acquisition Date.

 

New Bolton Acquisition Date ” shall mean October 13, 2009.

 

New Bolton Acquisition Documents ” shall mean the New Bolton Acquisition Agreement, and all agreements, instruments and documents executed pursuant thereto or in connection therewith, as in existence as of the New Bolton Acquisition Date.

 

 

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New Bolton Loan Documents ” shall mean that certain loan agreement, dated on or about the New Bolton Acquisition Date, between New Bolton and Comerica Bank, pursuant to which New Bolton may borrow an aggregate principal amount of up to Five Million Dollars ($5,000,000) from Comerica Bank, and any modification or amendment thereto, or any restatement or refinancing thereof, whether with Comerica Bank or another lender or lenders, and all agreements, instruments and documents executed pursuant to or in connection with any such loan agreement (as so modified amended, restated or refinanced).

 

Non-Consenting Lender ” shall have the meaning set forth in Section 15.5(h).

 

Non-Excluded Taxes ” shall have the meaning specified in Section 3.13(a).

 

Non-Increasing Revolving Lender ” shall have the meaning specified in Section 2.6(a).

 

Note ” shall mean each Revolving Note and “Notes” shall collectively mean all of the Revolving Notes.

 

Obligated Lender ” shall have the meaning set forth in Section 2.12.

 

Obligations ” shall mean the present and future loans, advances, debts, liabilities and other obligations of any Loan Party to the Agent, the Lenders and the Issuer (or any of their respective Affiliates) under this Agreement and the Other Loan Documents (whether absolute, contingent, matured or unmatured) including: (a) the outstanding principal and accrued interest (including interest accruing after a petition for relief under the federal bankruptcy laws has been filed, whether or not allowed) in respect of any Revolving Advances to any Borrower by the Lenders plus the Letter of Credit Exposure and other amounts owing by any Borrower to the Agent or the Lenders under this Agreement, the Notes or any Other Loan Document, (b) all fees owing to the Lenders or the Agent under this Agreement and the Other Loan Documents, (c) any costs and expenses reimbursable to the Lenders or the Agent pursuant to Section 15.12, (d) Other Taxes, (e) compensation and indemnification obligations under this Agreement or any Other Loan Document, (f) reimbursement obligations owing to the Issuer, (g) the Unpaid Reimbursement Obligation, (h) the Hedging Obligations owing to a Qualified Counterparty and (i) any fees or charges owing with respect to Bank Services. It is understood and agreed that any amount owing to a Person which was an Affiliate of the Agent which was the Agent at the time such hedge exposure of any Loan Party was incurred, or which was an Affiliate of the Agent which was the Agent at the time the charge for Bank Services was incurred, or which was the Issuer at the time the applicable Letter of Credit was issued, shall continue to be considered as an Obligation for all purposes hereunder and secured hereby even after such Person is no longer an Affiliate of the Agent or the Issuer, unless such Obligation has been terminated or such Person otherwise waives such Obligation.

 

Obligor ” shall mean, singularly or collectively, as the context may require, each Borrower and each Guarantor.

 

Other Loan Documents ” shall mean the Notes, the Security Questionnaires, the Letters of Credit, any Blocked Account Agreement, any Guaranty, any IP Security Agreement, the Mortgages, the Pledge Agreement, the Pledge Agreement (Brazil), the 2010 Note Intercreditor Agreement, the Mexican Security Documents, any Waiver, any Compliance Certificate, the Agent’s Fee Letter, the Post-Closing Waiver Letter, any Hedging Contract executed by any Qualified Counterparty and any other note, mortgage, deed of trust, security agreement, pledge, guaranty, insurance assignment or other lien instrument, fee letter, reimbursement agreement, environmental or other indemnity agreement, financial statement, audit report, environmental audit, notice, credit request, cash management agreement, officer’s certificate or other writing of any kind which is now or hereafter required to be delivered by or on behalf of any Loan Party to the Agent, the Issuer or any Lender (or any of their respective Affiliates) in connection with this Agreement.

 

 

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“Other Taxes” shall have the meaning set forth in Section 3.13.

 

Parent ” shall mean Stoneridge, Inc., an Ohio corporation.

 

Parent Guaranty ” shall mean that certain guaranty agreement of the Parent, in form and substance satisfactory to the Agent, to be dated as of the date of the New Bolton Loan Documents, in favor of the lender or lenders with respect to the New Bolton Loan Documents, pursuant to which the Parent guarantees the obligations of New Bolton owing to such lender or lenders pursuant to the New Bolton Loan Documents.

 

Participant ” shall have the meaning set forth in Section 15.5(d).

 

Patent Security Agreement ” shall mean a patent and patent application security agreement, executed and delivered by a Loan Party in connection with this Agreement, in form and substance satisfactory to the Agent.

 

Payment Office ” shall mean initially 1900 East Ninth Street, 34th Floor, Cleveland, Ohio 44114; thereafter, such other office of the Agent, if any, which it may designate by notice to the Borrowing Agent and to each Lender to be the Payment Office.

 

PBGC ” shall mean the Pension Benefit Guaranty Corporation.

 

“Percentage” means, as the context may require, any Lender’s Revolving Percentage.

 

Permitted Acquisition ” shall have the meaning set forth in Section 7.1(b).

 

“Permitted Acquisition Assumed Indebtedness” shall have the meaning set forth in Section 7.1(b).

 

Permitted Discretion ” shall mean, as to any Person, a determination made in good faith and in the exercise of its reasonable (from a perspective of a secured asset-based lender) business judgment.

 

 

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Permitted Encumbrances ” shall mean (a) Liens in favor of the Agent for the benefit of the Secured Creditors; (b) Liens for taxes, assessments or other governmental charges that (i) are not delinquent or (ii) which are being contested in good faith by appropriate proceedings which stay the enforcement of any Lien and with respect to which proper reserves have been taken in accordance with GAAP; provided , however that such Liens shall have no effect on the priority of the Liens in favor of the Agent  (and the existence of such Liens shall not violate Section 6.1); (c) deposits or pledges of cash to secure obligations under worker’s compensation, social security or similar laws, or under unemployment insurance or general liability or product liability insurance; (d) deposits or pledges of cash  to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, performance bonds, surety and appeal bonds and other obligations of like nature arising in the ordinary course of business; (e) mechanics’, workers’, materialmens’, warehousemens’, common carriers’, landlords’ or other like Liens arising in the ordinary course of business with respect to obligations which are not due or which are being contested in good faith by a Loan Party or its Subsidiaries; (f) Liens (including Liens in connection with capital leases) placed upon equipment and real estate assets acquired to secure a portion of the purchase price thereof; provided that (x) any such Lien shall not encumber any other property of a Loan Party or any Subsidiary thereof (other than insurance and other proceeds of such equipment and real estate) 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; (g) zoning restrictions, easements, encroachments, rights of way, restrictions, leases, licenses, restrictive covenants and other similar title exceptions affecting Real Property, none of which materially impairs the use of such Real Property or the value thereof, and none of which is violated in any material respect by existing or supporting structures or land use; (h) attachment and judgment Liens which do not constitute an Event of Default under Section 10.6; (i) any Lien existing on any property or asset prior to the acquisition thereof by the Parent or any Subsidiary of the Parent; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition, (ii) such Lien does not apply to Receivables or Inventory, (iii) such Lien does not apply to any other property or assets of the Borrower or any Subsidiary and (iv) such Lien does not (A) materially interfere with the use, occupancy and operation of any Real Property, (B) materially reduce the fair market value of such Real Property but for such Lien or (C) result in any material increase in the cost of operating, occupying or owning or leasing such Real Property; (j) Liens securing the repayment of the 2010 Notes and evidenced by the 2010 Note Collateral Documents so long as such Liens are subject to the 2010 Note Intercreditor Agreement; and (k) the Liens listed on Schedule 7.2 to this Agreement so long as the principal amount secured thereby is not hereafter increased, and no additional assets become subject to such Liens.

 

Permitted Period ” shall mean, for purposes of making any guarantee of, investment in, or loan, advance or other extension of credit to, any Foreign Subsidiary or joint venture pursuant to Sections 7.3(e), 7.4(e) and 7.5(e), or for purposes of paying any dividend or distribution pursuant to Section 7.7, or for purposes of repaying or prepaying certain Indebtedness under Section 7.17, any time at which:

 

(a)           after giving effect to any such guarantee, investment, loan, advance or other extension of credit, or any dividend or distribution, or any repayment or prepayment of Indebtedness (any of the foregoing being a “Proposed Transaction”), the aggregate outstanding Revolving Advances plus the Letter of Credit Exposure at such time is not greater than or equal to Twenty Million Dollars ($20,000,000);

 

(b)           the Borrowing Agent shall have delivered to the Agent, in form and substance satisfactory to the Agent:

 

(i)           within fifteen days of the consummation of such Proposed Transaction, a pro forma consolidated balance sheet of the Parent and its consolidated Subsidiaries (the “Transaction Pro Forma”), based on recent financial data, which shall be accurate and complete in all material respects and shall fairly present the assets, liabilities and financial condition of the Parent and its consolidated Subsidiaries in accordance with GAAP consistently applied, but taking into account such Proposed Transaction and the funding of all Advances in connection therewith, and (x) such Transaction Pro Forma shall reflect that average daily Undrawn Availability for the thirty (30) day period preceding the consummation of such Proposed Transaction would have exceeded Fifty Million Dollars ($50,000,000) on a pro forma basis (giving effect to such Proposed Transaction and all Advances made and Letters of Credit issued in connection therewith as if made or issued on the first day of such period), (y) the Transaction Projections (as hereinafter defined) shall reflect that such Undrawn Availability of not less than Fifty Million Dollars ($50,000,000) shall continue for at least thirty (30) days after the consummation of such Proposed Transaction, and (z) on a pro forma basis (giving effect to such Proposed Transaction and all Advances made and Letters of Credit issued in connection therewith as if made on the first day of such period), the Loan Parties would have been in compliance with the financial covenant set forth in Section 6.4, for a period of four fiscal quarters ended with the most recent fiscal quarter for which financial statements have been provided (or are required to have been provided) pursuant to Sections 9.7 and 9.8, respectively, as if such financial covenant were applicable notwithstanding the fact that Undrawn Availability may be in excess of Twenty Million Dollars ($20,000,000);

 

 

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(ii)          within fifteen days of the consummation of such Proposed Transaction, updated versions of the most recently delivered projections under Section 9.11 covering a period of four fiscal quarters, commencing with the fiscal quarter in which the Proposed Transaction is to be consummated and otherwise prepared in accordance with the projections required to be delivered under Section 9.11 (the “Transaction Projections”) and based upon the financial statements (I) of the Parent and its consolidated Subsidiaries for Parent’s most recently completed fiscal year and each fiscal quarter during the current fiscal year for which financial statements have been provided (or are required to have been provided) pursuant to Sections 9.7 and9.8, respectively, in relation to the date of such required delivery of the Proposed Transaction, taking into account such Proposed Transaction and (II) in the case of an investment, of such Person in which such investment is being made, for a period similar to the period described in clause (I) above.

 

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 pension benefit plan within the meaning of Section 3(2) of ERISA, maintained for employees of any Loan Party or any Subsidiary thereof or any member of the Controlled Group or any such Plan to which any Loan Party or any Subsidiary thereof or any member of the Controlled Group is required to contribute on behalf of any of its employees.

 

Pledge Agreement ” shall mean a Pledge Agreement, dated as of the Closing Date, among the Loan Parties and the Agent, in substantially the same form as the Senior Secured Notes Pledge and Security Agreement used to secure the 2010 Note Collateral Agent for the benefit of the 2010 Noteholders.

 

Pledge Agreement (Brazil) ” shall mean a Pledge Agreement, dated as of the Closing Date, among Parent, Alphabet do Brazil Ltda and the Agent, in substantially the same form as the pledge agreement used to secure the 2010 Note Collateral Agent for the benefit of the 2010 Noteholders.

 

PNC Bank ” shall have the meaning set forth in the Preamble.

 

Post-Closing Waiver Letter ” shall mean the Post-Closing Waiver Letter, dated as of the Closing Date, among the Loan Parties and the Agent.

 

Projections ” shall have the meaning set forth in Section 5.6(a).

 

Proposed Acquisition ” shall have the meaning set forth in Section 7.1(b) hereof.

 

 

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Qualified Counterparty ” shall mean the Agent, any Affiliate of the Agent and any Lender (or a Person who was a lender at the time of execution and delivery of a Hedging Contract with a Loan Party) who has entered into a Hedging Contract with a Loan Party.

 

Real Property ” shall mean all real property, both owned and leased, of any Loan Party.

 

Receivable ” shall mean an Account.

 

Register ” shall have the meaning set forth in Section 15.5(c).

 

Reportable Event ” shall mean a reportable event described in Section 4043(b) of ERISA or the regulations promulgated thereunder.

 

Required Lenders ” shall mean, at any time, (x) if there are more than two Lenders, Lenders (excluding, for purposes of this definition, Lenders then constituting “Defaulting Lenders” under Section 2.11) holding greater than fifty percent (50%) of the aggregate amount of the Revolving Commitments of all of the Lenders at such time; provided, however , that, if all of the Revolving Commitments are terminated pursuant to the terms hereof, then, the term “Required Lenders” means Lenders (excluding, for purposes of this definition, any Defaulting Lenders) having greater than fifty percent (50%) of the aggregate principal amount of the Advances of all of the Lenders outstanding at such time, plus the Letter of Credit Exposure at such time (excluding, for purposes of this clause (x), the outstanding Revolving Commitments and the outstanding amount of Advances and Letter of Credit Exposure of any such Defaulting Lender); and (y) if there are no more than two (2) Lenders, all Lenders (excluding, for purposes of this clause (y), any Defaulting Lenders).

 

Revolving Advance Request ” shall have the meaning set forth in Section 2.2(a).

 

Revolving Advances ” shall mean each of the Advances made pursuant to Section 2.1.

 

Revolving Borrowing ” shall mean a Borrowing comprised of Revolving Advances which are made, converted or continued by the Lenders on a single date, and, in the case of Libor Rate Loans, which are in a single currency and as to which a single Interest Period is in effect.

 

Revolving Commitment ” shall mean, with respect to any Lender, (a) the commitment of such Lender to make Revolving Advances in an aggregate amount not to exceed the Dollar amount set forth below such Lender’s name on such Lender’s signature page hereto as such Lender’s Revolving Commitment, as same may be adjusted upon any assignment by a Lender pursuant to Section 15.5(b) or as may be otherwise adjusted from time to time in accordance with this Agreement or (b) the Dollar amount set forth in any Assignment and Assumption to which such Lender is a party as such Lender’s Revolving Commitment.

 

Revolving Note ” or “ Revolving Notes ” shall mean, singularly or collectively, as the context may require, the promissory notes referred to in Section 2.2(c).

 

“Revolving Percentage” shall mean, as to any Lender at any time, the percentage that such Lender’s Revolving Commitment then constitutes of the total Revolving Commitments (or, at any time after the Revolving Commitments shall have expired or terminated, the percentage that the aggregate principal amount of such Lender’s Revolving Advances outstanding at such time constitutes of the aggregate principal amount of the Revolving Advances of all of the Lenders outstanding at such time).

 

 

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RCRA ” shall mean the Resource Conservation and Recovery Act of 1976, as amended from time to time.

 

Sarasota Property ” shall mean the Real Property owned by one of the Borrowers in fee simple and located in Sarasota, Florida at 26 th Ct. F, Sarasota, FL 34243.

 

Secured Creditor ” or “Secured Creditors” shall have the meanings set forth in Section 4.1.

 

Securities Account Control Agreement ” shall mean an agreement in form and substance satisfactory to the Agent, executed by the Borrowing Agent and the Agent and acknowledged and agreed to by the relevant Approved Securities Intermediary.

 

Security Questionnaire ” shall mean, with respect to each Loan Party, the completed Security Questionnaire provided by such Loan Party to the Agent.

 

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.

 

Settlement Week ” shall mean the time period commencing with the opening of business on a Tuesday and ending on the end of business the following Tuesday.

 

Specified Fixed Assets ” shall mean and include with respect to any Person, such Person’s Real Property, all Investment Property and Security Entitlements consisting of any equity interests in any Subsidiaries or joint ventures, and all Equipment and Fixtures.

 

Specified Fixed Asset Collateral ” shall mean, with respect to any Loan Party, such Loan Party’s:

 

(a)           Specified Fixed Assets;

 

(b)           policies and certificates of insurance covering Specified Fixed Assets;

 

(c)           accessions to, substitutions for, and all replacements, Products and Proceeds of the Specified Fixed Assets including proceeds of insurance policies insuring such Specified Fixed Assets  and proceeds of any insurance, indemnity, warranty or guaranty, all to the extent relating to or arising from any of the Specified Fixed Assets; and

 

(d)           books, records, and other property (including credit files, programs, printouts, computer software (owned by such Person or in which it has an interest), and disks, magnetic tape and other magnetic media, and other materials and records) pertaining to any such above-referenced property.

 

Stated Amount ” shall mean, with respect to each Letter of Credit, the maximum available to be drawn thereunder (regardless of whether any conditions or other requirements for drawing could then be met).

 

“StuckyNet System” shall mean the Agent’s StuckyNet-Link internet-based communication system.

 

 

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Subsidiary ” shall mean, in respect of any Person that is not a natural Person, a corporation or other business entity the shares constituting a majority of the outstanding capital stock (or other form of ownership) or constituting a majority of the voting power in any election of directors (or shares constituting both majorities) of which are (or upon the exercise of any outstanding warrants, options or other rights would be) owned directly or indirectly at the time in question by such Person or another subsidiary of such Person or any combination of the foregoing.

 

“Subchapter S” shall mean subchapter S of the Code.

 

Synthetic Lease Obligation ” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

 

Termination Event ” shall mean: (i) a Reportable Event with respect to any Plan or Multiemployer Plan; (ii) the withdrawal of any Loan Party or any Subsidiary thereof or any member of the Controlled Group from a 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 could reasonably be expected to 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 could reasonably be expected to 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 Loan Party, any Subsidiary thereof or any member of the Controlled Group from a Multiemployer Plan.

 

Toxic Substance ” shall mean and include any material present on the Real Property 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.

 

Trademark Security Agreement ” shall mean a trademark security agreement, executed and delivered by a Loan Party in connection with this Agreement, in form and substance satisfactory to the Agent.

 

“Type” shall mean an Advance consisting of Libor Rate Loans made in Dollars, an Advance consisting of Libor Rate Loans made in a single Alternative Currency, or an Advance consisting of Alternate Base Rate Loans, as applicable.

 

UCP ” shall have the meaning set forth in Section 2.9(d).

 

“Undrawn Availability ” shall mean, as of any date of determination, an amount equal to (a) the lesser of (i) the Formula Amount at such time and (ii) the sum of the Maximum Revolving Advance Amount less the Letter of Credit Exposure at such time, minus (b) the sum of (i) the outstanding amount of Revolving Advances at such time, (ii) all amounts at such time due and owing to any Loan Party’s trade creditors which are outstanding ninety (90) days or more beyond the due date (without duplication with respect to any such amount deducted from the Formula Amount), and (iii) fees and expenses for which any Loan Party is liable at such time but which have not been paid or charged to the Loan Account.

 

 

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“Uniform Commercial Code” shall mean the Uniform Commercial Code or other similar law of the State of Ohio as in effect on the date of this Agreement and as amended from time to time.

 

Unpaid Reimbursement Obligation ” shall have the meaning set forth in Section 2.9(g).

 

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.

 

Waivers ” shall mean, collectively, any and all landlord’s waivers, warehouseman’s waivers, consignee waivers, creditor’s waivers, mortgagee waivers and processing facility and similar bailee’s waivers, executed and delivered in connection with this Agreement, in form and substance satisfactory to the Agent.

 

Wholly-Owned Subsidiary ” shall mean each Subsidiary of the Parent at least ninety-nine percent (99%) of whose capital stock, equity interests and partnership interests, other than director’s qualifying shares or similar interests, are owned directly or indirectly by the Parent.

 

Withholding Certificate ” shall mean 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) or (3) of the Income Tax Regulations; a statement described in Section 1.871-14(c)(2)(v) of the Income Tax Regulations; or any other certificates under the Code or Income Tax Regulations that certify or establish the status of a payee or beneficial owner as a U.S. or foreign person.

 

2002 Note Documents ” shall mean the 2002 Note Indenture, the 2002 Notes and each other document executed in connection therewith.

 

2002 Note Indenture ” shall mean that certain 2002 Note Indenture, dated as of May 1, 2002, among Parent, as Issuer, Electronics and Controls, as guarantors thereunder, and Bank of New York Mellon Trust Company, N.A., as Successor Trustee pursuant to which the 2002 Notes were issued, as the same may be from time to time amended, restated or otherwise modified in accordance with the provisions hereof, to be supplemented on or about the Closing Date by that certain First Supplemental Indenture, dated as of the Closing Date.

 

2002 Noteholder ” shall mean the holder or purchaser of any 2002 Note under the 2002 Note Indenture.

 

2002 Notes ” shall mean the Parent’s 11-1/2% Senior Notes due 2012 issued on May 1, 2002 pursuant to the 2002 Note Indenture.

 

2010 Note Collateral Agent ” shall mean The Bank of New York Mellon Trust Company, N.A., in its capacity as “Collateral Agent” with respect to the 2010 Noteholders under the 2010 Note Documents.

 

2010 Note Collateral Documents ” shall mean the Senior Secured Notes Pledge and Security Agreement, certain mortgages or deeds of trust with respect to the Real Properties, the pledge agreement with respect to the stock issued by PST Electronica S.A., and any other collateral documents executed in connection with the 2010 Note Indenture, in each case securing the payment of the 2010 Notes.

 

 

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2010 Note Documents ” shall mean the 2010 Note Indenture, the 2010 Notes, the 2010 Note Collateral Documents, and each other document executed in connection with the foregoing.

 

2010 Note Indenture ” shall mean that certain Indenture, dated as of the Closing Date, among Parent, as “Issuer”, Electronics and Controls, as guarantors thereunder, and The Bank of New York Mellon Trust Company, N.A., as “Trustee” pursuant to which the 2010 Notes were issued, as the same may be from time to time amended, restated or otherwise modified in accordance with the provisions hereof.

 

2010 Note Intercreditor Agreement ” shall mean that certain Intercreditor Agreement, executed by each of the Borrowers, any Guarantors, The Bank of New York Mellon Trust Company, N.A., as “Trustee” for the 2010 Noteholders and as “Collateral Agent” on behalf of itself and the 2010 Noteholders, and the Agent, on behalf of the Lenders and the Issuers, as the same may be from time to time amended, restated or otherwise modified in accordance with the provisions thereof..

 

2010 Noteholder ” shall mean the holder or purchaser of any 2010 Note under the 2010 Note Indenture.

 

2010 Notes ” shall mean the Parent’s Senior Secured Notes due 2017 issued on or about the Closing Date pursuant to the 2010 Note Indenture.

 

 

1.5

  Certain Matters of Construction.

 

For the purpose of computing periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.  Unless the context otherwise requires, (a) any definition of or reference to any agreement, instrument or Other Loan Document herein shall be construed as referring to such agreement, instrument, or Other Loan Document as from time to time amended, supplemented or otherwise modified, substituted, amended and restated or replaced, (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof,” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not any particular provision hereof, (d) any reference to payment, repayment, or prepayment shall be construed as referring to payment of immediately available funds in Dollars (or the substantial equivalent thereof in an Alternative Currency), (e) any pronoun used shall be deemed to cover all genders, (f) wherever appropriate in the context, terms used herein in the singular also include the plural and vice versa, (h) all references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations, (i) the word “including” may be read to mean “including, without limitation,” as the context requires and (j) unless otherwise stated, all section references are to this Agreement.

 

 

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1.6

  Currency Equivalents.

 

For purposes of this Agreement, except as otherwise specified herein, (i) the equivalent in Dollars of any Alternative Currency shall be determined by using the quoted spot rate at which the Agent offers to exchange Dollars for such Alternative Currency at its Payment Office at 9:00 A.M. (local time at the Lending Installation) two Business Days prior to the date on which such equivalent is to be determined, and (ii) the equivalent in any Alternative Currency of Dollars shall be determined by using the quoted spot rate at which the Agent’s Lending Installation offers to exchange such Alternative Currency for Dollars at the Payment Office at 9:00 A.M. (local time at the Payment Office) two Business Days prior to the date on which such equivalent is to be determined; provided, that (A) the equivalent in Dollars of each Libor Rate Loan made in an Alternative Currency shall be, for the purposes of determining the unused portion of each Lender’s Commitment, or any or all Advances outstanding on such date, calculated or recalculated, as the case may be, on the date that the Libor Rate applicable to such Advance is established, on the last day of the Interest Period applicable thereto, and on each date that it shall be necessary (or the Agent shall elect) to determine the unused portion of each Lender’s Commitment; (B) the equivalent in Dollars of any Letter of Credit Exposure in respect of any Letter of Credit denominated in an Alternative Currency shall be determined at the time the drawing under such Letter of Credit was paid or disbursed by the applicable Issuer; (C) for purposes of determining the Maximum Revolving Advance amount, the Letter of Credit Exposure or the Undrawn Availability as contemplated by Sections 2.1(a), 2.5(c), 2.7(b), 2.9(a) and 3.2, the equivalent in Dollars of the face amount of any Letter of Credit denominated in an Alternative Currency shall be calculated (x) on the date of the issuance of the respective Letter of Credit, (y) on the first Business Day of each calendar month thereafter and (z) in any other case where the same is required or permitted to be calculated, on such other day as the Agent may, in its Permitted Discretion, consider appropriate; and (D) for purposes of calculating letter of credit fees as contemplated by Section 3.4, the equivalent in Dollars of the Stated Amount of any Letter of Credit denominated in an Alternative Currency shall be calculated on the first day of each calendar month in the quarterly period in which the respective payment is due pursuant to said sections.  Notwithstanding the foregoing, for purposes of determining the amount of the unused facility fees or the Applicable Margin payable pursuant to Sections 3.5 or 3.2 hereof, the equivalent in Dollars of any outstanding Revolving Advances which are denominated in Alternative Currency shall be determined by using the quoted spot rate at which the Agent offers to exchange Dollars for such Alternative Currency at its Payment Office at 9:00 A.M. (local time at the Payment Office) two Business Days prior to the commencement date of the applicable Interest Period for such Revolving Advances, unless the Agent, in its sole discretion, shall elect to use another day or basis for determining such equivalent in Dollars.

 

 

1.7

  Addition of Borrowers .

 

By execution of a Borrower Joinder Agreement (including a Borrower Joinder Agreement executed in connection with a Permitted Acquisition) by a signatory thereof, and upon acceptance of such Borrower Joinder Agreement by the Agent, in its sole discretion, and such signatory’s satisfaction of all conditions and completion of all deliveries specified in the Joinder Amendment (if any) and the Borrower Joinder Agreement, this Agreement shall be amended so that such signatory shall become for all purposes a party to this Agreement as if an original signatory hereto and shall be admitted as a Borrower hereunder.  This Agreement (as amended by each Joinder Amendment) shall be binding for all purposes upon such signatory Borrower as if such signatory was an original signatory hereto, and, if applicable, accommodate the consummation of the Permitted Acquisition. The Borrower Joinder Agreement shall require, among other things, (x) a supplement the Schedules provided by the Loan Parties in connection with this Agreement to reflect the new Borrower, (y) to the extent acceptable to the Agent in its sole discretion, an update of certain previously delivered Schedules to the date of the Joinder Amendment to reflect any change in the disclosures therein made, (z) the delivery of new Notes reflecting all Borrowers.

 

 

1.8

   Joinder Amendments.

 

In connection with each Borrower Joinder Agreement, each of the Loan Parties, the Agent and the Required Lenders may execute an amendment to this Agreement (each a “Joinder Amendment”), which amendment shall amend such provisions of this Agreement and the Other Loan Documents as deemed necessary by the Agent to accommodate the addition of the applicable new Person as a Borrower.  The consent and execution thereof by all Lenders (and if applicable, the Issuer) shall be required with respect to any provision of a Joinder Amendment which would otherwise require pursuant to Section 15.3 hereof unanimous consent by all Lenders (and if applicable, the Issuer).

 

 

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1.9

  Classification of New Bolton as a Non-Subsidiary.

 

Notwithstanding any provision of this Agreement to the contrary, including, without limitation, the definition of “Subsidiary” hereunder, New Bolton will not be deemed for any purpose to be, and shall not have any of the rights or obligations of, a “Subsidiary”, “Borrower”, “Guarantor”, “Loan Party” or “Obligor” hereunder unless and until the Parent owns, directly or indirectly, one hundred percent (100%) of the issued and outstanding membership or any other equity interests of New Bolton.

 

 

1.10

Time References.

 

All time references in this Agreement are to Cleveland, Ohio time.

 

II.

ADVANCES; PAYMENTS.

 

 

2.1

Revolving Advances to Borrowers.

 

(a)           Subject to the terms and conditions set forth in this Agreement, each Lender with a Revolving Commitment severally and not jointly agrees to make, until and including the Business Day immediately preceding the Facility Termination Date, Revolving Advances to the Borrowers; provided, however , that the aggregate outstanding amount of such Lender’s Revolving Advances shall not at any time exceed of the lesser of: (x) such Lender’s Revolving Percentage of an amount equal to the Maximum Revolving Advance Amount less the Letter of Credit Exposure and (y) such Lender’s Revolving Percentage of an amount equal to the sum of:

 

(i)           up to eighty-five percent (85%) multiplied by the face amount of Eligible Receivables, plus

 

(ii)          either (A) sixty-five percent multiplied by the value of Eligible Inventory valued at the lower of cost (determined on a first-in-first-out basis) or market value, or (B) in the event that the Borrowing Agent elects to have its or any other Loan Party’s Inventory appraised for the purpose of determining the value of the Inventory portion of the Formula Amount by an appraisal firm acceptable to the Agent, in its sole discretion, the lesser of either (1) seventy percent (70%) multiplied by the value of Eligible Inventory valued at the lower of cost (determined on a first-in-first-out basis) or market value, or (2) eighty-five percent (85%) of the Net Orderly Liquidation Value of Eligible Inventory; provided, however, in no event will the aggregate amount of all such Revolving Advances from all Lenders made with respect to Eligible Inventory exceed Thirty-Five Million Dollars ($35,000,000) (the “Inventory Sublimit”); provided , further , that in no event will the aggregate amount of all such Revolving Advances from all Lenders made with respect to Eligible Inventory located in Mexico exceed Five Million Dollars ($5,000,000), minus

 

(iii)         the aggregate Letter of Credit Exposure, minus

 

(iv)         such reserves as the Agent may deem proper and necessary from time to time in the exercise of its Permitted Discretion.

 

 

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The percentages set forth in this clause (a) above with respect to Eligible Inventory and Eligible Receivables shall be collectively referred to as the “Advance Rates”.  The amount derived at any time and from time to time from the sum of clauses (i) and (ii) hereinabove minus the sum of clauses (iii) and (iv) hereinabove shall be referred to as the “Formula Amount”.  Prior to the Facility Termination Date, the Borrowers may use the Revolving Advances by borrowing, prepaying and reborrowing, all in accordance with the terms and conditions hereof.

 

(b)           Subject to Section 15.3(viii), the Advance Rates and the Inventory Sublimit may be increased or decreased by the Agent at any time and from time to time, in its Permitted Discretion.  Each Borrower consents to any such increases or decreases (to the extent such increase or decrease was made in the Agent’s Permitted Discretion) and acknowledges that decreasing the Advance Rates and the Inventory Sublimit, or increasing the reserves may limit or restrict Advances requested by the Borrowing Agent.

 

(c)           Subject to the terms and conditions of this Agreement, Revolving Advances may be Alternate Base Rate Loans or Libor Rate Loans, and, in the case of Libor Rate Loans, denominated in Dollars or an Alternative Currency; provided , however , that (i) all Revolving Advances made as part of the same Borrowing shall, unless otherwise specifically provided herein, consist of Revolving Advances of the same Type and currency, and (ii) the aggregate principal amount of Revolving Advances denominated in an Alternative Currency shall not exceed at any time outstanding the Alternative Currency Sublimit.

 

 

2.2

Requests For Revolving Advances.

 

(a)           Requests for Revolving Borrowings shall be given by the Borrowing Agent to the Agent not later than 1:00 p.m: (i) on the Business Day which is the requested date of a proposed Borrowing comprised of Alternate Base Rate Loans, (ii) on the Business Day which is three (3) Business Days before the requested date of a proposed Borrowing comprised of Libor Rate Loans denominated in Dollars, and (iii) on the Business Day which is five (5) Business Days before the requested date of a proposed Borrowing comprised of Libor Rate Loans denominated in an Alternative Currency.  Each such request (a “Revolving Advance Request”) for Alternate Base Rate Loans shall be transmitted to the Agent by an Approved Electronic Communication (or if requested by the Agent, only by a request posted to the Agent’s StuckyNet System).  Each Revolving Advance Request for Libor Rate Loans shall be transmitted to the Agent by the Borrowing Agent in a written or telephonic notice (in the case of a telephonic notice, promptly confirmed in writing if requested by the Agent).  Each written Revolving Advance Request for Libor Rate Loans or written confirmation shall be substantially in the form of Exhibit C attached hereto, executed or otherwise acceptably authenticated by the Borrowing Agent and transmitted to the Agent in accordance with Section 15.8.  Each Revolving Advance Request shall be irrevocable and binding on the Borrowers and be subject to the indemnification provisions of this Agreement.  Each Revolving Advance Request shall specify the following information:

 

(i)           the date of the proposed Borrowing, which shall be a Business Day;

 

(ii)          the amount of the proposed Borrowing;

 

(iii)         whether the resulting Borrowing is to consist of Alternate Base Rate Loans or Libor Rate Loans;

 

(iv)         in the case of a proposed Borrowing of Libor Rate Loans, the duration of the initial Interest Period; and

 

(v)          in the case of a proposed Borrowing of Libor Rate Loans, whether the Libor Rate Loans are to be denominated in Dollars or an Alternative Currency.

 

 

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If any such Revolving Advance Request requests a Borrowing consisting of Libor Rate Loans but does not specify an Interest Period, then the Borrowing Agent shall be deemed to have selected an Interest Period of one (1) month’s duration.  No Libor Rate Loan shall be made available to the Borrowers during the continuance of a Default or an Event of Default other than Libor Rate Loans in an Alternative Currency having an Interest Period of one (1) month.

 

(b)           Revolving Advances shall be made as part of a Borrowing consisting of Advances made by the Lenders ratably in accordance with the Revolving Percentage of each Lender.  Revolving Advances shall be comprised of one or more Revolving Borrowings as the Borrowers may elect from time to time by delivery to the Agent by the Borrowing Agent of a Revolving Advance Request or an Interest Election Request in accordance with this Agreement.  Each Revolving Borrowing comprised of Libor Rate Loans shall be in an aggregate amount of not less than Five Hundred Thousand Dollars ($500,000) (or the substantial equivalent thereof in an Alternative Currency) or an integral multiple of One Hundred Thousand Dollars ($100,000) (or the substantial equivalent thereof in an Alternative Currency) in excess thereof.  No minimum advance amounts shall apply to Revolving Borrowings comprised of Alternate Base Rate Loans.

 

(c)           Each Lender’s Revolving Advances to the Borrowers shall be evidenced at all times by a Revolving Note substantially in the form attached hereto as Exhibit B which shall: (i) be executed and delivered by the Borrowers and payable to the order of such Lender and (ii) be in a stated principal amount equal to the Revolving Commitment of such Lender and payable for the unpaid principal amount of the Revolving Advances evidenced thereby, (iii) mature on the Facility Termination Date, (iv) bear interest as provided in this Agreement, (v) be subject to optional and mandatory prepayment as provided in this Agreement, and (vi) be entitled to the benefits of this Agreement and the Other Loan Documents.

 

(d)           The Borrowers shall be deemed to have made a request for a Revolving Borrowing (a “Deemed Credit Request”), which Deemed Credit Request shall be irrevocable upon any interest, principal, fee or other Obligation of the Borrowers (including Unpaid Reimbursement Obligations) hereunder becoming due, for (i) to the extent such Revolving Borrowing is made in Dollars, a Revolving Borrowing comprised of Alternate Base Rate Loans in an amount necessary to pay such interest, principal fee or Obligation and (ii) to the extent such Revolving Borrowing is made in an Alternative Currency, a Revolving Borrowing comprised of LIBOR Rate Loans with an Interest Period of one (1) month in an amount necessary to pay such interest, principal fee or Obligation.  Each Lender agrees that its obligation to make or participate in Revolving Advances pursuant to a Deemed Credit Request is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence of any Default or Event of Default or the failure of any condition precedent.

 

(e)           In the case of a Revolving Advance Request with respect to a proposed Revolving Borrowing comprised of Libor Rate Loans denominated in an Alternative Currency, the obligation of each Lender to make its Libor Rate Loan in Alternative Currency as part of such Revolving Borrowing is subject to the confirmation by the Agent to the Borrower Agent not later than the fourth Business Day before the requested date of such Borrowing that the requested Alternative Currency is readily and freely transferable and convertible into Dollars.

 

(f)           If the Agent has not provided the confirmation referred to in clause (e) above, the Agent shall promptly notify the Borrowing Agent and each Lender, whereupon the Borrowing Agent shall, by notice to the Agent not later than the third Business Day before the requested date of such Borrowing, withdraw the Revolving Advance Request relating to such requested Borrowing.  If the Borrowing Agent does so withdraw such Revolving Advance Request, the Borrowing requested in such Revolving Advance Request shall not occur and the Agent shall promptly so notify each Lender.  If the Borrowing Agent does not so withdraw such Revolving Advance Request, the Agent shall promptly so notify each Lender and such Revolving Advance Request shall be deemed to be a Revolving Advance Request which requests a Revolving Borrowing comprised of Libor Rate Loans in an aggregate amount in Dollars equivalent, on the date the Agent so notifies each Lender, to the amount of the originally requested Revolving Borrowing in the Alternative Currency; and in such notice by the Agent to each Lender the Agent shall state such aggregate equivalent amount of such Revolving Borrowing in Dollars and such Lender’s ratable portion of such Borrowing.

 

 

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2.3

Interest Elections; Conversions of Advances.

 

(a)          All Revolving Advances made on the Closing Date shall consist of Alternate Base Rate Loans.  After the Closing Date, and, with respect to Revolving Advances, the Borrowing Agent may elect to convert any Revolving Borrowing to a different Type or to continue any such Borrowing and, in the case of a Borrowing consisting of Libor Rate Loans, may elect Interest Periods therefor, as provided in this Section 2.3.  The Borrowing Agent may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Advances comprising such Borrowing, and the Advances comprising each such portion shall be considered a separate Borrowing.  The Borrowers shall not be entitled to have outstanding in the aggregate at one time more than nine (9) Borrowings of Revolving Advances consisting of Libor Rate Loans.  This Section 2.3 shall not apply to Revolving Advances made under Section 15.4, which may not be converted or continued.

 

(b)         To make an election pursuant to this Section 2.3, the Borrowing Agent shall notify the Agent of such election in a written or telephonic notice (in the case of a telephonic notice, promptly confirmed in writing if requested by the Agent) (each, an “Interest Election Request”) by the time that a Revolving Advance Request would be required under Section 2.2(a) if the Borrowing Agent were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election.  Each Interest Election Request shall be irrevocable and binding on the Borrowing Agent and be subject to the indemnification provisions of this Agreement.  Each Interest Election Request shall specify the following information:

 

(i)           the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

 

(ii)          the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

 

(iii)         whether the resulting Borrowing is to consist of Alternate Base Rate Loans or Libor Rate Loans;

 

(iv)         if the resulting Borrowing is to consist of Libor Rate Loans, the Interest Period to be applicable thereto after giving effect to such election.

 

If any such Interest Election Request relates to a Borrowing consisting of Libor Rate Loans denominated in either Dollars or an Alternative Currency, but does not specify an Interest Period, then the Borrowing Agent shall be deemed to have selected an Interest Period of one (1) month’s duration in Dollars or such Alternative Currency, as applicable.

 

 

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If the Borrowing Agent fails to deliver a timely Interest Election Request with respect to a Revolving Borrowing consisting of Libor Rate Loans denominated in Dollars prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to a Revolving Borrowing consisting of Alternate Base Rate Loans.  If the Borrowing Agent fails to deliver a timely Interest Election Request with respect to a Borrowing consisting of Libor Rate Loans denominated in an Alternative Currency prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be continued as a Borrowing consisting of Libor Rate Loans denominated in such Alternative Currency for an Interest Period of one (1) month’s duration.

 

 

2.4

Disbursement of Proceeds of Advances.

 

All amounts shall be made available by each of the Lenders to the Agent in Dollars or the applicable Alternative Currency and immediately available funds at the Payment Office.  The Agent shall then make all Advances available to the Borrowing Agent by disbursing such Advances from whichever office or other place the Agent may designate from time to time and, such Advances, together with any and all other Obligations of the Borrowers, shall be charged to the Loan Account on the Agent’s books.  The proceeds of each Revolving Advance requested by the Borrowing Agent under Section 2.2 or deemed to have been requested by the Borrowers under Section 2.2(d) shall, (i) with respect to requested Revolving Advances, be made available to the Borrower on the day so requested by way of credit to an operating account of the Borrowing Agent or a Borrower at PNC Bank as the Borrowing Agent may designate following notification to the Agent, in immediately available funds, and (ii) with respect to Revolving Advances deemed to have been requested by the Borrowers, be disbursed to the Agent to be applied to the outstanding Obligations giving rise to such deemed request.

 

 

2.5

Repayment of Advances.

 

(a)           The Revolving Advances shall be due and payable in full on the Facility Termination Date subject to earlier prepayment as provided in Section 2.7 and the application of payments from Account Debtors as provided in this Section. 2.5(a).  Reimbursements of drawings on Letters of Credit shall be made as provided in Section 2.9(f).  The Borrowers shall pay principal, interest, and all other amounts payable hereunder, or under any Other Loan Document, without any deduction whatsoever, including any deduction for any setoff or counterclaim.

 

(b)           Each payment (including each prepayment) by the Borrowers on account of the principal of and interest on the Advances shall be applied according to the applicable Percentage of the Lenders.  

 

(c)           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 the Agent on the date received.  In consideration of the Agent’s agreement to conditionally credit the Loan Account as of the next Business Day following the Agent’s receipt of those items of payment, each Borrower agrees that, in computing charges under this Agreement, all items of payment shall be deemed applied by the Agent on account of the Obligations one (1) Business Day after (i) the Business Day Agent receives such payments via wire transfer or electronic depository check, or (ii) in the case of payments received by Agent in any other form, the Business Day such payment constitutes good funds in the Agent’s account.  The Agent is not, however, required to credit the Loan Account for the amount of any item of payment which is unsatisfactory to Agent and Agent may charge the Loan Account for the amount of any item of payment which is returned to Agent unpaid or otherwise not collected.

 

 

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(d)           All credits (other than federal wire transfers) shall be provisional, subject to verification and final settlement.  Each Borrower agrees that any information and data reported to the Borrowers pursuant to any service which is received prior to final posting and confirmation is subject to correction and is not to be construed as final posting information.  The Agent and the Lenders shall have no liability for the content of such preliminary service related information.

 

(e)           Except as expressly provided herein, all payments (including prepayments) of principal, interest, fees and other amounts payable hereunder, or under any of the Other Loan Documents, shall be made without set-off or counterclaim to the Agent at the Payment Office not later than 11:00 a.m. on the due date in federal funds or other funds to the Agent   and in lawful money of the United States of America (in the case of Advances denominated in Dollars) or in the applicable Alternative Currency (in the case of Advances denominated in Alternative Currency) ).  The Agent shall have the right to effectuate payment on any and all Obligations due and owing hereunder by charging such amounts to the Loan Account as Revolving Advances to the Borrowers.

 

 

2.6

Increase in Revolving Commitments.

 

(a)           The Borrowing Agent may, by written notice to the Agent from time to time, request that the Revolving Commitments be increased by an amount not to exceed the Incremental Revolving Advance Amount at such time.  Upon the approval of such request by the Agent (which approval shall be in the Agent’s Permitted Discretion), the Agent shall deliver a copy thereof to each Lender with a Revolving Commitment.  Such notice shall set forth the amount of the requested increase in the aggregate Revolving Commitments (which shall be in minimum aggregate increments of $5,000,000 and a minimum aggregate amount of $10,000,000 or equal to the remaining Incremental Revolving Advance Amount) and the date on which such increase is requested to become effective (which shall be not less than ten (10) Business Days nor more than sixty (60) days after the date of such notice and which, in any event, must be on or prior to the termination of the Revolving Commitments in accordance with the terms of this Agreement), and shall offer each such Lender the opportunity to increase its Revolving Commitment by its Revolving Percentage of the proposed increased amount.  Each such Lender shall, by notice to the Borrowing Agent and the Agent given not more than ten (10) Business Days after the date of the Agent’s notice, either agree to increase its Revolving Commitment by all or a portion of the offered amount (each such Lender so agreeing being an “Increasing Revolving Lender”) or decline to increase its Revolving Commitment (and any such Lender that does not deliver such a notice within such period of ten (10) Business Days shall be deemed to have declined to increase its Revolving Commitment), each Lender so declining or being deemed to have declined being a “Non-Increasing Revolving Lender”).  In the event that, on the tenth (10th) Business Day after the day the Agent has delivered a notice pursuant to the second sentence of this paragraph, the Increasing Revolving Lenders have agreed pursuant to the preceding sentence to increase their Revolving Commitments by an aggregate amount less than the increase in the aggregate Revolving Commitments requested by the Borrowing Agent, the Borrowing Agent may arrange for one or more banks or other entities (any such bank or other entity referred to in this clause being an “Augmenting Revolving Lender”), which may include any Lender, to extend Revolving Commitments or increase their existing Revolving Commitments in an aggregate amount equal to the unsubscribed amount; provided that each Augmenting Revolving Lender, if not already a Lender with a Revolving Commitment hereunder, shall be subject to the approval of the Agent (which approval shall be in the Agent’s Permitted Discretion) and the Borrowing Agent, and each Augmenting Revolving Lender shall execute all such documentation as the Agent shall reasonably specify to evidence its Revolving Commitment and/or its status as a Lender with a Revolving Commitment hereunder.  Any increase in the aggregate Revolving Commitments may be made in an amount which is less than the increase requested by the Borrowing Agent if the Borrowing Agent is unable to arrange for, or chooses not to arrange for, Augmenting Revolving Lenders.

 

 

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(b)           Each of the parties hereto agrees that the Agent may take any and all actions as may be reasonably necessary to ensure that, after giving effect to any increase in the aggregate Revolving Commitments pursuant to this Section 2.6, the outstanding Revolving Advances (if any) are held by the Lenders with Revolving Commitments in accordance with their new Revolving Percentages.  This may be accomplished at the discretion of the Agent (w) by requiring the outstanding Revolving Advances to be prepaid with the proceeds of new Revolving Advances, (x) by causing Non-Increasing Revolving Lenders to assign portions of their outstanding Revolving Advances to Increasing Revolving Lenders and Augmenting Revolving Lenders, (y) by permitting the Revolving Advances outstanding at the time of any increase in the aggregate Revolving Commitments pursuant to this Section 2.6 to remain outstanding until the last days of the respective Interest Periods therefor, even though the Lenders would hold such Revolving Advances other than in accordance with their new Revolving Percentages, or (z) by any combination of the foregoing.  Any prepayment or assignment described in this Section 2.6(b) shall be subject to Section 3.10 hereof but otherwise without premium or penalty.

 

(c)           Notwithstanding the foregoing, no increase in the aggregate Revolving Commitments (or in the Revolving Commitment of any Lender) or addition of a new Lender shall become effective under this Section 2.6 unless, (i) on the date of such increase, the conditions set forth in Section 8.2 shall be satisfied and the Agent shall have received a certificate to that effect dated such date and executed by a responsible financial officer of the Parent, (ii) the Parent shall have provided to the Agent and the Lenders an officer’s certificate, signed by an authorized officer of the Parent, and otherwise in form and substance satisfactory to the Agent, certifying that all of the Obligations (including any increase in the aggregate Revolving Commitments) constitute and will continue to be permitted under any material agreement of the Loan Parties, and (iii) the Agent shall have received (with sufficient copies for each of the Lenders with Revolving Commitments) legal opinions, board resolutions and an officer’s certificate consistent with those delivered on the Closing Date under Sections 8.1(f), 8.1(g), 8.1(h),8.1(i), 8.1(j), 8.1(l) and 8.1(y).

 

 

2.7

Voluntary and Mandatory Prepayments; Reduction of Commitments.

 

(a)           Subject to the provisions of Section 3.10, at their option and upon three (3) Business Days’ prior written notice, the Borrowers may prepay the Advances in whole at any time or in part from time to time, without premium or penalty, but with accrued interest on the principal being prepaid to the date of such prepayment.  The Borrowing Agent shall specify the date of prepayment of Advances which are Libor Rate Loans and the amount of such prepayment.  In the event that any prepayment of a Libor Rate Loan is made on a date other than the last Business Day of the then current Interest Period with respect thereto, the Borrowers shall indemnify the Agent and the Lenders therefor in accordance with Section 3.10.

 

(b)           If, on any Business Day, the aggregate principal amount of Revolving Advances then outstanding exceeds the lesser of: (i) the Maximum Revolving Advance Amount minus the Letter of Credit Exposure or (ii) the Formula Amount, the Borrowers shall on such day prepay to the Agent an amount sufficient to eliminate such excess, which amount shall be used to prepay Revolving Advances ratably in accordance with each Lender’s Revolving Percentage.  If, on any Business Day, the aggregate outstanding principal amount of Revolving Advances denominated in Alternative Currency plus the Letter of Credit Exposure denominated in Alternative Currency exceeds the Alternative Currency Sublimit, the Borrowers shall on such day prepay to the Agent an amount sufficient to eliminate such excess, which amount shall be used to prepay Revolving Advances denominated in Alternative Currency ratably in accordance with each Lender’s Revolving Percentage .

 

 

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(c)           So long as any Revolving Advances are outstanding, the Borrowers shall pay to the Agent any Net Proceeds received by a Loan Party promptly upon receipt thereof and the Agent shall apply such Net Proceeds to the Obligations outstanding at the time of such receipt in such order as the Agent may determine; provided , however , that: (i) no such payment to the Agent of any Net Proceeds from the disposition of Specified Fixed Asset Collateral consisting of equity interests in any Subsidiaries or joint ventures or the assets of any Foreign Subsidiaries pursuant to this Section 2.7 shall be required, (ii) no such payment to the Agent of any Net Proceeds from the disposition of, or from a Material Recovery Event with respect to, Specified Fixed Asset Collateral (other than Specified Fixed Asset Collateral consisting of equity interests in any Subsidiaries or joint ventures or the assets of any Foreign Subsidiaries pursuant to this Section 2.7 shall be required so long as no Event of Default has occurred and is continuing, (iii) no such payment to the Agent of any Net Proceeds from the disposition of, or from a Material Recovery Event with respect to, Collateral pursuant to this Section 2.7 shall be required so long as no Activation Notice has been delivered to the Borrowing Agent, (v) nothing in this Section 2.7 or in the definition of “Net Proceeds” shall constitute authorization not otherwise permitted by this Agreement for any Loan Party to enter into any transaction that would generate Net Proceeds, and (iv) no prepayment pursuant to this Section 2.7 shall be required with respect to any Net Proceeds of Collateral from a Material Recovery Event while such Net Proceeds are available for reinvestment as permitted by Section 4.19.  For the avoidance of doubt, any cash proceeds from a casualty loss, compulsory transfer or non-appealable judgment not constituting Net Proceeds of Collateral from a Material Recovery Event by reason of being in an amount less than One Million Dollars ($1,000,000) from any individual event giving rise thereto, shall be applied by the Agent to principal Revolving Advances then outstanding in accordance with Section 4.14(h) only in the event that an Activation Notice has been delivered to the Borrowing Agent.  In addition, to the extent any portion of the Net Proceeds remains after the application of Net Proceeds to outstanding Revolving Advances as required under this Section 2.7(c), such remaining Net Proceeds shall be released to the Borrowing Agent.

 

(d)           Each prepayment applied to Revolving Advances pursuant to this Section 2.7 shall not constitute a permanent reduction of the Maximum Revolving Advance Amount and the amount of outstanding Revolving Advances so prepaid may be reborrowed.  Any prepayment under this Section 2.7 shall be subject to Section 3.10; provided , however , the Agent will use reasonable efforts to avoid an application of Net Proceeds which causes early prepayment of a Borrowing of Libor Rate Loans prior to the expiration of the Interest Period applicable to such Libor Rate Loans.

 

(e)           Upon three (3) Business Days’ prior written notice from the Borrowing Agent to the Agent, the Borrowers may request that the Lenders permanently reduce, in whole or in part, the aggregate Revolving Commitments, whereupon the aggregate Revolving Commitments shall be so reduced.  Each reduction in the aggregate Revolving Commitments hereunder shall be made among the Lenders ratably in accordance with their Revolving Commitments.  Each reduction shall be subject to the following:  (i) each such reduction shall be in an aggregate principal amount of not less than Five Million Dollars ($5,000,000) or a multiple of One Million Dollars ($1,000,000) in excess thereof and (ii) the Borrowers shall not be permitted to reduce the aggregate Revolving Commitments unless, concurrently with any reduction, one or more of the Borrowers shall make principal payments, ratable among the Lenders, on each Lender’s then outstanding Revolving Advances to the Borrowers in an amount which, when aggregated with such ratable payment to the Lenders by the other Borrowers, will result in the aggregate Revolving Credit Advances of the Lenders to the Borrowers outstanding after such payments, when taken together with the aggregate Letter of Credit Exposure then outstanding, not exceeding the aggregate Revolving Commitments.  On the date of each such reduction, the Borrowers shall pay to the Agent for the account of the Lenders (A) the unused facility fees referenced in Section 3.5 and interest referenced in Section 3.1, in each case accrued through the date of such reduction in respect of the aggregate Revolving Commitment of the Lenders so reduced and (B) any amounts required pursuant to the provisions of Section 3.10.  Each reduction in the Revolving Commitments hereunder, if any, shall be a permanent reduction and no amount in excess of such reduced commitment may be borrowed or reborrowed.

 

 

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2.8

Statement of Account.

 

The Agent shall maintain, in accordance with its customary procedures, a loan account (“Loan Account”) in the name of the Borrowers in which shall be recorded, among other things, the date and amount of each Advance made by the Lenders, each Letter of Credit issued by the Issuer and the date and amount of each payment in respect thereof; provided , however , the failure by the Agent to record the date and amount of any Advance or Letter of Credit shall not adversely affect the Agent or any Lender.  Each calendar month, the Agent shall send to the Borrowing Agent a statement showing the accounting for the Advances made and Letters of Credit issued, payments made or credited in respect thereof, and other transactions between the Agent and the Borrowers, during such month, and the Agent shall provide the Borrowing Agent with access to Agent’s global GIR and StuckyNet System as relating to the Borrowers.  The monthly statements shall be deemed correct and binding upon the Borrowers in the absence of manifest error and shall constitute an account stated between the Lenders and the Borrowers unless the Agent receives a written statement from the Borrowing Agent of the Borrowers’ specific exceptions thereto within thirty (30) days after such statement is received by the Borrowing Agent.  The records of the Agent with respect to the Loan Account shall be presumed correct evidence absent manifest error of the amounts of Advances, Letters of Credit and other charges thereto and of payments applicable thereto.

 

Any sums expended by the Agent or any Lender due to the Borrowers’ failure to perform or comply with its obligations under this Agreement or any Other Loan Document including payments made in connection with the Borrowers’ obligations under Sections 2.5, 3.13, 4.2, 4.4, 4.12, 4.13, 6.1 and 15.12 may be charged to the Loan Account as a Revolving Advance to the Borrowers and shall thereafter be Obligations hereunder.

 

 

2.9

Letters of Credit.

 

(a)           Subject to the terms and conditions hereof, the Issuer shall issue or cause the issuance of certain Letters of Credit on behalf of any Borrower denominated and payable in Dollars or an Alternative Currency in such form as may be approved by the Issuer and the Agent; provided , however , that the Issuer 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 cause the then outstanding Revolving Advances to exceed the lesser of (A) the Maximum Revolving Advance Amount minus the sum of the Letter of Credit Exposure or (B) the Formula Amount.  The Letter of Credit Exposure shall not exceed Ten Million Dollars ($10,000,000)) at any time.  All disbursements or payments related to Letters of Credit shall be deemed to be Alternate Base Rate Loans consisting of Revolving Advances and shall bear interest at the Alternate Base Rate, unless and until converted to Libor Rate Loans hereunder in accordance with Section 2.3. Letters of Credit that have not been drawn upon shall not bear interest.

 

(b)            Schedule 2.9 contains a description of all Existing Letters of Credit.  All such Existing Letters of Credit shall constitute a “Letter of Credit” hereunder for all purposes hereof and shall be deemed to have been issued, for purposes of Section 3.4 hereof, as of the Closing Date.  From and after the Closing Date, the terms of this Agreement shall apply to such Existing Letters of Credit, superseding any other agreement otherwise applicable to them to the extent inconsistent with the terms hereof.

 

 

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(c)           The Borrowing Agent, on behalf of any Borrower, may request the Issuer to issue or cause the issuance of a Letter of Credit by delivering to the Issuer at the Payment Office, the Issuer’s form of letter of credit application (a “Letter of Credit Application”) completed to the satisfaction of the Issuer, and such other certificates, documents and other papers and information as the Issuer may reasonably request no later than 12:00 noon at least two (2) Business Days’ prior to the date of such proposed issuance.  The Agent shall notify the Lenders of the request by the Borrowing Agent for a Letter of Credit hereunder within a reasonable time after receiving such request.

 

(d)           Each Letter of Credit shall, among other things, (i) provide for the payment of sight drafts or other forms of written demand for payment, or acceptances of, issued 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 the earlier of one (1) year from the date of issuance or the Facility Termination Date.  Each trade Letter of Credit shall be subject to the Uniform Customs and Practice for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No. 600, and any amendments or revisions thereof adhered to by the Issuer (the “UCP”).  Each standby Letter of Credit shall be subject to the International Standby Practices (1998), International Chamber of Commerce Publication 590 and any amendments or revisions thereof adhered to by the Issuer (the “ISP”) or the UCP, as determined by the Issuer.  Each Letter of Credit shall be governed, to the extent not inconsistent with the UCP or the ISP, as applicable, by the laws of the State of Ohio.

 

(e)           Effective as of the date of its issuance of a Letter of Credit, the Issuer grants to each Lender, and each Lender acquires, an undivided participation in such Letter of Credit equal to such Lender’s Revolving Percentage of such Letter of Credit’s face amount.  Each Lender acknowledges and agrees that its obligation to pay for such acquisition pursuant to this Section 2.9(e) is absolute and unconditional and shall not be affected by any event or circumstance whatsoever, including the occurrence of any Default or Event of Default hereunder or the failure of any condition precedent in this Agreement to be satisfied and each payment in satisfaction thereof shall be made without any offset, abatement, withholding or reduction whatsoever; provided , however , that the Issuer shall not be excused from liability to any Lender for any direct damages caused by the Issuer’s gross negligence or willful misconduct.

 

(f)           Whenever there is a drawing on a Letter of Credit, the Borrowers agree to pay the Agent on the date of such drawing for the account of the Issuer an amount equal to the amount of such drawing, with such payment to be made in Dollars (and in the amount which is the Dollar equivalent of any such payment or disbursement made or denominated in an Alternative Currency).  Should the Borrowers fail to reimburse the Issuer for the amount of such drawing, the Borrowers shall be deemed to have requested a Revolving Borrowing consisting of Alternate Base Rate Loans to be made by the Lenders to the Borrowers pursuant to Section 2.2 in an aggregate amount equal to the amount of such drawing (with the Agent’s having determined in the case of any payment by the Issuer made in an Alternative Currency the equivalent thereof in Dollars), without regard to any minimums and multiples for lending amounts specified hereunder.  Each Lender agrees that its obligation to make any such Revolving Advance is absolute and unconditional and shall not be affected by any circumstances whatsoever, including the occurrence and continuance of a Default or Event of Default hereunder (except for an Event of Default arising under Section 10.7 or Section 10.8), and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.  The Agent shall disburse the proceeds of such disbursement directly to the Issuer and such disbursement shall satisfy the Borrowers’ reimbursement obligation.

 

 

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(g)           In the event that the Revolving Advances requested pursuant to Section 2.2(a) cannot be made because of the occurrence and continuance of an Event of Default under Section 10.7 or Section 10.8, each Lender shall be obligated to consummate the purchase, on the date its Revolving Advance would have been made pursuant to this Section 2.9(g), of its undivided participating interest in each outstanding unpaid reimbursement obligation (the “Unpaid Reimbursement Obligation”) owing to the Issuer.  On the purchase date, each such Lender shall pay to the Agent, for the benefit of the Issuer, the purchase price for its participating interest in an amount equal to its Revolving Percentage of such Unpaid Reimbursement Obligation.  Each Lender shall comply with its obligation under this Section 2.9(g) by wire transfer of immediately available funds, in the same manner as provided in Section 2.10 with respect to Revolving Advances made by such Lender (and Section 2.10 shall apply, mutatis mutandis , to the payment obligations of the Lenders), and the Agent shall promptly pay to the Issuer the amounts so received by it from the Lenders.  After the date of such purchase, the outstanding Unpaid Reimbursement Obligation shall bear interest for the account of the Lenders for each day from and including the date of the drawing giving rise to the Unpaid Reimbursement Obligation until the earlier of: (i) the date of reimbursement by the Borrowers and (ii) the date on which such drawing is reimbursed by Revolving Advances as provided in this Section 2.9(g), in each case, at the rate per annum that would apply to Alternate Base Rate Loans.  After the date of such purchase, any payment by the Borrowers to the Agent with respect to the Unpaid Reimbursement Obligation, together with interest thereon, shall be promptly distributed by the Agent to each Lender based on its Revolving Percentage.  Any Unpaid Reimbursement Obligation shall be deemed to be a Revolving Advance for all purposes of this Agreement and the Other Loan Documents until such Unpaid Reimbursement Obligation is repaid by the Borrowers in full, together with interest thereon as herein specified.

 

(h)           In connection with the issuance of any Letter of Credit, the Borrowers shall indemnify, save and hold the Agent, each Lender and each Issuer harmless from any loss, cost, expense or liability, including payments made by the Agent, any Lender or any Issuer and expenses and reasonable attorneys’ fees incurred by the Agent, any Lender or Issuer arising out of, or in connection with, any Letter of Credit to be issued or created for any Borrower, except for any loss, cost, expense or liability resulting from gross negligence or willful misconduct of the Agent, the Issuer or any correspondent of the Issuer.  The Borrowers shall be bound by the Agent’s or any Issuer’s regulations and good faith interpretations of any Letter of Credit issued or created for the Loan Account, although this interpretation may be different from its own; and, neither the 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 the 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 the Agent’s, any Lender’s, any Issuer’s or such correspondents’ gross negligence or willful misconduct.

 

(i)           The Borrowing Agent shall authorize and direct the Issuer to name the applicable Borrower as the “Applicant” or “Account Party” of each Letter of Credit whether the issuance is for the benefit of such Borrower or any Subsidiary of such Borrower.  The Borrowing Agent shall authorize and direct the Issuer to deliver to the 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 the Agent’s instructions and agreements with respect to all matters arising in connection with the Letter of Credit and the Letter of Credit Application.

 

 

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(j)           In connection with all Letters of Credit issued by the Issuer under this Agreement, each Borrower hereby appoints the Issuer, or its designee, as its attorney, with full power and authority upon the occurrence and during the continuance of an Event of Default: (i) to sign 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 Customs Department (“Customs”) in the name of such Borrower or Issuer or Issuer’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 the name of such Borrower or Issuer or Issuer’s designee, any order, sale or transaction, obtain the necessary documents in connection therewith, and collect the proceeds thereof.  Neither Issuer nor its attorneys will be liable for any acts or omissions or for any errors of judgment or mistakes of fact or law, except for Issuer’s or its attorney’s willful misconduct or gross negligence.  This power, being coupled with an interest, is irrevocable as long as any Letters of Credit remain outstanding.

 

 

2.10

Funding of Advances by Lenders; Sharing of Payments; Settlement.

 

(a)           Each Revolving Borrowing shall be advanced according to the applicable Revolving Percentage of the Lenders.

 

(b)           Notwithstanding anything to the contrary contained in Section 2.5(b) hereof, commencing with the first Business Day following the Closing Date, Revolving Advances shall be advanced by the Agent and each payment by the Borrowers on account of Revolving Advances shall be applied first to those Revolving Advances advanced by the Agent.  On or before 1:00 p.m. on each Settlement Date commencing with the first Settlement Date following the Closing Date, the Agent and the Lenders shall make certain payments as follows: (i) if the aggregate amount of new Revolving Advances made by the Agent during the preceding Settlement Week (if any) exceeds the aggregate amount of repayments applied to outstanding Revolving Advances during such preceding Settlement Week, then each Lender shall provide the Agent with funds in an amount equal to its applicable Revolving Percentage of the difference between (x) such Revolving Advances and (y) such repayments and (ii) if the aggregate amount of repayments applied to outstanding Revolving Advances during such Settlement Week exceeds the aggregate amount of new Revolving Advances made during such Settlement Week, then the Agent shall provide each Lender with funds in an amount equal to its applicable Revolving Percentage of the difference between (x) such repayments and (y) such Revolving Advances.  Each Lender shall be entitled to earn interest applicable under this Agreement on outstanding Advances which it has funded.  On each Settlement Date, the Agent shall submit to each Lender a settlement statement of the amount of outstanding Revolving Advances at the end of the Settlement Week immediately preceding such Settlement Date which shall disclose the net amount due to or due from such Lender on such Settlement Date.   Such settlement statement of the Agent shall be presumed correct in the absence of manifest error.

 

(c)           If any 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 (a “benefited Lender”), and such greater proportionate payment or receipt of Collateral is not expressly permitted hereunder, such benefited 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 benefited 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 benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.  Each benefited Lender so purchasing a portion of another Lender’s Advances may exercise all rights of payment (including 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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(d)           Unless the 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 Percentage of the Advances available to the Agent, the Agent may (but shall not be obligated to) assume that such Lender shall make such amount available to the Agent on the next Settlement Date and, in reliance upon such assumption, make available to the Borrowers a corresponding amount.  If such amount is not made available to the Agent by such Lender by the next Settlement Date, such Lender shall pay to the Agent on demand (i) such unpaid amount plus (ii) interest calculated at the daily average Federal Funds Effective Rate (computed on the basis of a year of three hundred and sixty (360) days) during the period from such Settlement Date to the date on which such amount does become available to the Agent from the Lender in immediately available funds.  If such amount is not made available to the Agent by such Lender within three (3) Business Days after such Settlement Date, the Agent shall also be entitled on demand to repayment of such an amount from the Borrowers with interest thereon at the rate per annum equal to the rate then applicable to Revolving Advances hereunder; provided , however , that the Agent’s right to such recovery shall not prejudice or otherwise adversely affect any rights the Borrowers’ may have against such Lender.

 

 

2.11

Defaulting Lender.

 

(a)           Notwithstanding anything to the contrary contained herein, in the event any Lender (x) has failed (which failure constitutes a breach by such Lender of its obligations under this Agreement) to make available its portion of any Advance or participation purchase price obligation as required under this Agreement or (y) has notified either the Agent or the Borrowing Agent that it does not intend to make available its portion of any Advance or participation purchase price obligation as required under this Agreement (if the actual failure 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”) shall be modified to the extent provided by this Section 2.11 while such Lender Default remains in effect.  In addition, in the case of any failure described in clause (x) or any such notice to the Agent from a Lender described in clause (y), the Agent will promptly notify the Borrowing Agent of any such failure or of its receipt of any such notice from a Lender.

 

(b)           The Agent shall not be obligated to transfer to such Defaulting Lender any payments made by the Borrowers for the benefit of such Defaulting Lender until such Defaulting Lender has cured its failure.  Until the earlier of such Defaulting Lender’s cure of its failure to fund or the termination of all of the Commitments, all amounts repaid to the Agent by the Borrowers which would otherwise be required to be applied to such Defaulting Lender’s Advances or participation purchase price obligation, as the case may be, shall be advanced to the Borrowers by the Agent on behalf of such Defaulting Lender to cure, in full or in part, the failure by such Defaulting Lender to fund, but shall nevertheless be deemed to have been paid to such Defaulting Lender in satisfaction of, the Obligations to which such payment would otherwise have been applied.

 

(c)           A Defaulting Lender shall not be entitled to give instructions to the Agent or to approve, disapprove, consent to or vote on any matters relating to this Agreement and the Other Loan Documents.  All amendments, waivers and other modifications of this Agreement and the Other Loan 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 (or participation purchase price obligations) outstanding.

 

(d)           Other than as expressly set forth in this Section 2.11, the rights and obligations of a Defaulting Lender (including the obligation to indemnify the Agent) and the other parties hereto shall remain unchanged.  Nothing in this Section 2.11 shall be deemed to release any Defaulting Lender from its obligations under this Agreement and the Other Loan 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, the Agent or any Lender may have against any Defaulting Lender as a result of any default by such Defaulting Lender hereunder.  In the event a Defaulting Lender retroactively cures to the satisfaction of the 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.

 

 

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2.12

Funding by Lending Installations.

 

All or any part of the Advances or Letters of Credit that any Lender or the Issuer (the “Obligated Lender”) may be obligated to fund pursuant to this Agreement: (i) may be funded by such Obligated Lender on behalf of such Obligated Lender’s Lending Installation or (ii) may be funded on such Obligated Lender’s behalf by such Lender by and through any such Lending Installation; provided , however, that, (a) if any Lending Installation fails to fund all or any part of any such Advance  or Letter of Credit, the Obligated Lender shall be obligated to fund such Advance or Letter of Credit pursuant to the terms hereof, (b) in no event shall any such funding by or through any Lending Installation increase the costs or expenses for which the Borrowers are liable under this Agreement and (c) in no event shall any such funding on behalf of or through any such Lending Installation subject any Borrower to any taxes, assessments and governmental charges without such Obligated Lender’s being subject to the exercise by such Borrower of its rights under Section 3.13.  The funding of an Advance or Letter of Credit by a Lending Installation hereunder shall utilize the applicable commitment of the Obligated Lender to the same extent, and as if, such Advance or Letter of Credit were funded by such Obligated Lender, and for purposes of this Agreement, such Advance or Letter of Credit shall be deemed to have been made directly by such Obligated Lender.

 

 

2.13

Use of Proceeds.

 

The Borrowers shall apply the proceeds of the Revolving Advances (i) to pay fees and expenses relating to the transaction contemplated by this Agreement, (ii) to pay all amounts owing under or with respect to the Original Credit Agreement , (iii) to fund any Permitted Acquisitions and (iv) for general corporate purposes.

 

III.

INTEREST; FEES; YIELD PROTECTION.

 

 

3.1

Interest.

 

The Borrowers shall pay interest on the unpaid principal amount of each Advance from the date such Advance is made until the principal amount thereof shall have been paid in full as follows.  Interest charges shall be computed on the actual principal amount of Advances outstanding during the calendar month.

 

(a)            Alternate Base Rate Loans .  So long as no Event of Default has occurred which is continuing, Alternate Base Rate Loans shall bear interest for each day at a rate per annum equal to the Alternate Base Rate plus the Applicable Base Rate Margin which is then in effect for Revolving Borrowings comprised of Alternate Base Rate Loans.  Interest on Alternate Base Rate Loans shall be payable in arrears on the first (1st) day of each calendar month, on the date such Revolving Advances comprising any such Revolving Borrowing shall be paid in full (whether at maturity, by reason of acceleration or otherwise) and, after maturity, on demand.

 

(b)            Libor Rate Loans .  So long as no Event of Default has occurred which is continuing, Libor Rate Loans shall bear interest during each applicable Interest Period at a rate per annum equal to the Libor Rate plus the Applicable Libor Rate Margin which is then in effect and applicable to the Borrowings comprised of such Libor Rate Loans.  Interest on Libor Rate Loans shall be payable at the last day of each Interest Period (but for Libor Rate Loans with an Interest Period in excess of three (3) months, on the ninetieth (90th) day after the commencement of such Libor Rate Loan, and after each ninety (90) day interval thereafter), on the date such Revolving Advances comprising any such Revolving Borrowing shall be paid in full (whether at maturity, by reason of acceleration or otherwise) and, after maturity, on demand.

 

 

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3.2

Applicable Margins .

 

At the end of each fiscal quarter, the Agent shall determine the Undrawn Availability for such fiscal quarter based upon the average daily Undrawn Availability for each day of such fiscal quarter.  From each Incentive Pricing Effective Date until the next Incentive Pricing Effective Date, the Applicable Base Rate Margin, the Applicable Libor Rate Margin, the Applicable Unused Facility Fee Percentage and the Applicable Letter of Credit Fee Percentage shall be determined by reference to the applicable Undrawn Availability on the grid below; provided , however , that Tier   III pricing shall apply through and including November 30, 2010.

 

Tier

 

Undrawn

Availability

 

Applicable Libor

Rate Margin

 

 

Applicable

Base Rate

Margin

 

 

Applicable

Letter of

Credit Fee

Percentage

 

 

Applicable

Unused

Facility Fee

Percentage

 

I

 

< $25,000,000

 

 

1.75

%

 

 

0.25

%

 

 

1.75

%

 

 

0.375

%

II

 

> $25,000,000 but

< $50,000,000

 

 

1.50

%

 

 

0

%

 

 

1.50

%

 

 

0.375

%

III

 

> $50,000,000 but

< $70,000,000

 

 

1.25

%

 

 

0

%

 

 

1.25

%

 

 

0.375

%

IV

 

> $70,000,000

 

 

1.00

%

 

 

0

%

 

 

1.00

%

 

 

0.375

%

 

If any financial statement or certificate delivered pursuant to Article IX is shown to be inaccurate (regardless of whether this Agreement is in effect when such inaccuracy is discovered), and such inaccuracy, if corrected, would have led to the application of a higher Applicable Base Rate Margin, Applicable Libor Rate Margin, Applicable Unused Facility Fee Percentage   or Applicable Letter of Credit Fee Percentage for any period (such period, the “Applicable Period”), than the Applicable Base Rate Margin, Applicable Libor Rate Margin, Applicable Unused Facility Fee Percentage   or Applicable Letter of Credit Fee Percentage, as applicable, actually applied to such Applicable Period, then, upon the written request of the Agent, such margin or percentage shall be determined in accordance with the correct financial information for such Applicable Period and the Borrowers shall immediately pay to the Agent any accrued additional interest and fees owing as a result of such increased margin or percentage for such Applicable Period, which payment shall be applied promptly by the Agent to the Lenders in accordance with the terms of this Agreement.  This paragraph shall not limit the rights of the Agent or the Lenders with respect to Article XI or to charge the Default Rate pursuant to Section 3.3.

 

 

3.3

Default Rate.

 

Upon the occurrence of an Event of Default which is continuing, upon the election of the Agent, or upon the request of the Required Lenders, the Obligations (including with respect to all Letter of Credit Fees) shall bear interest at a rate per annum equal at all times to two percent (2%) in excess of the otherwise applicable interest rate payable pursuant to the terms of this Agreement (the “Default Rate”).

 

 

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3.4

Letter of Credit Fees.

 

The Borrowers shall pay (x) to the Agent, for the ratable benefit of the Lenders, fees for each Letter of Credit for the period commencing with the date of issuance of such Letter of Credit and ending on the date of expiration or termination thereof, equal to the average daily face amount of each outstanding Letter of Credit multiplied by the Applicable Letter of Credit Fee Percentage, 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 calendar month and on the Facility Termination Date, and (y) 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 in connection with the opening, amendment or renewal of any such Letter of Credit and any acceptances created thereunder (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.  

 

 

3.5

Unused Facility Fees.

 

If, during any calendar month, the sum of (i) the average daily unpaid balance of the Revolving Advances for each day of such calendar month, plus (ii) the average daily outstanding face amount of Letters of Credit for each day of such calendar month, does not equal the Maximum Revolving Advance Amount, then the Borrowers shall pay to the Agent for the ratable benefit of the Lenders a fee at a rate per annum equal to (x) the Applicable Unused Facility Fee Percentage multiplied by (y) the amount by which the Maximum Revolving Advance Amount exceeds such aggregate average daily sum.  Such fee shall be payable to the Agent in arrears on the first (1st) day of each calendar month after the date hereof until the Facility Termination Date and on the Facility Termination Date.

 

 

3.6

Computation of Interest and Fees .

 

Interest and fees hereunder shall be computed on the basis of a year of three hundred and sixty-five (365) days and for the actual number of days 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 rate otherwise applicable under this Agreement during such extension.

 

 

3.7

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 the Borrowers, and if the then remaining excess amount is greater than the previously unpaid principal balance, the Lenders shall promptly refund such excess amount to the Borrowers and the provisions hereof shall be deemed amended to provide for such permissible rate.

 

 

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3.8

Increased Costs .

 

In the event that the Agent or any Lender shall determine that (a) the introduction after the effective date of this Agreement of any law, treaty, rule or regulation or any change therein after the effective date of this Agreement, (b) any change after the effective date of this Agreement in the interpretation or administration of any law, treaty, rule or regulation by any central bank or other Governmental Body or (c) the compliance by the Agent or such Lender with any guideline, request or directive from any central bank or other Governmental Body (whether or not having the force of law) promulgated or issued after the effective date of this Agreement (for purposes of this Section 3.8, the terms “Agent” and “Lender” shall include any corporation or bank controlling the Agent or such Lender and the office or branch where the Agent or such Lender makes or maintains any Libor Rate Loans), shall:

 

(a)           subject the Agent or such Lender to any tax of any kind whatsoever with respect to this Agreement or any Other Loan Document or change the basis of taxation of payments to the Agent or such Lender of principal, fees, interest or any other amount payable hereunder or under any Other Loan Documents (except for changes in the rate of tax on the overall net income of the Agent or such 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 the Agent or such Lender, including pursuant to Regulation D of the Board of Governors of the Federal Reserve System; or

 

(c)           impose on the Agent or such Lender or the London interbank offered rate market any other condition with respect to this Agreement or any Other Loan Document;

 

and the result of any of the foregoing is to increase the cost to the Agent or such Lender of making, renewing or maintaining its Revolving Advances hereunder by an amount that the 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 Revolving Advances by an amount that the Agent or such Lender deems to be material, then, in any case, the Borrowers shall promptly pay the Agent or such Lender, upon its demand, such additional amount as will compensate the Agent or such Lender for such additional cost or such reduction, as the case may be; provided , however , the foregoing shall not apply to increased costs which are reflected in the Eurocurrency Reserve Percentage.  The Agent or such Lender, upon determining in good faith that any such additional amounts will be payable pursuant to this Section 3.8, will give prompt written notice thereof to the Borrowing Agent, which notice shall set forth, in reasonable detail, the basis of the calculation of such additional amounts, which basis must be reasonable and which calculation shall be presumed correct absent manifest error, although the failure to give any such notice shall not release or diminish any of the Borrowers’ obligations to pay additional amounts pursuant to this Section 3.8 upon the subsequent receipt of such notice.  

 

 

3.9

Non-Ascertainable Libor Rate; Unavailable Deposits.

 

In the event that the Agent shall have determined that:

 

(a)           reasonable means do not exist for ascertaining the Libor Rate applicable for any Interest Period; or

 

(b)           Dollar deposits in the relevant amount and for the relevant maturity are not available in the London interbank offered rate market, with respect to an outstanding Libor Rate Loan, a proposed Libor Rate Loan, or a proposed conversion of an Alternate Base Rate Loan into a Libor Rate Loan,

 

 

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then the Agent shall give the Borrowing Agent prompt written, telephonic or telegraphic notice of such determination.  If such notice is given, (i) any such requested Libor Rate Loan shall be made as an Alternate Base Rate Loan, unless the Borrowing Agent shall notify the Agent, no later than 10:00 a.m. 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 Libor Rate Loan, (ii) any Alternate Base Rate Loan or Libor Rate Loan which was to have been converted to an affected type of Libor Rate Loan shall be continued as or converted into an Alternate Base Rate Loan, or, if the Borrowing Agent shall notify the Agent, no later than 10:00 a.m. two (2) Business Days prior to the proposed conversion, shall be maintained as an unaffected type of Libor Rate Loan, and (iii) any outstanding affected Libor Rate Loans shall be converted into an Alternate Base Rate Loan, or, if the Borrowing Agent shall notify the Agent, no later than 10:00 a.m. two (2) Business Days prior to the last Business Day of the then current Interest Period applicable to such affected Libor Rate Loan, shall be converted into an unaffected type of Libor Rate Loan, on the last Business Day of the then current Interest Period for such affected Libor Rate Loans.  Until such notice has been withdrawn, the Lenders shall have no obligation to make an affected type of Libor Rate Loan or maintain outstanding affected Libor Rate Loans and the Borrowers shall not have the right to convert an Alternate Base Rate Loan or an unaffected type of Libor Rate Loan into an affected type of Libor Rate Loan.

 

 

3.10

Libor Rate Loan Losses.

 

The Borrowers shall indemnify the Agent and the Lenders and hold the Agent and the Lenders harmless from and against any and all losses or expenses that the Agent and the Lenders may sustain or incur as a consequence of any prepayment, conversion of, or any default by the Borrowers in the payment of the principal of or interest on any Libor Rate Loan or failure by the Borrowers to complete a Borrowing of, a prepayment of or conversion of or to a Libor Rate Loan after notice thereof has been given, including any interest payable by the Agent or the Lenders to lenders of funds obtained by it in order to make or maintain its Libor Rate Loans hereunder.  The Agent or such Lender, upon determining in good faith that any such additional amounts will be payable pursuant to this Section 3.10, will give prompt written notice thereof to the Borrowing Agent, which notice shall set forth, in reasonable detail, the basis of the calculation of such additional amounts, which basis must be reasonable and which calculation shall be presumed correct absent manifest error, although the failure to give any such notice shall not release or diminish any of the Borrowers’ obligations to pay additional amounts pursuant to this Section 3.10 upon the subsequent receipt of such notice.

 

 

3.11

Capital Adequacy .

 

In the event that the Agent or any Lender shall have determined that (a) the introduction after the effective date of this Agreement of any law, treaty, rule or regulation or any change therein after the effective date of this Agreement, (b) any change after the effective date of this Agreement in the interpretation or administration of any law, treaty, rule or regulation by any central bank or other Governmental Body or (c) the compliance by any Lender or the Issuer with any guideline, request or directive from any central bank or other Governmental Body (whether or not having the force of law) promulgated or issued after the effective date of this Agreement (for purposes of this Section 3.11, the terms “Agent” and “Lender” shall include any corporation or bank controlling the Agent or any Lender and the office or branch where any such Lender makes or maintains any Libor Rate Loans), has or would have the effect of reducing the rate of return on the Agent or any Lender’s capital as a consequence of its obligations hereunder to a level below that which the Agent or such Lender could have achieved but for such adoption, change or compliance (taking into consideration the Agent’s and each Lender’s policies with respect to capital adequacy) by an amount deemed by the Agent or any Lender to be material, then, from time to time, the Borrowers shall pay upon demand to the Agent or such Lender such additional amount or amounts as will compensate the Agent or such Lender for such reduction.  In determining such amount or amounts, the Agent or such Lender may use any reasonable averaging or attribution methods.  The protection of this Section 3.11 shall be available to the Agent and each Lender regardless of any possible contention of invalidity or inapplicability with respect to the applicable law, regulation or condition.  The Agent or such Lender, upon determining in good faith that any such additional amounts will be payable pursuant to this Section 3.11, will give prompt written notice thereof to the Borrowing Agent, which notice shall set forth, in reasonable detail, the basis of the calculation of such additional amounts, which basis must be reasonable and which calculation shall be presumed correct absent manifest error, although the failure to give any such notice shall not release or diminish any of the Borrowers’ obligations to pay additional amounts pursuant to this Section 3.11 upon the subsequent receipt of such notice.

 

 

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3.12

Illegality.

 

Notwithstanding any other provision hereof, if any applicable law, treaty, regulation or directive adopted after the effective date of this Agreement, or any change therein or in the interpretation or application thereof after the effective date of this Agreement, shall make it unlawful for the Agent or any Lender (for purposes of this Section 3.12, the terms “Agent” and “Lender” shall include any corporation or bank controlling the Agent or such Lender or the office or branch where any such Lender or makes or maintains any Libor Rate Loans) to make or maintain its Libor Rate Loans, the obligation of the Lenders to make Libor Rate Loans hereunder shall forthwith be cancelled and the Borrowers shall, if any affected Libor Rate Loans are then outstanding, promptly upon request from the Agent, either pay all such affected Libor Rate Loans or convert such affected Libor Rate Loans into loans of another Type.  If any such payment or conversion of any Libor Rate Loan is made on a day that is not the last day of the Interest Period applicable to such Libor Rate Loan, the Borrowers shall pay the Agent, upon the Agent’s request, such amount or amounts as may be necessary to compensate the Lenders for any loss or expense sustained or incurred by the Lenders in respect of such Libor Rate Loan as a result of such payment or conversion, including any interest or other amounts payable by the Lenders to lenders of funds obtained by the Lenders in order to make or maintain such Libor Rate Loan.  The Agent or such Lender, upon determining in good faith that any such additional amounts will be payable pursuant to this Section 3.12, will give prompt written notice thereof to the Borrowing Agent, which notice shall set forth, in reasonable detail, the basis of the calculation of such additional amounts, which basis must be reasonable and which calculation shall be presumed correct absent manifest error, although the failure to give any such notice shall not release or diminish any of the Borrowers’ obligations to pay additional amounts pursuant to this Section 3.12 upon the subsequent receipt of such notice.

 

 

3.13

Taxes ; Withholding ; Tax Indemnification .

 

(a)           All payments made by the Loan Parties under this Agreement and the Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future taxes, levies, imposts, charges, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Body, excluding  (i) taxes imposed on or measured by the overall net income (however denominated) of, and franchise taxes imposed on (in lieu of net income taxes) any of the Agent, Issuer or the Lenders by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Installation is located, (ii) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which any Loan Party is located and (iii) in the case of a Foreign Lender (other than an assignee pursuant to a request by any Borrower under Section 15.5(g)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new lending office) or is attributable to such Foreign Lender’s failure or inability (other than as a result of a change in law) to comply with Section 3.13(c), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from such Loan Party with respect to such withholding tax pursuant to this Section 3.13(a) (all such non-excluded taxes, levies, imposts, charges, deductions and withholdings, the “Non-Excluded Taxes”).  In addition, the Loan Parties agree to pay to the relevant Governmental Body in accordance with applicable law any current or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any Other Loan Document (“Other Taxes”).

 

 

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(b)           If any Non-Excluded Taxes or Other Taxes are required by law to be withheld from any amounts payable to the Lenders or the Issuer hereunder or under the Notes, the amounts so payable to such Person shall be increased to the extent necessary to yield to such Person a net amount equal to interest or any such other amounts that would have been paid without such withholdings, at the rates or in the amounts specified in this Agreement and the Notes.  Whenever any Non-Excluded Taxes or Other Taxes are payable by the Loan Parties, the Borrowing Agent shall send to the Agent a certified copy of any original official receipt received by any Loan Party showing payment thereof or, if such receipts are not obtainable, other evidence of such payments by such Loan Party reasonably satisfactory to the Lenders, the Issuer or the Agent, as applicable.  The Loan Parties shall indemnify the Agent, the Lenders and the Issuer for the full amount of Non-Excluded Taxes and Other Taxes that are paid by such indemnified Person (including penalties, interest and expenses arising with respect thereto) whether or not such Non-Excluded Taxes or Other Taxes were correctly or legally imposed or asserted by any Governmental Body.

 

(c)           Each Lender, the Issuer or assignee or participant of a Lender or the Issuer that is a Foreign Lender (and, upon the written request of the Agent, each other Lender, the Issuer or assignee or participant of a Lender or the Issuer) agrees that it will deliver to each of the Borrowing Agent and the Agent two (2) duly completed appropriate valid Withholding Certificates certifying its status as a U.S. or foreign person and, if appropriate, making a claim of complete exemption from U.S. withholding tax on the basis of an income tax treaty or an exemption provided by the Code.  Each Lender or the Issuer, assignee or participant required to deliver to the Borrowing Agent and the Agent Withholding Certificates shall deliver such valid Withholding Certificates as follows: (A) each Lender or the Issuer which is a party hereto on the Closing Date shall deliver such valid Withholding Certificate not more than five (5) Business Days after it enters into this Agreement; (B) each assignee or participant shall deliver such valid Withholding Certificates at least five (5) Business Days before the effective date of such assignment or participation (unless the Agent in its sole discretion shall permit such assignee or participant to deliver such valid Withholding Certificates less than five (5) Business Days before such date in which case it shall be due on the date specified by the Agent).  Each Lender, the Issuer, assignee or participant which so delivers Withholding Certificates further undertakes to deliver to each of the Borrowing Agent and the 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 the Borrowing Agent or the Agent.

 

(d)           Without prejudice to the survival of any other agreement of the Borrowers hereunder, the agreement and liabilities of the Borrowers contained in this Section 3.13 shall survive the payment in full of the Obligations.

 

 

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IV.

COLLATERAL: GENERAL TERMS .

 

 

4.1

Security Interest in the Collateral .

 

To secure the prompt payment and performance of the Obligations, each Obligor hereby grants to the Agent, for its benefit and the ratable benefit of each Lender and the Issuer (and, in each case, their Subsidiaries and Affiliates to which Obligations are owed) (the “Secured Creditors”, and each individually, a “Secured Creditor”), a continuing security interest in and a pledge of all of the Collateral.  In addition, each Obligor shall promptly provide the Agent with written notice of all Commercial Tort Claims, such notice to contain the case title together with the applicable court and a brief description of the claim(s).  Upon delivery of each such notice, such Obligor shall be deemed to hereby grant to the Agent a security interest and lien in and to such Commercial Tort Claims and all proceeds thereof.

 

To further secure such prompt payment and performance of the Obligations, each Loan Party shall also assign, pledge and grant to the Agent, for the ratable benefit of the Secured Creditors, a mortgage on each parcel of owned Real Property in substantially the same form as the corresponding mortgages used to secure the 2010 Note Collateral Agent for the benefit of the 2010 Noteholders; provided , however , no Borrower shall be required to deliver a mortgage with respect to the Sarasota Property unless such Sarasota Property is not sold to a third party prior to April 1, 2011.

 

 

4.2

Perfection of Security Interest .

 

Each Obligor shall take all action that may be necessary or desirable, or that the Agent may request, so as at all times to maintain the validity, perfection, enforceability and priority of the Agent’s security interest in the Collateral or to enable the Agent to protect, exercise or enforce its rights hereunder and in the Collateral, including (i) immediately discharging all Liens other than Permitted Encumbrances, (ii) using commercially reasonable efforts to obtain applicable Waivers, as the Agent may request, (iii) delivering to the Agent, endorsed or accompanied by such instruments of assignment as the Agent may specify, and stamping or marking, in such manner as the Agent may specify, any and all Chattel Paper, Instruments, Letters of Credit and advices thereof and Documents evidencing or forming a part of the Collateral, (iv) entering into lockbox, warehousing and other custodial arrangements satisfactory to the Agent as and to the extent required hereunder, and (v) executing and delivering control agreements, instruments of pledge, mortgages, notices, assignments and lockbox arrangements, in each case in form and substance satisfactory to the Agent, relating to the creation, validity, perfection, maintenance or continuation of the Agent’s security interest in Collateral under the Uniform Commercial Code or other applicable law.  By its signature hereto, each Obligor hereby authorizes the Agent to file against such Obligor one or more financing, continuation, or amendment statements pursuant to the Uniform Commercial Code to perfect Liens in the Collateral securing Obligations arising hereunder in form and substance satisfactory to the Agent (which may describe the Collateral with such words as “all assets” or other words of similar effect so long as the Specified Fixed Asset Collateral is stated to be specifically excluded).  All charges, expenses and fees the Agent may incur in doing any of the foregoing, and any local taxes relating thereto, shall be charged to the Loan Account as a Revolving Advance of an Alternate Base Rate Loan and added to the Obligations, or, at the Agent’s option, shall be paid to the Agent for the ratable benefit of the Secured Creditors immediately upon demand.  Each Obligor shall mark its respective books and records as may be necessary or appropriate to evidence, protect and perfect the Agent’s security interest and shall cause its financial statements to reflect such security interest.

 

 

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4.3

  Disposition of Collateral .

 

Each Obligor will safeguard and protect all Collateral and shall make no disposition thereof whether by sale, lease or except as may be otherwise permitted under this Agreement.

 

 

4.4

  Preservation of Collateral .

 

Following the occurrence and during the continuation of an Event of Default, in addition to the rights and remedies set forth in Section 11.1, the Agent may at any time take such steps as the Agent deems necessary to protect the Agent’s interest in and to preserve the Collateral, including: (a) the hiring of such security guards or the placing of other security protection measures as the Agent may deem appropriate and the employing and maintaining at any Obligor’s premises a custodian who shall have full authority to do all acts necessary to protect the Agent’s interests in the Collateral, (b) leasing warehouse facilities to which the Agent may move all or part of the Collateral, and (c) using any of each Obligor’s owned or leased lifts, hoists, trucks and other facilities or equipment for handling or removing the Collateral.  The Agent shall have, and is hereby granted, a right of ingress and egress to the places where the Collateral is located, and may proceed over and through any of each Obligor’s owned or leased property.  Each Obligor shall cooperate fully with all of the Agent’s efforts to preserve the Collateral as permitted in the foregoing sentence and will take such actions to preserve the Collateral as the Agent may direct.  All of the Agent’s expenses of preserving the Collateral in accordance with the foregoing, including any expenses relating to the bonding of a custodian, shall be charged to the Loan Account as a Revolving Advance of an Alternate Base Rate Loan and added to the Obligations.

 

 

4.5

  Ownership of Collateral .

 

With respect to the Collateral, at the time the Collateral becomes subject to the Agent’s security interest: (a) each Obligor shall be the sole owner of and fully authorized and able to sell, transfer, pledge or grant a perfected security interest in each and every item of its respective Collateral to the Agent; and, except for Permitted Encumbrances, the Collateral shall be free and clear of all Liens and encumbrances whatsoever; (b) each document and agreement executed by each Obligor or delivered to the Agent or any Lender in connection with this Agreement shall be true and correct in all material respects; (c) all signatures and endorsements of each Obligor that appear on such documents and agreements shall be genuine and such Obligor shall have full capacity to execute same; and (d) each Obligor’s Inventory shall be located as set forth on Schedule 5.23 and shall not be removed from such location(s) without the prior written consent of the Agent, except (i) with respect to the sale of Inventory in the ordinary course of business, (ii) with respect to Inventory in transit from one location identified on Schedule 5.23 to another location identified on Schedule 5.23 and (iii) such other location appearing on any subsequent amendments to Schedule 5.23 as consented to by the Agent pursuant to Section 15.3.

 

 

4.6

  Defense of Agent’s and Lenders’ Interests .

 

Each Obligor shall defend the Agent’s interests in the Collateral against any and all Persons whatsoever.  At any time during the continuance of an Event of Default, the Agent shall have the right to take possession of the indicia of the Collateral and the Collateral in whatever physical form contained, including: labels, stationery, documents, instruments and advertising materials.  If the Agent exercises such right to take possession of the Collateral, the Obligors shall, upon demand, assemble it in the best manner possible and make it available to the Agent at a place reasonably convenient to the Agent.  In addition, with respect to all Collateral, the Agent, the Issuer and the Lenders shall be entitled to all of the rights and remedies set forth herein and further provided by the Uniform Commercial Code or other applicable law.  At any time during the continuance of an Event of Default, each Obligor shall and the Agent may, at its option, instruct all suppliers, carriers, forwarders, warehousers or others receiving or holding cash, checks, Inventory, Documents or Instruments in which the Agent holds a security interest to deliver same to the Agent or subject to the Agent’s order and if they shall come into any Obligor’s possession, they, and each of them, shall be held by such Obligor in trust as the Agent’s trustee, and such Obligor will immediately deliver them to the Agent in their original form together with any necessary endorsement.

 

 

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4.7

  Books and Records .

 

Each  Obligor shall (a) keep proper books of record and account in which true and correct entries will be made of all dealings or transactions of or in relation to its business and affairs, (b) set up on its books accruals with respect to all taxes, assessments and other Charges, levies and claims, and (c) on a reasonably current basis set up on its books, from its earnings, allowances against doubtful Receivables, advances and investments and all other proper accruals (including accruals for premiums, if any, due on required payments and accruals for depreciation, obsolescence, or amortization of properties) which should be set aside from such earnings in connection with its business.  All determinations pursuant to this Section 4.7 shall be made in all material respects in accordance with, or as required by, GAAP consistently applied in the opinion of such independent public accountant as shall then be regularly engaged by the Obligors.

 

 

4.8

  Financial Disclosure .

 

Each Obligor irrevocably authorizes and directs: (i) all accountants and auditors employed by such Obligor at any time and promptly after the request of the Agent to exhibit and deliver to the Agent copies of such Obligor’s or any Subsidiary’s financial statements (if any exist at or prior to the date of such request), trial balances or other accounting records of any sort in the accountant’s or auditor’s possession, and to disclose to the Agent any information such accountants may have concerning such Obligor’s or such Subsidiary’s financial status and business operations and (ii) to the extent permitted by applicable law, all federal, state and municipal authorities to furnish to the Agent copies of reports or examinations relating to such Obligor or such Subsidiary, whether made by such Obligor or such Subsidiary or otherwise; provided , however , prior to the occurrence of an Event of Default which is continuing, the Agent may only obtain such information or materials from such accountants or such authorities if such Obligor or such Subsidiary, as applicable, fails to furnish such information or materials to the Agent within fifteen (15) Business Days after the Agent has requested such information and material from such Obligor.

 

 

4.9

  Compliance with Laws .

 

Each Obligor shall be in compliance with all laws, acts, rules, regulations and orders of any Governmental Body with jurisdiction over it or the Collateral or any part thereof or the operation of such Obligor’s business, except to the extent any noncompliance, when taken singly or in the aggregate with all other similar instances of noncompliance, has not resulted or could not reasonably be expected to result in a Material Adverse Effect.  Each Obligor may, however, contest or dispute any acts, rules, regulations, orders and directions of those Governmental Bodies or officials in any reasonable manner; provided , however, that any related Lien is otherwise a Permitted Encumbrance.  The Collateral at all times shall be maintained in accordance with the material requirements of all insurance carriers which provide insurance with respect to the Collateral so that such insurance shall remain in full force and effect.

 

 

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4.10

   Inspection of Premises .

 

At all reasonable times as the Agent deems necessary, the Agent shall have full access to and the right to audit, check, inspect and make abstracts and copies from each Obligor’s books, records, audits, correspondence and all other papers relating to the Collateral and the operation of such Obligor’s business.  The Agent and its agents may enter upon any Obligor’s premises at any time during business hours and at any other reasonable time, and from time to time as the Agent deems necessary or desirable, for the purpose of auditing, inspecting and appraising the Collateral and any and all records pertaining thereto and the operation of such Obligor’s business.  Each Lender shall have the right to request that such Lender be permitted to accompany the Agent with respect to any such visit or inspection, and shall have the option to so accompany the Agent, all at such Lender’s expense.  The Agent shall have the right to conduct such audits, appraisals and field examinations at such times as the Agent deems necessary and such audits, appraisals and field examinations shall be at the Borrowers’ expense; provided , however , such audits, appraisals and field examinations shall be at the Borrowers’ expense only to the extent that (i) such audit, appraisal and field examination of the Collateral is the first conducted by Agent during the then current fiscal year, (ii) such audit, appraisal and field examination of the Collateral is the second conducted by Agent during the then current fiscal year and the average daily amount of the aggregate outstanding Revolving Credit Advances and Letter of Credit Exposure exceeds Fifty Million Dollars ($50,000,000) for any sixty (60) consecutive day period during such then current fiscal year, or (iii) such audit, appraisal and field examination of the Collateral is conducted by Agent at any time an Event of Default has occurred and is continuing.

 

 

4.11

   Insurance .

 

(a)           Each Obligor shall bear the full risk of any loss of any nature whatsoever with respect to the Collateral and the other assets of such Obligor.  At each Obligor’s own cost and expense, such Obligor shall, with financially sound and reputable insurance carriers having a “Financial Strength Rating” of at least A- as provided by A.M. Best Company, Inc., (i) keep all its properties and assets insured against the hazards of fire, business interruption, those hazards covered by extended coverage insurance and such other hazards as is customary in the case of companies engaged in businesses similar to such Obligor’s, (ii) maintain public and product liability insurance, as is customary in the case of companies engaged in businesses similar to such Obligor’s against claims for personal injury, death or property damage suffered by others and employee theft, embezzlement and other criminal activities, and (iii) maintain all such worker’s compensation or similar insurance as may be required under the laws of any state or jurisdiction in which such Obligor is engaged in business.  All such insurance shall be in amounts, cover such assets and be under policies acceptable to the Agent in its Permitted Discretion, but, in any case, no less than is customary for companies engaged in businesses similar to such Obligor’s.  In the event any Collateral or other properties or assets of any Obligor is located in any area that has been designated by the Federal Emergency Management Agency as a “Special Flood Hazard Area”, the applicable Obligor shall purchase and maintain flood insurance on such Collateral, properties or assets (including any personal property which is located on any Real Property leased by an Obligor within a “Special Flood Hazard Area”).  The amount of all insurance required by this Section 4.11 shall at a minimum comply with applicable law, including the Flood Disaster Protection Act of 1973.

 

 

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(b)           The Obligors shall furnish the Agent with (i) a status report with respect to the renewal of all such insurance no later than ten (10) days before the expiration date thereof, (ii) evidence of the maintenance of all such insurance by the renewal thereof no later than the expiration date thereof, and (iii) with respect to the Collateral, appropriate loss payable endorsements in form and substance satisfactory to the Agent, naming the Agent as a additional insured and lender loss payee, as its interests may appear and providing (A) that all proceeds thereunder covering a loss of or damage to Collateral shall be payable to the Agent, (B) no such insurance shall be affected by any act or neglect of the insured or owner of the property described in such policy, and (C) that such policy and loss payable clauses may not be cancelled, amended or terminated unless at least thirty (30) days’ prior written notice is given to the Agent.  The Obligors shall provide copies of all such insurance policies (including the appropriate lender loss payee and additional insured endorsements) within thirty (30) days after the Agent’s request, however, only certificates of such insurance shall be required on the Closing Date.

 

(c)           The carriers named in any insurance policies covering Collateral shall be directed in such policies that in the event of any loss to make payment for such loss to the Agent and not to the applicable Obligors and the Agent jointly.  The Agent may endorse any Obligor’s name on any insurance losses with respect to Collateral paid by check, draft or other instrument payable to any Obligor and the Agent jointly and do such other things as the Agent may deem advisable to reduce the same to cash.  At any time during the continuance of an Event of Default, the Agent is hereby authorized to adjust and compromise claims under insurance coverage with respect to Collateral, and, so long as any Revolving Advances are outstanding, with respect to any other assets or properties.  All loss recoveries upon any insurance with respect to a Material Recovery Event received by the Agent or the applicable Obligor shall be applied in accordance with Section 4.19 and Section 2.7(c).  In the event that an Event of Default has occurred and is continuing and any Revolving Advances are outstanding, any loss recoveries attributable to Specified Fixed Asset Collateral (other than Specified Fixed Asset Collateral consisting of equity interests in any Subsidiaries or joint ventures) not relating to a Material Recovery Event shall be payable directly to the Agent to be applied to the Obligations as required by the terms of Section 4.14(h) and Section 2.7(c).  In the event that an Activation Notice has been delivered to the Borrowing Agent, any loss recoveries attributable to assets other than Specified Fixed Asset Collateral and not relating to a Material Recovery Event shall be payable directly to the Agent to be applied to the Obligations as required by the terms of Section 4.14(h) and Section 2.7(c).

 

(d)           Each Obligor shall give the Agent prior written notice of any change in insurance carriers and any new insurance policy shall comply with the provisions of this Section 4.11 and otherwise be acceptable to the Agent in its Permitted Discretion.  Without in any way limiting the foregoing, in no event shall any Obligor change any insurance carrier with respect to the Collateral without first obtaining a loss payable endorsement in form and substance satisfactory to the Agent.

 

 

4.12

   Failure to Pay Insurance .

 

If any Obligor fails to obtain insurance as hereinabove provided, or to keep the same in force, the Agent, if the Agent so elects, may obtain such insurance and pay the premium therefor on behalf of such Obligor, and charge the Loan Account therefor as a Revolving Advance of an Alternate Base Rate Loan to the Borrowers and such expenses so paid shall be part of the Obligations.

 

 

4.13

   Payment of Leasehold Obligations .

 

Each Obligor shall at all times pay, when and as due (in accordance with all applicable grace periods, if any), its rental obligations under all leases under which it is a tenant, and shall otherwise comply, in all material respects, with all other terms of such leases and keep them in full force and effect, and, at the Agent’s reasonable request, will provide evidence of having done so.

 

 

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4.14

   Receivables; Investments, Cash Management .

 

(a)            Nature of Receivables .  Each of the Receivables shall be a bona fide and valid Receivable representing a bona fide obligation incurred by the Account Debtor therein named, for a fixed sum as set forth in the invoice relating thereto (provided immaterial or unintentional invoice errors shall not be deemed to be a breach hereof) with respect to an absolute sale or lease and delivery of goods upon stated terms of an Obligor, or work, labor or services theretofore rendered by an Obligor as of the date each Receivable is created.  Each Receivable shall be due and owing without dispute, setoff or counterclaim at the time of its inclusion as an Eligible Receivable on the Borrowing Base Certificate and shall be excluded from being an Eligible Receivable on each Borrowing Base Certificate delivered by the Borrowing Agent to the Agent after assertion of any such dispute, setoff or counterclaim against such Receivable that would cause such Receivable not to be an Eligible Receivable.

 

(b)            Solvency of Account Debtors .  Each Account Debtor with respect to Receivables, to the applicable Obligor’s knowledge, as of the date each Receivable is created, is and will be solvent and able to pay all Receivables on which the Account Debtor is obligated in full when due (other than with respect to Delphi Corp. and any other debtor-in-possession Account Debtor whose insolvency is disclosed to the Agent in writing and whose insolvency is deemed acceptable to the Agent, in its Permitted Discretion,) or with respect to such Account Debtors of any Obligor who are not solvent such Borrower has or will promptly set up on its books and in its financial records bad debt reserves in accordance with GAAP.

 

(c)            Chief Executive Offices .  Each Obligor’s chief executive office is located at the addresses set forth on Schedule 4.14(c) hereto.  Until written notice is given to the Agent by the Borrowing Agent of any other office at which any Obligor keeps its records pertaining to Receivables, all such records shall be kept at such disclosed chief executive office.

 

(d)            Notification of Assignment of Receivables .  At any time an Event of Default has occurred and is continuing, the Agent shall have the right to send notice of the assignment of, and the Agent’s security interest in, the Receivables to any and all Account Debtors or any third party holding or otherwise concerned with any of the Collateral.  During the continuance of any Event of Default, the Agent shall have the sole right to collect the Receivables, take possession of the Collateral, or both.  The Agent’s actual reasonable collection expenses, including stationery and postage, telephone and telecopier, secretarial and clerical expenses and the salaries of any collection personnel used for collection (including reasonable attorneys’ fees), may be charged to the Loan Account as a Revolving Advance of an Alternate Base Rate Loan to the Borrowers and such expenses so paid shall be part of the Obligations.

 

(e)            Power of Attorney to Act for Obligors .  The Agent shall have the right, upon the occurrence of an Event of Default which is continuing, to receive, endorse, assign and deliver in the name of the Agent or any Obligor any and all checks, drafts and other instruments for the payment of money relating to the Receivables, and each Obligor hereby waives notice of presentment, protest and non-payment of any instrument so endorsed.  Each Obligor hereby constitutes the Agent or the Agent’s designee as such Obligor’s attorney with power at any time upon the occurrence of an Event of Default which is continuing: (i) to endorse such Obligor’s name upon any notes, acceptances, checks, drafts, money orders or other evidences of payment of Collateral, (ii) to sign such Obligor’s name on any invoice or bill of lading relating to any of the Receivables, drafts against Account Debtors, assignments and verifications of Receivables, (iii) to send verifications of Receivables to any Account Debtor, (iv) to demand payment of the Receivables, (v) to enforce payment of the Receivables by legal proceedings or otherwise, (vi) to exercise all of such Obligor’s rights and remedies with respect to the collection of the Receivables and any other Collateral, (vii) to settle, adjust, compromise, extend or renew the Receivables, (viii) to settle, adjust or compromise any legal proceedings brought to collect Receivables, (ix) to prepare, file and sign such Obligor’s name on a proof of claim in bankruptcy or similar document against any Account Debtor, (x) to prepare, file and sign such Obligor’s name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables, and (xi) to do all other lawful acts and things necessary to collect the Receivables.  All acts of said attorney or designee are hereby ratified and approved, and said attorney or designee shall not be liable for any acts of omission or commission nor for any error of judgment or mistake of fact or of law, unless done with gross negligence or willful misconduct; this power being coupled with an interest is irrevocable while any of the Obligations remain unpaid.  The Agent shall have the right at any time an Event of Default has occurred and is continuing, to change the address for delivery of mail addressed to any Obligor to such address as the Agent may designate and to receive and open all mail addressed to any Obligor.

 

 

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(f)            No Liability .  None of the Agent, the Issuer or any Lender shall, under any circumstances or in any event whatsoever, have any liability for any error or omission or delay of any kind occurring in the settlement, collection or payment of any of the Receivables or any instrument received in payment thereof, or for any resulting damage unless such liability arises from the Agent’s, the Issuer’s or any Lender’s willful misconduct or gross negligence as finally determined by a court of competent jurisdiction.  Upon the occurrence of an Event of Default which is continuing, the Agent may, without notice or consent from any Obligor, su


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