FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1999
Commission File Number: 0-21461
OMNIQUIP INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 43-1721419
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
222 East Main Street, Port Washington, Wisconsin 53074
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(Address of principal executive offices)
(Zip Code)
(414) 268-8965
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant:(1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports),
and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No
The number of shares of Common Stock, $0.01 par value, of the registrant
outstanding as of May 10, 1999 was 14,271,000.
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Index
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Page
Number
------
Part I Financial Information
Item 1. Financial Statements (Unaudited, except as noted)
Consolidated Balance Sheet at March 31, 1999
and September 30, 1998 (Audited) 3
Consolidated Statement of Income for the
three and six months ended March 31, 1999 and
March 31, 1998 4
Consolidated Statement of Changes in
Stockholders' Equity for the six months
ended March 31, 1999 5
Consolidated Statement of Cash Flows for the
six months ended March 31, 1999 and
March 31, 1998 6
Notes to Consolidated Financial Statements 7-10
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 11-17
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 17
Part II Other Information
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 6. Exhibits and Reports on Form 8-K 18-19
Signatures 20
2
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Item 1. Financial Statements
Consolidated Balance Sheet
(Dollars in Thousands Except Per Share Data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 31, September 30,
1999 1998
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash $ 893 $ 4,684
Accounts receivable, net 77,839 66,580
Inventories 98,888 71,065
Prepaid expenses and other current assets 10,940 10,020
-------------- --------------
Total current assets 188,560 152,349
Property, plant and equipment, net 57,958 41,375
Goodwill, net 146,171 120,746
Other assets, net 2,473 1,992
-------------- --------------
$ 395,162 $ 316,462
============== ==============
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt $ 21,200 $ 13,750
Accounts payable 69,763 47,834
Accrued liabilities 19,265 31,873
-------------- --------------
Total current liabilities 110,228 93,457
-------------- --------------
Long-term debt 174,739 124,250
Other noncurrent liabilities, net 418 418
Deferred income taxes 3,368 3,368
-------------- --------------
178,525 128,036
============== ==============
Commitments and contingencies (Notes 3 and 7)
Stockholders' equity:
Preferred stock, $.01 par value, 1,500,000 shares
authorized; no shares issued and outstanding
Common stock, $.01 par value, 100,000,000 shares
authorized; 14,271,000 and 14,270,000 shares
issued and outstanding, respectively 143 143
Additional paid-in capital 44,143 44,128
Other (698) (754)
Cumulative translation adjustment (937) (1,657)
Retained earnings 63,758 53,109
-------------- --------------
Total stockholders' equity 106,409 94,969
-------------- --------------
$ 395,162 $ 316,462
============== ==============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Item 1. Financial Statements
Consolidated Statement of Income (Unaudited)
(Amounts in Thousands Except Per Share Data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three months ended March 31, Six months ended March 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 121,725 $ 119,378 $ 235,238 $ 203,953
Cost of sales 97,370 91,885 186,277 155,318
------------------------------------------------------------------
Gross profit 24,355 27,493 48,961 48,635
Selling, general and administrative expenses 11,704 12,362 24,796 21,821
------------------------------------------------------------------
Operating profit 12,651 15,131 24,165 26,814
Other expenses:
Interest on indebtedness 2,417 2,857 4,927 4,662
Other finance charges 425 628 895 1,302
Other, net 3 52 (33) 5
------------------------------------------------------------------
2,845 3,537 5,789 5,969
==================================================================
Income before income taxes and
extraordinary item 9,806 11,594 18,376 20,845
Provision for income taxes 3,971 4,695 7,442 8,406
------------------------------------------------------------------
Income before extraordiantry item 5,835 6,899 10,934 12,439
Extraordinary item, net of tax - - - (545)
------------------------------------------------------------------
Net income $ 5,835 $ 6,899 $ 10,934 $ 11,894
==================================================================
Basic earnings per share:
Income before extraordinary item $ 0.41 $ 0.48 $ 0.77 $ 0.87
Extraordinary item - - - (0.04)
------------------------------------------------------------------
Net income $ 0.41 $ 0.48 $ 0.77 $ 0.83
==================================================================
Weighted average shares 14,271 14,260 14,271 14,257
==================================================================
Diluted earnings per share:
Income before extraordinary item $ 0.41 $ 0.48 $ 0.77 $ 0.86
Extraordinary item - - - (0.04)
------------------------------------------------------------------
Net income $ 0.41 $ 0.48 $ 0.77 $ 0.82
==================================================================
Weighted average shares 14,287 14,478 14,288 14,423
==================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Item 1. Financial Statements
Consolidated Statement of Changes in Shareholders' Equity (Unaudited)
(Dollars in Thousands)
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<TABLE>
<CAPTION>
Compre- Cumulative Additional
hensive Retained translation Common paid-in
income earnings adjustment stock capital Other Total
------- -------- ----------- ------ ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1998 $53,109 $(1,657) $ 143 $44,128 $ (754) $94,969
Net income (unaudited) $10,934 10,934 10,934
Other comprehensive income:
Foreign currency translation
adjustments (unaudited) 720 720 720
----------
Comprehensive income (unaudited) $11,654
==========
Issuance of restricted stock (unaudited) 15 (15) -
Partial repayment of stock
subscriptions receivable (unaudited) 71 71
Dividends paid (unaudited) (285) (285)
----------- ------------ ------------ ----------- ---------- ----------
Balance, March 31, 1999 $63,758 $ (937) $ 143 $44,143 $ (698) $106,409
=========== ============ ============ =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Item 1. Financial Statements
Consolidated Statement of Cash Flows (Unaudited)
(Dollars in Thousands)
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<TABLE>
<CAPTION>
Six months Six months
ended ended
March 31, March 31,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net income $ 10,934 $ 11,894
Adjustments to reconcile net income to net cash provided
by operating activities, excluding the effects of an acquisition:
Depreciation 3,327 2,187
Amortization 1,821 1,533
Loss on debt refinancing - 916
Other (140) 20
(Increase) decrease in current assets, excluding the
effect of an acquisition:
Accounts receivable, net (11,259) (23,253)
Inventories (27,823) (2,680)
Prepaid expenses and other current assets (920) (85)
Increase (decrease) in current liabilities, excluding
the effect of an acquisition:
Accounts payable 21,929 12,190
Other current liabilities (12,608) (6,118)
----------------- ----------------
Net cash used in operating activities (14,739) (3,396)
----------------- ----------------
Cash flows from investing activities
Acquisition of net assets of Snorkel Division of Figgie International Inc. - (107,706)
Capital expenditures, net (15,395) (3,350)
----------------- ----------------
Net cash used in investing activities (15,395) (111,056)
----------------- ----------------
Cash flows from financing activities:
Proceeds from financing 20,000 125,000
Net proceeds from revolver 12,600 26,698
Payments on long-term debt (6,176) (33,625)
Payment of dividends (285) (285)
Financing costs (590) (1,742)
Other 74 -
----------------- ----------------
Net cash provided by financing activities 25,623 116,046
----------------- ----------------
Effect of exchange rate changes on cash 720 (737)
----------------- ----------------
Net change in cash (3,791) 857
Cash beginning of period 4,684 5
----------------- ----------------
Cash at end of period $ 893 $ 862
================= ================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
- --------------------------------------------------------------------------------
1. Unaudited consolidated financial statements
The accompanying unaudited consolidated financial statements of
OmniQuip International, Inc. (OmniQuip or the Company) have been
prepared in accordance with the instructions for Form 10-Q and do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
However, in the opinion of management, such information includes all
adjustments, which consist only of normal and recurring adjustments,
necessary for a fair presentation of the results of operations for the
periods presented. Operating results for any quarter are not
necessarily indicative of the results for any other quarter or for the
full year. These statements should be read in conjunction with the
Company's consolidated financial statements and notes to the
consolidated financial statements included in the Company's September
30, 1998 Form 10-K filed on December 28, 1998.
2. Organization
OmniQuip owns 100% of the outstanding common stock of its subsidiaries,
TRAK International, Inc. (TRAK), Lull International, Inc. (Lull), and
Snorkel International, Inc. (Snorkel). The consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries. All significant intercompany transactions and balances
have been eliminated.
The accounts of the Company's foreign subsidiaries are maintained in
their respective local currencies. The accompanying consolidated
financial statements have been translated and adjusted to reflect U.S.
dollars on the following basis. Assets and liabilities are translated
into U.S. dollars at year-end exchange rates. Income and expense items
are translated at average exchange rates prevailing during the period.
Adjustments resulting from the process of translating the consolidated
amounts into U.S. dollars are accumulated in a separate translation
adjustment account, included in stockholders' equity. Common stock and
additional paid-in capital are translated at historical U.S. dollar
equivalents in effect at the date of acquisition. Foreign currency
transaction gains and losses are included in earnings currently. The
foreign currency transaction gains and losses for the six months ended
March 31, 1999 were not material.
3. Snorkel acquisition and related financing
On November 17, 1997, OmniQuip purchased certain net assets of the
Snorkel Division of Figgie International Inc. (Snorkel), a
Midwest-based manufacturer of aerial work platforms and aerial fire
apparatus, in a transaction accounted for under the purchase method of
accounting. The cash purchase price of approximately $100,000 was
financed by borrowing under a $165,000 senior credit facility which
replaced the Company's existing credit facility. The purchase price was
allocated to the assets acquired and liabilities assumed based on
estimated fair values; the excess of purchase price over the estimated
fair value of net assets acquired at the date of acquisition (goodwill)
approximated $59,000. The purchase price may be increased up to $50,000
based on Snorkel's net sales between April 1, 1998 and March 31, 1999;
any such additional purchase price will result in additional goodwill
for financial reporting purposes. As of April 30, 1999, the Company
estimated the additional purchase price to be $27,000, subject to audit
confirmation, which was paid on April 30, 1999. The $27,000 payment has
been accrued in the accompanying March 31, 1999 consolidated financial
statements as additional goodwill and long-term debt. Snorkel's results
of operations are reflected in the accompanying financial statements
from the date of acquisition.
During November 1997, in connection with the acquisition of Snorkel,
the Company entered into a senior credit facility which replaced the
existing loan agreement. The senior agreement provided for a $165,000
credit facility consisting of a $40,000 revolving credit facility and a
$125,000 term loan. The term loan required quarterly principal payments
ranging from $2,500 to $6,250 commencing on February 28, 1998 with
final maturity on November 30, 2004. Borrowings under the agreement
bore interest at prime or
7
<PAGE>
LIBOR plus an additional rate (ranging from 0.0% to 1.125%) based on
the Company's leverage ratio (debt/EBITDA). On February 26, 1999, the
credit facility was amended and restated as detailed below.
The amended and restated credit facility provides for a $211,574 credit
facility consisting of a $40,000 revolving credit facility, a $40,000
delayed draw term loan and a $131,574 term loan. The delayed draw term
loan became effective upon payment of the additional purchase price of
Snorkel, the first installment of which ($27,000) was paid on April 30,
1999. The term loans require quarterly principal payments ranging from
$3,750 to $10,000 commencing on February 28, 1999 with a final maturity
on November 30, 2004. Borrowings under the agreement bear interest at
prime plus an additional rate (ranging from 0.0% to 0.625%) based on
the Company's leverage ratio (debt/EBITDA) or LIBOR plus an additional
rate (ranging from 1.0% to 1.625%) based on the Company's leverage
ratio (debt/EBITDA). At March 31, 1999, the interest rate on the
Company's borrowings ranged from 6.5% to 8.25%. Amounts outstanding
under the revolving credit facility and term loan at March 31, 1999
were $36,600 and $127,824, respectively. In addition, the Company had
approximately $157 in outstanding letters of credit and had unused
borrowing capacity of $3,243 under this facility. The Company also has
available an overline facility of $10,000 which will bear interest at
prime through July 31, 1999. As of March 31, 1999, there were no
borrowings under the overline facility.
In conjunction with entering into the senior credit facility in
November 1997, the Company recognized an extraordinary loss of $545
attributable to the write-off of $916 of unamortized deferred financing
fees, net of a related $371 tax benefit. In conjunction with the
amended and restated credit facility in February 1999, the Company
recorded $590 of deferred financing costs.
4. Lease Commitments
On February 26, 1999, the Company entered into a lease arrangement
relating to a building in Oakes, North Dakota. The agreement extends
for a period of 180 months and contains a purchase option. The $4,515
lease is reflected in the consolidated financial statements as a
capitalized lease in accordance with the requirements of Statement of
Financial Accounting Standards No. 13, "Accounting for Leases."
5. Inventories
Inventories consist of the following:
March 31, September 30,
1999 1998
(unaudited)
Raw material and purchased components $ 49,846 $ 43,521
Work-in-process 9,701 11,751
Finished goods 39,009 15,651
Unbilled government contract costs 332 142
============ ===========
$ 98,888 $ 71,065
============ ===========
8
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
- --------------------------------------------------------------------------------
6. Stock options
The Company has two stock option plans: the 1996 Long-Term Incentive
Plan and the 1996 Directors Non-Qualified Stock Option Plan. A summary
of the status of the Company's stock option plans as of March 31, 1999
and the changes during the six months then ended is presented below:
Shares Weighted average
exercise price
Outstanding at September 30, 1998 817,250 $ 14.84
Granted 350,000 $ 10.34
Exercised - -
Forfeited (41,750) $ 14.60
----------
Outstanding at March 31, 1999 812,250 $ 13.45
==========
Exercisable at March 31, 1999 151,076 $ 13.93
==========
The exercise prices of the options granted above are equivalent to the
market price of the Company's common stock on the date of grant. During
the six months ended March 31, 1999 and 1998, 1,000 shares and 10,000
shares, respectively, of restricted stock were granted. No performance
stock awards have been granted by the Company at March 31, 1999.
7. Commitments and contingencies
The Company is included in various litigation consisting almost
entirely of product and general liability claims arising in the normal
course of business. The Company maintains insurance policies relative
to product and general liability claims and has provided reserves for
the estimated cost of the self-insured retention and other amounts not
covered by insurance; accordingly, these actions, when ultimately
concluded, are not expected to have a material adverse effect on the
financial position, cash flows or results of operations of the Company.
The Company has financing arrangements with certain third-party
financing institutions to facilitate dealer purchases of equipment
under floor plan and rental fleet arrangements. The aggregate
outstanding loan balance on a consolidated basis under these agreements
was $56,646 at March 31, 1999. Under the Company's agreements, the
Company either provides a back-up guarantee of a dealer's credit or an
undertaking to repurchase equipment at a discounted price at specified
times or under specified circumstances. The Company's actual exposure
under these financing arrangements is significantly less than the
nominal amount outstanding. Aggregate losses under substantially all of
the Company's guarantee obligations to third-party lenders with respect
to the Company's dealers in each of calendar years 1997, 1998 and 1999
are limited to the greater of $1,500 or 5% of the loan balance at the
previous calendar year end (approximately $60,452 and $55,100 at
December 31, 1998 and 1997, respectively).
8. Comprehensive income
Statement of Financial Accounting Standards No. 130 (SFAS 130),
"Reporting Comprehensive Income", establishes standards for the
reporting and display of comprehensive income and its components in a
full set of general-purpose financial statements. Comprehensive income
represents net income plus certain items that are charged directly to
stockholders' equity. The only component of other comprehensive income
for the Company relates to foreign currency translation adjustments.
The Company adopted SFAS 130 for the quarter ended December 31, 1998.
9
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
- --------------------------------------------------------------------------------
9. Earnings Per Share of Common Stock
The following table represents the reconciliation of income before
extraordinary loss and weighted average shares outstanding between
basic and diluted earnings per share for the three and six months ended
March 31, 1999 and 1998 (share data in thousands):
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Numerator:
Income before extraordinary loss $ 5,835 $ 6,899 $10,934 $12,439
========================================
Denominator:
Basic weighted average shares outstanding 14,271 14,260 14,271 14,257
Effect of dilutive securities:
Stock options 16 218 17 166
----------------------------------------
Weighted average shares and dilutive potential common shares 14,287 14,478 14,288 14,423
========================================
</TABLE>
10
<PAGE>
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition
Overview
The following discussion summarizes the significant factors affecting the
consolidated operating results and financial condition of OmniQuip
International, Inc. (OmniQuip or the Company) for the three and six months ended
March 31, 1999 compared to the three and six months ended March 31, 1998. The
discussion should be read in conjunction with the consolidated financial
statements as of September 30, 1998 and the associated notes to consolidated
financial statements included in the Company's Form 10-K filed on December 28,
1998.
On November 17, 1997, OmniQuip purchased certain net assets of the Snorkel
Division of Figgie International Inc. (Snorkel), a Midwest based manufacturer of
aerial work platforms and aerial fire apparatus, in a transaction accounted for
under the purchase method of accounting. The cash purchase price of
approximately $100 million was financed by borrowing under a $165 million senior
credit facility which replaced the Company's existing facility. The purchase
price was allocated to the assets acquired and liabilities assumed based on
estimated fair values; the excess of purchase price over the estimated fair
value of net assets acquired at the date of acquisition (goodwill) approximated
$59 million. The purchase price may be increased up to $50 million based on
Snorkel's net sales between April 1, 1998 and March 31, 1999; any such
additional purchase price will result in additional goodwill for financial
reporting purposes. As of April 30, 1999, the Company estimated the additional
purchase price to be $27 million, subject to audit confirmation, which was paid
on April 30, 1999. The $27 million payment has been reflected in the March 31,
1999 consolidated financial statements as additional goodwill and long-term
debt. Snorkel's results of operations are reflected in the accompanying
financial statements from the date of acquisition. The $27 million payment was
financed under an amended and restated credit agreement described below.
Certain statements included herein are forward-looking statements concerning the
Company's operations, economic performance and financial condition. Such
forward-looking statements are subject to certain risks and uncertainties.
Actual results could differ materially from those currently anticipated due to a
number of factors including cyclical fluctuations in demand, manufacturing
capacity constraints and production inefficiencies, increased competition from
larger and better capitalized companies, the effects on price and margin of the
rapid consolidation of distributors, the inability to achieve expected cost
savings from the strategic sourcing initiatives, field warranty campaigns for
certain products, loss of, or reduced orders under the Company's contract for
the sale of ATLAS vehicles, the inability to make complementary acquisitions, or
to integrate any such acquisitions, and risks associated with the substantial
borrowings that may be necessary to finance acquisitions.
11
<PAGE>
Results of Operations
The following table sets forth for the periods indicated the percentage of net
sales represented by certain items reflected in the Company's consolidated
statement of income:
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 80.0% 77.0% 79.2% 76.2%
----- ----- ----- -----
Gross profit 20.0% 23.0% 20.8% 23.8%
Selling, general and administrative
expenses 9.6% 10.4% 10.5% 10.7%
----- ----- ----- -----
Operating income 10.4% 12.6% 10.3% 13.1%
Interest expense 2.0% 2.4% 2.1% 2.3%
Other finance charges 0.3% 0.5% 0.4% 0.6%
----- ----- ----- -----
Income before income taxes and
extraordinary items 8.1% 9.7% 7.8% 10.2%
Provision for income taxes 3.3% 3.9% 3.2% 4.1%
----- ----- ----- -----
Income before extraordinary items 4.8% 5.8% 4.6% 6.1%
Extraordinary items -- -- -- 0.3%
----- ----- ----- -----
Net income 4.8% 5.8% 4.6% 5.8%
===== ===== ===== =====
</TABLE>
Three Months Ended March 31, 1999 compared to Three Months Ended March 31, 1998
Net sales for the three months ended March 31, 1999 were $121.7 million, an
increase of $2.3 million over net sales of $119.4 million for the three months
ended March 31, 1998. Net sales by product line were as follows:
<TABLE>
<CAPTION>
($ in millions)
Three months
ended
March 31,
Increase
1999 1998 (Decrease)
---- ---- ----------
<S> <C> <C> <C>
Commercial Telescopic Material Handlers $ 73.1 $ 62.1 $ 11.0
Military Telescopic Material Handlers 3.8 5.5 (1.7)
Compact Products (1) 5.0 5.1 (0.1)
Aerial Work Platforms 31.7 38.5 (6.8)
Parts and Other Products 8.1 8.2 (0.1)
--------- -------- --------
$ 121.7 $ 119.4 $ 2.3
========= ======== ========
</TABLE>
- ------------
(1) Compact products includes skid steer loaders, mini-excavators, power
haulers and power lifters and articulated forklifts and loaders.
Commercial sales of telescopic material handlers for the three months ended
March 31, 1999 increased approximately 17.7% over the three months ended March
31, 1999 due to continued strong market demand and the Company's ability to fill
market demand through increased plant capacity. Military sales under the U.S.
Army ATLAS contract decreased approximately 30.6% from the three months ended
March 31, 1998. This decrease was
12
<PAGE>
planned and was a part of Company management strategy to move higher levels of
military sales to the calendar year end, which has typically seen reduced demand
in commercial sales of telescopic material handlers. Sales of aerial work
platforms decreased 17.8%, due to a decrease in sales to national rental fleets.
Sales of compact products and parts and other products for the three months
ended March 31, 1999 were relatively flat compared to the three months ended
March 31, 1998.
Gross profit for the three months ended March 31, 1999 was $24.4 million, a
decrease of $3.1 million from gross profit of $27.5 million for the three months
ended March 31, 1998. The decrease in gross profit primarily reflects an
increase in costs associated with set-up costs related to the addition and
expansion of two telescopic material handling manufacturing facilities,
consulting and employee training costs. Also affecting gross profit was the
continued pricing pressure in aerial work platforms and manufacturing cost
increases in the Snorkel facility. The gross margin decreased to 20.0% for the
three months ended March 31, 1999 from 23.0% for the three months ended March
31, 1998. The decline in gross margin was due to the increase in costs discussed
above.
Selling, general and administrative (SG&A) expenses for the three months ended
March 31, 1999 were $11.7 million, a decrease of $0.7 million from SG&A expenses
of $12.4 million for the three months ended March 31, 1998. SG&A expenses as a
percentage of net sales decreased to 9.6% for the three months ended March 31,
1999 from 10.4% for the three months ended March 31, 1998. This decrease in the
SG&A percentage reflected the timing of various expenses and cost reduction
measures.
Operating income for the three months ended March 31, 1999 was $12.7 million, a
decrease of $2.4 million, or 16.4%, from operating income of $15.1 million for
the three months ended March 31, 1998 due to the factors discussed above.
Operating margin decreased to 10.4% for the three months ended March 31, 1999
from 12.6% for the 1998 period, primarily reflecting the gross margin decline
discussed above.
Interest expense for the three months ended March 31, 1999 was $2.4 million, a
decrease of $0.5 million, compared to interest expense of $2.9 million for the
three months ended March 31, 1998. The decrease in interest expense was due
primarily to the lower interest rates for the three months ended March 31, 1999
compared to the three months ended March 31, 1998.
Other finance charges, which are primarily comprised of dealer-related finance
charges, were $0.4 million for the three months ended March 31, 1999 compared to
$0.6 million for the three months ended March 31, 1998, reflecting a lower
proportion of financed sales for the 1999 period. Other finance charges as a
percentage of net sales decreased to 0.3% from 0.5%. The reduction in finance
charges as a percentage of sales primarily reflected a shift in sales to the
national rental fleets which historically have not utilized the dealer-related
finance programs.
Provision for income taxes for the three months ended March 31, 1999 was $4.0
million compared to $4.7 million for the three months ended March 31, 1998. The
decrease reflected the decrease in income before income taxes of $1.8 million.
The Company's effective tax rate was 40.5% for the three months ended March 31,
1999 and 1998.
Net income for the three months ended March 31, 1999 was $5.8 million, a
decrease of $1.1 million, or 15.4%, from net income of $6.9 million for the
three months ended March 31, 1998, as a result of the factors described above.
Basic and diluted earnings per share were $0.41 for the three months ended March
31, 1999. Basic and diluted earnings per share were $0.48 for the three months
ended March 31, 1998.
13
<PAGE>
Six Months Ended March 31, 1999 compared to Six Months Ended March 31, 1998
Net sales for the six months ended March 31, 1999 were $235.2 million, an
increase of $31.2 million over net sales of $204.0 million for the six months
ended March 31, 1998. Of the $31.2 million increase, net sales from the Snorkel
division (acquired in November 1997) accounted for $16.0 million, while net
sales for the existing OmniQuip business increased by $15.2 million, or 7.0%.
Net sales by product line were as follows:
<TABLE>
<CAPTION>
($ in millions)
Six months ended
March 31,
Increase
1999 1998 (Decrease)
---- ---- ----------
<S> <C> <C> <C>
Commercial Telescopic Material Handlers $ 128.7 $ 114.8 $ 13.9
Military Telescopic Material Handlers 9.7 10.8 (1.1)
Compact Products (1) 10.2 10.4 (0.2)
Aerial Work Platforms 69.0 54.6 14.4
Parts and Other Products 17.6 13.4 4.2
---------- --------- --------
$ 235.2 $ 204.0 $ 31.2
========== ========= ========
</TABLE>
- --------------
(1) Compact products includes skid steer loaders, mini-excavators, power
haulers and power lifters and articulated forklifts and loaders.
Commercial sales of telescopic material handlers for the six months ended March
31, 1999 increased approximately 12.1% over the six months ended March 31, 1999
due to continued strong market demand and increased plant capacity to fill this
demand. Military sales under the U.S. Army ATLAS contract decreased
approximately 9.5% from the six months ended March 31, 1998. This decrease was
planned and was a part of Company management strategy to move higher levels of
military sales to the calendar year end, which has typically seen reduced demand
in commercial sales of telescopic material handlers. Sales of aerial work
platforms were flat, on a pro forma basis. Sales of parts and other products for
the six months ended March 31, 1999 increased approximately 30.6% from the six
months ended March 31, 1998, due to an increasing population of machines in the
field and Snorkel part sales.
Gross profit for the six months ended March 31, 1999 was $49.0 million, an
increase of $0.4 million over gross profit of $48.6 million for the six months
ended March 31, 1998. The increase in gross profit primarily reflected the
increase in net sales discussed above, offset by increased manufacturing costs
associated with set-up costs related to the addition and expansion of two
telescopic material handling manufacturing facilities, consulting and employee
training costs. The gross margin decreased to 20.8% for the six months ended
March 31, 1999 from 23.8% for the six months ended March 31, 1998. The decline
in gross margin was due to the increase in costs discussed above.
SG&A expenses for the six months ended March 31, 1999 were $24.8 million, an
increase of $3.0 million from SG&A expenses of $21.8 million for the six months
ended March 31, 1998 primarily due to the inclusion of Snorkel for the entire
six-month period. SG&A expenses as a percentage of net sales decreased to 10.5%
for the six months ended March 31, 1999 from 10.7% for the six months ended
March 31, 1998. This decrease in the SG&A percentage reflected the fixed
component of SG&A and increased sales.
Operating income for the six months ended March 31, 1999 was $24.2 million, a
decrease of $2.6 million, or 9.9%, from operating income of $26.8 million for
the six months ended March 31, 1998 due to the factors discussed above.
Operating margin decreased to 10.3% for the six months ended March 31, 1999 from
13.1% for the 1998 period, primarily reflecting the gross margin decline
discussed above.
14
<PAGE>
Interest expense for the six months ended March 31, 1999 was $4.9 million, an
increase of $0.2 million, compared to interest expense of $4.7 million for the
six months ended March 31, 1998. The increase in interest expense was due
primarily to the increased debt level outstanding for the six months ended March
31, 1999 compared to the six months ended March 31, 1998, partially offset by
lower interest rates.
Other finance charges, which are primarily comprised of dealer-related finance
charges, were $0.9 million for the six months ended March 31, 1999 compared to
$1.3 million for the six months ended March 31, 1998, reflecting a lower
proportion of financed sales for the 1999 period. Other finance charges as a
percentage of net sales decreased to 0.4% from 0.6%. The reduction in finance
charges as a percentage of sales primarily reflected a shift in sales to the
national rental fleets which historically have not utilized the dealer-related
finance programs.
Provision for income taxes for the six months ended March 31, 1999 was $7.4
million compared to $8.4 million for the six months ended March 31, 1998. The
decrease reflected the decrease in income before income taxes of $2.5 million.
The Company's effective tax rate was 40.5% for the six months ended March 31,
1999 compared to 40.3% for the six months ended March 31, 1998.
Income from continuing operations for the six months ended March 31, 1999 was
$10.9 million, a decrease of $1.5 million, or 12%, from income from continuing
operations for the six months ended March 31, 1998 as a result of the factors
described above.
In November 1997, in connection with the refinancing related to the Snorkel
acquisition, the Company incurred an extraordinary $0.5 million after-tax charge
for the write-off of deferred financing charges.
Net income for the six months ended March 31, 1999 was $10.9 million, a decrease
of $1.0 million, or 8.1%, from net income of $11.9 million for the six months
ended March 31, 1998, as a result of the factors described above.
Basic and diluted earnings per share were $0.77 for the six months ended March
31, 1999. Basic and diluted earnings per share, before the effect of the
extraordinary item discussed above, were $0.87 and $0.86, respectively, for the
six months ended March 31, 1998. Basic and diluted earnings per share were $0.83
and $0.82, respectively, for the six months ended March 31, 1998.
Capital Resources and Liquidity
Net cash used in operating activities of the Company was $14.8 million for the
six months ended March 31, 1999. Working capital (excluding the effects of
changes in cash and current portions of long-term debt) increased by $30.7
million in the period, primarily reflecting an $11.3 million increase in
accounts receivable, a $27.8 million increase in inventories and a $12.6 million
decrease in other current liabilities, offset by a $21.9 million increase in
accounts payable. Accounts receivable increased due to timing of shipments at
the end of the quarter. The decrease in other current liabilities primarily
reflected customer utilization of volume rebates. The increase in inventories
was due primarily to reduced sales at Snorkel. Net cash used in investing
activities was $15.4 million for capital expenditures. See further discussion on
the capacity expansion program below. These cash requirements were financed with
an amended and restated credit facility described below.
Net cash used in operating activities of the Company was $3.4 million for the
six months ended March 31, 1998. Working capital (excluding the effects of
changes in cash and current portions of long-term debt) increased by $19.9
million in the period, primarily reflecting a $23.3 million increase in accounts
receivable and a $6.1 million decrease in other current liabilities offset by a
$12.2 million increase in accounts payable. Accounts receivable increased due to
timing of shipments at the end of the quarter. The decrease in other current
liabilities primarily reflected the issuance of volume rebates and the payment
of year-end bonuses. The increase in accounts payable primarily reflected
increased inventory purchases due to increases in production schedules. Net cash
used in investing activities was $111.1 million, including $3.4 million for
capital expenditures and $107.7 million for acquisition of the net assets of
Snorkel.
During February 1999, the Company amended and restated its credit facility. The
amended and restated credit facility provides for a $211.6 million credit
facility consisting of a $40.0 million revolving credit facility, a $40.0
15
<PAGE>
million delayed draw term loan and a $131.6 million term loan. The delayed draw
term loan became effective upon the preliminary payment of the additional
purchase price of Snorkel on April 30, 1999. The term loans require quarterly
principal payments ranging from $3.75 million to $10.0 million commencing on
February 28, 1999 with the final maturity on November 30, 2004. Borrowings under
the amended and restated agreement bear interest at a rate that is determined
from a pricing grid based on the Company's leverage ratio (debt / EBITDA). At
March 31, 1999, the interest rate under this agreement was prime plus 0.5% or
LIBOR plus 1.5%.
Amounts outstanding under the amended and restated credit facility at March 31,
1999 were $164.4 million. As of March 31, 1999, the Company accrued an
additional $27.0 million in goodwill and debt based on the preliminary payment
for Snorkel made on April 30, 1999. In addition, the Company had $0.2 million in
outstanding letters of credit under this revolving line of credit facility. At
March 31, 1999 the Company had unused borrowing capacity of $3.2 million. The
Company also has available a $10 million overline facility which will bear
interest at prime through July 31, 1999. As of March 31, 1999, there were no
borrowings under the overline facility.
Pursuant to the Snorkel acquisition, the Company will be required to pay an
additional purchase price of up to $50 million in May 1999. The additional
payment will be equal to the amount of the net sales of Snorkel for the
twelve-month period commencing on April 1, 1998 and ending on March 31, 1999
(the Earn-out Provision) in excess of $140 million, such additional amount not
to exceed $20 million, plus 70% of the amount of the net sales of Snorkel during
the Earn-Out Period in excess of $160 million, such additional amount not to
exceed $30 million. Based on the performance of Snorkel since April 1, 1998, the
Company made a preliminary payment of $27 million on April 30, 1999 and financed
such payment through the delayed draw term loan provision of the amended and
restated credit facility.
Certain manufacturing facilities have experienced capacity constraints, which
have limited production output and caused manufacturing inefficiencies during
the last twelve months, thus affecting sales and gross margins. A major capacity
expansion program, which was launched in September 1998 and is described in more
detail below, is expected to address these issues. However, it is expected that
these capacity constraints will continue to affect the material handling
business in fiscal 1999.
As the result of a major capacity expansion program for telescopic material
handlers launched in September 1998, the Company's capital expenditures for
fiscal year 1999 will be higher than normal. It is expected that total capital
expenditures for the year ending September 30, 1999 will be approximately $25
million, approximately $20 million of which is related to the capacity expansion
program. These capital expenditures are expected to be financed through internal
cash flow and existing credit lines, with the exception of approximately $4.5
million related to the Oakes, North Dakota building expansion which was financed
through a capital lease. Approximately 80% of the capital spending for fiscal
year 1999 has occurred in the first half of the fiscal year.
Backlog
The Company's backlog as of March 31, 1999 was approximately $156.5 million of
which $44.0 million relates to the ATLAS military contract. It is expected that
substantially all of the commercial backlog and approximately 53% of the
military backlog will be shipped before March 31, 2000.
Market Risk
In the ordinary course of business, the Company is exposed to foreign currency
and interest rate risks, which the Company does not currently consider to be
material. These exposures primarily relate to having investments denominated in
foreign currencies and to changes in interest rates. Fluctuations in currency
exchange rates can impact operating results, including net sales and operating
expenses. The Company may utilize derivative financial instruments, including
forward exchange contracts and swap agreements, to manage certain of its foreign
currency and interest rate risks that it considers practical to do so. The
Company currently has $61.3 million notional principal outstanding under an
interest rate swap agreement which fixes LIBOR at 6.24% through November 2004.
The Company does not enter into derivative financial instruments for trading
purposes. Market risks that the Company currently has elected not to hedge
relate to foreign currency exposure and the portion of the floating rate debt
not covered by the interest rate swap.
16
<PAGE>
New Accounting Pronouncements
In June 1997 the FASB issued Statement of Financial Accounting Standards No.
131, "Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131"). The statement requires that the Company report certain information
if specific requirements are met about operating segments of the Company
including information about services, geographic areas of operation and major
customers. SFAS 131 is effective for fiscal years beginning after December 15,
1997. The Company is evaluating the provisions of SFAS 131 to determine its
future reporting requirements.
In June 1998 the FASB issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"). The statement establishes accounting and reporting standards for
derivative instruments and for hedging activities and requires recognition of
all derivatives on the balance sheet measured at fair value. SFAS 133 is
effective for all fiscal quarters of all fiscal years beginning after June 15,
1999. The Company is continuing to evaluate the provisions of SFAS 133 to
determine its impact on financial position and results of operations.
Year 2000
The Company utilizes software and related computer technologies essential to its
operations that use two digits rather than four to specify the year, which could
result in a date recognition problem with the transition to the year 2000. The
Company has established a plan to assess the potential impact of the year 2000
on the Company's systems and operations and to implement solutions to address
this issue. The Company has substantially completed the assessment of its
internal systems for year 2000 compliance issues. The Company's plan for
remediation includes a combination of repair and replacement of affected
systems. For the Company's internal systems at TRAK and Lull, this remediation
is an incidental consequence of the ongoing implementation of a new integrated
core business system. The Company expects the remediation phase to be completed
by August 31, 1999 and for testing to be conducted by September 30, 1999. For
the Company's internal systems at Snorkel, this remediation is a software patch
for the existing system which has been implemented. The Company expects that all
critical systems will be year 2000 compliant by September 30, 1999.
Substantially all of the costs incurred, and expected to be incurred, to achieve
year 2000 compliance have been and are a part of ongoing expenditures to upgrade
systems. The Company is dependent upon various third parties, including certain
product suppliers, to conduct its business operations. The failure of
mission-critical third parties to achieve year 2000 compliance could have a
material effect on the Company's operations. The Company is presently in the
assessment phase of its year 2000 plan with respect to the Company's suppliers,
vendors and service providers for year 2000 compliance. The Company expects to
complete the assessment phase by July 31 1999. The Company plans to develop a
contingency plan by September 30, 1999 in the event its systems or its
mission-critical vendors do not achieve year 2000 compliance. However, there can
be no assurance that the Company will not experience unanticipated costs and/or
business interruptions due to year 2000 problems in its internal systems or its
supply chain, or that such costs and/or interruptions will not have a material
adverse effect on the Company's consolidated results of operations.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
See "Market Risk" under Item 2 hereof.
17
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
PART II. Other Information
- --------------------------------------------------------------------------------
Item 4. Submission of Matters to a Vote of Security Holders
On February 16, 1999, OmniQuip International, Inc. held its second
annual meeting of stockholders since its initial public offering on
March 20, 1997. At the meeting, the following persons were elected to
serve on the Board of Directors until the Annual Meeting of
Stockholders in 2002:
For Withheld Authority
--- ------------------
Samuel A. Hamacher 11,003,147 17,852
Jay G. Henges 10,771,218 249,781
Robert L. Virgil 10,772,118 248,881
Also at the meeting, the selection of PricewaterhouseCoopers LLP as
independent auditors of the Company was ratified by the following
votes:
For 11,002,329
Against 11,576
Abstain 7,094
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10.1 - First Amendment, dated as of December 19, 1997,
by and among OmniQuip International, Inc., First Union
National Bank, as Administrative Agent, and the various
lending institutions set forth therein.
Exhibit 10.2 - Second Amendment, dated as of February 8, 1999,
by and among OmniQuip International, Inc., First Union
National Bank, as Administrative Agent, and the various
lending institutions set forth therein.
Exhibit 10.3 - Amended and Restated Credit Agreement, dated as
of February 26, 1999, by and among OmniQuip International,
Inc., Morgan Stanley Senior Funding, Inc., as Syndication
Agent and Co-Arranger, First Union National Bank, as
Administrative Agent and Co-Arranger, and the various lending
institutions set forth therein.
Exhibit 10.4 - Offering Basis Loan Agreement, dated January
14, 1999, by and between OmniQuip International, Inc. and
First Union National Bank.
Exhibit 10.5 - Sublease Agreement, dated as of February 1,
1999, by and between OmniQuip International, Inc. and Oakes
Enhancement, Inc.
Exhibit 10.6 - Lease, dated as of March 1, 1999, by and
between TRAK International, Inc. and Park Street Industrial
LLC.
Exhibit 10.7 - Letter Agreement, dated as of April 19, 1999,
by and between OmniQuip International, Inc. and Thomas K.
Breslin.
Exhibit 27 - Financial Data Schedule
18
<PAGE>
(b) Reports on Form 8-K
On February 11, 1999, a Current Report on Form 8-K was filed
to report, pursuant to Item 5 thereof, the amendment of the
Rights Agreement, dated as of August 21, 1998, as amended, by
and between the Company and First Chicago Trust Company of New
York, as Rights Agent.
19
<PAGE>
OMNIQUIP INTERNATIONAL, INC.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OMNIQUIP INTERNATIONAL, INC.
Date: May 14, 1999 /s/ Thomas K. Breslin
-----------------------------------
Thomas K. Breslin
Vice President-Finance and Chief Financial Officer
Principal accounting and financial officer)
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
10.1 First Amendment, dated as of December 19, 1997, by
and among OmniQuip International, Inc., First Union
National Bank, as Administrative Agent, and the
various lending institutions set forth therein.
10.2 Second Amendment, dated as of February 8, 1999, by
and among OmniQuip International, Inc., First Union
National Bank, as Administrative Agent, and the
various lending institutions set forth therein.
10.3 Amended and Restated Credit Agreement, dated as of
February 26, 1999, by and among OmniQuip
International, Inc., Morgan Stanley Senior Funding,
Inc., as Syndication Agent and Co-Arranger, First
Union National Bank, as Administrative Agent and
Co-Arranger, and the various lending institutions set
forth therein.
10.4 Offering Basis Loan Agreement, dated January 14,
1999, by and between OmniQuip International, Inc. and
First Union National Bank.
10.5 Sublease Agreement, dated as of February 1, 1999, by
and between OmniQuip International, Inc. and Oakes
Enhancement, Inc.
10.6 Lease, dated as of March 1, 1999, by and between TRAK
International, Inc. and Park Street Industrial LLC.
10.7 Letter Agreement, dated as of April 19, 1999, by and
between OmniQuip International, Inc. and Thomas K.
Breslin.
27 Financial Data Schedule
FIRST AMENDMENT
---------------
FIRST AMENDMENT (this "Amendment"), dated as of December 19,
1997, among OMNIQUIP INTERNATIONAL, INC., a Delaware corporation (the
"Borrower"), the lenders party to the Credit Agreement referred to below on the
date hereof and immediately before giving effect to this Amendment (the
"Existing Banks"), FIRST UNION NATIONAL BANK, as Administrative Agent (the
"Agent"), and each of the lenders listed on Schedule A hereto (the "New Banks").
All capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Credit Agreement referred to
below.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrower, the Existing Banks and the Agent are
parties to a Credit Agreement, dated as of November 17, 1997 (the "Credit
Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit
Agreement as herein provided;
NOW, THEREFORE, it is agreed:
1. Each of the Existing Banks severally and not jointly
hereby sells and assigns to each of the New Banks without recourse and without
representation or warranty (other than as expressly provided herein), and each
New Bank hereby purchases and assumes from each of the Existing Banks, that
interest in and to each of such Existing Bank's rights and obligations in
respect of those Facilities set forth on Schedule B hereto under the Credit
Agreement as of the date hereof which in the aggregate represents such New
Bank's pro rata share (for each such New Bank, its "Pro Rata Share") in such
Facilities as set forth on such Schedule B (calculated after giving effect to
this Amendment), and such Pro Rata Share represents all of the outstanding
rights and obligations under the Credit Agreement in respect of the Facilities
that are being sold and assigned to each New Bank pursuant to this Amendment,
including, without limitation, in the case of any assignment of the outstanding
Term Loans and/or portion of the Total Revolving Loan Commitment, all rights and
obligations with respect to such New Bank's Pro Rata Share of such outstanding
Term Loans and/or portion of the Total Revolving Loan Commitment, respectively.
After giving effect to this Amendment, each Bank's outstanding Term Loans and
Revolving Loan Commitment will be as set forth on Schedule C hereto.
2. In accordance with the requirements of Section 13.04(b)
of the Credit Agreement, on the First Amendment Effective Date (as defined
below), (i) the Credit Agreement shall be amended by deleting Schedule I thereto
in its entirety and by inserting in lieu thereof a new Schedule I in the form of
Schedule C hereto and (ii) the Borrower agrees that it will issue an appropriate
A Term Note, B Term Note and Revolving Note to each Bank in conformity with the
requirements of Section 1.05 of the Credit Agreement.
<PAGE>
3. On and after the First Amendment Effective Date, Schedule
II to the Credit Agreement shall be amended by deleting such Schedule in its
entirety and inserting in lieu thereof a new Schedule II in the form of Schedule
D hereto.
4. Each Existing Bank (i) represents and warrants that it is
the legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the other Credit Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or the other Credit Documents or any other instrument or document
furnished pursuant thereto; and (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or any of its Subsidiaries or the performance or observance by the
Borrower or any of its Subsidiaries of any of their obligations under the Credit
Agreement or the other Credit Documents to which they are a party or any other
instrument or document furnished pursuant thereto.
5. Each New Bank (i) confirms that it has received a copy of
the Credit Agreement and the other Credit Documents, together with copies of the
financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Amendment; (ii) agrees that it will, independently
and without reliance upon the Agent or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) confirms that it is an Eligible Transferee under Section
13.04(b) of the Credit Agreement; (iv) appoints and authorizes the Agent and the
Collateral Agent to take such action as agent on its behalf and to exercise such
powers under the Credit Agreement and the other Credit Documents as are
delegated to the Agent and the Collateral Agent by the terms thereof, together
with such powers as are reasonably incidental thereto; (v) agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Credit Agreement are required to be performed by it as a Bank; and (vi)
to the extent legally entitled to do so, agrees to promptly submit the forms
described in Section 13.04(b) of the Credit Agreement.
6. Each of the Existing Banks, the New Banks and the Agent
hereby agree that all amounts accrued with respect to the Term Loans,
Outstanding Revolving Loans and the Total Revolving Loan Commitment prior to the
delivery by such New Bank of the amount referred to in clause (ii) of Section 11
of this Amendment shall be for the account of the Existing Banks, respectively,
and that all such amounts accrued on and after the delivery of such amounts
referred to in clause (ii) of such Section 11 shall be for the account of such
New Bank based upon its relevant Pro Rata Share.
7. In accordance with Section 13.04(b) of the Credit
Agreement, on and as of the date upon which each of the New Banks delivers the
amounts referred to in clause (ii) of Section 11 of this Amendment, each New
Bank shall become a "Bank" under, and for all purposes of, the Credit Agreement
and the other Credit Documents and, notwithstanding
-2-
<PAGE>
anything to the contrary in Section 8.13 of the Credit Agreement, the
Administrative Agent shall record the transfers contemplated hereby in the
Register.
8. This Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.
9. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts when executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument. A complete set
of counterparts shall be lodged with the Borrower and the Agent.
10. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.
11. Subject to Section 12 of this Amendment, this Amendment
shall become effective on the date (the "First Amendment Effective Date") when
(i) the Borrower, the Agent, each Existing Bank and each New Bank shall have
signed a counterpart hereof (whether the same or different counterparts) and
shall have delivered (including by way of facsimile transmission) the same to
the Agent at its Notice Office and (ii) each New Bank shall have delivered to
the Agent, for the accounts of the Existing Banks, respectively, an amount equal
to such New Bank's relevant Pro Rata Share of the outstanding Term Loans and
Revolving Loans being assigned to such New Bank.
12. Notwithstanding Section 11 of this Amendment, if for any
reason any New Bank shall not have (i) signed a counterpart hereof and delivered
the same to the Agent at its Notice Office and (ii) delivered to the Agent an
amount equal to such New Bank's relevant Pro Rata Share of the outstanding Term
Loans and Revolving Loans being assigned to such New Bank, in each case on or
prior to December 19, 1997, then, if each Existing Bank agrees, this Amendment
shall become effective notwithstanding such failure, provided that (x) Schedule
C shall be modified to delete any such New Bank and such New Bank's relevant Pro
Rata Share shall be reallocated among the Existing Banks in such manner as the
Existing Banks shall agree and (y) the signature pages of this Amendment shall
be deemed revised to delete such New Bank's name therefrom.
13. From and after the First Amendment Effective Date, all
references in the Credit Agreement and each of the Credit Documents to the
Credit Agreement shall be deemed to be references to the Credit Agreement as
amended hereby.
* * *
-3-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
OMNIQUIP INTERNATIONAL, INC.
By /s/ Philip G. Franklin
------------------------------
Title: Vice President and CFO
FIRST UNION NATIONAL BANK
Individually, and as Agent
By /s/ George L. Woolsey
------------------------------
Title: Vice President
MORGAN STANLEY SENIOR FUNDING, INC.
By /s/ Mike Hart
------------------------------
Title: Principal
-4-
<PAGE>
NEW BANKS:
BANK OF SCOTLAND
By /s/ Joseph Fratus
------------------------------
Joseph Fratus
Title: Asst. Vice President
CREDIT AGRICOLE INDOSUEZ
By /s/ Katherine L. Abbott
------------------------------
Katherine L. Abbott
Title: First Vice President
By /s/ W. Leroy Startz
------------------------------
W. Leroy Startz
Title: First Vice President
FIRST BANK
By /s/ Ted Kraizer
------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF
CHICAGO
By /s/ Jerry Kane
------------------------------
Title: SVP
FIRSTAR BANK MILWAUKEE, N.A.
By /s/ Jeff Janza
------------------------------
Title: Commercial Banking Officer and
Relationship Manager
FLEET CAPITAL CORPORATION
By /s/ Sandra Evans
------------------------------
Title: Vice President
-5-
<PAGE>
THE FUJI BANK, LIMITED
By /s/ Peter L. Chinnici
------------------------------
Peter L. Chinnici
Title: Joint General Manager
HARRIS TRUST AND SAVINGS BANK
By /s/ signature
------------------------------
Title: Vice President
M&I MARSHALL AND ILSLEY BANK
By /s/ Kathleen T. Coleman
------------------------------
Title: Vice President
THE MITSUBISHI TRUST AND
BANKING CORPORATION
By /s/ Nobuo Tominaga
------------------------------
Mr. Nobuo Tominaga
Title: Chief Manager
NATIONAL CITY BANK
By /s/ Barry C. Robinson
------------------------------
Title: Vice President
WACHOVIA BANK, N.A.
By /s/ Todd J. Eagle
------------------------------
Title: Vice President
-6-
SECOND AMENDMENT
----------------
SECOND AMENDMENT (this "Amendment"), dated as of February 8,
1999, among OMNIQUIP INTERNATIONAL, INC., a Delaware corporation (the
"Borrower"), the lenders party to the Credit Agreement referred to below on the
date hereof and immediately before giving effect to this Amendment (the
"Existing Banks") and FIRST UNION NATIONAL BANK, as Administrative Agent (the
"Agent"). All capitalized terms used herein and not otherwise defined shall have
the respective meanings provided such terms in the Credit Agreement referred to
below.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrower, the Existing Banks and the Agent are
parties to a Credit Agreement, dated as of November 17, 1997 (as amended to the
date hereof, the "Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit
Agreement as herein provided;
NOW, THEREFORE, it is agreed:
1. On and after the Second Amendment Effective Date (as
defined below), Subsection 9.04(ix) of the Credit Agreement shall be amended by
deleting such Subsection 9.04(ix) in its entirety and inserting in lieu thereof:
"additional unsecured Indebtedness of the Borrower and its
Subsidiaries not to exceed $10,000,000 in aggregate
principal amount at any time outstanding."
2. This Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.
3. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts when executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument. A complete set
of counterparts shall be lodged with the Borrower and the Agent.
4. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.
5. Subject to Section 6 of this Amendment, this Amendment
shall become effective on the date (the "Second Amendment Effective Date") when
the Borrower, the Agent and each Existing Bank shall have signed a counterpart
hereof (whether the same or different
<PAGE>
Page 2
counterparts) and shall have delivered (including by way of facsimile
transmission) the same to the Agent at its Notice Office.
6. From and after the Second Amendment Effective Date, all
references in the Credit Agreement and each of the Credit Documents to the
Credit Agreement shall be deemed to be references to the Credit Agreement as
amended hereby.
* * *
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
OMNIQUIP INTERNATIONAL, INC.
By /s/ P. Enoch Stiff
------------------------------
Title: President & CEO
FIRST UNION NATIONAL BANK
Individually, and as Agent
By /s/ George L. Woolsey
------------------------------
George L. Woolsey
Title: Vice President
MORGAN STANLEY SENIOR
FUNDING, INC.
By /s/ J. Morgan Edwards
------------------------------
Title: Vice President
BANK OF SCOTLAND
By /s/ Janet Taffe
------------------------------
Janet Taffe
Title: Asst. Vice President
CREDIT AGRICOLE INDOSUEZ
By /s/ David Bouhl By /s/ Katherine L. Abbot
- ------------------------------ ------------------------------
David Bouhl, F.V.P. Katherine L. Abbot
Title: Head of Corporate Banking Title: First Vice President
Chicago
FIRST BANK
By /s/ Ted Kraizer
------------------------------
Title: VP
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Dennis J. Redpath
------------------------------
Title: Vice President
FIRSTAR BANK MILWAUKEE, N.A.
By /s/ Jeff Janza
------------------------------
Title: Asst. Vice President
FLEET CAPITAL CORPORATION
By /s/ Sandra Evans
------------------------------
Title: SVP
THE FUJI BANK, LIMITED
By /s/ Peter L. Chinnici
------------------------------
Peter L. Chinnici
Title: Joint General Manager
HARRIS TRUST AND SAVINGS BANK
By /s/ George Dloby
------------------------------
Title: Vice President
M&I MARSHALL AND ILSLEY BANK
By /s/ Kathleen Coleman
------------------------------
Title: Vice President
THE MITSUBISHI TRUST AND
BANKING CORPORATION
By
------------------------------
Title:
<PAGE>
NATIONAL CITY BANK
By /s/ Barry C. Robinson
------------------------------
Title: Vice President
WACHOVIA BANK, N.A.
By /s/ Debra L. Coheley
------------------------------
Debra L. Coheley
Title: Senior Vice President
RZB FINANCE, LLP
By /s/ John A. Valiska By /s/ Christoph Hoedl
----------------------------------------------------------
John A. Valiska Christoph Hoedl
Title: Vice President Title: Assistant Vice President
AMENDED AND RESTATED CREDIT AGREEMENT
among
OMNIQUIP INTERNATIONAL, INC.,
VARIOUS LENDING INSTITUTIONS,
MORGAN STANLEY SENIOR FUNDING, INC.,
as Syndication Agent and Co-Arranger,
and
FIRST UNION NATIONAL BANK,
as Administrative Agent and Co-Arranger
----------------------------------
Dated as of November 17, 1997 and Amended
and Restated as of February 26, 1999
----------------------------------
$211,574,468.09
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of February
26, 1999, among OMNIQUIP INTERNATIONAL, INC., a Delaware corporation (the
"Borrower"), the Banks party hereto from time to time, MORGAN STANLEY SENIOR
FUNDING, INC., as Syndication Agent and Co-Arranger, and FIRST UNION NATIONAL
BANK, as Administrative Agent and Co-Arranger (all capitalized terms used herein
and defined in Section 11 are used herein as therein defined).
W I T N E S S E T H :
WHEREAS, the Borrower, certain of the Banks, the Syndication
Agent and the Administrative Agent are parties to a certain Credit Agreement,
dated as of November 17, 1997 (as amended to the date hereof, the "Original
Credit Agreement"); and
WHEREAS, the parties hereto have agreed to amend and restate
in its entirety the Original Credit Agreement as provided herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 The Commitments. (a) Subject to and upon the terms and
conditions set forth herein, each Bank with a Term Loan Commitment severally
agrees to make, (x) on the Restatement Effective Date (in the case of Term Loans
other than Delayed-Draw Term Loans) and (y) on or before the Delayed-Draw
Commitment Expiration Date (in the case of Delayed-Draw Term Loans), a term loan
or term loans (each a "Term Loan" and, collectively, the "Term Loans") to the
Borrower, which Term Loans (i) shall, at the option of the Borrower, be incurred
and maintained as, and/or converted into, Base Rate Loans or Eurodollar Loans,
provided that (A) except as otherwise specifically provided in Section 1.10(b),
all Term Loans comprising the same Borrowing shall at all times be of the same
Type and (B) no Term Loans maintained as Eurodollar Loans may be incurred prior
to the earlier of the fifth day after the Restatement Effective Date and the
date on which the initial syndication of the credit facilities provided for in
this Agreement is completed, as determined by the Agents (the "Syndication
Date"), (ii) if made on the Restatement Effective Date, shall not exceed for any
Bank that amount which equals the Term Loan Commitment of such Bank less the
Delayed Draw Commitment of such Bank, each as in effect on the Restatement
Effective Date (before giving effect to any reduction thereto on such date
pursuant to Section 3.03(a)(i) but after giving effect to any reductions thereto
on or prior to such date pursuant to Section 3.03(a)(ii)), and (iii) if made on
the Earnout Payment Date, shall not exceed (A) for any Bank that amount which
equals the Delayed-Draw Commitment of such Bank on the Earnout Payment Date
(before giving effect to any reduction thereto on such date pursuant to Section
3.03(b)(i) but after giving effect to any reductions thereto on or prior to such
date pursuant to Section 3.03(b)(ii)) and (B) for all Banks the amount of the
Earnout. The Delayed-Draw Term Loans may only be incurred on the date (the
"Earnout Payment Date") on which the Earnout is paid and shall not exceed the
amount of the Earnout. Once repaid, Term Loans incurred hereunder may not be
reborrowed.
<PAGE>
(b) Subject to and upon the terms and conditions set forth
herein, each Bank with a Revolving Loan Commitment severally agrees, at any time
and from time to time on and after the Restatement Effective Date and prior to
the Revolving Loan Maturity Date, to make a revolving loan or revolving loans
(each a "Revolving Loan" and, collectively, the "Revolving Loans") to the
Borrower, which Revolving Loans (i) shall, at the option of the Borrower, be
incurred and maintained as, and/or converted into, Base Rate Loans or Eurodollar
Loans, provided that (A) except as otherwise specifically provided in Section
1.10(b), all Revolving Loans comprising the same Borrowing shall at all times be
of the same Type and (B) no Borrowings of Revolving Loans maintained as
Eurodollar Loans may be incurred prior to the earlier of the fifth day after the
Restatement Effective Date and the Syndication Date, (ii) may be repaid and
reborrowed in accordance with the provisions hereof, (iii) shall not exceed for
any such Bank at any time outstanding that aggregate principal amount which,
when added to the product of (x) such Bank's Adjusted RL Percentage and (y) the
sum of (I) the aggregate amount of all Letter of Credit Outstandings (exclusive
of Unpaid Drawings which are repaid with the proceeds of, and simultaneously
with the incurrence of, the respective incurrence of Revolving Loans) at such
time and (II) the aggregate principal amount of all Swingline Loans (exclusive
of Swingline Loans which are repaid with the proceeds of, and simultaneously
with the incurrence of, the respective incurrence of Revolving Loans) then
outstanding, equals the Revolving Loan Commitment of such Bank at such time and
(iv) shall not exceed for all Banks at any time outstanding that aggregate
principal amount which, when added to (I) the amount of all Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid with the proceeds
of, and simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) at such time and (II) the aggregate principal amount of all
Swingline Loans (exclusive of Swingline Loans which are repaid with the proceeds
of, and simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) then outstanding, equals the Total Revolving Loan Commitment at
such time.
(c) Subject to and upon the terms and conditions set forth
herein, the Swingline Bank agrees to make, at any time and from time to time on
and after the Restatement Effective Date and prior to the Swingline Expiry Date,
a revolving loan or revolving loans (each a "Swingline Loan" and, collectively,
the "Swingline Loans") to the Borrower, which Swingline Loans (i) shall be made
and maintained as Base Rate Loans, (ii) may be repaid and reborrowed in
accordance with the provisions hereof, (iii) shall not exceed in aggregate
principal amount at any time outstanding, when combined with the aggregate
principal amount of all Revolving Loans made by Non-Defaulting Banks then
outstanding and the Letter of Credit Outstandings at such time, an amount equal
to the Adjusted Total Revolving Loan Commitment at such time (after giving
effect to any reductions to the Adjusted Total Revolving Loan Commitment on such
date), and (iv) shall not exceed in aggregate principal amount at any time
outstanding the Maximum Swingline Amount. Notwithstanding anything to the
contrary contained in this Section 1.01(c), the Swingline Bank shall not make
any Swingline Loan after it has received written notice from the Borrower or the
Required Banks stating that a Default or an Event of Default exists and is
continuing until such time as the Swingline Bank shall have received written
notice (i) of rescission of all such notices from the party or parties
originally delivering such notice, (ii) of the waiver of such Default or Event
of Default by the Required Banks or (iii) that the Agents in good faith believe
that such Default or Event of Default no longer exists.
-2-
<PAGE>
(d) On any Business Day, the Swingline Bank may, in its sole
discretion, give notice to the Banks that its outstanding Swingline Loans shall
be funded with one or more Borrowings of Revolving Loans (provided that such
notice shall be deemed to have been automatically given upon the occurrence of a
Default or an Event of Default under Section 10.05 or upon the exercise of any
of the remedies provided in the last paragraph of Section 10), in which case one
or more Borrowings of Revolving Loans constituting Base Rate Loans (each such
Borrowing, a "Mandatory Borrowing") shall be made on the immediately succeeding
Business Day by all Banks with a Revolving Loan Commitment (without giving
effect to any reductions thereto pursuant to the last paragraph of Section 10)
pro rata based on each such Bank's Adjusted RL Percentage (determined before
giving effect to any termination of the Revolving Loan Commitments pursuant to
the last paragraph of Section 10) and the proceeds thereof shall be applied
directly by the Swingline Bank to repay the Swingline Bank for such outstanding
Swingline Loans. Each such Bank hereby irrevocably agrees to make Revolving
Loans upon one Business Day's notice pursuant to each Mandatory Borrowing in the
amount and in the manner specified in the preceding sentence and on the date
specified in writing by the Swingline Bank notwithstanding (i) that the amount
of the Mandatory Borrowing may not comply with the Minimum Borrowing Amount
otherwise required hereunder, (ii) any failure to satisfy any conditions
specified in Section 6, (iii) any Default or Event of Default existing on such
date, (iv) the date of such Mandatory Borrowing and (v) the amount of the Total
Revolving Loan Commitment or the Adjusted Total Revolving Loan Commitment at
such time. In the event that any Mandatory Borrowing cannot for any reason be
made on the date otherwise required above (including, without limitation, as a
result of the commencement of a proceeding under the Bankruptcy Code with
respect to the Borrower), then each such Bank hereby agrees that it shall
forthwith purchase (as of the date the Mandatory Borrowing would otherwise have
occurred, but adjusted for any payments received by the Swingline Bank from the
Borrower on or after such date and prior to such purchase) from the Swingline
Bank such participations in the outstanding Swingline Loans as shall be
necessary to cause such Banks to share in such Swingline Loans ratably based
upon their respective Adjusted RL Percentages (determined before giving effect
to any termination of the Revolving Loan Commitments pursuant to the last
paragraph of Section 10), provided that (x) all interest payable on the
Swingline Loans shall be for the account of the Swingline Bank until the date as
of which the respective participation is required to be purchased and, to the
extent attributable to the purchased participation, shall be payable to the
participant from and after such date and (y) at the time any purchase of
participations pursuant to this sentence is actually made, the purchasing Bank
shall be required to pay the Swingline Bank interest on the principal amount of
the participation purchased for each day from and including the day upon which
the Mandatory Borrowing would otherwise have occurred to but excluding the date
of payment for such participation, at the overnight Federal Funds Rate for the
first three days and at the rate otherwise applicable to Revolving Loans
maintained as Base Rate Loans hereunder for each day thereafter.
1.02 Minimum Amount of Each Borrowing. The aggregate principal
amount of each Borrowing of Loans under a respective Tranche shall not be less
than the Minimum Borrowing Amount for such Tranche and, if greater, shall be in
integral multiples of $100,000. More than one Borrowing may occur on the same
date, but at no time shall there be outstanding more than eight Borrowings of
Eurodollar Loans.
-3-
<PAGE>
1.03 Notice of Borrowing. Whenever the Borrower desires to
incur Loans hereunder (excluding Swingline Loans and Revolving Loans incurred
pursuant to a Mandatory Borrowing), the Borrower shall give the Administrative
Agent at its Notice Office at least one Business Day's prior notice of each Base
Rate Loan and at least three Business Days' prior notice of each Eurodollar Loan
to be incurred hereunder, provided that any such notice shall be deemed to have
been given on a certain day only if given before 12:00 Noon (Eastern time) on
such day. Each such notice (each a "Notice of Borrowing"), except as otherwise
expressly provided in Section 1.10, shall be irrevocable and shall be given by
the Borrower in writing, or by telephone promptly confirmed in writing, in the
form of Exhibit A, appropriately completed to specify the aggregate principal
amount of the Loans to be incurred pursuant to such Borrowing, the date of such
Borrowing (which shall be a Business Day), whether the Loans being incurred
pursuant to such Borrowing shall constitute Term Loans, or Revolving Loans and
whether the Loans being incurred pursuant to such Borrowing are to be initially
maintained as Base Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the
initial Interest Period to be applicable thereto. The Administrative Agent shall
promptly give each Bank which is required to make Loans of the Tranche specified
in the respective Notice of Borrowing, notice of such proposed Borrowing, of
such Bank's proportionate share thereof and of the other matters required by the
immediately preceding sentence to be specified in the Notice of Borrowing.
(b)(i) Whenever the Borrower desires to incur Swingline Loans
hereunder, the Borrower shall give the Swingline Bank no later than 1:00 P.M.
(Eastern time) on the date that a Swingline Loan is to be incurred, written
notice or telephonic notice promptly confirmed in writing of each Swingline Loan
to be incurred hereunder. Each such notice shall be irrevocable and specify in
each case (A) the date of Borrowing (which shall be a Business Day) and (B) the
aggregate principal amount of the Swingline Loans to be incurred pursuant to
such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice
specified in Section 1.01(d), with the Borrower irrevocably agreeing, by its
incurrence of any Swingline Loan, to the making of the Mandatory Borrowings as
set forth in Section 1.01(d).
(c) Without in any way limiting the obligation of the Borrower
to confirm in writing any telephonic notice of any Borrowing or prepayment of
Loans, the Administrative Agent or the Swingline Bank, as the case may be, may
act without liability upon the basis of telephonic notice of such Borrowing or
prepayment, believed by the Administrative Agent or the Swingline Bank, as the
case may be, in good faith to be from the Chief Executive Officer, the
President, the Vice President-Finance, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer or the Controller of the Borrower, or from
any other authorized person of the Borrower designated in writing by the
Borrower to the Administrative Agent as being authorized to give such notices,
prior to receipt of written confirmation. In each such case, the Borrower hereby
waives the right, absent manifest error, to dispute the Administrative Agent's
or the Swingline Bank's record of the terms of such telephonic notice of such
Borrowing or prepayment of Loans.
1.04 Disbursement of Funds. No later than 12:00 Noon (Eastern
time) on the date specified in each Notice of Borrowing (or (x) in the case of
Swingline Loans, no later than 3:00 P.M. (Eastern time) on the date specified
pursuant to Section 1.03(b)(i), or (y) in the case of
-4-
<PAGE>
Mandatory Borrowings, no later than 12:00 Noon (Eastern time) on the date
specified in Section 1.01(d)), each Bank with a Commitment of the respective
Tranche will make available its pro rata portion (determined in accordance with
Section 1.07) of each such Borrowing requested to be made on such date (or, in
the case of Swingline Loans, the Swingline Bank will make available the full
amount thereof). All such amounts will be made available in Dollars and in
immediately available funds at the Payment Office of the Administrative Agent,
and the Administrative Agent will make available to the Borrower at the Payment
Office the aggregate of the amounts so made available by the Banks (other than
in respect of Mandatory Borrowings) by delivery of such amounts to the
Borrower's Account. Unless the Administrative Agent shall have been notified by
any Bank prior to the date of Borrowing that such Bank does not intend to make
available to the Administrative Agent such Bank's portion of any Borrowing to be
made on such date, the Administrative Agent may assume that such Bank has made
such amount available to the Administrative Agent on such date of Borrowing and
the Administrative Agent may (but shall not be obligated to), in reliance upon
such assumption, make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative Agent
by such Bank, the Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Bank. If such Bank does not pay such
corresponding amount forthwith upon the Administrative Agent's demand therefor,
the Administrative Agent shall promptly notify the Borrower and the Borrower
shall immediately pay such corresponding amount to the Administrative Agent. The
Administrative Agent shall also be entitled to recover on demand from such Bank
or the Borrower, as the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount was made available
by the Administrative Agent to the Borrower until the date such corresponding
amount is recovered by the Administrative Agent, at a rate per annum equal to
(i) if recovered from such Bank, the Federal Funds Rate for each day during the
period consisting of the first three Business Days following such date of
availability and thereafter at the Base Rate as in effect from time to time and
(ii) if recovered from the Borrower, the rate of interest applicable to the
respective Borrowing, as determined pursuant to Section 1.08. Nothing in this
Section 1.04 shall be deemed to relieve any Bank from its obligation to make
Loans hereunder or to prejudice any rights which the Borrower may have against
any Bank as a result of any failure by such Bank to make Loans hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the principal
of, and interest on, the Loans made by each Bank shall be evidenced (i) if Term
Loans, by promissory notes duly executed and delivered by the Borrower
substantially in the form of Exhibits B-1 (each an "A Term Note" and,
collectively, the "A Term Notes") and B-2 (each a "B Term Note" and,
collectively, the "B Term Notes" and, together with the A Term Notes, each a
"Term Note" and, collectively, the "Term Notes"), in each case with blanks
appropriately completed in conformity herewith, (ii) if Revolving Loans, by a
promissory note duly executed and delivered by the Borrower substantially in the
form of Exhibit B-3, with blanks appropriately completed in conformity herewith
(each a "Revolving Note" and, collectively, the "Revolving Notes") and (iii) if
Swingline Loans, by a promissory note duly executed and delivered by the
Borrower substantially in the form of Exhibit B-4, with blanks appropriately
completed in conformity herewith (the "Swingline Note").
-5-
<PAGE>
(b) The Term Notes issued to each Bank that has a Term Loan
Commitment or outstanding Term Loans shall (i) be executed by the Borrower, (ii)
be payable to such Bank or its registered assigns and be dated the Restatement
Effective Date (or, if issued after the Restatement Effective Date, be dated the
date of the issuance thereof), (iii) be in a combined stated principal amount
equal to the Term Loan Commitment of such Bank on the Restatement Effective Date
(before giving effect to the making of any Term Loans on such date by such Bank)
(or, if issued after the Restatement Effective Date, be in a stated principal
amount equal to the outstanding principal amount of any Term Loans of such Bank
at such time) and be payable in the outstanding principal amount of Term Loans
evidenced thereby, provided that the combined stated principal amount of the B
Term Notes shall be $3,000,000 at all times during which the Term Loan
Commitments exist or Term Loans in excess of $3,000,000 remain outstanding, with
such B Term Notes to be issued to each Bank with a Term Loan Commitment or
outstanding Term Loans in amounts equal to such Bank's pro rata portion of the
Term Loan obligations represented by such B Term Notes, (iv) mature on the Term
Loan Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby, (vi) be subject to voluntary prepayment as provided
in Section 4.01, and mandatory repayment as provided in Section 4.02 and (vii)
be entitled to the benefits of this Agreement and the other Credit Documents,
provided that the A Term Notes shall not be entitled to the benefits of the
Minnesota Mortgage.
(c) The Revolving Note issued to each Bank that has a
Revolving Loan Commitment or outstanding Revolving Loans shall (i) be executed
by the Borrower, (ii) be payable to such Bank or its registered assigns and be
dated the Restatement Effective Date (or, if issued after the Restatement
Effective Date, be dated the date of the issuance thereof), (iii) be in a stated
principal amount equal to the Revolving Loan Commitment of such Bank (or, if
issued after the termination thereof, be in a stated principal amount equal to
the outstanding Revolving Loans of such Bank at such time) and be payable in the
outstanding principal amount of the Revolving Loans evidenced thereby, (iv)
mature on the Revolving Loan Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 4.01, and mandatory repayment as
provided in Section 4.02 and (vii) be entitled to the benefits of this Agreement
and the other Credit Documents.
(d) The Swingline Note issued to the Swingline Bank shall (i)
be executed by the Borrower, (ii) be payable to the Swingline Bank or its
registered assigns and be dated the Restatement Effective Date, (iii) be in a
stated principal amount equal to the Maximum Swingline Amount and be payable in
the outstanding principal amount of the Swingline Loans evidenced thereby from
time to time, (iv) mature on the Swingline Expiry Date, (v) bear interest as
provided in the appropriate clause of Section 1.08 in respect of the Base Rate
Loans evidenced thereby, (vi) be subject to voluntary prepayment as provided in
Section 4.01, and mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(e) Each Bank will note on its internal records the amount of
each Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse
-6-
<PAGE>
on the reverse side thereof the outstanding principal amount of Loans evidenced
thereby. Failure to make any such notation or any error in such notation shall
not affect the Borrower's obligations in respect of such Loans.
1.06 Conversions. The Borrower shall have the option to
convert, on any Business Day occurring after the Restatement Effective Date, all
or a portion equal to at least the Minimum Borrowing Amount of the outstanding
principal amount of Loans (other than Swingline Loans, which may not be
converted pursuant to this Section 1.06) made pursuant to one or more Borrowings
(so long as of the same Tranche) of one or more Types of Loans into a Borrowing
(of the same Tranche) of another Type of Loan, provided that, (i) except as
otherwise provided in Section 1.10(b), Eurodollar Loans may be converted into
Base Rate Loans only on the last day of an Interest Period applicable to the
Loans being converted and no such partial conversion of Eurodollar Loans shall
reduce the outstanding principal amount of such Eurodollar Loans made pursuant
to a single Borrowing to less than the Minimum Borrowing Amount applicable
thereto, (ii) Base Rate Loans may only be converted into Eurodollar Loans if no
Default or Event of Default is in existence on the date of the conversion, and
(iii) no conversions of Base Rate Loans into Eurodollar Loans shall be permitted
prior to the earlier of (x) the fifth day after the Restatement Effective Date
and (y) the Syndication Date. Each such conversion shall be effected by the
Borrower by giving the Administrative Agent at its Notice Office prior to 12:00
Noon (Eastern time) at least three Business Days' prior notice (each a "Notice
of Conversion") specifying the Loans to be so converted, the Borrowing or
Borrowings pursuant to which such Loans were made and, if to be converted into
Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent shall give each Bank prompt notice of any such proposed
conversion affecting any of its Loans. Upon any such conversion the proceeds
thereof will be deemed to be applied directly on the day of such conversion to
prepay the outstanding principal amount of the Loans being converted.
1.07 Pro Rata Borrowings. All Borrowings of Term Loans and
Revolving Loans under this Agreement shall be incurred from the Banks pro rata
on the basis of their Term Loan Commitments or Revolving Loan Commitments, as
the case may be, provided, that all Borrowings of Revolving Loans made pursuant
to a Mandatory Borrowing shall be incurred from the Banks with Revolving Loan
Commitments pro rata on the basis of their Adjusted RL Percentages. No Bank
shall be responsible for any default by any other Bank of its obligation to make
Loans hereunder and each Bank shall be obligated to make the Loans provided to
be made by it hereunder, regardless of the failure of any other Bank to make its
Loans hereunder.
1.08 Interest. (a) The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Base Rate Loan from the date the
proceeds thereof are made available to the Borrower until the earlier of (i) the
maturity thereof (whether by acceleration or otherwise) and (ii) the conversion
of such Base Rate Loan into a Eurodollar Loan pursuant to Section 1.06, at a
rate per annum which shall be equal to the sum of the Applicable Base Rate
Margin plus the Base Rate in effect from time to time.
(b) The Borrower agrees to pay interest in respect of the
unpaid principal amount of each Eurodollar Loan from the date the proceeds
thereof are made available to the Borrower
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<PAGE>
until the earlier of (i) the maturity thereof (whether by acceleration or
otherwise) and (ii) the conversion of such Eurodollar Loan into a Base Rate Loan
pursuant to Section 1.06, 1.09 or 1.10, as applicable, at a rate per annum which
shall, during each Interest Period applicable thereto, be equal to the sum of
the Applicable Eurodollar Margin plus the Eurodollar Rate for such Interest
Period.
(c) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall, in each case, bear interest at a rate per annum equal to 2% per
annum in excess of the rate otherwise applicable to Base Rate Loans of the
respective Tranche of Loans from time to time, provided that at no time shall
any Loan bear interest after maturity at a rate per annum which is less than 2%
in excess of the rate applicable thereto at maturity without the application of
the preceding provisions of this Section 1.08(c), with such interest to be
payable on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable
(i) in respect of each Base Rate Loan, quarterly in arrears on each Quarterly
Payment Date, (ii) in respect of each Eurodollar Loan, on the last day of each
Interest Period applicable thereto and, in the case of an Interest Period in
excess of three months, on each date occurring at three month intervals after
the first day of such Interest Period and (iii) in respect of each Loan, on any
repayment or prepayment (on the amount repaid or prepaid), at maturity (whether
by acceleration or otherwise) and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Administrative
Agent shall determine the Eurodollar Rate for each Interest Period applicable to
Eurodollar Loans and shall promptly notify the Borrower and the Banks thereof.
Each such determination shall, absent manifest error, be final and conclusive
and binding on all parties hereto.
1.09 Interest Periods. At the time it gives any Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, any Eurodollar Loan (in the case of the initial Interest Period applicable
thereto) or on the third Business Day prior to the expiration of an Interest
Period applicable to such Eurodollar Loan (in the case of any subsequent
Interest Period), the Borrower shall have the right to elect, by giving the
Administrative Agent notice thereof, the interest period (each an "Interest
Period") applicable to such Eurodollar Loan, which Interest Period shall, at the
option of the Borrower (but subject to the limitation set forth in clause (B) of
the proviso in each of Sections 1.01(a)(i), and 1.01(b)(i), be a one, two, three
or six-month period, provided that:
(i) all Eurodollar Loans comprising a Borrowing shall at all
times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Eurodollar Loan (including
the date of any conversion thereto from a Loan of a different Type) and
each Interest Period occurring thereafter in respect of such Eurodollar
Loan shall commence on the day on which the immediately preceding
Interest Period applicable thereto expires;
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(iii) if any Interest Period for a Eurodollar Loan begins on a
day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period, such Interest Period shall
end on the last Business Day of such calendar month;
(iv) if any Interest Period for a Eurodollar Loan would
otherwise expire on a day which is not a Business Day, such Interest
Period shall expire on the next succeeding Business Day; provided,
however, that if any Interest Period for a Eurodollar Loan would
otherwise expire on a day which is not a Business Day but is a day of
the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(v) no Interest Period may be selected at any time when a
Default or an Event of Default is then in existence;
(vi) no Interest Period in respect of any Borrowing of any
Tranche of Loans shall be selected which extends beyond the respective
Maturity Date for such Tranche of Loans; and
(vii) no Interest Period in respect of any Borrowing of Term
Loans shall be selected which extends beyond any date upon which a
mandatory repayment of such Term Loans will be required to be made
under Section 4.02(b), if the aggregate principal amount of Term Loans
which have Interest Periods which will expire after such date will be
in excess of the aggregate principal amount of Term Loans then
outstanding less the aggregate amount of such required repayment.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to convert
such Eurodollar Loans into Base Rate Loans effective as of the expiration date
of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that
any Bank shall have determined (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties hereto but, with
respect to clause (i) below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the Restatement Effective Date affecting the
interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in
the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs
or reductions in the amounts received or receivable hereunder with
respect to any Eurodollar Loan because of (x) any change since the date
of this Agreement in any applicable law or governmental rule,
regulation, order, guideline or request (whether or not having the
force of law) or in
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the interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation, order,
guideline or request, such as, for example, but not limited to: (A) a
change in the basis of taxation of payment to any Bank of the principal
of or interest on the Notes or any other amounts payable hereunder
(except for changes in the rate of tax on, or determined by reference
to, the net income or profits of such Bank or any change in a tax
imposed solely on deposits or net assets of a Bank, in each case
pursuant to the laws of the jurisdiction in which it is organized or in
which its principal office or applicable lending office is located or
any subdivision thereof or therein) or (B) a change in official reserve
requirements, but, in all events, excluding reserves required under
Regulation D to the extent included in the computation of the
Eurodollar Rate and/or (y) other circumstances since the date of this
Agreement affecting the New York interbank Eurodollar market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has been made (x) unlawful by any law or governmental
rule, regulation or order, (y) impossible by compliance by any Bank in
good faith with any governmental request (whether or not having force
of law) or (z) impracticable as a result of a contingency occurring
after the date of this Agreement which materially and adversely affects
the interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent, in the case
of clause (i) above) shall promptly give notice (by telephone promptly confirmed
in writing) to the Borrower and, except in the case of clause (i) above, to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks). Thereafter (x) in the
case of clause (i) above, Eurodollar Loans shall no longer be available until
such time as the Administrative Agent notifies the Borrower and the Banks that
the circumstances giving rise to such notice by the Administrative Agent no
longer exist, and any Notice of Borrowing or Notice of Conversion given by the
Borrower with respect to Eurodollar Loans which have not yet been incurred
(including by way of conversion) shall be deemed rescinded by the Borrower, (y)
in the case of clause (ii) above, the Borrower shall, subject to the provisions
of this Section 1.10(a) and Section 13.17 (to the extent applicable), pay to
such Bank, within ten Business Days after such Bank's written request therefor
and the delivery to the Borrower of the written notice described below in this
clause (y), such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Bank in its sole
discretion shall determine (but without duplication of any amounts that may be
payable to such Bank under Section 1.10(c) or 2.06) as shall be required to
compensate such Bank for such increased costs or reductions in amounts received
or receivable hereunder reasonably determined by such Bank in good faith (a
written notice as to the additional amounts owed to such Bank, showing in
reasonable detail the basis for the calculation thereof, submitted to the
Borrower by such Bank shall, absent manifest error, be final and conclusive and
binding on all the parties hereto) and (z) in the case of clause (iii) above,
the Borrower shall take one of the actions specified in Section 1.10(b) as
promptly as possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) shall) either (x) if the affected
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Eurodollar Loan is then being made initially or pursuant to a conversion, by
giving the Administrative Agent telephonic notice (confirmed in writing) as
promptly as practicable and in any event within one Business Day after the date
that the Borrower was notified by the affected Bank or the Administrative Agent
pursuant to Section 1.10(a)(ii) or (iii) or (y) if the affected Eurodollar Loan
is then outstanding, upon at least three Business Days' written notice to the
Administrative Agent, require the affected Bank to convert such Eurodollar Loan
into a Base Rate Loan, provided that, if more than one Bank is affected at any
time, then all affected Banks must be treated the same pursuant to this Section
1.10(b).
(c) If at any time after the Restatement Effective Date any
Bank determines that the introduction of or any change (which introduction or
change shall have occurred after the Restatement Effective Date) in any
applicable law or governmental rule, regulation, order, guideline, directive or
request (whether or not having the force of law) concerning capital adequacy, or
any change in interpretation or administration thereof by any governmental
authority, central bank, the NAIC or comparable agency, will have the effect of
increasing the amount of capital required or expected to be maintained by such
Bank or any corporation controlling such Bank based on the existence of such
Bank's Commitments hereunder or its obligations hereunder, then the Borrower
shall, subject to the provisions of this Section 1.10(c) and Section 13.17 (to
the extent applicable), pay to such Bank, within ten Business Days after its
written demand therefor, such additional amounts as shall be required to
compensate such Bank or such other corporation for the increased cost to such
Bank or such other corporation or the reduction in the rate of return to such
Bank or such other corporation as a result of such increase of capital (but
without duplication of any amounts that may be payable to such Bank under
Section 1.10(a) or 2.06). In determining such additional amounts, each Bank will
act reasonably and in good faith and will use averaging and attribution methods
which are reasonable, provided that such Bank's determination of compensation
owing under this Section 1.10(c) shall, absent manifest error, be final and
conclusive and binding on all the parties hereto. Each Bank, upon determining
that any additional amounts will be payable pursuant to this Section 1.10(c),
will give prompt written notice thereof to the Borrower, which notice shall
describe in reasonable detail the introduction of or change in applicable law or
governmental rule, regulation, order, guideline, directive or request or change
in interpretation or administration and the basis for calculation of such
additional amounts.
1.11 Breakage. (a) The Borrower shall compensate each Bank,
within ten Business Days after its written request (which request shall set
forth in reasonable detail the basis for requesting such compensation), for all
reasonable losses, expenses and liabilities (including, without limitation, any
loss, expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by such Bank to fund its Eurodollar Loans
but excluding loss of anticipated profits) which such Bank may sustain: (i) if
for any reason (other than a default by such Bank or the Administrative Agent) a
Borrowing of, or conversion from or into, Eurodollar Loans does not occur on a
date specified therefor in a Notice of Borrowing or Notice of Conversion
(whether or not withdrawn by the Borrower or deemed withdrawn pursuant to
Section 1.10(a)); (ii) if any repayment (including any repayment made pursuant
to Section 4.01, 4.02 or as a result of an acceleration of the Loans pursuant to
Section 10) or conversion of any of its Eurodollar Loans occurs on a date which
is not the last day of an Interest Period with
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respect thereto; (iii) if any prepayment of any of its Eurodollar Loans is not
made on any date specified in a notice of prepayment given by the Borrower; or
(iv) as a consequence of (x) any other default by the Borrower to repay its
Loans when required by the terms of this Agreement or any Note held by such Bank
or (y) any election made pursuant to Section 1.10(b). Each Bank agrees to use
commercially reasonable efforts to minimize its losses, expenses and liabilities
described in this Section 1.11(a).
(b) In addition to any compensation owing pursuant to clause
(a) of this Section 1.11, on the Restatement Effective Date the Borrower shall
compensate each Bank with Eurodollar Loans outstanding under the Original Credit
Agreement for all reasonable losses, expenses and liabilities which such Bank
may sustain as a result of the refinancing or repayment of such Eurodollar Loans
on the Restatement Effective Date required pursuant to Section 5.07(b).
1.12 Change of Lending Office. Each Bank agrees that on the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect to such Bank,
it will (subject to overall policy considerations of such Bank), if requested by
the Borrower, designate another Lending Office for any Loans or Letters of
Credit affected by such event, provided that such designation is made on such
terms that such Bank and its Lending Office suffer no economic, legal or
regulatory disadvantage which such Bank determines, in its sole discretion, to
be adverse in any material respect, with the object of avoiding the consequence
of the event giving rise to the operation of such Section. Nothing in this
Section 1.12 shall affect or postpone any of the obligations of the Borrower or
the right of any Bank provided in Sections 1.10, 2.06 and 4.04.
1.13 Replacement of Banks. (a) If any Bank becomes a
Defaulting Bank or otherwise defaults in its obligations to make Loans or fund
Unpaid Drawings, (b) upon the occurrence of an event giving rise to the
operation of Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.06 or
Section 4.04 with respect to any Bank which results in such Bank charging to the
Borrower increased costs materially in excess of those being generally charged
by the other Banks or (c) in the case of a refusal by a Bank to consent to one
or more proposed changes, waivers, discharges or terminations with respect to
this Agreement which have been approved by the Required Banks as (and to the
extent) provided in Section 13.12(b), the Borrower shall have the right, if no
Default or Event of Default then exists (or, in the case of preceding clause
(c), no Default or Event of Default will exist immediately after giving effect
to such replacement), to either (i) replace such Bank (the "Replaced Bank") with
one or more other Eligible Transferees (it being acknowledged that the Replaced
Bank shall be under no obligation to identify or secure the commitment of such
Eligible Transferee or assist in identifying or securing the commitment of such
Eligible Transferee), none of whom shall constitute a Defaulting Bank at the
time of such replacement and each of whom shall be reasonably acceptable to the
Administrative Agent (collectively, the "Replacement Bank") or (ii) at the
option of the Borrower, replace only (x) the Revolving Loan Commitment (and
outstandings pursuant thereto) of the Replaced Bank with an identical Revolving
Loan Commitment provided by the Replacement Bank or (y) in the case of a
replacement as provided in Section 13.12(b) where the consent of the respective
Bank is required with respect to less than all Tranches of its Loans or
Commitments, the Commitments and/or
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outstanding Term Loans of such Bank in respect of each Tranche where the consent
of such Bank would otherwise be individually required, with identical
Commitments and/or Term Loans of the respective Tranche provided by the
Replacement Bank, provided that (1) at the time of any replacement pursuant to
this Section 1.13, the Replacement Bank shall enter into one or more Assignment
and Assumption Agreements pursuant to Section 13.04(b) (and with all fees
payable pursuant to said Section 13.04(b) to be paid by the Replacement Bank)
pursuant to which the Replacement Bank shall acquire all of the Commitments and
outstanding Loans (or, in the case of the replacement of only (I) the Revolving
Loan Commitment, the Revolving Loan Commitment and outstanding Revolving Loans
and participations in outstanding Letters of Credit and/or (II) the outstanding
Term Loans, the Term Loans) of, and in each case participations in Letters of
Credit by, the Replaced Bank and, in connection therewith, shall pay to (a) the
Replaced Bank in respect thereof an amount equal to the sum of (i) an amount
equal to the principal of, and all accrued interest on, all outstanding Loans
(or of the Loans of the respective Tranche being replaced) of the Replaced Bank,
(ii) an amount equal to all Unpaid Drawings that have been funded by (and not
reimbursed to) such Replaced Bank, together with all then unpaid interest with
respect thereto at such time and (iii) an amount equal to all accrued, but
theretofore unpaid, Fees owing to the Replaced Bank (but only with respect to
the relevant Tranche, in the case of the replacement of less than all Tranches
of Loans then held by the respective Replaced Bank) pursuant to Section 3.01,
(b) except in the case of the replacement of only the outstanding Term Loans of
a Replaced Bank, each Issuing Bank an amount equal to such Replaced Bank's
Adjusted RL Percentage (for this purpose, determined as if the adjustment
described in clause (i) of the immediately succeeding sentence had been made
with respect to such Replaced Bank) of any Unpaid Drawing (which at such time
remains an Unpaid Drawing) to the extent such amount was not theretofore funded
by such Replaced Bank to such Issuing Bank and (c) except in the case of the
replacement of only the outstanding Term Loans of a Replaced Bank, the Swingline
Bank an amount equal to such Replaced Bank's Adjusted RL Percentage of any
Mandatory Borrowing to the extent such amount was not theretofore funded by such
Replaced Bank, and (2) all obligations of the Borrower due and owing to the
Replaced Bank at such time (other than those specifically described in clause
(1) above in respect of which the assignment purchase price has been, or is
concurrently being, paid) shall be paid in full to such Replaced Bank
concurrently with such replacement. Upon the execution of the respective
Assignment and Assumption Agreement, the payment of amounts referred to in
clauses (1) and (2) above and, if so requested by the Replacement Bank, delivery
to the Replacement Bank of the appropriate Note or Notes executed by the
Borrower, (i) the Replacement Bank shall become a Bank hereunder and, unless the
respective Replaced Bank continues to have outstanding Term Loans or a
Commitment hereunder, the Replaced Bank shall cease to constitute a Bank
hereunder, except with respect to indemnification provisions under this
Agreement (including, without limitation, Sections 1.10, 1.11, 2.06, 4.04, 12.06
and 13.01), which shall survive as to such Replaced Bank and (ii) except in the
case of the replacement of only outstanding Term Loans of a Replaced Bank, the
Adjusted RL Percentages of the Banks shall be automatically adjusted at such
time to give effect to such replacement (and to give effect to the replacement
of a Defaulting Bank with one or more Non-Defaulting Banks). Replacements
pursuant to this Section 1.13 shall only be effected by assignments which
otherwise meet the applicable requirements of Section 13.04(b).
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SECTION 2. Letters of Credit.
2.01 Letters of Credit. (a) Subject to and upon the terms and
conditions set forth herein, the Borrower may request that any Issuing Bank
issue, at any time and from time to time on and after the Restatement Effective
Date and prior to the 30th day prior to the Revolving Loan Maturity Date, (x)
for the account of the Borrower and for the benefit of any holder (or any
trustee, agent or other similar representative for any such holders) of L/C
Supportable Obligations of the Borrower or any of its Subsidiaries, an
irrevocable standby letter of credit, in a form customarily used by such Issuing
Bank or in such other form as has been approved by such Issuing Bank (each such
standby letter of credit, a "Standby Letter of Credit") in support of such L/C
Supportable Obligations and (y) for the account of the Borrower and for the
benefit of sellers of goods and materials used in the ordinary course of
business of the Borrower or any of its Subsidiaries an irrevocable sight
commercial letter of credit in a form customarily used by such Issuing Bank or
in such other form as has been approved by such Issuing Bank (each such
commercial letter of credit, a "Trade Letter of Credit", and each such Trade
Letter of Credit and each Standby Letter of Credit, a "Letter of Credit") in
support of commercial transactions of the Borrower and its Subsidiaries. All
Letters of Credit shall be denominated in Dollars.
(b) Subject to and upon the terms and conditions set forth
herein, each Issuing Bank hereby agrees that it will, at any time and from time
to time on and after the Restatement Effective Date and prior to the 30th day
prior to the Revolving Loan Maturity Date, following its receipt of the
respective Letter of Credit Request, issue for the account of the Borrower, one
or more Letters of Credit (x) in the case of Standby Letters of Credit, in
support of such L/C Supportable Obligations of the Borrower or any of its
Subsidiaries as are permitted to remain outstanding without giving rise to a
Default or an Event of Default and (y) in the case of Trade Letters of Credit,
in support of sellers of goods or materials used in the ordinary course of
business of the Borrower or any of its Subsidiaries as referenced in Section
2.01(a), provided that the respective Issuing Bank shall be under no obligation
to issue any Letter of Credit of the types described above if at the time of
such issuance:
(i) any order, judgment or decree of any governmental
authority or arbitrator shall purport by its terms to enjoin or
restrain such Issuing Bank from issuing such Letter of Credit or any
requirement of law applicable to such Issuing Bank or any request or
directive (whether or not having the force of law) from any
governmental authority with jurisdiction over such Issuing Bank shall
prohibit, or request that such Issuing Bank refrain from, the issuance
of letters of credit generally or such Letter of Credit in particular
or shall impose upon such Issuing Bank with respect to such Letter of
Credit any restriction or reserve or capital requirement (for which
such Issuing Bank is not otherwise compensated) not in effect on the
date hereof, or any unreimbursed loss, cost or expense which was not
applicable, in effect or known to such Issuing Bank as of the date
hereof and which such Issuing Bank reasonably and in good faith deems
material to it; or
(ii) such Issuing Bank shall have received notice from the
Required Banks prior to the issuance of such Letter of Credit of the
type described in the penultimate
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sentence of Section 2.03(b) and the matters identified in such notice
have not previously been waived or cured.
2.02 Maximum Letter of Credit Outstandings; Final Maturities.
Notwithstanding anything to the contrary contained in this Agreement, (i) no
Letter of Credit shall be issued the Stated Amount of which, when added to the
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are repaid on
the date of, and prior to the issuance of, the respective Letter of Credit) at
such time would exceed either (x) $10,000,000 or (y) when added to the aggregate
principal amount of all Revolving Loans made by Non-Defaulting Banks then
outstanding and the aggregate principal amount of all Swingline Loans then
outstanding, an amount equal to the Adjusted Total Revolving Loan Commitment at
such time and (ii) each Letter of Credit shall by its terms terminate on or
before (x) in the case of Standby Letters of Credit, the earlier of (A) the date
which occurs one year after the date of the issuance thereof (although any such
Standby Letter of Credit may be extendible for successive periods of up to one
year, but not beyond the tenth Business Day prior to the Revolving Loan Maturity
Date, on terms acceptable to the Issuing Bank thereof) and (B) the tenth
Business Day prior to the Revolving Loan Maturity Date and (y) in the case of
Trade Letters of Credit, the earlier of (A) the date which occurs one year after
the date of issuance thereof and (B) 30 days prior to the Revolving Loan
Maturity Date.
2.03 Letter of Credit Requests. (a) Whenever the Borrower
desires that a Letter of Credit be issued for its account, the Borrower shall
give the Administrative Agent and the respective Issuing Bank at least five
Business Days' (or such shorter period as is acceptable to the respective
Issuing Bank) written notice thereof. Each notice shall be in the form of
Exhibit C (each a "Letter of Credit Request").
(b) The making of each Letter of Credit Request shall be
deemed to be a representation and warranty by the Borrower that such Letter of
Credit may be issued in accordance with, and will not violate the requirements
of, Section 2.02. Unless the respective Issuing Bank has received notice from
the Required Banks before it issues a Letter of Credit that one or more of the
conditions specified in Section 5 are not satisfied on the Restatement Effective
Date or Section 6 are not then satisfied, or that the issuance of such Letter of
Credit would violate Section 2.02, then, subject to the terms and conditions of
this Agreement, such Issuing Bank shall issue the requested Letter of Credit for
the account of the Borrower in accordance with such Issuing Bank's usual and
customary practices. Upon the issuance of or amendment or modification to a
Standby Letter of Credit, the respective Issuing Bank shall promptly notify the
Borrower and the Administrative Agent of such issuance, amendment or
modification and such notification shall be accompanied by a copy of the issued
Standby Letter of Credit or amendment or modification.
2.04 Letter of Credit Participations. (a) Immediately upon the
issuance by the respective Issuing Bank of any Letter of Credit, such Issuing
Bank shall be deemed to have sold and transferred to each Bank with a Revolving
Loan Commitment, other than such Issuing Bank (each such Bank, in its capacity
under this Section 2.04, a "Participant"), and each such Participant shall be
deemed irrevocably and unconditionally to have purchased and received from
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such Issuing Bank, without recourse or warranty, an undivided interest and
participation, to the extent of such Participant's Adjusted RL Percentage, in
such Letter of Credit, each drawing or payment made thereunder and the
obligations of the Borrower under this Agreement with respect thereto, and any
security therefor or guaranty pertaining thereto. Upon any change in the
Revolving Loan Commitments or Adjusted RL Percentages of the Banks pursuant to
Section 1.13 or 13.04, it is hereby agreed that, with respect to all outstanding
Letters of Credit and Unpaid Drawings, there shall be an automatic adjustment to
the participations pursuant to this Section 2.04 to reflect the new Adjusted RL
Percentages of the assignor and assignee Bank, as the case may be.
(b) In determining whether to pay under any Letter of Credit,
the respective Issuing Bank shall have no obligation relative to the other Banks
other than to confirm that any documents required to be delivered under such
Letter of Credit appear to have been delivered and that they appear to
substantially comply on their face with the requirements of such Letter of
Credit. Any action taken or omitted to be taken by any Issuing Bank under or in
connection with any Letter of Credit if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create for such Issuing Bank any
resulting liability to the Borrower, any other Credit Party, any Bank or any
other Person.
(c) In the event that any Issuing Bank makes any payment under
any Letter of Credit and the Borrower shall not have reimbursed such amount in
full to such Issuing Bank pursuant to Section 2.05(a), such Issuing Bank shall
promptly notify the Administrative Agent, which shall promptly notify each
Participant of such failure, and each Participant shall promptly and
unconditionally pay to such Issuing Bank the amount of such Participant's
Adjusted RL Percentage of such unreimbursed payment in Dollars and in same day
funds. If the Administrative Agent so notifies, prior to 11:00 A.M. (Eastern
time) on any Business Day, any Participant required to fund a payment under a
Letter of Credit, such Participant shall make available to such Issuing Bank in
Dollars such Participant's Adjusted RL Percentage of the amount of such payment
on such Business Day in same day funds. If and to the extent such Participant
shall not have so made its Adjusted RL Percentage of the amount of such payment
available to such Issuing Bank, such Participant agrees to pay to such Issuing
Bank, forthwith on demand such amount, together with interest thereon, for each
day from such date until the date such amount is paid to such Issuing Bank at
the overnight Federal Funds Rate for the first three days and at the interest
rate applicable to Revolving Loans maintained as Base Rate Loans for each day
thereafter. The failure of any Participant to make available to such Issuing
Bank its Adjusted RL Percentage of any payment under any Letter of Credit shall
not relieve any other Participant of its obligation hereunder to make available
to such Issuing Bank its Adjusted RL Percentage of any Letter of Credit on the
date required, as specified above, but no Participant shall be responsible for
the failure of any other Participant to make available to such Issuing Bank such
other Participant's Adjusted RL Percentage of any such payment.
(d) Whenever any Issuing Bank receives a payment of a
reimbursement obligation as to which it has received any payments from the
Participants pursuant to clause (c) above, such Issuing Bank shall pay to each
Participant which has paid its Adjusted RL Percentage thereof, in Dollars and in
same day funds, an amount equal to such Participant's share
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(based upon the proportionate aggregate amount originally funded by such
Participant to the aggregate amount funded by all Participants) of the principal
amount of such reimbursement obligation and interest thereon accruing after the
purchase of the respective participations.
(e) Upon the request of any Participant, each Issuing Bank
shall furnish to such Participant copies of any Letter of Credit issued by it
and such other documentation as may reasonably be requested by such Participant.
(f) The obligations of the Participants to make payments to
each Issuing Bank with respect to Letters of Credit issued by it shall be
irrevocable and not subject to any qualification or exception whatsoever (except
as otherwise expressly provided in the last sentence of Section 2.04(b)) and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Credit Documents;
(ii) the existence of any claim, setoff, defense or other
right which the Borrower or any of its Subsidiaries may have at any
time against a beneficiary named in a Letter of Credit, any transferee
of any Letter of Credit (or any Person for whom any such transferee may
be acting), the Administrative Agent, any Participant, or any other
Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Borrower
or any Subsidiary of the Borrower and the beneficiary named in any such
Letter of Credit);
(iii) any draft, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default.
2.05 Agreement to Repay Letter of Credit Drawings. (a) The
Borrower hereby agrees to reimburse the respective Issuing Bank, by making
payment to the Administrative Agent in immediately available funds at the
Payment Office, for any payment or disbursement made by such Issuing Bank under
any Letter of Credit issued by it (each such amount, so paid until reimbursed,
an "Unpaid Drawing"), immediately after, and in any event on the date of, such
payment or disbursement, with interest on the amount so paid or disbursed by
such Issuing Bank, to the extent not reimbursed prior to 12:00 Noon (Eastern
time) on the date of such payment or disbursement, from and including the date
paid or disbursed to but excluding the date such Issuing Bank was reimbursed by
the Borrower therefor at a rate per annum which shall be the Base Rate in effect
from time to time plus the Applicable Base Rate Margin; provided, however,
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to the extent such amounts are not reimbursed prior to 12:00 Noon (Eastern time)
on the third Business Day following the receipt by the Borrower of notice of
such payment or disbursement or following the occurrence of a Default or an
Event of Default under Section 10.05, interest shall thereafter accrue on the
amounts so paid or disbursed by such Issuing Bank (and until reimbursed by the
Borrower) at a rate per annum which shall be the Base Rate in effect from time
to time plus the Applicable Base Rate Margin plus 2%, in each such case, with
interest to be payable on demand. The respective Issuing Bank shall give the
Borrower prompt written notice of each Drawing under any Letter of Credit,
provided that the failure to give any such notice shall in no way affect, impair
or diminish the Borrower's obligations hereunder.
(b) The obligations of the Borrower under this Section 2.05 to
reimburse the respective Issuing Bank with respect to Unpaid Drawings
(including, in each case, interest thereon) shall be absolute and unconditional
under any and all circumstances and irrespective of any setoff, counterclaim or
defense to payment which the Borrower may have or have had against any Bank
(including in its capacity as issuer of the Letter of Credit or as Participant),
including, without limitation, any defense based upon the failure of any drawing
under a Letter of Credit (each a "Drawing") to conform to the terms of the
Letter of Credit or any nonapplication or misapplication by the beneficiary of
the proceeds of such Drawing; provided, however, that the Borrower shall not be
obligated to reimburse any Issuing Bank for any wrongful payment made by such
Issuing Bank under a Letter of Credit as a result of acts or omissions
constituting willful misconduct or gross negligence on the part of such Issuing
Bank.
2.06 Increased Costs. If at any time after the Restatement
Effective Date, the introduction of or any change in any applicable law, rule,
regulation, order, guideline or request or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Issuing Bank or
any Participant with any request or directive by any such authority (including
the NAIC) (whether or not having the force of law), shall either (i) impose,
modify or make applicable any reserve, deposit, capital adequacy or similar
requirement against letters of credit issued by any Issuing Bank or participated
in by any Participant, or (ii) impose on any Issuing Bank or any Participant any
other conditions relating, directly or indirectly, to this Agreement; and the
result of any of the foregoing is to increase the cost to any Issuing Bank or
any Participant of issuing, maintaining or participating in any Letter of
Credit, or reduce the amount of any sum received or receivable by any Issuing
Bank or any Participant hereunder or reduce the rate of return on its capital
with respect to Letters of Credit (except for changes in the rate of tax on, or
determined by reference to, the net income or profits of such Issuing Bank or
such Participant or any change in a tax imposed solely on deposits or net assets
of the Issuing Bank or such Participant, in each case pursuant to the laws of
the jurisdiction in which it is organized or in which its principal office or
applicable lending office is located or any subdivision thereof or therein),
then, within ten Business Days of the delivery of the certificate referred to
below to the Borrower by such Issuing Bank or any Participant (a copy of which
certificate shall be sent by such Issuing Bank or such Participant to the
Agent), the Borrower shall, subject to the provisions of this Section 2.06 and
Section 13.17 (to the extent applicable), pay to such Issuing Bank or such
Participant such additional amount or amounts as will compensate such Bank for
such increased cost or reduction in the amount receivable or reduction on the
rate of return on its capital. Any Issuing Bank or
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any Participant, upon determining that any additional amounts will be payable
pursuant to this Section 2.06, will give prompt written notice thereof to the
Borrower, which notice shall include a certificate submitted to the Borrower by
such Issuing Bank or such Participant (a copy of which certificate shall be sent
by such Issuing Bank or such Participant to the Agent), setting forth in
reasonable detail the introduction of or change in applicable law, rule,
regulation, order, guideline or request or in the interpretation or
administration thereof and the basis for the calculation of such additional
amount or amounts necessary to compensate such Issuing Bank or such Participant.
In determining such additional amounts, each Issuing Bank and each Participant
will act reasonably and in good faith, provided that the certificate required to
be delivered pursuant to this Section 2.06 shall, absent manifest error, be
final and conclusive and binding on the Borrower.
2.07 Existing Letters of Credit. Notwithstanding anything to
the contrary above in this Section 2, all letters of credit outstanding under
the Original Credit Agreement on the Restatement Effective Date shall continue
in effect in accordance with their terms, be deemed issued pursuant to this
Agreement on the Restatement Effective Date and constitute Letters of Credit for
all purposes hereunder.
SECTION 3. Commitment Commission; Fees; Reductions of
Commitment.
3.01 Fees. (a) The Borrower agrees to pay to the
Administrative Agent for distribution to each Non-Defaulting Bank with a
Revolving Loan Commitment a commitment commission (the "Revolving Loan
Commitment Commission") for the period from and including the Restatement
Effective Date to but excluding the Revolving Loan Maturity Date (or such
earlier date as the Total Revolving Loan Commitment shall have been terminated),
computed at a rate for each day equal to the Applicable Commitment Commission
Percentage on the daily average Unutilized Revolving Loan Commitment of such
Non-Defaulting Bank. Accrued Revolving Loan Commitment Commission shall be due
and payable quarterly in arrears on each Quarterly Payment Date and on the
Revolving Loan Maturity Date or such earlier date upon which the Total Revolving
Loan Commitment is terminated.
(b) The Borrower agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank with a Revolving Loan Commitment (based
on each such Non-Defaulting Bank's respective Adjusted RL Percentage) a fee in
respect of each Letter of Credit issued hereunder (the "Letter of Credit Fee"),
for the period from and including the date of issuance of such Letter of Credit
to and including the date of termination or expiration of such Letter of Credit,
computed at a rate per annum equal to the Applicable Eurodollar Margin on the
daily Stated Amount of such Letter of Credit. Accrued Letter of Credit Fees
shall be due and payable quarterly in arrears on each Quarterly Payment Date and
on the first day after the termination of the Total Revolving Loan Commitment
upon which no Letters of Credit remain outstanding.
(c) The Borrower agrees to pay to each Issuing Bank, for its
own account, a facing fee in respect of each Letter of Credit issued by such
Issuing Bank (the "Facing Fee"), for the period from and including the date of
issuance of such Letter of Credit to and including the date of the termination
of such Letter of Credit, computed at a rate equal to 1/4 of 1% per annum of the
daily Stated Amount of such Letter of Credit. Accrued Facing Fees shall be due
and
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payable quarterly in arrears on each Quarterly Payment Date and upon the first
day after the termination of the Total Revolving Loan Commitment upon which no
Letters of Credit remain outstanding.
(d) The Borrower agrees to pay, upon each drawing under,
issuance of, or amendment to, any Letter of Credit, such amount as shall at the
time of such event be the administrative charge which the applicable Issuing
Bank is generally imposing in connection with such occurrence with respect to
letters of credit.
(e) The Borrower agrees to pay to the Agents, for their own
account, such other fees as have been agreed to in writing by the Borrower and
the Agents.
(f) The Borrower agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank with a Term Loan Commitment a
commitment commission (the "Term Loan Commitment Commission") for the period
from and including the Restatement Effective Date to the earlier of: (i) the
Earnout Payment Date and (ii) the Delayed-Draw Commitment Expiration Date,
computed at a rate for each day equal to the Applicable Commitment Commission
Percentage on the daily average Unutilized Term Loan Commitment of such
Non-Defaulting Bank. Accrued Term Loan Commitment Commission shall be due and
payable quarterly in arrears on each Quarterly Payment Date and on the
Delayed-Draw Commitment Expiration Date or such earlier date upon which the
Total Term Loan Commitment is terminated.
3.02 Voluntary Termination of Unutilized Commitments. (a) Upon
at least one Business Day's prior written notice to the Administrative Agent at
its Notice Office (which notice the Administrative Agent shall promptly transmit
to each of the Banks), the Borrower shall have the right, at any time or from
time to time, without premium or penalty, to terminate the Total Unutilized
Revolving Loan Commitment, in whole or in part, in integral multiples of
$1,000,000 in the case of partial reductions to the Total Unutilized Revolving
Loan Commitment, provided that (i) each such reduction shall apply
proportionately to permanently reduce the Revolving Loan Commitment of each Bank
with such a Commitment and (ii) the reduction to the Total Unutilized Revolving
Loan Commitment shall in no case be in an amount which would cause the Revolving
Loan Commitment of any Bank to be reduced (as required by preceding clause (i))
by an amount which exceeds the remainder of (x) the Unutilized Revolving Loan
Commitment of such Bank as in effect immediately before giving effect to such
reduction minus (y) such Bank's Adjusted RL Percentage of the aggregate
principal amount of Swingline Loans then outstanding.
(b) Upon at least one Business Day's prior written notice to
the Administrative Agent at its Notice Office (which notice the Administrative
Agent shall promptly transmit to each of the Banks), the Borrower shall have the
right, at any time or from time to time, without premium or penalty, to
terminate the Total Unutilized Term Loan Commitment, in whole or in part, in
integral multiples of $1,000,000 in the case of partial reductions to the Total
Unutilized Term Loan Commitment, provided that each such reduction shall apply
proportionately to permanently reduce the Term Loan Commitment of each Bank with
such a Commitment.
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(c) In the event of a refusal by a Bank to consent to one or
more proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as (and to the extent)
provided in Section 13.12(b), the Borrower may, subject to its compliance with
the requirements of Section 13.12(b), upon 5 Business Days' prior written notice
to the Administrative Agent at its Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Banks) terminate all
of the Revolving Loan Commitment and Term Loan Commitment of such Bank and, so
long as all Loans, together with accrued and unpaid interest, Fees and all other
amounts, owing to such Bank (other than amounts owing in respect of any Tranche
of Loans maintained by such Bank which are not being repaid pursuant to Section
13.12(b)) are repaid concurrently with the effectiveness of such termination
pursuant to Section 4.01(b) (at which time Schedule I shall be deemed modified
to reflect such changed amounts), and at such time, unless the respective Bank
continues to have outstanding Loans of one or more Tranches hereunder, such Bank
shall no longer constitute a "Bank" for purposes of this Agreement, except with
respect to indemnifications under this Agreement (including, without limitation,
Sections 1.10, 1.11, 2.06, 4.04, 12.06 and 13.01), which shall survive as to
such repaid Bank.
3.03 Mandatory Reduction of Commitments. (a) The Total Term
Loan Commitment (other than the Total Delayed-Draw Commitment) shall (i)
terminate in its entirety on the Restatement Effective Date (immediately after
giving effect to the making of the Term Loans on such date) and (ii) be reduced
from time to time prior to such date to the extent required by Section 4.02.
(b) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total Delayed Draw Commitment shall (i)
terminate in its entirety on the earlier of (x) the Delayed-Draw Commitment
Expiration Date and (y) the Earnout Payment Date (immediately after giving
effect to the making of the Term Loans on such date) and (ii) prior to the
termination of the Delayed-Draw Commitment, be reduced from time to time to the
extent required by Section 4.02.
(c) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total Revolving Loan Commitment (and the
Revolving Loan Commitment of each Bank) shall terminate in its entirety on the
Revolving Loan Maturity Date.
(d) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date after the Restatement Effective Date
upon which a mandatory repayment of Term Loans or a mandatory reduction to the
Total Term Loan Commitment pursuant to any of Sections 4.02(c) through (f),
inclusive, is required (and exceeds in amount the sum of (i) the aggregate
principal amount of Term Loans then outstanding and (ii) the Total Term Loan
Commitment as then in effect) or would be required if Term Loans were then
outstanding or the Total Term Loan Commitment was then in effect, the Total
Revolving Loan Commitment shall be permanently reduced by the amount, if any, by
which the amount required to be applied pursuant to said Sections (determined as
if an unlimited amount of Term Loans were actually outstanding) exceeds the sum
of (x) the aggregate principal amount of Term Loans then outstanding and (y) the
Total Term Loan Commitment as then in effect.
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(e) Each reduction to the Total Term Loan Commitment and the
Total Revolving Loan Commitment pursuant to this Section 3.03 (or pursuant to
Section 4.02) shall be applied proportionately to permanently reduce the Term
Loan Commitment or the Revolving Loan Commitment, as the case may be, of each
Bank with such a Commitment.
SECTION 4. Prepayments; Payments; Taxes.
4.01 Voluntary Prepayments. (a) The Borrower shall have the
right to prepay the Loans, without premium or penalty, in whole or in part at
any time and from time to time on the following terms and conditions:
(i) the Borrower shall give the Administrative Agent prior to
12:00 Noon (Eastern time) at its Notice Office (x) at least one
Business Day's prior written notice (or telephonic notice promptly
confirmed in writing) of its intent to prepay Base Rate Loans and (y)
at least three Business Days' prior written notice (or telephonic
notice promptly confirmed in writing) of its intent to prepay
Eurodollar Loans, whether Term Loans, Revolving Loans or Swingline
Loans shall be prepaid, the amount of such prepayment and the Types of
Loans to be prepaid and, in the case of Eurodollar Loans, the specific
Borrowing or Borrowings pursuant to which made, which notice the
Administrative Agent shall promptly transmit to each of the Banks;
(ii) each prepayment shall be in an aggregate principal amount
of at least (x) $1,000,000 in the case of Term Loans or Revolving Loans
or (y) $100,000 in the case of Swingline Loans, and, in each case, if
greater, in integral multiples of $100,000, provided that if any
partial prepayment of Eurodollar Loans made pursuant to any Borrowing
shall reduce the outstanding principal amount of Eurodollar Loans made
pursuant to such Borrowing to an amount less than the Minimum Borrowing
Amount applicable thereto, then such Borrowing may not be continued as
a Borrowing of Eurodollar Loans and any election of an Interest Period
with respect thereto given by the Borrower shall have no force or
effect;
(iii) prepayments of Eurodollar Loans made pursuant to this
Section 4.01(a) may only be made on the last day of an Interest Period
applicable thereto unless such prepayment is accompanied by any
breakage costs and any other amounts due such Bank in accordance with
Section 1.11;
(iv) each prepayment in respect of any Loans made pursuant to
a Borrowing shall be applied pro rata among such Loans, provided that,
at the Borrower's election, in connection with any prepayment of
Revolving Loans pursuant to this Section 4.01(a), such prepayment shall
not be applied to any Revolving Loans of a Defaulting Bank; and
(v) each voluntary prepayment of Term Loans pursuant to this
Section 4.01(a) shall be applied to reduce the then remaining Scheduled
Repayments pro rata based upon the then remaining amount of each
Scheduled Repayment after giving effect to all prior reductions
thereto.
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(b) In the event of a refusal by a Bank to consent to one or
more proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as (and to the extent)
provided in Section 13.12(b), the Borrower may, upon 5 Business Days' prior
written notice to the Administrative Agent at its Notice Office (which notice
the Administrative Agent shall promptly transmit to each of the Banks) repay all
Loans, together with accrued and unpaid interest, Fees, and other amounts owing
to such Bank (or owing to such Bank with respect to each Tranche which gave rise
to the need to obtain such Bank's individual consent) in accordance with, and
subject to the requirements of, said Section 13.12(b) so long as (i) in the case
of the repayment of Revolving Loans of any Bank pursuant to this clause (b) the
Revolving Loan Commitment of such Bank is terminated concurrently with such
repayment pursuant to Section 3.02(c) (at which time Schedule I shall be deemed
modified to reflect the changed Revolving Loan Commitments), (ii) in the case of
the repayment of Term Loans of any Bank pursuant to this clause (b) the Term
Loan Commitment (if any) of such Bank is terminated concurrently with such
repayment pursuant to Section 3.02(c) (at which time Schedule I shall be deemed
modified to reflect the changed Term Loan Commitments), and (iii) the consents,
if any, required by Section 13.12(b) in connection with the repayment pursuant
to this clause (b) have been obtained.
4.02 Mandatory Repayments and Commitment Reductions. (a) (i)
On any day on which the sum of the aggregate outstanding principal amount of the
Revolving Loans made by Non-Defaulting Banks, Swingline Loans and the Letter of
Credit Outstandings exceeds the Adjusted Total Revolving Loan Commitment as then
in effect, the Borrower shall prepay on such day principal of Swingline Loans in
an amount up to the amount of such excess and, after all Swingline Loans have
been repaid in full, Revolving Loans of Non-Defaulting Banks in an amount equal
to such excess minus the principal amount of Swingline Loans so prepaid. If,
after giving effect to the prepayment of all outstanding Swingline Loans and
Revolving Loans of Non-Defaulting Banks, the aggregate amount of the Letter of
Credit Outstandings exceeds the Adjusted Total Revolving Loan Commitment as then
in effect, the Borrower shall pay to the Administrative Agent at the Payment
Office on such day an amount of cash or Cash Equivalents equal to the amount of
such excess (up to a maximum amount equal to the Letter of Credit Outstandings
at such time), such cash or Cash Equivalents to be held as security for all
obligations of the Borrower to the Issuing Banks and the Non-Defaulting Banks
hereunder in a cash collateral account to be established by the Administrative
Agent.
(ii) On any day on which the aggregate outstanding principal
amount of the Revolving Loans made by any Defaulting Bank exceeds the Revolving
Loan Commitment of such Defaulting Bank, the Borrower shall prepay on such day
principal of Revolving Loans of such Defaulting Bank in an amount equal to such
excess.
(b) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date set forth
below, the Borrower shall be required to repay that principal amount of Term
Loans, to the extent then outstanding, as is set forth opposite such date (each
such repayment, as the same may be reduced as provided in Sections 4.01(a) and
4.02(h), a "Scheduled Repayment," and each such date, a "Scheduled Repayment
Date"):
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Scheduled Repayment Date Amount
------------------------ ------
February 28, 1999 $3,750,000
May 31, 1999 $5,250,000
August 31, 1999 $5,250,000
November 30, 1999 $5,250,000
February 28, 2000 $5,250,000
May 31, 2000 $5,500,000
August 31, 2000 $5,500,000
November 30, 2000 $5,500,000
February 28, 2001 $8,000,000
May 31, 2001 $8,000,000
August 31, 2001 $8,000,000
November 30, 2001 $8,000,000
February 28, 2002 $8,000,000
May 31, 2002 $8,000,000
August 31, 2002 $8,000,000
November 30, 2002 $8,000,000
February 28, 2003 $8,000,000
May 31, 2003 $9,000,000
August 31, 2003 $9,000,000
November 30, 2003 $9,000,000
February 28, 2004 $10,000,000
May 31,2004 $10,000,000
August 31, 2004 $10,000,000
Term Loan Maturity Date Balance
(c) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date on or after
the Restatement Effective Date upon which the Borrower or any of its
Wholly-Owned Subsidiaries receives any cash proceeds from any incurrence by the
Borrower or any of its Wholly-Owned Subsidiaries of Indebtedness for borrowed
money (other than Indebtedness for borrowed money permitted to be incurred
pursuant to Section 9.04 (except for the incurrence of New Subordinated Notes
pursuant to Section 9.04(vi), the proceeds of which are required to be applied
as set forth in such Section) as such Section is in effect on the Restatement
Effective Date), an amount equal to 100% of the Net Debt Proceeds of the
respective incurrence of Indebtedness shall be applied as a mandatory repayment
of principal of outstanding Term Loans (and/or, if the Total Term Loan
Commitment has not yet been terminated, as a mandatory reduction to the Total
Term Loan Commitment) in accordance with the requirements of Sections 4.02(g)
and (h).
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(d) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date on or after
the Restatement Effective Date upon which the Borrower or any of its
Wholly-Owned Subsidiaries receives cash proceeds from any Asset Sale, an amount
equal to 100% of the Net Sale Proceeds from the respective Asset Sale shall be
applied as a mandatory repayment of principal of outstanding Term Loans (and/or,
if the Total Term Loan Commitment has not yet been terminated, as a mandatory
reduction to the Total Term Loan Commitment) in accordance with the requirements
of Sections 4.02(g) and (h), provided that, so long as no Default or Event of
Default then exists, up to $2,000,000 in the aggregate in any fiscal year of the
Borrower of Net Sale Proceeds from Asset Sales may be used or contractually
committed to be used to purchase like assets pursuant to Section 9.07(b) within
180 days following the date of the respective Asset Sale (and the Net Sale
Proceeds therefrom shall not be required to be applied on the date of receipt of
such Net Sale Proceeds pursuant to this Section 4.02(d)) so long as the Borrower
delivers a certificate to the Administrative Agent on or prior to such date
stating that such Net Sale Proceeds shall be used or contractually committed to
be used to purchase like assets within 180 days following the date of such Asset
Sale (which certificate shall set forth the estimates of the proceeds to be so
expended) and provided further, that (1) if all or any portion of such Net Sale
Proceeds are not so reinvested in like assets within such 180 day period or
contractually committed to be so reinvested within such 180-day period, 100% of
such remaining portion shall be applied on the last day of such applicable
period as a mandatory repayment of principal of outstanding Term Loans as
provided above in this Section 4.02(d) without regard to the immediately
preceding proviso and (2) if all or any portion of such Net Sale Proceeds are
not required to be applied on the 180th day referred to in clause (1) above
because such amount is contractually committed to be used and subsequent to such
date such contract is terminated or expires without such portion being so used,
then such remaining portion shall be applied within ten days of the date of such
termination or expiration as a mandatory repayment of principal of outstanding
Term Loans as provided in this Section 4.02(d) without regard to the immediately
preceding proviso.
(e) In addition to any other mandatory repayments pursuant to
this Section 4.02, on each Excess Cash Payment Date, an amount equal to 50% of
the Excess Cash Flow for the relevant Excess Cash Payment Period shall be
applied as a mandatory repayment of principal of outstanding Term Loans in
accordance with the requirements of Sections 4.02(g) and (h).
(f) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, within five days following
each date on or after the Restatement Effective Date upon which the Borrower or
any of its Wholly-Owned Subsidiaries receives any cash proceeds from any
Recovery Event in excess of $250,000 in the aggregate in any fiscal year of the
Borrower from all Recovery Events, an amount equal to 100% of the Net Insurance
Proceeds of such Recovery Event shall be applied as a mandatory repayment of
principal of outstanding Term Loans (and/or, if the Total Term Loan Commitment
has not yet been terminated, as a mandatory reduction to the Total Term Loan
Commitment) in accordance with the requirements of Sections 4.02(g) and (h),
provided that, so long as no Default or Event of Default then exists, such
proceeds shall not be required to be so applied on such date to the extent that
the Borrower has delivered a certificate to the Administrative Agent on or prior
to such date stating that such proceeds shall be used or shall be contractually
committed to be used
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to replace or restore any properties or assets in respect of which such proceeds
were paid within 180 days following the date of the receipt of such proceeds
(which certificate shall set forth the estimates of the proceeds to be so
expended), and provided further, that (1) if all or any portion of such proceeds
not required to be applied to the repayment of outstanding Term Loans (and/or as
a reduction to the Total Term Loan Commitment) are not so used or contractually
committed to be used within 180 days after the date of the receipt of such
proceeds, then such remaining portion not used or contractually committed to be
used shall be applied on the date which is the 180th day after the date of the
receipt of such proceeds as a mandatory repayment of principal of outstanding
Term Loans as provided above in this Section 4.02(f) without regard to the
immediately preceding proviso and (2) if all or any portion of such proceeds are
not required to be applied on the 180th day referred to in clause (1) above
because such amount is contractually committed to be used and subsequent to such
date such contract is terminated or expires without such portion being so used,
then such remaining portion shall be applied within ten days of the date of such
termination or expiration as a mandatory repayment of principal of outstanding
Term Loans as provided in this Section 4.02(f) without regard to the immediately
preceding proviso.
(g) With respect to each repayment of Loans required by this
Section 4.02, the Borrower may designate the Types of Loans of the respective
Tranche which are to be repaid and, in the case of Eurodollar Loans, the
specific Borrowing or Borrowings of the respective Tranche pursuant to which
made, provided that: (i) repayments of Eurodollar Loans pursuant to this Section
4.02 may only be made on the last day of an Interest Period applicable thereto
unless all Eurodollar Loans of the respective Tranche with Interest Periods
ending on such date of required repayment and all Base Rate Loans of the
respective Tranche have been paid in full; (ii) if any repayment of Eurodollar
Loans made pursuant to a single Borrowing shall reduce the outstanding
Eurodollar Loans made pursuant to such Borrowing to an amount less than the
Minimum Borrowing Amount applicable thereto, such Borrowing shall be converted
at the end of the then current Interest Period into a Borrowing of Base Rate
Loans; and (iii) each repayment of any Loans made pursuant to a Borrowing shall
be applied pro rata among such Loans. In the absence of a designation by the
Borrower as described in the preceding sentence, the Administrative Agent shall,
subject to the above, make such designation in its sole discretion.
Notwithstanding the foregoing provisions of this Section 4.02(g), if at any time
a mandatory repayment of Loans pursuant to this Section 4.02(g) would result,
after giving effect to the procedures set forth above in this Section 4.02(g),
in the Borrower incurring breakage costs under Section 1.11 as a result of
Eurodollar Loans being prepaid other than on the last day of an Interest Period
applicable thereto (the "Affected Eurodollar Loans"), then the Borrower may in
its sole discretion, and upon notice to the Administrative Agent, initially
deposit a portion (up to 100%) of the amount that otherwise would have been paid
in respect of the Affected Eurodollar Loans with the Administrative Agent (which
deposit must be equal in amount to the amount of the Affected Eurodollar Loans
not immediately repaid) to be held as security for the Obligations of the
Borrower pursuant to a cash collateral arrangement satisfactory to the
Administrative Agent and the Borrower which shall permit investments in Cash
Equivalents reasonably satisfactory to the Administrative Agent, with such cash
collateral to be directly applied upon the earlier of (x) the first occurrence
(or occurrences) thereafter of the last day of an Interest Period applicable to
the relevant Affected Eurodollar Loans of the respective Tranche or Tranches
that
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were initially required to be repaid (or such earlier date or dates as shall be
requested by the Borrower) and (y) the date which is 180 days after such initial
deposit, to repay an aggregate principal amount of such Loans equal to the
Affected Eurodollar Loans not initially repaid pursuant to this sentence.
Notwithstanding anything to the contrary contained in the immediately preceding
sentence, all amounts deposited as cash collateral pursuant to the immediately
preceding sentence shall be held first for the sole benefit of the Banks whose
Loans would otherwise have been immediately repaid with the amounts deposited
and upon the taking of any action by the Administrative Agent or the Banks
pursuant to the remedial provisions of Section 10, any amounts held as cash
collateral pursuant to this Section 4.02(g) shall first be immediately applied
to such Loans and thereafter to the other Obligations of the Borrower.
(h) Each amount required to be applied to repay Term Loans
pursuant to Sections 4.02(c) through (f), inclusive, shall be applied to repay
the outstanding principal amount of the Term Loans with all such repayments to
be deemed to apply first to repay Term Loans evidenced by the A Term Notes
before any obligations of the Borrower evidenced by the B Term Notes are so
reduced. The amount of each principal repayment of Term Loans (and the amount of
each reduction to the Term Loan Commitments) made as required by said Sections
4.02(c) through (f), inclusive, shall be applied to reduce the then remaining
Scheduled Repayments pro rata based upon the then remaining amount of each
Scheduled Repayment after giving effect to all prior reductions thereto. To the
extent the amount of any mandatory repayment exceeds the aggregate principal
amount of Term Loans then outstanding, such excess shall be applied (i) first,
to reduce the Total Revolving Loan Commitment and (ii) second, to reduce the
Total Delayed Draw Commitment.
(i) Notwithstanding anything to the contrary contained in this
Agreement or in any other Credit Document, all then outstanding Loans of any
Tranche shall be repaid in full on the respective Maturity Date for such Tranche
of Loans.
4.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement or under any
Note shall be made to the Administrative Agent for the account of the Bank or
Banks entitled thereto not later than 12:30 p.m. (Eastern time) on the date when
due and shall be made in Dollars in immediately available funds at the Payment
Office of the Administrative Agent. Whenever any payment to be made hereunder or
under any Note shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest shall be payable during such
extension at the applicable rate immediately prior to such extension.
4.04 Net Payments. All payments made by the Borrower hereunder
or under any Note will be made without setoff, counterclaim or other defense.
Except as provided in Section 4.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net
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income or net profits of a Bank and any taxes imposed solely on deposits or net
assets of a Bank, in each case pursuant to the laws of the jurisdiction in which
it is organized or the jurisdiction in which the principal office or applicable
lending office of such Bank is located or any subdivision thereof or therein)
and all interest, penalties or similar liabilities with respect to such
non-excluded taxes, levies, imposts, duties, fees, assessments or other charges
(all such non-excluded taxes, levies, imposts, duties, fees, assessments or
other charges being referred to collectively as "NonExcluded Taxes"). Except as
otherwise provided in Section 4.04(b), if any NonExcluded Taxes are so levied or
imposed, the Borrower agrees to pay the full amount of such NonExcluded Taxes,
and such additional amounts as may be necessary so that every payment of all
amounts due under this Agreement or under any Note, after withholding or
deduction for or on account of any NonExcluded Taxes, will not be less than the
amount provided for herein or in such Note. If any amounts are payable in
respect of Non-Excluded Taxes pursuant to the preceding sentence, the Borrower
agrees to reimburse each Bank, upon the written request of such Bank, for taxes
imposed on or measured by the net income or net profits of such Bank pursuant to
the laws of the jurisdiction in which such Bank is organized or in which the
principal office or applicable lending office of such Bank is located or under
the laws of any political subdivision or taxing authority of any such
jurisdiction in which such Bank is organized or in which the principal office or
applicable lending office of such Bank is located and for any withholding of
taxes as such Bank shall determine are payable by, or withheld from, such Bank,
in respect of such amounts so paid to or on behalf of such Bank pursuant to the
preceding sentence and in respect of any amounts paid to or on behalf of such
Bank pursuant to this sentence. The Borrower will furnish to the Administrative
Agent within 45 days after the date the payment of any NonExcluded Taxes is due
pursuant to applicable law certified copies of tax receipts evidencing such
payment by the Borrower. The Borrower agrees to indemnify and hold harmless each
Bank, and reimburse such Bank upon its written request, for the amount of any
NonExcluded Taxes so levied or imposed and paid by such Bank.
(b) Each Bank that is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes agrees to deliver to the Borrower and the Administrative Agent on or
prior to the Restatement Effective Date, or in the case of a Bank that is an
assignee or transferee of an interest under this Agreement pursuant to Section
1.13 or 13.04 (unless the respective Bank was already a Bank hereunder
immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Bank, (i) two accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any Note, or (ii) if the Bank is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 1001 or 4224 pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit D (any such certificate, a "Section
4.04(b)(ii) Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such Bank's entitlement to a complete exemption from United States withholding
tax with respect to payments of interest to be made under this Agreement and
under any Note. In addition, each Bank agrees that from time to time after the
Restatement Effective Date, when a lapse in time or change in circumstances
renders the previous certification obsolete or inaccurate in any material
respect, it will, promptly
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upon request by the Borrower, deliver to the Borrower and the Administrative
Agent two new accurate and complete original signed copies of Internal Revenue
Service Form 4224 or 1001, or Form W-8 and a Section 4.04(b)(ii) Certificate, as
the case may be, and such other forms as may be required in order to confirm or
establish the entitlement of such Bank to a continued exemption from or
reduction in United States withholding tax with respect to payments under this
Agreement and any Note, or it shall immediately notify the Borrower and the
Administrative Agent of its inability to deliver any such Form or Certificate
because a change in law or change in circumstance eliminates the availability to
the Bank of an exemption from United States withholding tax with respect to
payments to be made under this Agreement or any Note, in which case such Bank
shall not be required to deliver any such Form or Certificate pursuant to this
Section 4.04(b). Notwithstanding anything to the contrary contained in Section
4.04(a), but subject to Section 13.04(b), (x) the Borrower shall be entitled, to
the extent it is required to do so by law, to deduct or withhold income or
similar taxes imposed by the United States (or any political subdivision or
taxing authority thereof or therein) from interest, Fees or other amounts
payable hereunder for the account of any Bank which is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code) for U.S.
Federal income tax purposes to the extent that such Bank has not provided to the
Borrower U.S. Internal Revenue Service Forms that establish a complete exemption
from such deduction or withholding and (y) the Borrower shall not be obligated
pursuant to Section 4.04(a) hereof to gross-up payments to be made to a Bank in
respect of income or similar taxes imposed by the United States if (I) such Bank
has not provided to the Borrower the Internal Revenue Service Forms required to
be provided to the Borrower pursuant to this Section 4.04(b) or (II) in the case
of a payment, other than interest, to a Bank described in clause (ii) above, to
the extent that such Forms do not establish a complete exemption from
withholding of such taxes.
SECTION 5. Conditions Precedent. The obligation of each Bank
to make Loans, and the obligation of any Issuing Bank to issue Letters of
Credit, on the Restatement Effective Date, is subject at the time of the making
of such Loans or the issuance of such Letters of Credit to the satisfaction of
the following conditions:
5.01 Execution of Agreement; Notes. The Restatement Effective
Date shall have occurred and there shall have been delivered to the Agents for
the account of each of the Banks the appropriate Term Notes and/or Revolving
Note executed by the Borrower and to the Swingline Bank, the Swingline Note
executed by the Borrower, in each case in the amount, maturity and otherwise as
provided herein.
5.02 Officer's Certificate. On the Restatement Effective Date,
the Agents shall have received a certificate, dated the Restatement Effective
Date and signed on behalf of the Borrower by the President or any Vice President
of the Borrower, stating that all of the conditions in Sections 5.06, 5.07, 5.08
and 6.01 have been satisfied on such date.
5.03 Opinions of Counsel. On the Restatement Effective Date,
the Agents shall have received from (i) Dickstein, Shapiro, Morin & Oshinsky
LLP, counsel to the Credit Parties, an opinion addressed to the Agents and each
of the Banks and dated the Restatement Effective Date, covering the matters set
forth in Exhibit E and such other matters incident to the
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transactions contemplated herein as any Agent may reasonably request and (ii)
local counsel (reasonably satisfactory to the Agents) opinions, each of which
shall (x) be addressed to the Agents and each of the Banks and dated the
Restatement Effective Date, (y) be in form and substance reasonably satisfactory
to the Agents and (z) cover the perfection of the security interests granted
pursuant to the Security Documents and such other matters incident to the
transactions contemplated hereby as any Agent may reasonably request.
5.04 Corporate Documents; Proceedings; etc. (a) On the
Restatement Effective Date, the Agents shall have received a certificate from
each Credit Party, dated the Restatement Effective Date, signed by the President
or any Vice President of such Credit Party, and attested to by the Secretary or
any Assistant Secretary of such Credit Party, in the form of Exhibit F with
appropriate insertions, together with copies of the certificate of incorporation
(or equivalent organizational document) and by-laws of such Credit Party and the
resolutions of such Credit Party referred to in such certificate, and each such
certificate of incorporation and by-laws shall be in the form provided to the
Agents prior to the Restatement Effective Date or in such other form as is
reasonably acceptable to the Agents, and the foregoing resolutions shall be in
form and substance reasonably acceptable to the Agents.
(b) All corporate and legal proceedings and all instruments
and agreements in connection with the transactions contemplated by this
Agreement and the other Documents shall be reasonably satisfactory in form and
substance to the Agents, and the Agents shall have received all information and
copies of all documents and papers, including records of corporate proceedings,
governmental approvals, good standing certificates and bring-down telegrams or
facsimiles, if any, which any Agent may have requested in connection therewith,
such documents and papers where appropriate to be certified by proper corporate
or governmental authorities.
5.05 Employee Benefit Plans; Shareholders' Agreements;
Management Agreements; Collective Bargaining Agreements; Existing Indebtedness
Agreements. On or prior to the Restatement Effective Date, there shall have been
made available for review by the Agents true and correct copies of the following
documents:
(i) all Plans (and for each Plan that is required to file an
annual report on Internal Revenue Service Form 5500-series, a copy of
the most recent such report (including, to the extent required, the
related financial and actuarial statements and opinions and other
supporting statements, certifications, schedules and information), and
for each Plan that is a "single-employer plan," as defined in Section
4001(a)(15) of ERISA, the most recently prepared actuarial valuation
therefor) and any other "employee benefit plans", as defined in Section
3(3) of ERISA, and any other material agreements, plans or
arrangements, with or for the benefit of current or former employees of
the Borrower or any of its Subsidiaries or any ERISA Affiliate
(collectively, the "Employee Benefit Plans");
(ii) all material agreements entered into by the Borrower or
any of its Subsidiaries governing the terms and relative rights of its
capital stock and any
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agreements entered into by shareholders relating to any such entity
with respect to its capital stock (collectively, the "Shareholders'
Agreements");
(iii) all material agreements with members of, or with respect
to, the senior management and management of the Borrower or any of its
Subsidiaries (collectively, the "Management Agreements");
(iv) all collective bargaining agreements applying or relating
to any employee of the Borrower or any of its Subsidiaries
(collectively, the "Collective Bargaining Agreements");
(v) all agreements evidencing or relating to Indebtedness of
the Borrower or any of its Subsidiaries which is to remain outstanding
after giving effect to the incurrence of Loans on the Restatement
Effective Date to the extent such Indebtedness exceeds (or upon the
utilization of any unused commitments may exceed) $250,000
(collectively, the "Existing Indebtedness Agreements"); and
(vi) all tax sharing, tax allocation and other similar
agreements entered into by the Borrower or any of its Subsidiaries
(collectively, the "Tax Sharing Agreements").
all of which Employee Benefit Plans, Shareholders' Agreements, Management
Agreements, Collective Bargaining Agreements, Existing Indebtedness Agreements
and Tax Sharing Agreements shall be in full force and effect on the Restatement
Effective Date.
5.06 Indebtedness; Original Credit Agreement. (a) On the
Restatement Effective Date and after giving effect to the Loans incurred on the
Restatement Effective Date, neither the Borrower nor any of its Subsidiaries
shall have any Indebtedness outstanding except for (x) the Obligations and (y)
the Existing Indebtedness. The Agents shall have received evidence, in form and
substance reasonably satisfactory to them, that the matters set forth in the
immediately preceding sentence have been satisfied as of the Restatement
Effective Date.
(b) On the Restatement Effective Date, all Loans under the
Original Credit Agreement shall have been repaid in full, together with interest
thereon and all accrued but unpaid Fees, in each case whether or not then due
and payable. In addition, the Borrower shall have reimbursed each Bank party to
the Original Credit Agreement for any amounts owing pursuant to Section 1.11(b).
5.07 Adverse Change, etc. (a) On or prior to the Restatement
Effective Date, nothing shall have occurred (and the Agents shall have become
aware of no facts or conditions not previously known) which is reasonably likely
to have a material adverse effect on the rights or remedies of the Banks or the
Agents, or on the ability of the Borrower or its Subsidiaries to perform their
obligations to the Banks or which is reasonably likely to have a materially
adverse effect on the business, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries taken
as a whole, in each case after giving effect to the consummation of the
Transaction.
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(b) All necessary governmental approvals and/or consents, all
necessary shareholder and board of director approvals and/or consents, in each
case in connection with the Transaction and the other transactions contemplated
by the Documents and otherwise referred to herein or therein shall have been
obtained and remain in effect, and all applicable waiting periods with respect
thereto shall have expired without any action being taken by any competent
authority which restrains, prevents or imposes materially adverse conditions
upon, the consummation of the Transaction or the other transactions contemplated
by the Credit Documents or otherwise referred to herein or therein.
Additionally, there shall not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified prohibiting or imposing materially adverse
conditions upon the Transaction or the other transactions contemplated by the
Credit Documents.
5.08 Litigation. On the Restatement Effective Date, no
litigation by any entity (private or governmental) shall be pending or
threatened (i) with respect to the Transaction or any Document or (ii) which is
reasonably likely to have a material adverse effect on the rights or remedies of
the Banks or the Agents, or on the ability of the Borrower or its Subsidiaries
to perform their obligations to the Banks or which is reasonably likely to have
a materially adverse effect on the business, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole, in each case after giving effect to the
consummation of the Transaction.
5.09 Pledge Agreement. On the Restatement Effective Date, each
Credit Party shall have duly authorized, executed and delivered the Pledge
Agreement in the form of Exhibit G (as amended, modified or supplemented from
time to time, the "Pledge Agreement") and shall have delivered to the Collateral
Agent, as Pledgee thereunder, all of the Pledged Securities, if any, referred to
therein then owned by such Credit Party, (x) endorsed in blank in the case of
promissory notes constituting Pledged Securities and (y) together with executed
and undated stock powers in the case of capital stock constituting Pledged
Securities.
5.10 Security Agreement. On the Restatement Effective Date,
each Credit Party shall have duly authorized, executed and delivered the
Security Agreement in the form of Exhibit H (as modified, supplemented or
amended from time to time, the "Security Agreement") covering all of such Credit
Party's present and future Security Agreement Collateral, together with:
(i) proper Financing Statements (Form UCC-1 or the equivalent)
fully executed for filing under the UCC or other appropriate filing
offices of each jurisdiction as may be necessary or, in the reasonable
opinion of the Collateral Agent, desirable to perfect the security
interests purported to be created by the Security Agreement;
(ii) copies of Requests for Information or Copies (Form
UCC-11), or equivalent reports, listing all effective financing
statements that name any Credit Party as debtor and that are filed in
the jurisdictions referred to in clause (i) above, together with copies
of such other financing statements that name any Credit Party as debtor
(none of which shall cover the Collateral except to the extent
evidencing Permitted Liens or in
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respect of which the Collateral Agent shall have received termination
statements (Form UCC-3) or such other termination statements as shall
be required by local law fully executed for filing); and
(iii) evidence that all other actions necessary or, in the
reasonable opinion of the Collateral Agent, desirable to perfect and
protect the security interests purported to be created by the Security
Agreement have been (or within 10 days following the Restatement
Effective Date will be) taken.
5.11 Subsidiaries Guaranty. On the Restatement Effective Date,
each Subsidiary Guarantor shall have duly authorized, executed and delivered the
Subsidiaries Guaranty in the form of Exhibit I (as amended, modified or
supplemented from time to time, the "Subsidiaries Guaranty").
5.12 Mortgages; Title Insurance; Survey; etc. On the
Restatement Effective Date, the Collateral Agent shall have received:
(i) fully executed counterparts of amendments to the
Mortgages, in form and substance reasonably satisfactory to the Agents,
which Mortgages shall cover the Mortgaged Properties owned by the
Credit Parties on the Restatement Effective Date as designated on
Schedule III, together with evidence that counterparts of such
Mortgages and amendments have been delivered to the title insurance
company insuring the Lien of such Mortgages for recording in all places
to the extent necessary or, in the reasonable opinion of the Collateral
Agent, desirable, to effectively create a valid and enforceable first
priority mortgage lien on each such Mortgaged Property in favor of the
Collateral Agent (or such other trustee as may be required or desired
under local law) for the benefit of the Secured Creditors;
(ii) a mortgagee title insurance policy on each such Mortgaged
Property issued by a title insurer reasonably satisfactory to the
Agents (the "Mortgage Policies") in amounts satisfactory to the Agents
assuring the Collateral Agent that the Mortgages (as amended) on such
Mortgaged Properties are valid and enforceable first priority mortgage
liens on the respective Mortgaged Properties, free and clear of all
defects and encumbrances except Permitted Encumbrances and such
Mortgage Policies shall otherwise be in form and substance reasonably
satisfactory to the Agents and shall include, as appropriate, an
endorsement for future advances under this Agreement and the Notes and
for any other matter that any Agent in its reasonable discretion may
reasonably request, shall not include (to the extent permissible under
applicable state law) an exception for mechanics' liens, and shall
provide for affirmative insurance and such reinsurance as any Agent in
its discretion may reasonably request;
(iii) a survey, in form and substance reasonably satisfactory
to the Agents, of each such Mortgaged Property, certified by a licensed
professional surveyor reasonably satisfactory to the Agents; and
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(iv) such landlord waivers and/or estoppel certificates as any
Agent may have reasonably required, which landlord waivers and/or
estoppel certificates shall be in form and substance reasonably
satisfactory to the Agents.
5.13 Projections; Pro Forma Balance Sheet. On or prior to the
Restatement Effective Date, the Agents shall have received copies of the
financial statements (including the pro forma financial statements) and
Projections referred to in Sections 7.05(a) and (d).
5.14 Solvency Certificate; Insurance Certificates. On the
Restatement Effective Date, the Borrower shall have delivered to the Agents:
(i) a solvency certificate from the Chief Financial Officer of
the Borrower in the form of Exhibit J; and
(ii) certificates of insurance complying with the requirements
of Section 8.03 for the business and properties of the Borrower and its
Subsidiaries, in form and substance satisfactory to the Agents and
naming the Collateral Agent as an additional insured and as loss payee,
and stating that such insurance shall not be cancelled without at least
30 days prior written notice by the insurer to the Collateral Agent (or
such shorter period of time as a particular insurance company generally
provides).
5.15 Fees, etc. On the Restatement Effective Date, the
Borrower shall have paid to the Agents and each Bank all costs, fees and
expenses (including, without limitation, legal fees and expenses) payable to the
Agents and such Bank to the extent then due.
SECTION 6. Conditions Precedent to All Credit Events. The
obligation of each Bank to make Loans (including Loans made on the Restatement
Effective Date), and the obligation of any Issuing Bank to issue any Letter of
Credit (including Letters of Credit issued on the Restatement Effective Date),
is subject, at the time of each such Credit Event (except as hereinafter
indicated), to the satisfaction of the following conditions:
6.01 No Default; Representations and Warranties. At the time
of each such Credit Event and also after giving effect thereto (i) there shall
exist no Default or Event of Default and (ii) all representations and warranties
contained herein or in the other Credit Documents shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on the date of such Credit Event (it being understood
and agreed that any representation or warranty which by its terms is made as of
a specified date shall be required to be true and correct in all material
respects only as of such specified date).
6.02 Notice of Borrowing; Letter of Credit Request. Prior to
the making of each Loan (other than a Swingline Loan or a Revolving Loan made
pursuant to a Mandatory Borrowing), the Administrative Agent shall have received
a Notice of Borrowing meeting the requirements of Section 1.03(a). Prior to the
making of each Swingline Loan, the Swingline Bank shall have received the notice
referred to in Section 1.03(b)(i).
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(b) Prior to the issuance of each Letter of Credit, the
Administrative Agent and the respective Issuing Bank shall have received a
Letter of Credit Request meeting the requirements of Section 2.03.
The acceptance of the proceeds of each Loan and the making of
each Letter of Credit Request shall constitute a representation and warranty by
the Borrower to the Agents and each of the Banks that all the conditions
specified in Section 5 (with respect to Credit Events on the Restatement
Effective Date) and in this Section 6 (with respect to Credit Events on and
after the Restatement Effective Date) and applicable to such Credit Event exist
as of that time. All of the Notes, certificates, legal opinions and other
documents and papers referred to in Section 5 and in this Section 6, unless
otherwise specified, shall be delivered to the Administrative Agent at the
Notice Office for the account of each of the Banks and, except for the Notes, in
sufficient counterparts or copies for each of the Banks and shall be in form and
substance reasonably satisfactory to the Agents and the Required Banks.
SECTION 7. Representations, Warranties and Agreements. In
order to induce the Banks to enter into this Agreement and to make the Loans,
and issue (or participate in) the Letters of Credit as provided herein, the
Borrower makes the following representations, warranties and agreements, in each
case after giving effect to the Transaction, all of which shall survive the
execution and delivery of this Agreement and the Notes and the making of the
Loans and issuance of the Letters of Credit, with the occurrence of each Credit
Event on or after the Restatement Effective Date being deemed to constitute a
representation and warranty that the matters specified in this Section 7 are
true and correct in all material respects on and as of the Restatement Effective
Date and on the date of each such Credit Event (it being understood and agreed
that any representation or warranty which by its terms is made as of a specified
date shall be required to be true and correct only as of such specified date).
7.01 Corporate and Other Status. Each Credit Party and each of
its Subsidiaries (i) is a duly organized and validly existing corporation or
partnership, as the case may be, in good standing under the laws of the
jurisdiction of its organization, (ii) has the corporate or partnership power
and authority to own its property and assets and to transact the business in
which it is engaged and presently proposes to engage and (iii) is duly qualified
and is authorized to do business and is in good standing in each jurisdiction
where the ownership, leasing or operation of its property or the conduct of its
business requires such qualifications except for failures to be so qualified
which, individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower or
the Borrower and its Subsidiaries taken as a whole.
7.02 Corporate and Other Power and Authority. Each Credit
Party has the corporate or partnership power and authority to execute, deliver
and perform the terms and provisions of each of the Documents to which it is
party and has taken all necessary corporate or partnership action to authorize
the execution, delivery and performance by it of each of such Documents. Each
Credit Party has duly executed and delivered each of the Documents to which it
is party, and each of such Documents constitutes its legal, valid and binding
obligation
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enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law).
7.03 No Violation. Neither the execution, delivery or
performance by any Credit Party of the Documents to which it is a party, nor
compliance by it with the terms and provisions thereof, (i) will contravene any
provision of any law, statute, rule or regulation or any order, writ, injunction
or decree of any court or governmental instrumentality, (ii) will conflict with
or result in any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien (except pursuant to the
Security Documents) upon any of the property or assets of the Borrower or any of
its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of
trust, credit agreement or loan agreement, or any other material agreement,
contract or instrument, to which the Borrower or any of its Subsidiaries is a
party or by which it or any of its property or assets is bound or to which it
may be subject or (iii) will violate any provision of the certificate of
incorporation, by-laws or partnership agreement (or equivalent organizational
documents) of the Borrower or any of its Subsidiaries.
7.04 Approvals. (a) No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except for those that have otherwise been obtained or made on or prior to the
Restatement Effective Date and which remain in full force and effect on the
Restatement Effective Date, or to the extent not required to be obtained or made
on or prior to the Restatement Effective Date, as will be obtained or made on or
prior to the required date therefor), or exemption by, any governmental or
public body or authority, or any subdivision thereof, is required to authorize,
or is required in connection with, (i) the execution, delivery and performance
of any Document or (ii) the legality, validity, binding effect or enforceability
of any such Document.
(b) All necessary shareholder and board of director approvals
and/or consents and all material third party non-governmental approvals and/or
consents required to be obtained by the Borrower, SKL or any Credit Party, in
each case in connection with the Transaction and the execution, delivery and
performance of any Document have been obtained by the Borrower, SKL and each
Credit Party and remain in full force and effect on the Restatement Effective
Date.
7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc. The consolidated balance sheet of the Borrower
and its Subsidiaries at September 30, 1997 and September 30, 1998 and the
related consolidated statements of operations, cash flows and shareholders'
equity of the Borrower and its Subsidiaries for the fiscal years ended on such
dates, respectively, copies of which have been furnished to the Banks prior to
the Restatement Effective Date, present fairly the financial position of the
Borrower and its Subsidiaries at the date of such balance sheets and the results
of the operations of the Borrower and its Subsidiaries for the periods covered
thereby. After giving effect to the Transaction (but for this purpose assuming
that the Transaction had occurred prior to September 30, 1998), since September
30, 1998, there has been no material adverse change in the business, operations,
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property, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower or the Borrower and its Subsidiaries taken as a whole.
(b) (i) On and as of the Restatement Effective Date and after
giving effect to the Transaction and to all Indebtedness (including the Loans)
being incurred or assumed and Liens created by the Credit Parties in connection
therewith, (a) the sum of the assets, at a fair valuation, of each of the
Borrower on a stand alone basis and of the Borrower and its Subsidiaries taken
as a whole will exceed its debts; (b) each of the Borrower on a stand alone
basis and the Borrower and its Subsidiaries taken as a whole has not incurred
and does not intend to incur, and does not believe that they will incur, debts
beyond their ability to pay such debts as such debts mature; and (c) each of the
Borrower on a stand alone basis and the Borrower and its Subsidiaries taken as a
whole will have sufficient capital with which to conduct its business. For
purposes of this Section 7.05(b), "debt" means any liability on a claim, and
"claim" means (i) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured or (ii) right to
an equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured. The amount of contingent liabilities at any time shall be computed
as the amount that, in the light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
(c) Except as fully disclosed in the financial statements
delivered pursuant to Section 7.05(a) there were as of the Restatement Effective
Date no liabilities or obligations with respect to the Borrower or any of its
Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due) which, either individually or in aggregate,
could reasonably be expected to have a material and adverse effect on the
Borrower and its Subsidiaries taken as a whole. As of the Restatement Effective
Date, the Borrower does not know of any basis for the assertion against it or
any of its Subsidiaries of any liability or obligation of any nature whatsoever
that is not fully disclosed in the financial statements delivered pursuant to
Section 7.05(a) which, either individually or in the aggregate, could reasonably
be expected to be material to the Borrower or the Borrower and its Subsidiaries
taken as a whole.
(d) On and as of the Restatement Effective Date, the
Projections delivered to the Agents and the Banks prior to the Restatement
Effective Date have been prepared in good faith and are based on reasonable
assumptions. On the Restatement Effective Date, the Borrower believes that the
Projections are reasonable, it being understood that the Projections include
assumptions as to future events that are not to be viewed as facts and that
actual results may differ from the projected results and such differences may be
material.
7.06 Litigation. There are no actions, suits or proceedings
pending or, to the best knowledge of the Borrower, threatened (i) with respect
to any Document or (ii) that are reasonably likely to materially and adversely
affect the business, operations, property, assets,
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liabilities, condition (financial or otherwise) or prospects of the Borrower or
the Borrower and its Subsidiaries taken as a whole.
7.07 True and Complete Disclosure. All factual information
(taken as a whole) furnished by any Credit Party in writing to any Agent or any
Bank (including, without limitation, all information contained in the Documents)
for purposes of or in connection with this Agreement, the other Credit Documents
or any transaction contemplated herein or therein is, and all other such factual
information hereafter furnished by or on behalf of any Credit Party in writing
to any Agent or any Bank will be, true and accurate in all material respects on
the date as of which such information is dated or certified and not incomplete
by omitting to state any fact necessary to make such information not misleading
in any material respect at such time in light of the circumstances under which
such information was provided.
7.08 Use of Proceeds; Margin Regulations. (a) All proceeds of
the Term Loans will be used by the Borrower (i) to refinance Indebtedness of the
Borrower outstanding under the Original Credit Agreement, (ii) to finance
payment of the Earnout and (iii) to pay fees and expenses related to the
Transaction.
(b) The proceeds of all Revolving Loans and all Swingline
Loans will be used for the Borrower's and its Subsidiaries' general corporate
and working capital purposes.
(c) No part of any Credit Event (or the proceeds thereof) will
be used to purchase or carry any Margin Stock or to extend credit for the
purpose of purchasing or carrying any Margin Stock. Neither the making of any
Loan nor the use of the proceeds thereof nor the occurrence of any other Credit
Event will violate or be inconsistent with the provisions of Regulation G, T, U
or X of the Board of Governors of the Federal Reserve System.
7.09 Tax Returns and Payments. Each of the Borrower and each
of its Subsidiaries has filed all federal income tax returns and all other
material tax returns, domestic and foreign, required to be filed by it and has
paid all material taxes and assessments payable by it which have become due,
except for those contested in good faith and adequately disclosed and fully
provided for on the financial statements of the Borrower and its Subsidiaries in
accordance with generally accepted accounting principles. The Borrower and each
of its Subsidiaries have at all times paid, or have provided adequate reserves
(in the good faith judgment of the management of the Borrower) for the payment
of, all federal, state and foreign income taxes applicable for all prior fiscal
years and for the current fiscal year to date. There is no material action,
suit, proceeding, investigation, audit, or claim now pending or, to the
knowledge of the Borrower or any of its Subsidiaries, threatened by any
authority regarding any taxes relating to the Borrower or any of its
Subsidiaries. Neither the Borrower nor any of its Subsidiaries has entered into
an agreement or waiver or been requested to enter into an agreement or waiver
extending any statute of limitations relating to the payment or collection of
taxes of the Borrower or any of its Subsidiaries, or is aware of any
circumstances that would cause the taxable years or other taxable periods of the
Borrower or any of its Subsidiaries not to be subject to the normally applicable
statute of limitations.
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7.10 Compliance with ERISA. (i) Each Plan and to the knowledge
of the Borrower each Multiemployer Plan (and each related trust, insurance
contract or fund) is in substantial compliance with its terms and with all
applicable laws, including, without limitation, ERISA and the Code; each Plan
and to the knowledge of the Borrower each Multiemployer Plan (and each related
trust, if any) which is intended to be qualified under Section 401(a) of the
Code has received a determination letter from the Internal Revenue Service to
the effect that it meets the requirements of Sections 401(a) and 501(a) of the
Code; no Reportable Event has occurred with respect to a Plan; to the knowledge
of the Borrower, no Multiemployer Plan is insolvent or in reorganization; no
Plan has an Unfunded Current Liability; no Plan and to the knowledge of the
Borrower no Multiemployer Plan which is subject to Section 412 of the Code or
Section 302 of ERISA has an accumulated funding deficiency, within the meaning
of such sections of the Code or ERISA, or has applied for or received a waiver
of an accumulated funding deficiency or an extension of any amortization period,
within the meaning of Section 412 of the Code or Section 303 or 304 of ERISA;
all material contributions required to be made by the Borrower, any Subsidiary
of the Borrower or any ERISA Affiliate with respect to a Plan or a Multiemployer
Plan have been timely made; neither the Borrower nor any Subsidiary of the
Borrower nor any ERISA Affiliate has incurred any material liability (including
any indirect or secondary liability) to or on account of a Plan pursuant to
Section 409, 502(i), 502(l), 4062, 4063, 4064 or 4069 of ERISA or Section
401(a)(29), 4971 or 4975 of the Code or expects to incur any such material
liability under any of the foregoing sections with respect to any Plan; to the
knowledge of the Borrower and its Subsidiaries, no condition exists which
presents a material risk to the Borrower or any Subsidiary of the Borrower or
any ERISA Affiliate of incurring a material liability to or on account of a Plan
pursuant to the foregoing provisions of ERISA and the Code; no proceedings have
been instituted to terminate or appoint a trustee to administer any Plan which
is subject to Title IV of ERISA; no action, suit, proceeding, hearing, audit or
investigation with respect to the administration, operation or the investment of
assets of any Plan (other than routine claims for benefits) is pending or, to
the knowledge of the Borrower and its Subsidiaries, threatened; using actuarial
assumptions and computation methods consistent with Part 1 of subtitle E of
Title IV of ERISA, the aggregate liabilities of the Borrower and its
Subsidiaries and its ERISA Affiliates to all Multiemployer Plans in the event of
a complete withdrawal therefrom, as of the close of the most recent fiscal year
of each such Plan ended prior to the date of this Agreement and with respect to
fiscal years ended prior to the date of each Credit Event would not be material;
each group health plan (as defined in Section 607(1) of ERISA or Section
4980B(g)(2) of the Code) which covers or has covered employees or former
employees of the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate
has at all times been operated in substantial compliance with the provisions of
Part 6 of subtitle B of Title I of ERISA and Section 4980B of the Code; no lien
imposed under the Code or ERISA on the assets of the Borrower or any Subsidiary
of the Borrower or any ERISA Affiliate exists or is likely to arise on account
of any Plan; neither the Borrower nor any Subsidiary of the Borrower nor any
ERISA Affiliate has incurred any material liability (including any indirect or
secondary liability) under Sections 515, 4201, 4202 or 4212 of ERISA with
respect to any Multiemployer Plan; to the knowledge of the Borrower, no
condition exists which presents a material risk to the Borrower or any
Subsidiary of the Borrower or any ERISA Affiliate of incurring a material
liability to or on account of a Multiemployer Plan pursuant to the foregoing
provisions of ERISA; to the knowledge of the Borrower and its Subsidiaries, no
action, suit, proceeding, hearing, audit or
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investigation with respect to the administration, operation or the investment of
assets of any Multiemployer Plan (other than routine claims for benefits) that
could reasonably be expected to be material to the Borrower or the Borrower and
its Subsidiaries taken as a whole is pending or threatened; and the Borrower and
its Subsidiaries do not maintain or contribute to any employee welfare benefit
plan (as defined in Section 3(1) of ERISA), which provides benefits to retired
employees or other former employees (other than as required by Section 601 of
ERISA) or any Plan or Multiemployer Plan, the obligations with respect to which
could reasonably be expected to have a material adverse effect on the ability of
the Borrower or any of its Subsidiaries to perform their respective obligations
under the Credit Documents.
(ii) To the knowledge of the Borrower and its Subsidiaries,
each Foreign Pension Plan has been maintained in substantial compliance with its
terms and with the requirements of any and all applicable laws, statutes, rules,
regulations and orders and has been maintained, where required, in good standing
with applicable regulatory authorities. All material contributions required to
be made with respect to a Foreign Pension Plan have been timely made. Neither
the Borrower nor any of its Subsidiaries has incurred any material obligation in
connection with the termination of or withdrawal from any Foreign Pension Plan.
The Borrower and its Subsidiaries do not maintain or contribute to any Foreign
Pension Plan the obligations with respect to which could reasonably be expected
to have a material adverse effect on the ability of the Borrower or the Borrower
and its Subsidiaries taken as a whole to perform their obligations under the
Credit Documents.
7.11 The Security Documents. (a) The provisions of the
Security Agreement are effective to create in favor of the Collateral Agent for
the benefit of the Secured Creditors a legal, valid and enforceable security
interest in all right, title and interest of the Credit Parties party thereto in
the Security Agreement Collateral described therein, and the Collateral Agent,
for the benefit of the Secured Creditors, has a fully perfected lien on, and
security interest in, all right, title and interest in all of the Security
Agreement Collateral described therein, subject to no other Liens other than
Permitted Liens. The recordation of the Assignment of Security Interest in U.S.
Patents and Trademarks in the form attached to the Security Agreement in the
United States Patent and Trademark Office together with filings on Form UCC-1
made pursuant to the Security Agreement will create, as may be perfected by such
filing and recordation, a perfected security interest granted to the Collateral
Agent in the trademarks and patents covered by the Security Agreement and the
recordation of the Assignment of Security Interest in U.S. Copyrights in the
form attached to the Security Agreement with the United States Copyright Office
together with filings on Form UCC-1 made pursuant to the Security Agreement will
create, as may be perfected by such filing and recordation, a perfected security
interest granted to the Collateral Agent in the copyrights covered by the
Security Agreement.
(b) The security interests created in favor of the Collateral
Agent, as Pledgee, for the benefit of the Secured Creditors, under the Pledge
Agreement constitute first priority perfected security interests in the Pledged
Securities described in the Pledge Agreement, subject to no security interests
of any other Person. No filings or recordings are required in order to perfect
(or maintain the perfection or priority of) the security interests created in
the Pledged Securities under the Pledge Agreement.
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(c) The Mortgages create, for the obligations purported to be
secured thereby, a valid and enforceable perfected security interest in and
mortgage lien on all of the Mortgaged Properties in favor of the Collateral
Agent (or such other trustee as may be required or desired under local law) for
the benefit of the Secured Creditors, superior to and prior to the rights of all
third persons (except that the security interest and mortgage lien created in
the Mortgaged Properties may be subject to the Permitted Encumbrances related
thereto) and subject to no other Liens (other than Liens permitted under Section
9.01). Schedule III contains a true and complete list of each parcel of Real
Property owned or leased by the Borrower and its Subsidiaries on the Restatement
Effective Date, and the type of interest therein held by the Borrower or such
Subsidiary. The Borrower and each of its Subsidiaries have (i) good and
marketable title to all fee-owned Real Property free and clear of all Liens
except those described in the first sentence of this subsection (c) and (ii)
valid leasehold title to all Leaseholds.
7.12 Representations and Warranties in Acquisition Documents.
All representations and warranties set forth in the Acquisition Documents were
true and correct at the time as of which such representations and warranties
were (or are) made (or deemed made), except for such inaccuracies which, either
individually or in the aggregate, are not reasonably likely to have a material
adverse effect on the business, operations, property, assets, condition
(financial or otherwise) or prospects of the Acquired Business.
7.13 Properties. The Borrower and each of its Subsidiaries
have good and marketable title to all material properties owned by them,
including all material property reflected in the balance sheets referred to in
Section 7.05(a), free and clear of all Liens, other than Liens permitted by
Section 9.01.
7.14 Capitalization. On the Restatement Effective Date, the
authorized capital stock of the Borrower shall consist of (i) 100,000,000 shares
of common stock, $.01 par value per share, of which 14,271,000 shares of such
common stock are issued and outstanding and (ii) 1,500,000 shares of preferred
stock, $.01 par value per value, none of which shares of such preferred stock
are issued or outstanding. All outstanding shares of capital stock of the
Borrower have been duly and validly issued, are fully paid and nonassessable.
Except for options or warrants to purchase shares of common stock of the
Borrower held by employees and directors of the Borrower or any of its
Subsidiaries, as of the Restatement Effective Date, the Borrower does not have
outstanding any securities convertible into or exchangeable for its capital
stock or outstanding any rights to subscribe for or to purchase, or any options
for the purchase of, or any agreement providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
its capital stock.
7.15 Subsidiaries. As of the Restatement Effective Date, the
Borrower has no Subsidiaries other than those Subsidiaries listed on Schedule V.
Schedule V correctly sets forth, as of the Restatement Effective Date, the
percentage ownership (direct or indirect) of the Borrower in each class of
capital stock or other equity of each of its Subsidiaries and also identifies
the direct owner thereof.
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7.16 Compliance with Statutes, etc. Each of the Borrower and
each of its Subsidiaries is in compliance with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls), except such noncompliances as could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or the Borrower and its Subsidiaries
taken as a whole.
7.17 Investment Company Act. Neither the Borrower nor any of
its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
7.18 Public Utility Holding Company Act. Neither the Borrower
nor any of its Subsidiaries is a "holding company," or a "subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
7.19 Environmental Matters. (a) The Borrower and each of its
Subsidiaries have complied with, and on the date of such Credit Event are in
compliance with, all applicable Environmental Laws and the requirements of any
permits issued under such Environmental Laws. There are no pending or, to the
best knowledge of the Borrower, threatened Environmental Claims against the
Borrower or any of its Subsidiaries (including any such claim arising out of the
ownership or operation by the Borrower or any of its Subsidiaries of any Real
Property no longer owned or operated by the Borrower or any of its Subsidiaries)
or any Real Property owned or operated by the Borrower or any of its
Subsidiaries. There are no facts, circumstances, conditions or occurrences with
respect to any Real Property owned or operated by the Borrower or any of its
Subsidiaries (including any Real Property formerly owned or operated by the
Borrower or any of its Subsidiaries but no longer owned or operated by the
Borrower or any of its Subsidiaries) or, to the best knowledge of the Borrower,
any property adjoining or adjacent to any such Real Property that could
reasonably be expected (i) to form the basis of an Environmental Claim against
the Borrower or any of its Subsidiaries or any Real Property owned or operated
by the Borrower or any of its Subsidiaries, or (ii) to cause any Real Property
owned or operated by the Borrower or any of its Subsidiaries to be subject to
any restrictions on the ownership, occupancy or transferability of such Real
Property by the Borrower or any of its Subsidiaries under any applicable
Environmental Law.
(b) Hazardous Materials have not at any time been generated,
used, treated or stored on, or transported to or from, any Real Property owned
or operated by the Borrower or any of its Subsidiaries where such generation,
use, treatment or storage has violated or could reasonably be expected to
violate any Environmental Law. Hazardous Materials have not at any time been
Released on or from any Real Property owned or operated by the Borrower or any
of its Subsidiaries where such Release has violated or could reasonably be
expected to violate any applicable Environmental Law.
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(c) Notwithstanding anything to the contrary in this Section
7.19, the representations made in this Section 7.19 shall not be untrue unless
the aggregate effect of all violations, claims, restrictions, failures and
noncompliances of the types described above could reasonably be expected to have
a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower or
the Borrower and its Subsidiaries taken as a whole.
7.20 Labor Relations. Neither the Borrower nor any of its
Subsidiaries is engaged in any unfair labor practice that could reasonably be
expected to have a material adverse effect on the Borrower or the Borrower and
its Subsidiaries taken as a whole. There is (i) no unfair labor practice
complaint pending against the Borrower or any of its Subsidiaries or, to the
best knowledge of the Borrower or any of its Subsidiaries, threatened against
any of them, before the National Labor Relations Board, and no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against the Borrower or any of its Subsidiaries or, to
the best knowledge of the Borrower, threatened against any of them, (ii) no
strike, labor dispute, slowdown or stoppage pending against the Borrower or any
of its Subsidiaries or, to the best knowledge of the Borrower or any of its
Subsidiaries, threatened against the Borrower or any of its Subsidiaries and
(iii) no union representation question exists with respect to the employees of
the Borrower or any of its Subsidiaries, except (with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate) such as could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower or any of its Subsidiaries
and its Subsidiaries taken as a whole.
7.21 Patents, Licenses, Franchises and Formulas. Each of the
Borrower and each of its Subsidiaries owns all the patents, trademarks, permits,
service marks, trade names, copyrights, licenses, franchises, proprietary
information (including but not limited to rights in computer programs and
databases) and formulas, or rights with respect to the foregoing, and has
obtained assignments of all leases and other rights of whatever nature,
necessary for the present conduct of its business, without any known conflict
with the rights of others which, or the failure to obtain which, as the case may
be, could reasonably be expected to result in a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or the Borrower and its Subsidiaries
taken as a whole.
7.22 Indebtedness. Schedule VI sets forth a true and complete
list of all Indebtedness (including Contingent Obligations) of the Borrower and
its Subsidiaries as of the Restatement Effective Date and which is to remain
outstanding after giving effect to the Transaction (excluding the Loans, the
Letters of Credit and Indebtedness permitted under Section 9.04(iii), the
"Existing Indebtedness"), in each case showing the aggregate principal amount
thereof and the name of the respective borrower and any Credit Party or any of
its Subsidiaries which directly or indirectly guaranteed such debt.
7.23 Transaction. At the time of consummation thereof, the
Transaction shall have been consummated in accordance with the terms of the
respective Documents and all applicable laws. At the time of consummation
thereof, all material consents and approvals of,
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and filings and registrations with, and all other actions in respect of, all
governmental agencies, authorities or instrumentalities required in order to
make or consummate the Transaction to the extent then required have been
obtained, given, filed or taken and are or will be in full force and effect (or
effective judicial relief with respect thereto has been obtained). All
applicable waiting periods with respect thereto have or, prior to the time when
required, will have, expired without, in all such cases, any action being taken
by any competent authority which restrains, prevents, or imposes material
adverse conditions upon the Transaction. Additionally, there does not exist any
judgment, order or injunction prohibiting or imposing material adverse
conditions upon the Transaction, or the occurrence of any Credit Event or the
performance by any Credit Party of its obligations under the Documents to which
it is party. All actions taken by each Credit Party pursuant to or in
furtherance of the Transaction have been taken in compliance in all material
respects with the respective Documents and all applicable laws.
SECTION 8. Affirmative Covenants. The Borrower hereby
covenants and agrees that on and after the Restatement Effective Date and until
the Total Commitments and all Letters of Credit have terminated and the Loans,
Notes and Unpaid Drawings, together with interest, Fees and all other
Obligations incurred hereunder and thereunder, are paid in full:
8.01 Information Covenants. The Borrower will furnish to each
Bank:
(a) Quarterly Financial Statements. Within 45 days after the
close of the first three quarterly accounting periods in each fiscal
year of the Borrower, (i) the consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such quarterly
accounting period and the related consolidated statements of income and
retained earnings and statement of cash flows for such quarterly
accounting period and for the elapsed portion of the fiscal year ended
with the last day of such quarterly accounting period, in each case
setting forth comparative figures for the related periods in the prior
fiscal year, all of which shall be certified by the Chief Financial
Officer of the Borrower or another senior financial officer of the
Borrower, subject to normal year-end audit adjustments and (ii)
management's discussion and analysis of the important operational and
financial developments during the quarterly and year-to-date periods,
it being understood that the delivery by the Borrower of its Form 10Q
as filed with the SEC shall satisfy the requirements of this Section
8.01(a).
(b) Annual Financial Statements. Within 90 days after the
close of each fiscal year of the Borrower, (i) the consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such fiscal
year and the related consolidated statements of income and retained
earnings and of cash flows for such fiscal year setting forth
comparative figures for the preceding fiscal year and certified by
Price Waterhouse LLP, any other "Big Six" independent certified public
accountants or such other independent certified public accountants of
recognized national standing reasonably acceptable to the Agents, in
each case to the effect that such statements fairly present in all
material respects the financial condition of the Borrower and its
Subsidiaries as of the dates indicated and the results of their
operations and changes in its financial position for the periods
indicated in conformity with generally accepted accounting principles
applied on
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a basis consistent with prior years, together with a certificate of
such accounting firm stating that in the course of its regular audit of
the business of the Borrower and its Subsidiaries, which audit was
conducted in accordance with generally accepted auditing standards, no
Default or Event of Default which has occurred and is continuing has
come to their attention or, if such a Default or an Event of Default
has come to their attention a statement as to the nature thereof.
(c) Management Letters. Promptly after the Borrower's or any
of its Subsidiaries' receipt thereof, a copy of any "management letter"
received from its certified public accountants.
(d) Budgets. No later than the 30th day following the start of
each fiscal year of the Borrower, a budget in form satisfactory to the
Agents (including budgeted statements of income and sources and uses of
cash and balance sheets, with such information to be set forth on a
quarterly basis) prepared by the Borrower for such fiscal year prepared
in detail, setting forth, with appropriate discussion, the principal
assumptions upon which such budget was based.
(e) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Sections 8.01(a) and (b), a
certificate of the Chief Financial Officer of the Borrower or another
senior financial officer of the Borrower acceptable to the Agents to
the effect that, to the best of such officer's knowledge, no Default or
Event of Default has occurred and is continuing or, if any Default or
Event of Default has occurred and is continuing, specifying the nature
and extent thereof, which certificate shall (x) set forth in reasonable
detail the calculations required to establish whether the Borrower and
its Subsidiaries were in compliance with the provisions of Sections
9.08 through 9.10, inclusive, at the end of such fiscal quarter or
year, as the case may be and (y) if delivered with the financial
statements required by Section 8.01(b), set forth in reasonable detail
the calculations required to establish whether the Borrower and its
Subsidiaries were in compliance with the provisions of Sections 4.02(e)
and 9.07 as at the end of such fiscal year and the amount of (and the
calculations required to establish the amount of) Excess Cash Flow for
the respective Excess Cash Payment Period.
(f) Notice of Default or Litigation. Promptly upon, and in any
event within three Business Days after, an officer of the Borrower
obtains knowledge thereof, notice of (i) the occurrence of any event
which constitutes a Default or an Event of Default and (ii) any
litigation or governmental investigation or proceeding pending (x)
against the Borrower or any of its Subsidiaries which could reasonably
be expected to materially and adversely affect the business,
operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or the Borrower and its
Subsidiaries taken as a whole or (y) with respect to the Transaction or
any Document.
(g) Other Reports and Filings. Promptly after the filing or
delivery thereof, copies of all financial information, proxy materials
and reports, if any, which the Borrower or any of its Subsidiaries
shall publicly file with the Securities and Exchange
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Commission or any successor thereto (the "SEC") or deliver to holders
of its Indebtedness pursuant to the terms of the documentation
governing such Indebtedness (or any trustee, agent or other
representative therefor).
(h) Environmental Matters. Promptly upon, and in any event
within ten Business Days after, an officer of the Borrower obtains knowledge
thereof, notice of one or more of the following environmental matters, unless
such environmental matters could not, individually or when aggregated with all
other such environmental matters, be reasonably expected to materially and
adversely affect the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower or the Borrower
and its Subsidiaries taken as a whole:
(i) any pending or threatened Environmental Claim against the
Borrower or any of its Subsidiaries or any Real Property owned or
operated by the Borrower or any of its Subsidiaries;
(ii) any condition or occurrence on or arising from any Real
Property owned or operated by the Borrower or any of its Subsidiaries
that (a) results in noncompliance by the Borrower or any of its
Subsidiaries with any applicable Environmental Law or (b) could
reasonably be expected to form the basis of an Environmental Claim
against the Borrower or any of its Subsidiaries or any such owned or
operated Real Property;
(iii) any condition or occurrence on any Real Property owned
or operated by the Borrower or any of its Subsidiaries that could
reasonably be expected to cause such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability by the
Borrower or any of its Subsidiaries of such Real Property under any
Environmental Law; and
(iv) the taking of any removal or remedial action in response
to the actual or alleged presence of any Hazardous Material on any Real
Property owned or operated by the Borrower or any of its Subsidiaries
as required by any Environmental Law or any governmental or other
administrative agency; provided, that in any event the Borrower shall
deliver to each Bank all notices received by the Borrower or any of its
Subsidiaries from any government or governmental agency under, or
pursuant to, CERCLA which identify the Borrower or any of its
Subsidiaries as potentially responsible parties for remediation costs
which reasonably could be expected to exceed $500,000 or which
otherwise notify the Borrower or any of its Subsidiaries of potential
liability which reasonably could be expected to exceed $500,000 under
CERCLA.
All such notices shall describe in reasonable detail the
nature of the claim, investigation, condition, occurrence or removal or remedial
action and the Borrower's or such Subsidiary's response thereto.
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(i) Other Information. From time to time, such other
information or documents (financial or otherwise) with respect to the Borrower
or any of its Subsidiaries as any Agent or any Bank may reasonably request.
8.02 Books, Records and Inspections. The Borrower will, and
will cause each of its Subsidiaries to, keep proper books of record and accounts
in which full, true and correct entries in conformity with generally accepted
accounting principles and all requirements of law shall be made of all dealings
and transactions in relation to its business and activities. Upon reasonable
notice to the Borrower, the Borrower will, and will cause each of its
Subsidiaries to, permit officers and designated representatives of any Agent or
any Bank to visit and inspect, under guidance of officers of the Borrower or
such Subsidiary, any of the properties owned or leased by the Borrower or such
Subsidiary, and to examine the books of account of the Borrower or such
Subsidiary and discuss the affairs, finances and accounts of the Borrower or
such Subsidiary with, and be advised as to the same by, its and their officers
and independent accountants, all at such reasonable times and intervals and to
such reasonable extent as such Agent or such Bank may request.
8.03 Maintenance of Property; Insurance. (a) Schedule VII sets
forth a true and complete listing of all insurance maintained by the Borrower
and its Subsidiaries as of the Restatement Effective Date. The Borrower will,
and will cause each of its Subsidiaries to, (i) keep all property owned or
leased by the Borrower and its Subsidiaries necessary to the business of the
Borrower and its Subsidiaries in reasonably good working order and condition,
ordinary wear and tear excepted, (ii) maintain, with financially sound and
reputable insurers, insurance on all such property (including, without
limitation, flood insurance to the extent applicable) in at least such amounts
and against at least such risks as is consistent and in accordance with industry
practice for companies similarly situated owning similar properties in the same
general areas in which the Borrower or any of its Subsidiaries operates, and
(iii) furnish to any Agent or any Bank, upon written request, full information
as to the insurance carried.
(b) The Borrower will, and will cause each of the other Credit
Parties to, at all times keep its property insured, with the Collateral Agent
named as loss payee or additional insured, and all policies (including Mortgage
Policies) or certificates (or certified copies thereof) with respect to such
insurance (and any other insurance maintained by the Borrower and/or such other
Credit Parties) shall (i) name the Collateral Agent as loss payee and/or
additional insured) and (ii) state that such insurance policies shall not be
cancelled without at least 30 days' prior written notice thereof by the
respective insurer to the Collateral Agent (or such shorter period of time as a
particular insurance company policy generally provides).
(c) If the Borrower or any of its Subsidiaries shall fail to
insure its property in accordance with this Section 8.03, or if the Borrower or
any of its Subsidiaries shall fail to so name the Collateral Agent as a loss
payee or additional insured with respect thereto, the Collateral Agent shall
have the right (but shall be under no obligation), after giving the Borrower
prior written notice, to procure such insurance and the Borrower agrees to
reimburse the Collateral Agent for all costs and expenses of procuring such
insurance or naming the Collateral Agent as a loss payee or additional insured
with respect thereto.
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8.04 Corporate Franchises. The Borrower will, and will cause
each of its Subsidiaries to, do or cause to be done, all things necessary to
preserve and keep in full force and effect its existence and its material
rights, franchises, licenses and patents; provided, however, that nothing in
this Section 8.04 shall prevent (i) sales of assets, mergers and other
transactions by the Borrower or any of its Subsidiaries in accordance with
Section 9.02 or (ii) the withdrawal by the Borrower or any of its Subsidiaries
of its qualification as a foreign corporation in any jurisdiction where such
withdrawal could not reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or the Borrower and its Subsidiaries
taken as a whole.
8.05 Compliance with Statutes, etc. The Borrower will, and
will cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls), except such noncompliances as could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or the Borrower and its Subsidiaries
taken as a whole.
8.06 Compliance with Environmental Laws. (a) The Borrower will
comply, and will cause each of its Subsidiaries to comply, with all
Environmental Laws applicable to the ownership or use of its Real Property now
or hereafter owned or operated by the Borrower or any of its Subsidiaries
(except such noncompliances as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower or the Borrower and its Subsidiaries taken as a
whole), will promptly pay or cause to be paid all costs and expenses incurred in
connection with such compliance, and will keep or cause to be kept all such Real
Property free and clear of any Liens imposed pursuant to such Environmental
Laws. Neither the Borrower nor any of its Subsidiaries will generate, use,
treat, store, release or dispose of, or permit the generation, use, treatment,
storage, release or disposal of Hazardous Materials on any Real Property now or
hereafter owned or operated by the Borrower or any of its Subsidiaries, or
transport or permit the transportation of Hazardous Materials to or from any
such Real Property, except to the extent that any such generation, use,
treatment, storage, release or disposal could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or the Borrower and its Subsidiaries
taken as a whole.
(b) At the written request of the Agents or the Required
Banks, which request shall specify in reasonable detail the basis therefor, at
any time and from time to time, the Borrower will provide, at the sole expense
of the Borrower, an environmental site assessment report concerning any Real
Property owned or operated by the Borrower or any of its Subsidiaries, prepared
by an environmental consulting firm reasonably approved by the Agents,
indicating the presence or absence of Hazardous Materials and the potential cost
of any removal or remedial action in connection with such Hazardous Materials on
such Real Property, provided that in no event shall
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such request be made more often than once every two years for any particular
Real Property unless either (i) the Obligations have been declared (or have
become) due and payable pursuant to Section 10 or (ii) the Banks receive notice
under Section 8.01(h) of any event for which notice is required to be delivered
for any such Real Property. If the Borrower fails to provide the same within 90
days after such request was made, the Agents may order the same, the cost of
which shall be borne by the Borrower, and the Borrower shall grant and hereby
grants to the Agents and the Banks and their agents access to such Real Property
and specifically grants the Agents and the Banks an irrevocable non-exclusive
license, subject to the rights of tenants, to undertake such an assessment at
any reasonable time upon reasonable notice to the Borrower, all at the sole and
reasonable expense of the Borrower.
8.07 ERISA. As soon as possible and, in any event, within
fifteen Business Days after the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate knows of the occurrence of any of the following, the Borrower
will deliver to each of the Banks a certificate of the Chief Financial Officer
of the Borrower setting forth the full details as to such occurrence and the
action, if any, that the Borrower, such Subsidiary or such ERISA Affiliate is
required or proposes to take, together with any notices required or proposed to
be given to or filed with or by the Borrower, the Subsidiary, the ERISA
Affiliate, the PBGC, a Plan participant or the Plan administrator with respect
thereto: that a Reportable Event has occurred; that an accumulated funding
deficiency, within the meaning of Section 412 of the Code or Section 302 of
ERISA, has been incurred or an application may be or has been made for a waiver
or modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under Section
412 of the Code or Section 303 or 304 of ERISA with respect to a Plan or a
Multiemployer Plan; that a contribution for a material amount required to be
made with respect to a Plan, a Multiemployer Plan or a Foreign Pension Plan has
not been timely made; that a Plan or a Multiemployer Plan has been or may be
terminated under Section 4041(c) or 4042 of ERISA, reorganized, partitioned or
declared insolvent under Title IV of ERISA; that a Plan has an Unfunded Current
Liability; that proceedings may be or have been instituted to terminate or
appoint a trustee to administer a Plan or a Multiemployer Plan which is subject
to Title IV of ERISA; that a proceeding has been instituted pursuant to Section
515 of ERISA to collect a delinquent contribution to a Multiemployer Plan; that
the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate will or may
incur any material liability (including any indirect or secondary liability) to
or on account of the termination of or withdrawal from a Plan under Section
4062, 4063, 4064 or 4069 of ERISA or with respect to a Plan under Section
401(a)(29), 4971, 4975 or 4980 of the Code or Section 409 or 502(i) or 502(l) of
ERISA or under Section 4980B(a) of the Code with respect to a group health plan
(as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under
Section 4980B of the Code or with respect to a Multiemployer Plan under Sections
4201, 4204 or 4212 of ERISA; or that the Borrower or any Subsidiary of the
Borrower may incur any material liability pursuant to any employee welfare
benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to
retired employees or other former employees (other than as required by Section
601 of ERISA) or any Plan which is subject to Title IV of ERISA, any
Multiemployer Plan or any Foreign Pension Plan. Upon written request of any
Agent, the Borrower will deliver to each of the Banks a complete copy of the
annual report (on Internal Revenue Service Form 5500-series) of each Plan
(including, to the extent required, the related financial and actuarial
statements and opinions and other supporting
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statements, certifications, schedules and information) required to be filed with
the Internal Revenue Service or any other material financial information the
Borrower or any Subsidiary has with respect to any Plan. In addition to any
certificates or notices delivered to the Banks pursuant to the first sentence
hereof, copies of any material notices pertaining to the foregoing events
received by the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate
with respect to any Plan, Multiemployer Plan or Foreign Pension Plan shall be
delivered to the Banks no later than ten Business Days after the date such
notice has been received by the Borrower, the Subsidiary or the ERISA Affiliate,
as applicable.
8.08 End of Fiscal Years; Fiscal Quarters. The Borrower will
cause (i) each of its, and each of its Subsidiaries', fiscal years to end on
September 30, and (ii) each of its, and each of its Subsidiaries', fiscal
quarters to end on December 31, March 31, June 30 and September 30.
8.09 Performance of Obligations. The Borrower will, and will
cause each of its Subsidiaries to, perform all of its obligations under the
terms of each mortgage, indenture, security agreement, loan agreement or credit
agreement and each other material agreement, contract or instrument by which it
is bound, except such non-performances as could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or the Borrower and its Subsidiaries
taken as a whole.
8.10 Payment of Taxes. The Borrower will pay and discharge,
and will cause each of its Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims for sums that have become
due and payable which, if unpaid, might become a Lien not otherwise permitted
under Section 9.01(i); provided, that neither the Borrower nor any of its
Subsidiaries shall be required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by proper proceedings if it has
maintained adequate reserves with respect thereto in accordance with generally
accepted accounting principles.
8.11 Interest Rate Protection. Within 90 days following the
Restatement Effective Date, the Borrower will enter into and thereafter
maintain, Interest Rate Protection Agreements acceptable to the Agents
establishing a fixed or maximum interest rate acceptable to the Agents for an
aggregate amount equal to at least 50% of the aggregate principal amount of all
Term Loans then outstanding.
8.12 Additional Security; Further Assurances. (a) The Borrower
will, and will cause each of the Subsidiary Guarantors to, grant to the
Collateral Agent security interests and mortgages in such assets and properties
(including Real Property) of the Borrower and such Subsidiary Guarantors which
are of the type required to be pledged or assigned pursuant to the original
Security Documents and as are not covered by such original Security Documents,
and as may be requested from time to time by the Agents or the Required Banks
(collectively, the "Additional Security Documents"). All such security interests
and mortgages shall be granted
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pursuant to documentation reasonably satisfactory in form and substance to the
Agents and shall constitute valid and enforceable perfected security interests
and mortgages superior to and prior to the rights of all third Persons and
subject to no other Liens except for Permitted Liens. The Additional Security
Documents or instruments related thereto shall have been duly recorded or filed
in such manner and in such places as are required by law to establish, perfect,
preserve and protect the Liens in favor of the Collateral Agent required to be
granted pursuant to the Additional Security Documents and all taxes, fees and
other charges payable in connection therewith shall have been paid in full.
(b) The Borrower will, and will cause each of the Subsidiary
Guarantors to, at the expense of the Borrower, make, execute, endorse,
acknowledge, file and/or deliver to the Collateral Agent from time to time such
vouchers, invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, real
property surveys, reports and other assurances or instruments and take such
further steps relating to the collateral covered by any of the Security
Documents as the Collateral Agent may reasonably require. Furthermore, the
Borrower will cause to be delivered to the Collateral Agent such opinions of
counsel, title insurance and other related documents as may be reasonably
requested by the Agents to assure itself that this Section 8.12 has been
complied with.
(c) On the Earnout Payment Date, the Borrower will provide to
the Agents evidence of payment by the Borrower of the Earnout.
(d) The Borrower agrees that, unless specified otherwise, each
action required above by this Section 8.12 shall be completed within 90 days
after such action is either requested to be taken by the Agents or the Required
Banks or required to be taken by the Borrower and the Subsidiary Guarantors
pursuant to the terms of this Section 8.12.
8.13 Foreign Subsidiaries Security. If following a change in
the relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder, counsel for the
Borrower reasonably acceptable to the Agents does not within 30 days after a
request from the Agents or the Required Banks deliver evidence, in form and
substance mutually satisfactory to the Agents and the Borrower, with respect to
any Foreign Subsidiary of the Borrower which has not already had all of its
stock pledged pursuant to the Pledge Agreement that (i) a pledge of 662/3% or
more of the total combined voting power of all classes of capital stock of such
Foreign Subsidiary entitled to vote, (ii) the entering into by such Foreign
Subsidiary of a security agreement in substantially the form of the Security
Agreement and (iii) the entering into by such Foreign Subsidiary of a guaranty
in substantially the form of the Subsidiaries Guaranty, in any such case would
cause the undistributed earnings of such Foreign Subsidiary as determined for
Federal income tax purposes to be treated as a deemed dividend to such Foreign
Subsidiary's United States parent for Federal income tax purposes, then in the
case of a failure to deliver the evidence described in clause (i) above, unless
the Borrower determines in good faith and notifies the Agents that such action
will result in material negative tax implications to the Borrower or any of its
Subsidiaries, that portion of such Foreign Subsidiary's outstanding capital
stock not theretofore pledged pursuant to the Pledge Agreement shall be pledged
to the Collateral Agent for the benefit of the Secured Creditors pursuant to the
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Pledge Agreement (or another pledge agreement in substantially similar form, if
needed), and in the case of a failure to deliver the evidence described in
clause (ii) above unless the Borrower determines in good faith and notifies the
Agents that such action will result in material negative tax implications to the
Borrower or any of its Subsidiaries, such Foreign Subsidiary (to the extent that
same is a Wholly-Owned Foreign Subsidiary and would otherwise constitute a
Subsidiary Guarantor) will execute and deliver the Security Agreement (or
another security agreement in substantially similar form, if needed), granting
the Collateral Agent for the benefit of the Secured Creditors a security
interest in all of such Foreign Subsidiary's assets and securing the Obligations
of the Borrower under the Credit Documents and under any Interest Rate
Protection Agreement or Other Hedging Agreement and, in the event the
Subsidiaries Guaranty shall have been executed by such Foreign Subsidiary, the
obligations of such Foreign Subsidiary thereunder, and in the case of a failure
to deliver the evidence described in clause (iii) above unless the Borrower
determines in good faith and notifies the Agents that such action will result in
material negative tax implications to the Borrower or any of its Subsidiaries,
such Foreign Subsidiary (to the extent that same is a Wholly-Owned Foreign
Subsidiary and would otherwise constitute a Subsidiary Guarantor) will execute
and deliver the Subsidiaries Guaranty (or another guaranty in substantially
similar form, if needed), guaranteeing the Obligations of the Borrower under the
Credit Documents and under any Interest Rate Protection Agreement or Other
Hedging Agreement, in each case to the extent that the entering into such
Security Agreement or Subsidiaries Guaranty is permitted by the laws of the
respective foreign jurisdiction and with all documents delivered pursuant to
this Section 8.13 to be in form and substance reasonably satisfactory to the
Agents.
SECTION 9. Negative Covenants. The Borrower hereby covenants
and agrees that on and after the Restatement Effective Date and until the Total
Commitments and all Letters of Credit have terminated and the Loans, Notes and
Unpaid Drawings, together with interest, Fees and all other Obligations incurred
hereunder and thereunder, are paid in full:
9.01 Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets (real or personal, tangible or
intangible) of the Borrower or any of its Subsidiaries, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable with recourse to the Borrower
or any of its Subsidiaries), or assign any right to receive income or permit the
filing of any financing statement under the UCC or any other similar notice of
Lien under any similar recording or notice statute; provided that the provisions
of this Section 9.01 shall not prevent the creation, incurrence, assumption or
existence of the following (Liens described below are herein referred to as
"Permitted Liens"):
(i) inchoate Liens for taxes, assessments or governmental
charges or levies not yet due or Liens for taxes, assessments or
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves have been
established in accordance with generally accepted accounting
principles;
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(ii) Liens in respect of property or assets of the Borrower or
any of its Subsidiaries imposed by law, which were incurred in the
ordinary course of business and do not secure Indebtedness for borrowed
money, such as carriers', warehousemen's, materialmen's and mechanics'
liens and other similar Liens arising in the ordinary course of
business, and which (x) do not in the aggregate materially detract from
the value of the Borrower's or such Subsidiary's property or assets or
materially impair the use thereof in the operation of the business of
the Borrower or such Subsidiary or (y) are being contested in good
faith by appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property or assets subject to
any such Lien;
(iii) Liens in existence on the Restatement Effective Date
which are listed, and the property subject thereto described, in
Schedule VIII, without giving effect to any extensions or renewals
thereof;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to this Agreement and the Security
Documents;
(vi) Liens upon assets of the Borrower or any of its
Subsidiaries subject to Capitalized Lease Obligations to the extent
such Capitalized Lease Obligations are permitted by Section 9.04(iii),
provided that (x) such Liens only serve to secure the payment of
Indebtedness arising under such Capitalized Lease Obligation and (y)
the Lien encumbering the asset giving rise to the Capitalized Lease
Obligation does not encumber any other asset of the Borrower or any
Subsidiary of the Borrower;
(vii) Liens placed upon equipment or machinery used in the
ordinary course of business of the Borrower or any of its Subsidiaries
at the time of acquisition thereof by the Borrower or any such
Subsidiary to secure Indebtedness incurred to pay all or a portion of
the purchase price thereof or to secure Indebtedness incurred solely
for the purpose of financing the acquisition of any such equipment or
machinery or extensions, renewals or replacements of any of the
foregoing for the same or a lesser amount, provided that (x) the
aggregate outstanding principal amount of all Indebtedness secured by
Liens permitted by this clause (vii), when added to the amount
outstanding under clause 9.04(iii), shall not at any time exceed
$10,000,000 and (y) in all events, the Lien encumbering the equipment
or machinery so acquired does not encumber any other asset of the
Borrower or such Subsidiary;
(viii) easements, rights-of-way, restrictions, encroachments
and other similar charges or encumbrances, and minor title
deficiencies, in each case not securing Indebtedness and not materially
interfering with the conduct of the business of the Borrower or any of
its Subsidiaries;
(ix) Liens arising from precautionary UCC financing statement
filings regarding operating leases;
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(x) Liens arising out of judgments, decrees or attachments not
constituting an Event of Default under Section 10.09, provided that no
cash or other property shall be pledged by the Borrower or any
Subsidiary as security therefor;
(xi) statutory and common law landlords' liens under leases to
which the Borrower or any of its Subsidiaries is a party;
(xii) Liens (other than Liens imposed under ERISA) incurred in
the ordinary course of business in connection with workers compensation
claims, unemployment insurance and social security benefits and Liens
securing the performance of bids, tenders, leases and contracts in the
ordinary course of business, statutory obligations, surety bonds,
performance bonds and other obligations of a like nature incurred in
the ordinary course of business (exclusive of obligations in respect of
the payment for borrowed money), provided that the aggregate value of
all cash and property encumbered by consensual Liens permitted pursuant
to this clause (xii) shall not at any time exceed $750,000;
(xiii) Liens on property or assets acquired pursuant to a
Permitted Acquisition, or on property or assets of a Subsidiary of the
Borrower in existence at the time such Subsidiary is acquired pursuant
to a Permitted Acquisition, provided that (x) any Indebtedness that is
secured by such Liens is permitted to exist under Section 9.04(vii) and
(y) such Liens are not incurred in connection with, or in contemplation
or anticipation of, such Permitted Acquisition and do not attach to any
other asset of the Borrower or any of its Subsidiaries; and
(xiv) Liens in existence on the Restatement Effective Date
securing the IDB Financing to the extent such financing is permitted by
Section 9.04.
In connection with the granting of Liens of the type described
in clauses (vi), (vii) and (xiii) of this Section 9.01 by the Borrower or any of
its Subsidiaries, the Administrative Agent and the Collateral Agent shall be
authorized to take any actions deemed appropriate by it in connection therewith
(including, without limitation, by executing appropriate lien releases or lien
subordination agreements in favor of the holder or holders of such Liens, in
either case solely with respect to the item or items of equipment or other
assets subject to such Liens).
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc.
The Borrower will not, and will not permit any of its Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of all or any part of
its property or assets, or enter into any sale-leaseback transactions, or
purchase or otherwise acquire (in one or a series of related transactions) any
part of the property or assets (other than purchases or other acquisitions of
inventory, materials and equipment in the ordinary course of business) of any
Person (or agree to do any of the foregoing at any future time), except that:
(i) Capital Expenditures by the Borrower and its Subsidiaries
shall be permitted to the extent permitted by Section 9.07;
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(ii) each of the Borrower and its Subsidiaries may in the
ordinary course of business sell, lease or otherwise dispose of any
equipment or materials which, in the reasonable judgment of such
Person, are obsolete, unusable or worn out;
(iii) each of the Borrower and its Subsidiaries may sell
assets (other than the capital stock of any Subsidiary Guarantor), so
long as (w) no Default or Event of Default then exists or would result
therefrom, (x) each such sale is in an arms-length transaction and the
Borrower or the respective Subsidiary receives at least fair market
value (as determined in good faith by the Borrower or such Subsidiary,
as the case may be), (y) at least 80% of the total consideration
received by the Borrower or such Subsidiary is cash and paid at the
time of the closing of such sale and (z) the aggregate amount of the
proceeds received from all assets sold pursuant to this clause (iii)
shall not exceed $400,000 in any fiscal year of the Borrower;
(iv) each of the Borrower and its Subsidiaries may sell assets
(other than the capital stock of any Subsidiary Guarantor), so long as
(v) no Default or Event of Default then exists or would result
therefrom, (w) each such sale is in an arm's-length transaction and the
Borrower or the respective Subsidiary receives at least fair market
value (as determined in good faith by the Borrower or such Subsidiary,
as the case may be), (x) at least 80% of the total consideration
received by the Borrower or such Subsidiary is cash and is paid at the
time of the closing of such sale, (y) the Net Sale Proceeds therefrom
are applied as (and to the extent) required by Section 4.02(d) and (z)
the aggregate amount of the proceeds received from all assets sold
pursuant to this clause (iv) shall not exceed $10,000,000 in any fiscal
year of the Borrower;
(v) Investments may be made to the extent permitted by Section
9.05;
(vi) each of the Borrower and its Subsidiaries may lease (as
lessee) real or personal property in the ordinary course of business
(so long as any such lease does not create a Capitalized Lease
Obligation except to the extent permitted by Section 9.04(iv));
(vii) each of the Borrower and its Subsidiaries may make sales
of inventory in the ordinary course of business;
(viii) the Transaction shall be permitted;
(ix) the Borrower and each of its Subsidiaries may acquire
assets or the capital stock of any Person, including by merger, so long
as the survivor of such merger is, or becomes at such time, a
Subsidiary Guarantor (any such acquisition, a "Permitted Acquisition"
and the date of consummation of any such acquisition, an "Acquisition
Date"), provided that (i) the sum of the aggregate cash and Cash
Equivalents plus the aggregate market value of all other consideration
paid by the Borrower and its Subsidiaries (including any Indebtedness
assumed by the Borrower or any Subsidiary) in connection with (x) any
one such Permitted Acquisition shall not exceed $40,000,000 and (y) all
such Permitted Acquisitions shall not exceed $60,000,000; (ii) no
Default or Event of Default exists at the time of such acquisition or
will exist as a result thereof; (iii) in
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respect of each Permitted Acquisition (or of all Permitted Acquisitions
closing on the same date), the Borrower shall have delivered to the
Agents an officer's certificate executed by an authorized officer of
the Borrower demonstrating that on a Pro Forma Basis determined as if
such Permitted Acquisition (or Acquisitions) had been consummated (and
any Indebtedness to be incurred to finance such Permitted Acquisition
had been incurred) on the first day of the last Test Period of the
Borrower then last ended, the Borrower would have been in compliance
with Sections 9.08 through 9.10, inclusive, for such Test Period; and
(iv) the principal place of business of, and at least 80% of the assets
of, each such Acquired Business shall be located in the United States;
(x) the Borrower may transfer any assets to a Subsidiary
Guarantor, and any Subsidiary of the Borrower may merge or consolidate
with and into, or be liquidated into, or transfer any of its assets to,
the Borrower or any Subsidiary Guarantor, in each case, so long as (i)
the Borrower or the respective Subsidiary Guarantor is the surviving
corporation of any such transaction, (ii) in the case of any such
transaction involving a non-Wholly-Owned Subsidiary, the only
consideration paid to third parties in connection therewith are shares
of common stock of the Borrower and (iii) in the case of any
transaction between or among the Borrower and the Subsidiary
Guarantors, all Liens granted pursuant to the Security Documents on any
property or assets involved shall remain in full force and effect (with
at least the same priority as such Lien would have had if such transfer
pursuant to this clause (x) had not occurred);
(xi) any Foreign Subsidiary of the Borrower may merge or
consolidate with and into, or be liquidated into, or transfer any of
its assets to, the Borrower or any Foreign Subsidiary so long as in the
case of any such merger or consolidation, the Borrower or any Foreign
Subsidiary is the surviving corporation of any such transaction; and
(xii) each of the Borrower and its Subsidiaries may sell Cash
Equivalents permitted to be held by them pursuant to Section 9.05(ii)
so long as each such sale is for cash and at fair market value (as
determined in good faith by the Borrower or such Subsidiary, as the
case may be).
To the extent the Required Banks waive the provisions of this
Section 9.02 with respect to the sale of any Collateral, or any Collateral is
sold as permitted by this Section 9.02 (other than to the Borrower or a
Subsidiary thereof), such Collateral shall be sold free and clear of the Liens
created by the Security Documents, and the Administrative Agent and the
Collateral Agent shall be authorized to take any actions deemed appropriate in
order to effect the foregoing.
9.03 Dividends. The Borrower will not, and will not permit any
of its Subsidiaries to, authorize, declare or pay any Dividends with respect to
the Borrower or any of its Subsidiaries, except that:
(i) any Subsidiary of the Borrower may pay cash Dividends to
the Borrower or any Subsidiary Guarantor;
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(ii) so long as there shall exist no Default or Event of
Default (both before and after giving effect to the payment thereof),
the Borrower may repurchase outstanding shares of its common stock (or
options to purchase such common stock) following the death, disability
or termination of employment of employees of the Borrower or any of its
Subsidiaries, provided that the aggregate amount of Dividends paid by
the Borrower pursuant to this clause (ii) shall not exceed $250,000 in
any fiscal year of the Borrower; and
(iii) so long as there shall be no Default or Event of Default
(both before and after giving effect to the payment thereof), the
Borrower may pay cash Dividends to its shareholders in an amount not to
exceed in the aggregate for all such Dividends, the then applicable
Cumulative Net Income Amount.
9.04 Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to, contract, create, incur, assume or suffer to exist
any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the
other Credit Documents;
(ii) Existing Indebtedness outstanding on the Restatement
Effective Date and listed on Schedule VI, without giving effect to any
subsequent extension, renewal or refinancing thereof;
(iii) Indebtedness of the Borrower and its Subsidiaries
evidenced by Capitalized Lease Obligations to the extent permitted
pursuant to Section 9.07, provided that in no event shall the aggregate
principal amount of Capitalized Lease Obligations permitted by this
clause (iii), when added to the amount outstanding under clause
9.01(vii), exceed $10,000,000 at any time outstanding;
(iv) Indebtedness subject to Liens permitted under Section
9.01(vii);
(v) intercompany Indebtedness to the extent permitted by
Sections 9.05;
(vi) a single issuance of one or more tranches of unsecured
subordinated Indebtedness of the Borrower (the "New Subordinated
Notes"), so long as (i) the aggregate outstanding principal amount
thereof does not exceed $100,000,000 (less any repayments of principal
thereof), (ii) at least 10 Business Days prior to the issuance thereof,
the Borrower shall have delivered to the Agents and each of the Banks
substantially final drafts of the documents pursuant to which the New
Subordinated Notes are to be issued and with any changes thereto made
after the initial delivery of such documents to be delivered to the
Agents and with any significant changes thereto made after such initial
delivery to be delivered to each of the Banks at least three days prior
to the issuance of such New Subordinated Notes, (iii) the final
maturity date thereof is at least one year beyond the Term Loan
Maturity Date, (iv) there are no required amortization, mandatory
redemption or sinking fund or similar provisions prior to the date
which is one year after the Term Loan Maturity Date, (v) all other
terms and
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conditions thereof (including, without limitation, interest rates,
covenants, defaults, remedies and subordination provisions) are
reasonably satisfactory to the Agents, (vi) no Default or Event of
Default then exists or would result therefrom and (vii) the Net Debt
Proceeds from such New Subordinated Notes shall be applied to repay
Term Loans to the extent outstanding at the time of such issuance (or,
if prior to the termination of the Term Loan Commitment, to reduce the
Total Term Loan Commitment) with any remaining amount of such Net Debt
Proceeds to be applied to reduce any outstanding Revolving Loans (with
no reduction in the respective commitments thereunder); and
(vii) Indebtedness assumed by the Borrower or any Subsidiary
in connection with a Permitted Acquisition, provided that (x) such
Indebtedness was not incurred in connection with or in contemplation of
such Permitted Acquisition and (y) such Indebtedness does not exceed
20% of the aggregate consideration paid by the Borrower and/or its
Subsidiaries in connection with such Permitted Acquisition;
(viii) Indebtedness of the Borrower and its Subsidiaries
consisting of guaranty and repurchase obligations entered into in the
ordinary course of business in connection with their dealer floor plan
and rental fleet financing arrangements;
(ix) the IDB Financing in an aggregate principal amount not to
exceed $4,700,000 at any time outstanding, less all repayments of
principal made thereon;
(x) Indebtedness of the Borrower and its Subsidiaries
consisting of contingent obligations entered into in the ordinary
course of business in connection with customers' lease financing
arrangements, provided that in no event shall the aggregate amount of
such contingent obligations permitted by this clause (x) exceed, at any
time, $20,000,000; and
(xi) additional unsecured Indebtedness of the Borrower and its
Subsidiaries not to exceed $10,000,000 in aggregate principal amount at
any time outstanding.
9.05 Advances, Investments and Loans. The Borrower will not,
and will not permit any of its Subsidiaries to, directly or indirectly, lend
money or credit or make advances to any Person, or purchase or acquire any
stock, obligations or securities of, or any other interest in, or make any
capital contribution to, any other Person, or purchase or own a futures contract
or otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract, or hold any
cash or Cash Equivalents (each of the foregoing an "Investment" and,
collectively, "Investments"), except that the following shall be permitted:
(i) the Borrower and its Subsidiaries may acquire and hold
accounts receivables owing to any of them, if created or acquired in
the ordinary course of business and payable or dischargeable in
accordance with customary terms, and the Borrower and its Subsidiaries
may own Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of
delinquent obligations of,
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and other disputes with, customers and suppliers arising in the
ordinary course of business;
(ii) the Borrower and its Subsidiaries may acquire and hold or
invest in cash and Cash Equivalents;
(iii) the Borrower and its Subsidiaries may hold the
Investments held by them on the Restatement Effective Date and
described on Schedule IX, provided that any additional Investments made
with respect thereto shall be permitted only if independently permitted
under the other provisions of this Section 9.05;
(iv) the Borrower and its Subsidiaries may make loans and
advances in the ordinary course of business to their respective
employees so long as the aggregate principal amount thereof at any time
outstanding (determined without regard to any write-downs or write-offs
of such loans and advances) shall not exceed $1,000,000;
(v) the Borrower may enter into Interest Protection Agreements
in respect of the Obligations;
(vi) the Borrower and the Subsidiary Guarantors may make
intercompany loans and advances between or among one another
(collectively, "Intercompany Loans"), so long as each Intercompany Loan
shall be evidenced by an Intercompany Note that is pledged to the
Collateral Agent pursuant to the Pledge Agreement;
(vii) the Borrower and its Subsidiaries may hold promissory
notes issued by a purchaser in connection with an asset sale permitted
under Section 9.02(iii) and (iv);
(viii) the Borrower and the Subsidiary Guarantors may make
Investments in addition to the loans and advances described in Section
9.05(vi) between or among one another;
(ix) the Borrower and its Subsidiaries may make Permitted
Acquisitions effected in accordance with the requirements of Section
9.02(ix); and
(x) the Borrower and its Subsidiaries may make Investments in
addition to the Investments described above in this Section 9.05 not to
exceed $2,000,000 in aggregate amount at any time outstanding.
9.06 Transactions with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any transaction or series
of related transactions, whether or not in the ordinary course of business, with
any Affiliate of the Borrower or any of its Subsidiaries, other than in the
ordinary course of business and on terms and conditions substantially as
favorable to the Borrower or such Subsidiary as would reasonably be obtained by
the Borrower or such Subsidiary at that time in a comparable arm's-length
transaction with a Person other than an Affiliate, except that the following in
any event shall be permitted: (i) Dividends may be paid to the extent provided
in Section 9.03, (ii) loans may be made and other
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transactions may be entered into by the Borrower and its Subsidiaries to the
extent permitted by Sections 9.02, 9.04, 9.05 and 9.07, (iii) customary fees may
be paid to non-officer directors of the Borrower and (iv) the Borrower and its
Subsidiaries may pay management, advisory, consulting and similar fees to the
Borrower, any WhollyOwned Subsidiary of the Borrower and Harbor Group
Industries, Inc. and its Affiliates.
9.07 Capital Expenditures. (a) The Borrower will not, and will
not permit any of its Subsidiaries to, make any Capital Expenditures, except
that during any fiscal year of the Borrower (taken as one accounting period),
the Borrower and its Subsidiaries may make Capital Expenditures so long as the
aggregate amount of such Capital Expenditures does not exceed $20,000,000 for
any such fiscal year, provided that any such amount not utilized in any fiscal
year may be applied to Capital Expenditures in the next succeeding fiscal year,
provided further that any amounts so carried forward shall not be considered in
the determination of amounts available to be carried forward to any succeeding
year.
(b) Notwithstanding the foregoing paragraph (a), for the
Borrower's fiscal year 1999, the Borrower and its Subsidiaries shall be
permitted to make Capital Expenditures in an aggregate amount not to exceed
$25,000,000 for such fiscal year, provided that any amounts not utilized in the
1998 fiscal year may not be carried forward and applied to Capital Expenditures
in the 1999 fiscal year.
(c) Notwithstanding the foregoing, the Borrower and its
Subsidiaries may make additional Capital Expenditures (which Capital
Expenditures will not be included in any determination under Section 9.07(a))
with the Net Sale Proceeds of Asset Sales to the extent such proceeds are not
required to be applied to repay Term Loans (or reduce the Total Revolving Loan
Commitment) pursuant to Section 4.02(d) and such proceeds are reinvested as
required by Section 4.02(d).
(d) Notwithstanding the foregoing, the Borrower and its
Subsidiaries may make additional Capital Expenditures (which Capital
Expenditures will not be included in any determination under Section 9.07(a))
with the insurance proceeds received by the Borrower or any of its Subsidiaries
from any Recovery Event so long as such Capital Expenditures are to replace or
restore any properties or assets in respect of which such proceeds were paid or
contractually committed to be paid within 180 days following the date of the
receipt of such insurance proceeds to the extent such insurance proceeds are not
required to be applied to repay Term Loans (or reduce the Total Revolving Loan
Commitment) pursuant to Section 4.02(f).
(e) Notwithstanding the foregoing, the Borrower may make
additional Capital Expenditures (which Capital Expenditures will not be included
in any determination under Section 9.07(a)) constituting Permitted Acquisitions
effected in accordance with the requirements of Section 9.02(viii).
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9.08 Consolidated Fixed Charge Coverage Ratio. The Borrower
will not permit the Consolidated Fixed Charge Coverage Ratio for any Test Period
ending on the last day of a fiscal quarter set forth below to be less than the
ratio set forth opposite such fiscal quarter below:
Fiscal Quarter Ratio
-------------- -----
March 31, 1999 3.00:1.00
June 30, 1999 3.00:1.00
September 30, 1999 3.00:1.00
December 31, 1999 3.50:1.00
March 31, 2000 3.50:1.00
June 30, 2000 4.00:1.00
Thereafter 4.00:1.00
9.09 Consolidated Interest Coverage Ratio. The Borrower will
not permit the Consolidated Interest Coverage Ratio for any Test Period ending
on the last day of a fiscal quarter set forth below to be less than the ratio
set forth opposite such fiscal quarter below:
Fiscal Quarter Ratio
-------------- -----
March 31, 1999 4.50:1.00
June 30, 1999 4.50:1.00
September 30, 1999 4.50:1.00
December 31, 1999 4.50:1.00
March 31, 2000 5.00:1.00
Thereafter 5.00:1.00
9.10 Maximum Leverage Ratio. The Borrower will not permit the
Leverage Ratio at any time during a period set forth below to be greater than
the ratio set forth opposite such period below:
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Fiscal Quarter Ratio
-------------- -----
March 31, 1999 3.25:1.00
June 30, 1999 3.25:1.00
September 30, 1999 3.25:1.00
December 31, 1999 3.00:1.00
March 31, 2000 3.00:1.00
June 30, 2000 2.75:1.00
September 30, 2000 2.75:1.00
December 31, 2000 2.50:1.00
March 31, 2001 2.50:1.00
June 30, 2001 2.25:1.00
September 30, 2001 2.25:1.00
December 31, 2001 2.00:1.00
March 31, 2002 2.00:1.00
June 30, 2002 1.75:1.00
Thereafter 1.75:1.00
9.11 Limitation on Voluntary Payments and Modifications of
Subordinated Indebtedness; Modifications of Certificate of Incorporation and
Certain Other Agreements; etc. The Borrower will not, and will not permit any of
its Subsidiaries to, (i) make (or give any notice in respect of) any voluntary
or optional payment or prepayment on or redemption or acquisition for value of,
or make any prepayment or redemption as a result of any asset sale, change of
control or similar event of (including, in each case, without limitation, by way
of depositing with the trustee with respect thereto or any other Person, money
or securities before due for the purpose of paying when due) any New
Subordinated Notes (after the issuance thereof) or the IDB Financing, (ii) amend
or modify, or permit the amendment or modification of, any provision of the New
Subordinated Notes or any New Subordinated Note Documents, in each case after
the issuance thereof, (iii) amend, modify or change any IDB Financing Documents
or its certificate of incorporation (including, without limitation, by the
filing or modification of any certificate of designation) (or the equivalent
organizational documents) or any agreement entered into by it with respect to
its capital stock (including any Shareholders' Agreement), or enter into any new
agreement with respect to its capital stock, unless such amendment,
modification, change or
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other action contemplated by this clause (iii) could not reasonably be expected
to be adverse to the interests of the Banks in any material respect, and (iv)
amend, modify or change any provision of any Tax Sharing Agreement or enter into
any new tax sharing agreement, tax allocation agreement or similar agreement,
unless such amendment, modification, change or other action contemplated by this
clause (iv) cannot reasonably be expected to be adverse to the interests of the
Banks in any material respect.
9.12 Limitation on Certain Restrictions on Subsidiaries. The
Borrower will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by the Borrower or any Subsidiary
the Borrower, or pay any Indebtedness owed to the Borrower or any Subsidiary of
the Borrower, (b) make loans or advances to the Borrower or any Subsidiary of
the Borrower or (c) transfer any of its properties or assets to the Borrower or
any Subsidiary of the Borrower, except for such encumbrances or restrictions
existing under or by reason of (i) applicable law, (ii) this Agreement and the
other Credit Documents and (iii) restrictions on the transfer of any asset
subject to a Lien permitted by this Agreement.
9.13 Limitation on Issuance of Capital Stock. (a) The Borrower
will not, and will not permit any of its Subsidiaries to, issue (i) any
preferred stock or (ii) any common stock redeemable at the option of the holder
thereof.
(b) The Borrower will not permit any of its Subsidiaries to
issue any capital stock (including by way of sales of treasury stock) or any
options or warrants to purchase, or securities convertible into, capital stock,
except (i) for transfers and replacements of then outstanding shares of capital
stock, (ii) for stock splits, stock dividends and issuances which do not
decrease the percentage ownership of the Borrower or any of its Subsidiaries in
any class of the capital stock of such Subsidiary, (iii) to qualify directors to
the extent required by applicable law and (iv) for issuances by newly created or
acquired Subsidiaries in accordance with the terms of this Agreement.
9.14 Business. The Borrower will not, and will not permit any
of its Subsidiaries to, engage (directly or indirectly) in any business other
than the businesses in which the Borrower and its Subsidiaries are engaged on
the Restatement Effective Date (after giving effect to the Transaction) and
reasonable extensions thereof and those reasonably related or complementary
thereto.
9.15 Limitation on Creation of Subsidiaries. Notwithstanding
anything to the contrary contained in this Agreement, the Borrower will not, and
will not permit any of its Subsidiaries to, establish, create or acquire after
the Restatement Effective Date any Subsidiary; provided that, the (A) Borrower
and its Wholly-Owned Subsidiaries shall be permitted to establish or create
Wholly-Owned Subsidiaries so long as, in each case, (i) at least 15 days' prior
written notice thereof is given to the Agents (or such shorter period of time as
is acceptable to the Agents), (ii) the capital stock of such new Subsidiary (or
65% of the outstanding capital stock of
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a Foreign Subsidiary) is promptly pledged pursuant to, and to the extent
required by, this Agreement and the Pledge Agreement and the certificates, if
any, representing such stock, together with stock powers duly executed in blank,
are delivered to the Collateral Agent, (iii) such new Subsidiary (other than a
Foreign Subsidiary except to the extent otherwise required pursuant to Section
8.13) promptly executes a counterpart of the Subsidiaries Guaranty, the Pledge
Agreement and the Security Agreement, and (iv) to the extent requested by the
Agents or the Required Banks, takes all actions required pursuant to Section
8.12 and (B) Subsidiaries may be acquired pursuant to Permitted Acquisitions so
long as, in each such case the actions specified in preceding clause (A) shall
be taken. In addition, each new Subsidiary that is required to execute any
Credit Document shall execute and deliver, or cause to be executed and
delivered, all other relevant documentation of the type described in Section 5
as such new Subsidiary would have had to deliver if such new Subsidiary were a
Credit Party on the Restatement Effective Date.
SECTION 10. Events of Default. Upon the occurrence of any of
the following specified events (each an "Event of Default"):
10.01 Payments. The Borrower shall (i) default in the payment
when due of any principal of any Loan or any Note, or (ii) default, and such
default shall continue for more than two Business Days, in the payment when due
of any interest on any Loan or Note, any Unpaid Drawing or any Fees or any other
amounts owing hereunder or thereunder; or
10.02 Representations, etc. Any representation, warranty or
statement made by any Credit Party herein or in any other Credit Document or in
any certificate delivered to any Agent or any Bank pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of which made or
deemed made; or
10.03 Covenants. Any Credit Party shall (i) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 8.01(f)(i), 8.08 or 8.11 or Section 9 or (ii) default in the due
performance or observance by it of any other term, covenant or agreement
contained in this Agreement or any other Credit Document (other than those set
forth in Sections 10.01 and 10.02) and such default shall continue unremedied
for a period of 30 days after written notice thereof to the defaulting party by
any Agent or the Required Banks; or
10.04 Default Under Other Agreements. (i) The Borrower or any
of its Subsidiaries shall (x) default in any payment of any Indebtedness (other
than the Notes) beyond the period of grace or cure, if any, provided in the
instrument or agreement under which such Indebtedness was created or (y) default
in the observance or performance of any agreement or condition relating to any
Indebtedness (other than the Notes) or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause (determined without regard
to whether any notice is required, but beyond the period of grace or cure, if
any, provided in the instrument or agreement under which such Indebtedness was
created), any such Indebtedness to become due prior to its stated maturity, or
(ii) any
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Indebtedness (other than the Notes) of the Borrower or any of its Subsidiaries
shall be declared to be (or shall become) due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment, prior to the
stated maturity thereof, provided that it shall not be a Default or an Event of
Default under this Section 10.04 unless the aggregate principal amount of all
Indebtedness as described in preceding clauses (i) and (ii) is at least
$2,000,000; or
10.05 Bankruptcy, etc. The Borrower or any of its Subsidiaries
shall commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced
against the Borrower or any of its Subsidiaries, and the petition is not
controverted within 15 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
the Borrower or any of its Subsidiaries, or the Borrower or any of its
Subsidiaries commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Borrower or any of its Subsidiaries, or there is
commenced against the Borrower or any of its Subsidiaries any such proceeding
which remains undismissed for a period of 60 days, or the Borrower or any of its
Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or
other order approving any such case or proceeding is entered; or the Borrower or
any of its Subsidiaries suffers any appointment of any custodian or the like for
it or any substantial part of its property to continue undischarged or unstayed
for a period of 60 days; or the Borrower or any of its Subsidiaries makes a
general assignment for the benefit of creditors; or any corporate action is
taken by the Borrower or any of its Subsidiaries for the purpose of effecting
any of the foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum
funding standard required for any plan year or part thereof under Section 412 of
the Code or Section 302 of ERISA or a waiver of such standard or extension of
any amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, any Plan or
Multiemployer Plan which is subject to Title IV of ERISA shall have had or is
likely to have a trustee appointed to administer such Plan or Multiemployer
Plan, any Plan or Multiemployer Plan which is subject to Title IV of ERISA is,
shall have been or is likely to be terminated or to be the subject of
termination proceedings under ERISA, any Plan or Multiemployer Plan shall have
an Unfunded Current Liability, a contribution required to be made with respect
to a Plan, a Multiemployer Plan or a Foreign Pension Plan has not been timely
made, the Borrower or any Subsidiary of the Borrower or any ERISA Affiliate has
incurred or is likely to incur any liability to or on account of a Plan or
Multiemployer Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the
Code or on account of a group health plan (as defined in Section 607(1) of ERISA
or Section 4980B(g)(2) of the Code) under Section 4980B(a) of the Code, or the
Borrower or any Subsidiary of the Borrower has incurred or is likely to incur
liabilities pursuant to one or more employee welfare benefit plans (as defined
in Section 3(1) of ERISA) that provide benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or Plans or
Foreign Pension Plans; (b) there shall result from any such
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event or events the imposition of a lien, the granting of a security interest,
or a liability or a material risk of incurring a liability; and (c) such lien,
security interest or liability, individually, and/or in the aggregate, has had,
or could reasonably be expected to have, a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or the Borrower and its Subsidiaries
taken as a whole; or
10.07 Security Documents. At any time after the execution and
delivery thereof, any of the Security Documents shall cease to be in full force
and effect, or shall cease to give the Collateral Agent for the benefit of the
Secured Creditors the Liens, rights, powers and privileges purported to be
created thereby (including, without limitation, a perfected security interest
in, and Lien on, all of the Collateral, in favor of the Collateral Agent,
superior to and prior to the rights of all third Persons (except as permitted by
Section 9.01), and subject to no other Liens (except as permitted by Section
9.01); or
10.08 Subsidiaries Guaranty. At any time after the execution
and delivery thereof, the Subsidiaries Guaranty or any provision thereof shall
cease to be in full force or effect as to any Subsidiary Guarantor, or any
Subsidiary Guarantor or any Person acting by or on behalf of such Subsidiary
Guarantor shall deny or disaffirm such Subsidiary Guarantor's obligations under
the Subsidiaries Guaranty or any Subsidiary Guarantor shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to the Subsidiaries Guaranty; or
10.09 Judgments. One or more judgments or decrees shall be
entered against the Borrower or any Subsidiary of the Borrower involving in the
aggregate for the Borrower and its Subsidiaries a liability (not paid or fully
covered by a reputable and solvent insurance company) and such judgments and
decrees either shall be final and non-appealable or shall not be vacated,
discharged or stayed or bonded pending appeal for any period of 30 consecutive
days, and the aggregate amount of all such judgments exceeds $2,000,000; or
10.10 Change of Control. A Change of Control shall occur:
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written request of
the Required Banks, shall by written notice to the Borrower, take any or all of
the following actions, without prejudice to the rights of any Agent, any Bank or
the holder of any Note to enforce its claims against any Credit Party (provided,
that, if an Event of Default specified in Section 10.05 shall occur with respect
to the Borrower, the result which would occur upon the giving of written notice
by the Administrative Agent as specified in clauses (i) and (ii) below shall
occur automatically without the giving of any such notice): (i) declare the
Total Commitments terminated, whereupon all Commitments of each Bank shall
forthwith terminate immediately and any Commitment Commission shall forthwith
become due and payable without any other notice of any kind; (ii) declare the
principal of and any accrued interest in respect of all Loans and the Notes and
all Obligations owing hereunder and thereunder to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by each Credit Party; (iii)
terminate any Letter of Credit which may be terminated in accordance with its
terms; (iv) direct the Borrower to pay (and the Borrower agrees that upon
receipt of such notice, or upon the
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occurrence of an Event of Default specified in Section 10.05 with respect to the
Borrower, it will pay) to the Collateral Agent at the Payment Office such
additional amount of cash, to be held as security by the Collateral Agent, as is
equal to the aggregate Stated Amount of all Letters of Credit issued for the
account of the Borrower and then outstanding; (v) enforce, as Collateral Agent,
all of the Liens and security interests created pursuant to the Security
Documents; and (vi) apply any cash collateral held by the Administrative Agent
pursuant to Section 4.02 to the repayment of the Obligations.
SECTION 11. Definitions and Accounting Terms.
11.01 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"A Term Note" shall have the meaning provided in Section
1.05(a).
"Additional Security Documents" shall have the meaning
provided in Section 8.12.
"Adjusted Consolidated Cash Income" shall mean, for any
period, Consolidated Net Income for such period plus, without duplication, the
sum of the amount of all net non-cash charges (including, without limitation,
depreciation, amortization, deferred tax expense, non-cash interest expense) and
net non-cash losses which were included in arriving at Consolidated Net Income
for such period less the sum of the amount of all net non-cash gains which were
included in arriving at Consolidated Net Income for such period.
"Adjusted Consolidated Working Capital" at any time shall mean
Consolidated Current Assets (but excluding therefrom all cash and Cash
Equivalents) less Consolidated Current Liabilities at such time.
"Adjusted RL Percentage" shall mean (x) at a time when no Bank
Default exists, for each Bank, such Bank's RL Percentage and (y) at a time when
a Bank Default exists, (i) for each Bank that is a Defaulting Bank, zero and
(ii) for each Bank that is a Non-Defaulting Bank, the percentage determined by
dividing such Bank's Revolving Loan Commitment at such time by the Adjusted
Total Revolving Loan Commitment at such time, it being understood that all
references herein to Revolving Loan Commitments and the Adjusted Total Revolving
Loan Commitment at a time when the Total Revolving Loan Commitment or Adjusted
Total Revolving Loan Commitment, as the case may be, has been terminated shall
be references to the Revolving Loan Commitments or Adjusted Total Revolving Loan
Commitment, as the case may be, in effect immediately prior to such termination,
provided that (A) a Bank's Adjusted RL Percentage shall only change upon the
occurrence of a Bank Default from that in effect immediately prior to such Bank
Default to the extent that after giving effect to such Bank Default, and any
repayment of Revolving Loans and Swingline Loans at such time pursuant to
Section 4.02(a) or otherwise, the sum of (i) the aggregate outstanding principal
amount of Revolving Loans of such Bank plus (ii) such Bank's new Adjusted RL
Percentage of the aggregate outstanding principal amount of Swingline Loans and
the Letter of Credit
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Outstandings, would not exceed the Revolving Loan Commitment of such Bank at
such time; (B) the changes to the Adjusted RL Percentage that would have become
effective upon the occurrence of a Bank Default but that did not become
effective as a result of the preceding clause (A) shall become effective on the
first date after the occurrence of the relevant Bank Default on which the sum of
(i) the aggregate outstanding principal amount of the Revolving Loans of all
Non-Defaulting Banks, plus (ii) the aggregate outstanding principal amount of
Swingline Loans, plus (iii) the Letter of Credit Outstandings, is equal to or
less than the Adjusted Total Revolving Loan Commitment; and (C) if (i) a
Non-Defaulting Bank's Adjusted RL Percentage is changed pursuant to the
preceding clause (B) and (ii) any repayment of such Bank's Revolving Loans or of
Unpaid Drawings or of Swingline Loans that were made during the period
commencing after the date of the relevant Bank Default and ending on the date of
such change to its Adjusted RL Percentage must be returned to the Borrower as a
preferential or similar payment in any bankruptcy or similar proceeding of the
Borrower, then the change to such Non-Defaulting Bank's Adjusted RL Percentage
effected pursuant to said clause (B) shall be reduced to that positive change,
if any, as would have been made to its Adjusted RL Percentage if (x) such
repayments had not been made and (y) the maximum change to its Adjusted RL
Percentage would have resulted in the sum of the outstanding principal of
Revolving Loans made by such Bank plus such Bank's new Adjusted RL Percentage of
the outstanding principal amount of Swingline Loans and of Letter of Credit
Outstandings equaling such Bank's Revolving Loan Commitment at such time.
"Adjusted Total Revolving Loan Commitment" shall mean at any
time the Total Revolving Loan Commitment less the aggregate Revolving Loan
Commitments of all Defaulting Banks.
"Administrative Agent" shall mean First Union National Bank,
in its capacity as Administrative Agent for the Banks hereunder and Co-Arranger,
and shall include any successor to the Administrative Agent appointed pursuant
to Section 12.09.
"Affected Eurodollar Loans" shall have the meaning provided in
Section 4.02(g).
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person. A Person shall be deemed to control
another Person if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such other
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agent" shall mean and include the Administrative Agent and
the Syndication Agent.
"Agreement" shall mean this Amended and Restated Credit
Agreement, as modified, supplemented, amended, restated (including any amendment
and restatement hereof), extended, renewed, refinanced or replaced from time to
time.
"Applicable Base Rate Margin" from and after the first day of
any Applicable Pricing Period (the "Start Date") to and including the last day
of such Applicable Pricing Period
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(the "End Date"), shall mean the respective percentage per annum set forth in
clause (A) or (B) below if, but only if, as of the last day of the most recent
fiscal quarter of the Borrower ended immediately prior to such Start Date (the
"Test Date") the condition in clause (A) or (B) below is met:
(A) 0.625% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such Test Date
shall be greater than 2.5:1.0; or
(B) 0.500% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such Test Date
shall be equal to or less than 2.50:1.0 but greater than 2.25:1.0; or
(C) 0.375% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such Test Date
shall be equal to or less than 2.25:1.0 but greater than 2.00:1.0; or
(D) 0.250% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such Test Date
shall be equal to or less than 2.00:1.0 but greater than 1.75:1.0; or
(E) 0.125% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such Test Date
shall be equal to or less than 1.75:1.0 but greater than 1.50:1.0; or
(F) 0.000% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such Test Date
shall be equal to or less than 1.5:1.0.
Notwithstanding anything to the contrary contained above in
this definition, (a) the Applicable Base Rate Margin shall be 0.625% at all
times when financial statements have not been delivered when required pursuant
to Section 8.01(a) or (b), as the case may be, and (b) on and after the date on
which the Borrower has issued New Subordinated Notes in an aggregate principal
amount of at least $100,000,000, each of the percentage margins set forth above
shall be reduced by 0.125% (but not below 0%).
"Applicable Commitment Commission Percentage" (i) for any
calculation of the Commitment Commission payable in respect of Term Loans, shall
mean 0.375%, and (ii) for any calculation of the Commitment Commission payable
in respect of Loans other than Term Loans, after any Start Date to and including
the corresponding End Date, shall mean the respective percentage per annum set
forth in clause (A) or (B) below if, but only if, as of the Test Date for such
Start Date the condition set forth in clause (A) or (B) below is met:
(A) 0.375% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such Test Date
shall be greater than 2.00:1.00; or
(B) 0.250% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such Test Date
shall be equal to or less than 2.00:1.00.
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Notwithstanding anything to the contrary contained above in
this definition, the Applicable Commitment Commission Percentage shall be 0.375%
at all times when financial statements have not been delivered when required
pursuant to Section 8.01(a) or (b), as the case may be.
"Applicable Eurodollar Margin" from and after any Start Date
to and including the corresponding End Date, shall mean the respective
percentage per annum set forth in clause (A)-(F) below if, but only if, as of
the Test Date for such Start Date the condition in clause (A)-(F) below is met:
(A) 1.625% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such Test Date
shall be greater than 2.5:1.0; or
(B) 1.500% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such Test Date
shall be equal to or less than 2.50:1.0 but greater than 2.25:1.0; or
(C) 1.375% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such Test Date
shall be equal to or less than 2.25:1.0 but greater than 2.00:1.0; or
(D) 1.250% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such Test Date
shall be equal to or less than 2.00:1.0 but greater than 1.75:1.0; or
(E) 1.125% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such Test Date
shall be equal to or less than 1.75:1.0 but greater than 1.50:1.0; or
(F) 1.000% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such Test Date
shall be equal to or less than 1.5:1.0.
Notwithstanding anything to the contrary contained above in
this definition, (a) the Applicable Eurodollar Margin shall be 1.625% at all
times when financial statements have not been delivered when required pursuant
to Section 8.01(a) or (b), as the case may be, and (b) on and after the date on
which the Borrower has issued New Subordinated Notes in an aggregate principal
amount of at least $100,000,000, each of the percentage margins set forth above
shall be reduced by 0.125%.
"Applicable Pricing Period" shall mean each period which shall
commence on a date five Business Days after the date on which the financial
statements are delivered pursuant to Section 8.01(a) or (b) and which shall end
on the earlier of (i) the date five Business Days after the date of actual
delivery of the next financial statements pursuant to Section 8.01(a) or (b) and
(ii) the latest date on which the next financial statements are required to be
delivered pursuant to Section 8.01(a) or (b) if such financial statements have
not been delivered on or prior to such date.
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"Asset Sale" shall mean any sale, transfer or other
disposition by the Borrower or any of its Subsidiaries to any Person (including
by way of redemption by such Person) other than to the Borrower or a
Wholly-Owned Subsidiary of the Borrower of any asset (including, without
limitation, any capital stock or other securities of, or equity interests in,
another Person) of the Borrower or any of its Subsidiaries, other than any sale,
transfer or disposition permitted by Sections 9.02(ii), (iii), (v), (vii), (xi)
and (xii).
"Assignment and Assumption Agreement" shall mean an Assignment
and Assumption Agreement substantially in the form of Exhibit K (appropriately
completed).
"B Term Note" shall have the meaning provided in Section
1.05(a).
"Bank" shall mean each Person listed on Schedule I, as well as
any Person which becomes a "Bank" hereunder pursuant to Section 1.13 or
13.04(b).
"Bank Default" shall mean (i) the refusal (which has not been
retracted) or the failure of a Bank to make available its portion of any
Borrowing (including any Mandatory Borrowing) or to fund its portion of any
unreimbursed payment under Section 2.04(c) or (ii) a Bank having notified in
writing the Borrower and/or the Administrative Agent that such Bank does not
intend to comply with its obligations under Section 1.01(a), 1.01(b), 1.01(c),
1.04 or 2, in the case of either clause (i) or (ii) as a result of any takeover
or control (including, without limitation, as a result of the occurrence of any
event of the type described in Section 10.05 with respect to such Bank) of such
Bank by any regulatory authority or agency.
"Bankruptcy Code" shall have the meaning provided in Section
10.05.
"Base Rate" at any time shall mean the higher of (i) 1/2 of 1%
in excess of the Federal Funds Rate and (ii) the Prime Lending Rate.
"Base Rate Loan" shall mean (i) each Swingline Loan and (ii)
each other Loan designated or deemed designated as such by the Borrower at the
time of the incurrence thereof or conversion thereto.
"Borrower" shall have the meaning provided in the first
paragraph of this Agreement.
"Borrower's Account" shall mean a deposit account of the
Borrower maintained with the Payment Office of the Administrative Agent, which
is identified by the Borrower in the most recent Notice of Account Designation,
substantially in the form of Exhibit M hereto delivered by the Borrower to the
Administrative Agent as the Borrower's Account for receipt of proceeds of Loans
to the Borrower.
"Borrowing" shall mean the borrowing of one Type of Loan of a
single Tranche from all the Banks having Commitments of the respective Tranche
(or from the Swingline Bank in the case of Swingline Loans) on a given date (or
resulting from a conversion or conversions on such date) having in the case of
Eurodollar Loans the same Interest Period, provided that Base
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Rate Loans incurred pursuant to Section 1.10(b) shall be considered part of the
related Borrowing of Eurodollar Loans.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day except Saturday, Sunday and any day which
shall be in New York City, New York or Charlotte, North Carolina a legal holiday
or a day on which banking institutions are authorized or required by law or
other government action to close and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
Eurodollar Loans, any day which is a Business Day described in clause (i) above
and which is also a day for trading by and between banks in the London interbank
Eurodollar market.
"Calculation Period" shall mean the period of four consecutive
fiscal quarters of the Borrower last ended before the date of the respective
Permitted Acquisition which requires calculations to be made on a Pro Forma
Basis.
"Capital Expenditures" shall mean, with respect to any Person,
all expenditures by such Person which should be capitalized in accordance with
generally accepted accounting principles and, without duplication, the amount of
Capitalized Lease Obligations incurred by such Person.
"Capitalized Lease Obligations" of any Person shall mean all
rental obligations which, under generally accepted accounting principles, are or
will be required to be capitalized on the books of such Person, in each case
taken at the amount thereof accounted for as indebtedness in accordance with
such principles.
"Cash Equivalents" shall mean, as to any Person, (i)
securities issued or directly and fully guaranteed or insured by the United
States or any agency or instrumentality thereof (provided that the full faith
and credit of the United States is pledged in support thereof) having maturities
of not more than one year from the date of acquisition, (ii) Dollar denominated
time deposits and certificates of deposit of any commercial bank having, or
which is the principal banking subsidiary of a bank holding company having, a
long-term unsecured debt rating of at least "A" or the equivalent thereof from
Standard & Poor's Ratings Services or "A2" or the equivalent thereof from
Moody's Investors Service, Inc. with maturities of not more than one year from
the date of acquisition by such Person, (iii) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications specified
in clause (ii) above, (iv) commercial paper issued by any Person incorporated in
the United States rated at least A-1 or the equivalent thereof by Standard &
Poor's Ratings Services or at least P1 or the equivalent thereof by Moody's
Investors Service, Inc. and in each case maturing not more than 270 days after
the date of acquisition by such Person, (v) asset-backed certificates of
participation representing a fractional undivided interest in the assets of a
trust, which certificates are rated at least A-1 or the equivalent thereof by
Standard & Poor's Rating Services or at least P-1 or the equivalent thereof by
Moody's Investors Service, Inc., and (vi) investments in money market funds
substantially all of whose assets are comprised of securities of the types
described in clauses (i) through (v) above.
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"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. ss. 9601 et seq.
"Change of Control" shall mean (i) any Person or "group"
(within the meaning of Rules 13d-3 or 13d-5 under the Securities Exchange Act
(as in effect on the Restatement Effective Date)), other than the Permitted
Holders, shall (A) have acquired beneficial ownership of 25% or more on a fully
diluted basis of the voting and/or economic interest in the Borrower's capital
stock or (B) have obtained the power (whether or not exercised) to elect a
majority of the Borrower's directors or (ii) the Board of Directors of the
Borrower shall cease to consist of a majority of Continuing Directors.
"Co-Arrangers" shall mean each of First Union National Bank
and Morgan Stanley Senior Funding, Inc. in their respective capacities as
Co-Arrangers. The Co-Arrangers shall incur no liabilities and shall have no
duties or responsibilities under this Agreement or any other Credit Document in
such capacity.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to the Code are to the Code, as in effect at the
date of this Agreement and any subsequent provisions of the Code, amendatory
thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or
personal) with respect to which any security interests have been granted (or
purport to be granted) pursuant to any Security Document, including, without
limitation, all Pledge Agreement Collateral, all Security Agreement Collateral,
the Mortgaged Properties, and all cash and Cash Equivalents delivered as
collateral pursuant to Section 4.02 or 10.
"Collateral Agent" shall mean the Administrative Agent acting
as collateral agent for the Secured Creditors pursuant to the Security
Documents.
"Collective Bargaining Agreements" shall have the meaning
provided in Section 5.05.
"Commitment" shall mean any of the commitments of any Bank,
i.e., whether the Term Loan Commitment or the Revolving Loan Commitment.
"Commitment Commission" shall mean the Revolving Loan
Commitment Commission.
"Consolidated Current Assets" shall mean, at any time, the
consolidated current assets of the Borrower and its Subsidiaries at such time.
"Consolidated Current Liabilities" shall mean, at any time,
the consolidated current liabilities of the Borrower and its Subsidiaries at
such time, but excluding the current
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portion of and accrued but unpaid interest on any Indebtedness under this
Agreement and any other long-term Indebtedness which would otherwise be included
therein.
"Consolidated EBIT" shall mean, for any period, Consolidated
Net Income before Consolidated Interest Expense and before provision for taxes
for such period and without giving effect (w) to any extraordinary gains or
losses, (x) to any gains or losses from sales of assets other than from sales of
inventory sold in the ordinary course of business and (y) to any expenses
related to or incurred by the Borrower in connection with the Transaction or any
Permitted Acquisition, provided, however, that with respect to any Permitted
Acquisition which is accounted for as a "purchase," for the Calculation Period
following such acquisition Consolidated EBIT shall include results of operations
of the company or assets so acquired which amounts shall be determined on a Pro
Forma Basis.
"Consolidated EBITDA" shall mean, for any period, Consolidated
EBIT for such period, adjusted by adding thereto the amount of all amortization
and depreciation expense of the Borrower and its Subsidiaries that was deducted
in arriving at Consolidated EBIT for such period.
"Consolidated Fixed Charge Coverage Ratio" shall mean, for any
period the ratio of (x) Consolidated EBITDA for such period less the amount of
all Capital Expenditures made by Borrower and its Subsidiaries during such
period pursuant to Section 9.07(a) to (y) Consolidated Interest Expense for such
period.
"Consolidated Fixed Charges" for any period shall mean the
sum, without duplication, of (i) Consolidated Interest Expense for such period,
(ii) the amount of all cash payments made by the Borrower and its Subsidiaries
in respect of taxes or tax liabilities during such period (net of any cash
refunds actually received during such period), (iii) the scheduled principal
amount (after giving effect to any refinancing thereof other than with proceeds
of Loans) of all amortization payments made (or required to be made and not
made) on all Indebtedness (including, without limitation, the principal
component of all Capitalized Lease Obligations) of the Borrower and its
Subsidiaries for such period plus the amount of all voluntary repayments of such
Indebtedness during such period to the extent that any such repayment reduced
the amount of any such scheduled amortization payment and (iv) the amount of all
cash Dividends paid by the Borrower during such period.
"Consolidated Indebtedness" shall mean, at any time, the
principal amount of all Indebtedness of the Borrower and its Subsidiaries at
such time determined on a consolidated basis to the extent that such
Indebtedness would be accounted for as debt in accordance with generally
accepted accounting principles plus, without duplication, (i) the maximum amount
available to be drawn under all letters of credit (including any Letters of
Credit) issued for the account of the Borrower and its Subsidiaries and all
unpaid drawings (including any Unpaid Drawings) in respect of such letters of
credit, (ii) the principal amount of all bonds issued by the Borrower and its
Subsidiaries in connection with workers' compensation obligations, lease
obligations and similar obligations, (iii) all Indebtedness set forth on
Schedule VI to the extent outstanding at such time and (iv) the amount of all
Contingent Obligations of the Borrower and
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its Subsidiaries determined on a consolidated basis in respect of Indebtedness
of other Persons of the type described above in this definition.
"Consolidated Interest Coverage Ratio" shall mean, for any
period, the ratio of (x) Consolidated EBITDA for such period to (y) Consolidated
Interest Expense for such Test Period.
"Consolidated Interest Expense" shall mean, for any period,
the total consolidated interest expense of the Borrower and its Subsidiaries for
such period (calculated without regard to any limitations on the payment
thereof) plus, without duplication, that portion of Capitalized Lease
Obligations of the Borrower and its Subsidiaries representing the interest
factor for such period; provided that the amortization of fees and expenses with
respect to this Agreement, the Indebtedness incurred hereunder and any
Indebtedness incurred under Section 9.04(vi) or (vii) shall be excluded from
Consolidated Interest Expense to the extent same would otherwise have been
included therein.
"Consolidated Net Income" shall mean, for any Person and
period, the net income (or loss) of such Person and its Subsidiaries for such
period, determined on a consolidated basis (after deduction for minority
interests) in accordance with generally accepted accounting principles, provided
that (i) in determining Consolidated Net Income of the Borrower, the net income
(or loss) of any other Person which is not a Subsidiary of the Borrower or is
accounted for by the Borrower by the equity method of accounting shall be
included only to the extent of the payment of dividends or distributions by such
other Person to the Borrower or a Subsidiary thereof during such period and (ii)
the net income (or loss) of any other Person acquired by such specified Person
or a Subsidiary of such Person in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded.
"Contingent Obligation" shall mean, as to any Person, any
obligation of such Person as a result of such Person being a general partner of
the other Person, unless the underlying obligation is expressly made
non-recourse as to such general partner, and any obligation of such Person
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (x) for the purchase
or payment of any such primary obligation or (y) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the holder of such
primary obligation against loss in respect thereof; provided, however, that the
term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
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reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Continuing Directors" shall mean the directors of the
Borrower on the Restatement Effective Date and each other director, if such
other director's nomination for election to the Board of Directors of the
Borrower is recommended by a majority of the then Continuing Directors or is
recommended by a committee of the Board of Directors a majority of which is
composed of the then Continuing Directors.
"Credit Documents" shall mean this Agreement and, after the
execution and delivery thereof pursuant to the terms of this Agreement, each
Note, the Subsidiaries Guaranty and each Security Document.
"Credit Event" shall mean the making of any Loan or the
issuance of any Letter of Credit.
"Credit Party" shall mean the Borrower and each Subsidiary
Guarantor.
"Cumulative Net Income Amount" shall mean, on any date of
determination, an amount equal to (i) 50% of Consolidated Net Income (determined
on a cumulative basis) for all Cumulative Net Income Periods ending prior to
such date of determination for which Consolidated Net Income was a positive
number, minus (ii) 100% of Consolidated Net Income (determined on a cumulative
basis) for all Cumulative Net Income Periods ending prior to such date of
determination for which Consolidated Net Income was a negative number.
"Cumulative Net Income Period" shall mean each period
consisting of a fiscal quarter of the Borrower ending after October 1, 1997.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a
Bank Default is in effect.
"Delayed-Draw Commitment" shall mean for each Bank, such Banks
pro-rata share of the Total Delayed-Draw Commitment calculated according to such
Bank's pro-rata share of the Total Term Loan Commitment.
"Delayed-Draw Commitment Expiration Date" shall mean June 30,
1999.
"Delayed-Draw Term Loans" shall mean a portion of the Term
Loans that may be borrowed by the Borrower on the Earnout Payment Date in an
aggregate amount not to exceed $40,000,000.
"Determination Date" shall have the meaning provided in the
definition of "Pro Forma Basis."
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"Dividend" with respect to any Person shall mean that such
Person has declared or paid a dividend or returned any equity capital to its
stockholders or partners or authorized or made any other distribution, payment
or delivery of property (other than common stock of such Person) or cash to its
stockholders or partners as such, or redeemed, retired, purchased or otherwise
acquired, directly or indirectly, for a consideration any shares of any class of
its capital stock or any partnership interests outstanding on or after the
Restatement Effective Date (or any options or warrants issued by such Person
with respect to its capital stock), or set aside any funds for any of the
foregoing purposes, or shall have permitted any of its Subsidiaries to purchase
or otherwise acquire for a consideration any shares of any class of the capital
stock or any partnership interests of such Person outstanding on or after the
Restatement Effective Date (or any options or warrants issued by such Person
with respect to its capital stock). Without limiting the foregoing, "Dividends"
with respect to any Person shall also include all payments made or required to
be made by such Person with respect to any stock appreciation rights, plans,
equity incentive or achievement plans or any similar plans or setting aside of
any funds for the foregoing purposes.
"Documents" shall mean the Credit Documents, the Acquisition
Documents and the Refinancing Documents.
"Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States.
"Domestic Subsidiary" shall mean each Subsidiary of the
Borrower incorporated or organized in the United States or any State or
territory thereof.
"Drawing" shall have the meaning provided in Section 2.05(b).
"Earnout" shall mean the amounts due to Figgie pursuant to
Section 1.4(b) of the Figgie Asset Purchase Agreement.
"Earnout Payment Date" shall have the meaning provided in
Section 1.01.
"Effective Date" shall mean the effective date of the Original
Credit Agreement (i.e., November 17, 1997).
"Eligible Transferee" shall mean and include a commercial
bank, insurance company, financial institution, fund or other Person which
regularly purchases interests in loans or extensions of credit of the types made
pursuant to this Agreement, any other Person which would constitute a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act as
in effect on the Restatement Effective Date or other "accredited investor" (as
defined in Regulation D of the Securities Act).
"Employee Benefit Plans" shall have the meaning provided in
Section 5.05.
"End Date" shall have the meaning provided in the definition
of Applicable Base Rate Margin.
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"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of noncompliance or violation, investigations or
proceedings relating in any way to any Environmental Law or any permit issued,
or any approval given, under any such Environmental Law (hereafter, "Claims"),
including, without limitation, (a) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (b)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in connection
with alleged injury or threat of injury to health, safety or the environment due
to the presence of Hazardous Materials.
"Environmental Law" shall mean any Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guideline, written policy
and rule of common law now or hereafter in effect and in each case as amended,
and any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment, relating to the
environment, employee health and safety or Hazardous Materials, including,
without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33
U.S.C. ss. 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et
seq.; the Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Safe Drinking Water
Act, 42 U.S.C. ss. 3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. ss.
2701 et seq.; the Emergency Planning and the Community Right-to-Know Act of
1986, 42 U.S.C. ss. 11001 et seq.; the Hazardous Material Transportation Act, 49
U.S.C. ss. 1801 et seq. and the Occupational Safety and Health Act, 29 U.S.C.
ss. 651 et seq.; and any state and local or foreign counterparts or equivalents,
in each case as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder. Section references to ERISA are to ERISA, as in
effect at the date of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in
Section 3(9) of ERISA) which together with the Borrower or a Subsidiary of the
Borrower would be deemed to be a "single employer" within the meaning of Section
414(b), (c), (m) or (o) of the Code.
"Eurodollar Loan" shall mean each Loan designated as such by
the Borrower at the time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean, with respect to each Interest
Period for a Eurodollar Loan, the London Interbank Offered Rate for borrowings
(rounded upward to the nearest 1/16 of one percent) for deposits of Dollars in
minimum amounts of at least the Minimum Borrowing Amount applicable to such
Eurodollar Loan for a period equivalent to such period at or about 11:00 A.M.
(London time) on the second Business Day before the first day of such period as
is displayed on Telerate page 3750 (British Bankers' Association Interest
Settlement Rates) (or such other page as may replace such page 3750 on such
system, provided that if on such date no such rate is so displayed, the
Eurodollar Rate for such period shall be the rate determined by the
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Administrative Agent to be the arithmetic average (rounded upward, if necessary,
to the nearest 1/16 of one percent) of the rate per annum at which deposits of
Dollars in an amount approximately equal to the amount in relation to which the
Eurodollar Rate is to be determined for a period equivalent to such period are
being offered by first class banks in the London Interbank Market at or about
11:00 A.M. (London time) on the second Business Day before the first day of such
period, provided further that in each case the rate obtained above shall be
adjusted to take account of reserve requirements by dividing such rate by the
Eurodollar Reserve Percentage (with such resulting rate to be rounded upward, if
necessary, to the nearest 1/100 of one percent).
"Eurodollar Reserve Percentage" shall mean for any day, the
remainder of one minus the percentage (expressed as a decimal and rounded
upwards, if necessary, to the next higher 1/100th of 1%) which is in effect for
such day as prescribed by the Federal Reserve Board (or any successor) for
determining the maximum reserve requirement (including without limitation any
basic, supplemental or emergency reserves) in respect of Eurocurrency
liabilities or any similar category of liabilities for a member bank of the
Federal Reserve System in New York City.
"Event of Default" shall have the meaning provided in Section
10.
"Excess Cash Flow" shall mean, for any period, the remainder
of (i) the sum of (a) Adjusted Consolidated Cash Income for such period and (b)
the decrease, if any, in Adjusted Consolidated Working Capital from the first
day of such period to the last day of such period, minus (ii) the sum of (a) the
amount of all Capital Expenditures, made by the Borrower and its Subsidiaries
pursuant to Section 9.07(a) during such period, (b) the aggregate principal
amount of permanent principal payments of Indebtedness for borrowed money of the
Borrower and its Subsidiaries (other than repayments pursuant to which any other
Indebtedness is being refinanced with proceeds of Indebtedness, equity
issuances, asset sales or insurance proceeds, and repayments of Loans, provided
that repayments of Loans shall be deducted in determining Excess Cash Flow if
such repayments were (x) required as a result of a Scheduled Repayment under
Section 4.02(b) or (y) made as a voluntary prepayment (but in the case of a
voluntary prepayment of Revolving Loans or Swingline Loans, only to the extent
accompanied by a voluntary reduction to the Total Revolving Loan Commitment))
during such period and (c) the increase, if any, in Adjusted Consolidated
Working Capital from the first day of such period to the last day of such
period.
"Excess Cash Payment Date" shall mean the date occurring 90
days after the last day of each fiscal year of the Borrower (beginning with its
fiscal year ending September 30, 1998).
"Excess Cash Payment Period" shall mean, with respect to the
repayment required on each Excess Cash Payment Date, the immediately preceding
fiscal year of the Borrower.
"Existing Indebtedness" shall have the meaning provided in
Section 7.22.
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"Existing Indebtedness Agreements" shall have the meaning
provided in Section 5.05.
"Facing Fee" shall have the meaning provided in Section
3.01(c).
"Federal Funds Rate" shall mean for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred
to in Section 3.01.
"Figgie" shall mean Figgie International Inc., a Delaware
corporation.
"Figgie Asset Purchase Agreement" shall mean the Asset
Purchase Agreement, dated as of July 19, 1997, by and among Figgie, various
subsidiaries of Figgie and SKL and the amendment thereto dated as of November 9,
1997.
"Foreign Pension Plan" shall mean any plan, fund (including,
without limitation, any superannuation fund) or other similar program
established or maintained outside the United States of America by the Borrower
or any one or more of its Subsidiaries primarily for the benefit of employees of
the Borrower or such Subsidiaries residing outside the United States of America,
which plan, fund or other similar program provides, or results in, retirement
income, a deferral of income in contemplation of retirement or payments to be
made upon termination of employment, and which plan is not subject to ERISA or
the Code.
"Foreign Subsidiary" shall mean each Subsidiary of the
Borrower other than a Domestic Subsidiary.
"Hazardous Materials" shall mean (a) any petroleum or
petroleum products, radioactive materials, asbestos in any form that is friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous waste," "hazardous materials,"
"extremely hazardous substances," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, the Release of which is prohibited, limited or
regulated by any governmental authority.
"IDB Financing" shall mean the City of Oakes, North Dakota
Industrial Development Revenue Bonds Series 1999 (Omniquip International, Inc.
Project) dated February 25, 1999 in the aggregate amount of $4,500,000.
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"IDB Financing Documents" shall mean the Indenture of Trust
dated as of February 25, 1999 between the City of Oakes, North Dakota and
Norwest Bank Minnesota, National Association; the Lease Agreement dated as of
February 25, 1999 between the City of Oakes, North Dakota and Oakes Enhancement,
Inc.; the Sublease Agreement dated as of February 25, 1999 between Oakes
Enhancement, Inc. and the Borrower; the Mortgage, Security Agreement and Fixture
Financing dated as of February 25, 1999 between Norwest Bank Minnesota, National
Association, the City of Oakes, North Dakota and Oakes Enhancement, Inc.; the
Assignment of Leases and Rents dated as of February 25, 1999 between Norwest
Bank Minnesota, National Association, the City of Oakes, North Dakota and Oakes
Enhancement, Inc.; and all other agreements and documents entered into in
connection with the IDB Financing.
"Indebtedness" shall mean, as to any Person, without
duplication, (i) all indebtedness (including principal, interest, fees and
charges) of such Person for borrowed money or for the deferred purchase price of
property or services, (ii) the maximum amount available to be drawn under all
letters of credit issued for the account of such Person and all unpaid drawings
in respect of such letters of credit, (iii) all Indebtedness of the types
described in clause (i), (ii), (iv), (v), (vi) or (vii) of this definition
secured by any Lien on any property owned by such Person, whether or not such
Indebtedness has been assumed by such Person (provided, that, if the Person has
not assumed or otherwise become liable in respect of such Indebtedness, such
Indebtedness shall be deemed to be in an amount equal to the fair market value
of the property to which such Lien relates as determined in good faith by such
Person), (iv) the aggregate amount required to be capitalized under leases under
which such Person is the lessee, (v) all obligations of such person to pay a
specified purchase price for goods or services, whether or not delivered or
accepted, i.e., take-or-pay and similar obligations, (vi) all Contingent
Obligations of such Person and (vii) all obligations under any Interest Rate
Protection Agreement, any Other Hedging Agreement or under any similar type of
agreement. Notwithstanding the foregoing, Indebtedness shall not include (x)
trade payables and accrued expenses incurred by any Person in accordance with
customary practices and in the ordinary course of business of such Person and
(y) deferred compensation obligations of any Person.
"Indebtedness to be Refinanced" shall mean all Indebtedness
set forth on Schedule IV.
"Initial Borrowing Date" shall mean the date occurring on or
after the Restatement Effective Date on which the initial Borrowing of Loans or
issuance of a Letter of Credit occurs.
"Intercompany Loan" shall have the meaning provided in Section
9.05(vi).
"Intercompany Note" shall mean a promissory note, in the form
of Exhibit L, evidencing Intercompany Loans.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
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"Interest Period" shall have the meaning provided in Section
1.09.
"Interest Rate Protection Agreement" shall mean any interest
rate swap agreement, interest rate cap agreement, interest collar agreement,
interest rate hedging agreement or other similar agreement or arrangement.
"Investments" shall have the meaning provided in Section 9.05.
"Issuing Bank" shall mean First Union National Bank and any
other Bank which at the request of the Borrower and with the consent of the
Agents (which consent shall not be unreasonably withheld) agrees, in such Bank's
sole discretion, to become an Issuing Bank for the purpose of issuing Letters of
Credit pursuant to Section 2. The sole Issuing Bank on the Restatement Effective
Date is First Union National Bank.
"Leaseholds" of any Person shall mean all the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"L/C Supportable Obligations" shall mean (i) obligations of
the Borrower or any of its Subsidiaries with respect to workers compensation,
surety bonds and other similar statutory obligations and (ii) such other
obligations of the Borrower or any of its Subsidiaries as are otherwise
permitted to exist pursuant to (or otherwise not restricted by) the terms of
this Agreement, other than any Indebtedness for borrowed money unless consented
to by the Agents and the Issuing Bank.
"Lending Office" shall mean, with respect to any Bank, any
office, branch, subsidiary or affiliate of such Bank.
"Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fee" shall have the meaning provided in
Section 3.01(c).
"Letter of Credit Outstandings" shall mean, at any time, the
sum of (i) the aggregate Stated Amount of all outstanding Letters of Credit and
(ii) the amount of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided in
Section 2.03(a).
"Leverage Ratio" shall mean, at any time, the ratio of (x)
Consolidated Indebtedness at such time to (y) Consolidated EBITDA for the then
most recently ended Test Period.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
the
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UCC or any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" shall mean each Term Loan, each Revolving Loan and each
Swingline Loan.
"Majority Banks" of any Tranche shall mean those
Non-Defaulting Banks which would constitute the Required Banks under, and as
defined in, this Agreement if all outstanding Obligations of the other Tranches
under this Agreement were repaid in full and all Commitments with respect
thereto were terminated.
"Management Agreements" shall have the meaning provided in
Section 5.05.
"Mandatory Borrowing" shall have the meaning provided in
Section 1.01(d).
"Margin Stock" shall have the meaning provided in Regulation
U.
"Maturity Date" shall mean, with respect to any Tranche of
Loans, the Term Loan Maturity Date, the Revolving Loan Maturity Date or the
Swingline Expiry Date, as the case may be.
"Maximum Swingline Amount" shall mean $5,000,000.
"Minimum Borrowing Amount" shall mean (i) for Term Loans,
$5,000,000, (ii) for Revolving Loans, $1,000,000 and (iii) for Swingline Loans,
$250,000.
"Minnesota Mortgage" shall mean the Mortgage granted by Lull
International, Inc. with respect to its real property and fixtures in the state
of Minnesota.
"Mortgage" shall mean each mortgage, deed to secure debt or
deed of trust pursuant to which any Credit Party shall have granted to the
Collateral Agent a mortgage lien on such Credit Party's Mortgaged Property.
"Mortgage Policy" shall have the meaning provided in Section
5.12.
"Mortgaged Property" shall mean (i) each Real Property owned
by any Credit Party and designated as a Mortgaged Property on Schedule III and
(ii) each Real Property owned or leased by any Credit Party and designated as a
Mortgaged Property pursuant to Section 8.12.
"MSSF" shall mean Morgan Stanley Senior Funding, Inc., in its
individual capacity.
"Multiemployer Plan" shall mean a plan as defined in Section
4001(a)(3) of ERISA with respect to which the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate has an obligation to contribute to or any
liability.
"NAIC" shall mean the National Association of Insurance
Commissioners.
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"Net Debt Proceeds" shall mean, with respect to any incurrence
of Indebtedness for borrowed money, the cash proceeds (net of underwriting
discounts and commissions, commitment and other financing fees and other costs
associated therewith) received by the respective Person from the respective
incurrence of such Indebtedness for borrowed money.
"Net Insurance Proceeds" shall mean, with respect to any
Recovery Event, the cash proceeds (net of costs and taxes incurred in connection
with such Recovery Event) received by the respective Person in connection with
the respective Recovery Event.
"Net Sale Proceeds" shall mean, for any Asset Sale, the gross
cash proceeds (including any cash received by way of deferred payment pursuant
to a promissory note, receivable or otherwise, but only as and when received)
received from such sale of assets, net of the costs of such sale (including fees
and commissions, payments of unassumed liabilities relating to the assets sold
and required payments of any Indebtedness (other than Indebtedness secured
pursuant to the Security Documents or any Indebtedness owed to the Borrower or a
Subsidiary thereof) which is secured by the respective assets which were sold),
and the taxes paid or payable as a result of such Asset Sale.
"New Subordinated Note Documents" shall mean the New
Subordinated Notes, any indenture or purchase agreement related thereto and each
of the other documents entered into in connection therewith.
"New Subordinated Notes" shall have the meaning provided in
Section 9.04(vi).
"Non-Defaulting Bank" shall mean and include each Bank other
than a Defaulting Bank.
"Non-Excluded Taxes" shall have the meaning provided in
Section 4.04(a).
"Note" shall mean each Term Note, each Revolving Note and the
Swingline Note.
"Notice of Borrowing" shall have the meaning provided in
Section 1.03(a).
"Notice of Conversion" shall have the meaning provided in
Section 1.06.
"Notice Office" shall mean the office of the Administrative
Agent located at One First Union Center, 301 South College Street, TW-10,
Charlotte, NC 28288-0608, Attention: Syndication Services, with copies to 301
South College Street, DC-5, Charlotte, NC 28288-0737, Attention: Leveraged
Finance, or such other office as the Administrative Agent may hereafter
designate in writing as such to the other parties hereto. "Obligations" shall
mean all amounts owing to any Agent, the Collateral Agent or any Bank pursuant
to the terms of this Agreement or any other Credit Document.
"Original Credit Agreement" shall have the meaning provided in
the preamble to this Agreement.
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"Other Creditor" shall have the meaning provided in the
Security Documents.
"Other Hedging Agreement" shall mean any foreign exchange
contracts, currency swap agreements, commodity agreements or other similar
agreements or arrangements designed to protect against the fluctuations in
currency values.
"Participant" shall have the meaning provided in Section
2.04(a).
"Payment Office" shall mean the office of the Administrative
Agent located at One First Union Center, 301 South College Street, TW-10,
Charlotte, NC 28288-0608, Attention: Syndication Services, or such other office
as the Administrative Agent may hereafter designate in writing as such to the
other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall have the meaning provided in
Section 9.02(ix).
"Permitted Encumbrance" shall mean, with respect to any
Mortgaged Property, such exceptions to title as are set forth in the title
insurance policy or title commitment delivered with respect thereto and accepted
by the Agents.
"Permitted Holders" shall mean Harbor Group Investments III,
L.P., Uniquip-HGI Associates, L.P., P. Enoch Stiff, Curtis Laetz, James Hook,
Philip Franklin, Paul Roblee and Robert Melin.
"Permitted Liens" shall have the meaning provided in Section
9.01.
"Person" shall mean any individual, partnership, joint
venture, firm, corporation, association, limited liability company, trust or
other enterprise or any government or political subdivision or any agency,
department or instrumentality thereof.
"Plan" shall mean any pension plan as defined in Section 3(2)
of ERISA, other than a multiemployer plan as defined in Section 4001(a)(3) of
ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) the Borrower or a Subsidiary of the Borrower or an
ERISA Affiliate or with respect to which any such entity has liability.
"Pledge Agreement" shall have the meaning provided in Section
5.09.
"Pledge Agreement Collateral" shall mean all "Collateral" as
defined in the Pledge Agreement.
"Pledged Notes" shall have the meaning provided in the Pledge
Agreement.
"Pledged Securities" shall mean all "Pledged Securities" as
defined in the Pledge Agreement.
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"Prime Lending Rate" shall mean the rate which the
Administrative Agent announces from time to time as its prime lending rate, the
Prime Lending Rate to change when and as such prime lending rate changes. The
Prime Lending Rate is a reference rate and does not necessarily represent the
lowest or best rate actually charged to any customer. The Administrative Agent
may make commercial loans or other loans at rates of interest at, above or below
the Prime Lending Rate.
"Pro Forma Basis" shall mean, with respect to any Permitted
Acquisition, the calculation of the consolidated results of the Borrower and its
Subsidiaries otherwise determined in accordance with this Agreement as if the
respective Permitted Acquisition (and all Indebtedness incurred to finance such
Permitted Acquisition, and all other Permitted Acquisitions, effected during the
respective Calculation Period or thereafter and on or prior to the date of
determination) (each such date, a "Determination Date") had been effected on the
first day of the respective Calculation Period; provided that all such
calculations shall be made on a basis consistent with the requirements of
Regulation S-X under the Securities Act and the Securities Exchange Act and
shall take into account the following assumptions:
(i) interest expense attributable to interest on any
Indebtedness (whether existing or being incurred) bearing a floating
interest rate shall be computed as if the rate in effect on the date of
computation (taking into account any Interest Rate Protection Agreement
applicable to such Indebtedness if such Interest Rate Protection
Agreement has a remaining term in excess of 12 months) had been the
applicable rate for the entire period; and
(ii) pro forma effect shall be given to all Permitted
Acquisitions (by excluding or including, as the case may be, the
historical financial results for the respective properties) that occur
during such Calculation Period or thereafter and on or prior to the
Determination Date (including any Indebtedness assumed or acquired in
connection therewith) as if they had occurred on the first day of such
Calculation Period, in each case to the extent that the occurrence of
any such event required the financial covenants contained in Sections
9.08 through 9.10, inclusive, to be recalculated on a Pro Forma Basis.
"Projections" shall mean the projections prepared by the
Borrower relating to the Transaction and delivered to the Agents prior to the
Restatement Effective Date.
"Quarterly Payment Date" shall mean each March 31, June 30,
September 30 and December 31 occurring after the Restatement Effective Date.
"RCRA" shall mean the Resource Conservation and Recovery Act,
as the same may be amended from time to time, 42 U.S.C.ss. 6901 et seq.
"Real Property" of any Person shall mean all the right, title
and interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
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"Recovery Event" shall mean the receipt by the Borrower or any
of its Subsidiaries of any cash insurance proceeds or condemnation awards
payable (i) by reason of theft, loss, physical destruction, damage, taking or
any other similar event with respect to any property or assets of the Borrower
or any of its Subsidiaries and (ii) under any policy of insurance required to be
maintained under Section 8.03.
"Refinancing" shall mean the repayment in full of, and the
termination of all commitments in respect of, the Indebtedness to be Refinanced.
"Refinancing Documents" shall mean all of the documents and
agreements entered into in connection with the Refinancing.
"Register" shall have the meaning provided in Section 13.15.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Release" shall mean the disposing, discharging, injecting,
spilling, pumping, leaking, leaching, dumping, emitting, escaping, emptying,
pouring or migrating, into or upon any land or water or air, or otherwise
entering into the environment.
"Replaced Bank" shall have the meaning provided in Section
1.13.
"Replacement Bank" shall have the meaning provided in Section
1.13.
"Reportable Event" shall mean an event described in Section
4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA
other than those events as to which the 30-day notice period is waived under
subsection .13, .14, .16, .18, .19 or .20 of PBGC Regulation Section 4043.
"Required Banks" shall mean Non-Defaulting Banks the sum of
whose outstanding Term Loans (and, if prior to the termination thereof, Term
Loan Commitments), and Revolving Loan Commitments (or after the termination
thereof, outstanding Revolving Loans and Adjusted RL Percentage of Swingline
Loans and Letter of Credit Outstandings) represent an
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amount greater than 50% of the sum of all outstanding Term Loans (and, if prior
to the termination thereof, the Term Loan Commitments) of Non-Defaulting Banks,
and the Adjusted Total Revolving Loan Commitment (or after the termination
thereof, the sum of the then total outstanding Revolving Loans of Non-Defaulting
Banks, and the aggregate Adjusted RL Percentages of all Non-Defaulting Banks of
the total outstanding Swingline Loans and Letter of Credit Outstandings at such
time).
"Restatement Effective Date" shall have the meaning provided
in Section 13.10.
"Revolving Loan" shall have the meaning provided in Section
1.01(b).
"Revolving Loan Commitment" shall mean, for each Bank, the
amount set forth opposite such Bank's name in Schedule I directly below the
column entitled "Revolving Loan Commitment," as same may be (x) reduced from
time to time pursuant to Sections 3.02, 3.03 and/or 10 or (y) adjusted from time
to time as a result of assignments to or from such Bank pursuant to Section 1.13
or 13.04(b).
"Revolving Loan Commitment Commission" shall have the meaning
provided in Section 3.01(a).
"Revolving Loan Maturity Date" shall mean November 17, 2004.
"Revolving Note" shall have the meaning provided in Section
1.05(a).
"RL Percentage" of any Bank at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Revolving Loan
Commitment of such Bank at such time and the denominator of which is the Total
Revolving Loan Commitment at such time, provided that if the RL Percentage of
any Bank is to be determined after the Total Revolving Loan Commitment has been
terminated, then the RL Percentages of the Banks shall be determined immediately
prior (and without giving effect) to such termination.
"Scheduled Repayments" shall have the meaning provided in
Section 4.02(b).
"SEC" shall have the meaning provided in Section 8.01(g).
"Section 4.04(b)(ii) Certificate" shall have the meaning
provided in Section 4.04(b)(ii).
"Secured Creditors" shall have the meaning assigned that term
in the respective Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
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"Security Agreement" shall have the meaning provided in
Section 5.10.
"Security Agreement Collateral" shall mean all "Collateral" as
defined in the Security Agreement.
"Security Document" shall mean and include each of the
Security Agreement, the Pledge Agreement and each Mortgage and, after the
execution and delivery thereof, each Additional Security Document.
"Shareholders' Agreements" shall have the meaning provided in
Section 5.05.
"SKL" shall mean Snorkel International, Inc., a Delaware
corporation, formerly known as SKL Lift, Inc.
"Standby Letter of Credit" shall have the meaning provided in
Section 2.01(a).
"Start Date" shall have the meaning provided in the definition
of Applicable Base Rate Margin.
"Stated Amount" of each Letter of Credit shall, at any time,
mean the maximum amount available to be drawn thereunder (in each case
determined without regard to whether any conditions to drawing could then be
met).
"Subsidiary" shall mean, as to any Person, (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at the time.
"Subsidiajry Guarantor" shall mean each Wholly-Owned Domestic
Subsidiary of the Borrower and, to the extent required by Section 8.13, each
Wholly-Owned Foreign Subsidiary of the Borrower.
"Subsidiaries Guaranty" shall have the meaning provided in
Section 5.11.
"Supermajority Banks" of any Tranche shall mean those
Non-Defaulting Banks which would constitute the Required Banks under, and as
defined in, this Agreement if (x) all outstanding Obligations of the other
Tranches under this Agreement were repaid in full and all Commitments with
respect thereto were terminated and (y) the percentage "50%" contained therein
were changed to "66-2/3%."
"Swingline Bank" shall mean First Union National Bank.
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"Swingline Expiry Date" shall mean the date which is five
Business Days prior to the Revolving Loan Maturity Date.
"Swingline Loan" shall have the meaning provided in Section
1.01(c).
"Swingline Note" shall have the meaning provided in Section
1.05(a).
"Syndication Agent" shall mean MSSF, in its capacity as
Syndication Agent and Co-Arranger for the Banks hereunder.
"Syndication Date" shall have the meaning provided in Section
1.01(a).
"Tax Sharing Agreements" shall have the meaning provided in
Section 5.05.
"Term Loan" shall have the meaning provided in Section
1.01(a).
"Term Loan Commitment" shall mean, for each Bank, the amount
set forth opposite such Bank's name in Schedule I directly below the column
entitled "Term Loan Commitment," as same may be (x) reduced from time to time
pursuant to Sections 3.02, 3.03, 4.02 and/or 10 or (y) adjusted from time to
time as a result of assignments to or from such Bank pursuant to Section 1.13 or
13.04(b).
"Term Loan Commitment Commission" shall have the meaning
provided in Section 3.01(f).
"Term Loan Maturity Date" shall mean November 17, 2004.
"Term Loan Percentage" shall mean, at any time, a fraction
(expressed as a percentage) the numerator of which is equal to the sum of the
aggregate principal amount of all Term Loans outstanding at such time plus the
Total Term Loan Commitment at such time and the denominator of which is equal to
the sum of the aggregate principal amount of all Term Loans outstanding at such
time plus the Total Term Loan Commitment at such time.
"Term Note" shall have the meaning provided in Section
1.05(a).
"Test Period" shall mean the period of four consecutive fiscal
quarters of the Borrower then last ended (in each case taken as one accounting
period).
"Total Delayed Draw Commitment" shall mean a portion of the
Total Term Loan Commitment equal to $40,000,000, which shall only be permitted
to be borrowed on the Earnout Payment Date.
"Total Commitments" shall mean, at any time, the sum of the
Commitments of each of the Banks.
"Total Revolving Loan Commitment" shall mean, at any time, the
sum of the Revolving Loan Commitments of each of the Banks.
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"Total Term Loan Commitment" shall mean, at any time, the sum
of the Term Loan Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at
any time, an amount equal to the remainder of (x) the Total Revolving Loan
Commitment then in effect, less (y) the sum of the aggregate principal amount of
Revolving Loans and Swingline Loans then outstanding plus the then aggregate
amount of Letter of Credit Outstandings.
"Total Unutilized Term Loan Commitment" shall mean, at any
time, an amount equal to the remainder of (x) the Total Term Loan Commitment
then in effect, less (y) the sum of the aggregate principal amount of Term Loans
then outstanding.
"Trade Letter of Credit" shall have the meaning provided in
Section 2.01(a).
"Tranche" shall mean the respective facility and commitments
utilized in making Loans hereunder, with there being three separate Tranches,
i.e., Term Loans, Revolving Loans and Swingline Loans.
"Transaction" shall mean, collectively, (i) payment of the
Earnout, (ii) the refinancing of all Indebtedness (including letters of credit)
outstanding under the Original Credit Agreement, (iii) the incurrence of Loans
on the Restatement Effective Date, and (iv) the payment of fees and expenses
owing in connection with the foregoing.
"Type" shall mean the type of Loan determined with regard to
the interest option applicable thereto, i.e., whether a Base Rate Loan or a
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to
time in effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the
amount, if any, by which the actuarial present value of the accumulated plan
benefits under the Plan as of the close of its most recent plan year exceeds the
fair market value of the assets allocable thereto, each determined in accordance
with Statement of Financial Accounting Standards No. 87, based upon the
actuarial assumptions used by the Plan's actuary in the most recent annual
valuation of the Plan.
"United States" and "U.S." shall each mean the United States
of America.
"Unpaid Drawing" shall have the meaning provided for in
Section 2.05(a).
"Unutilized Revolving Loan Commitment" with respect to any
Bank, at any time, shall mean such Bank's Revolving Loan Commitment at such time
less the sum of (i) the aggregate outstanding principal amount of Revolving
Loans made by such Bank and (ii) such Bank's Adjusted RL Percentage of the
Letter of Credit Outstandings.
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"Unutilized Term Loan Commitment" with respect to any Bank, at
any time, shall mean such Bank's Term Loan Commitment at such time less the
aggregate outstanding principal amount of Term Loans made by such Bank.
"U.S. Internal Revenue Service Forms" shall have the meaning
provided in Section 4.04(b).
"Wholly-Owned Domestic Subsidiary" shall mean, as to any
Person, any Wholly-Owned Subsidiary of such Person which is a Domestic
Subsidiary.
"Wholly-Owned Foreign Subsidiary" shall mean, as to any
Person, any Wholly-Owned Subsidiary of such Person which is a Foreign
Subsidiary.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i)
any corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint venture
or other entity in which such Person and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time.
SECTION 12. The Administrative Agent and the Syndication
Agent.
12.01 Appointment. The Banks hereby designate First Union
National Bank as Administrative Agent (for purposes of this Section 12, the term
"Administrative Agent" also shall include First Union National Bank in its
capacity as Co-Arranger hereunder and as Collateral Agent pursuant to the
Security Documents) to act as specified herein and in the other Credit
Documents. The Banks hereby designate MSSF as Syndication Agent (for purposes of
this Section 12, the term "Syndication Agent" also shall include MSSF in its
capacity as Co-Arranger) to act as specified herein and in the other Credit
Documents. Each Bank hereby irrevocably authorizes, and each holder of any Note
by the acceptance of such Note shall be deemed irrevocably to authorize, the
Administrative Agent and the Syndication Agent to take such action on its behalf
under the provisions of this Agreement, the other Credit Documents and any other
instruments and agreements referred to herein or therein and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Administrative Agent and the Syndication Agent
by the terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Administrative Agent and the Syndication Agent may
perform any of their duties hereunder by or through its respective officers,
directors, agents, employees or affiliates.
12.02 Nature of Duties. Neither the Administrative Agent nor
the Syndication Agent in their capacity as such shall have any duties or
responsibilities except those expressly set forth in this Agreement and in the
other Credit Documents. Neither the Administrative Agent, the Syndication Agent
in their capacity as such nor any of their respective officers, directors,
agents, employees or affiliates shall be liable for any action taken or omitted
by it or them hereunder or under any other Credit Document or in connection
herewith or therewith, unless caused by its or their gross negligence or willful
misconduct. The duties of the Administrative Agent and the Syndication Agent
shall be mechanical and administrative in nature; neither the
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Administrative Agent nor the Syndication Agent shall have by reason of this
Agreement or any other Credit Document a fiduciary relationship in respect of
any Bank or the holder of any Note; and nothing in this Agreement or any other
Credit Document, expressed or implied, is intended to or shall be so construed
as to impose upon the Administrative Agent or the Syndication Agent any
obligations in respect of this Agreement or any other Credit Document except as
expressly set forth herein or therein.
12.03 Lack of Reliance on the Administrative Agent and the
Syndication Agent. Independently and without reliance upon the Administrative
Agent or the Syndication Agent, each Bank and the holder of each Note, to the
extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of the Borrower
and its Subsidiaries in connection with the making and the continuance of the
Loans and the taking or not taking of any action in connection herewith and (ii)
its own appraisal of the creditworthiness of the Borrower and its Subsidiaries
and, except as expressly provided in this Agreement, neither the Administrative
Agent nor the Syndication Agent shall have any duty or responsibility, either
initially or on a continuing basis, to provide any Bank or the holder of any
Note with any credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time or times
thereafter. Neither the Administrative Agent nor the Syndication Agent shall be
responsible to any Bank or the holder of any Note for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or for the
execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of this Agreement or any other Credit
Document or the financial condition of the Borrower or any of its Subsidiaries
or be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement or
any other Credit Document, or the financial condition of the Borrower or any of
its Subsidiaries or the existence or possible existence of any Default or Event
of Default.
12.04 Certain Rights of the Agents. If any Agent shall request
instructions from the Required Banks with respect to any act or action
(including failure to act) in connection with this Agreement or any other Credit
Document, such Agent shall be entitled to refrain from such act or taking such
action unless and until such Agent shall have received instructions from the
Required Banks; and such Agent shall not incur liability to any Person by reason
of so refraining. Without limiting the foregoing, no Bank or the holder of any
Note shall have any right of action whatsoever against any Agent as a result of
such Agent acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Required Banks.
12.05 Reliance. The Administrative Agent and the Syndication
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any note, writing, resolution, notice, statement, certificate, telex, teletype
or telecopier message, cablegram, radiogram, order or other document or
telephone message signed, sent or made by any Person that the Administrative
Agent or the Syndication Agent believed to be the proper Person, and, with
respect to all legal matters pertaining to this Agreement and any other Credit
Document and its duties hereunder and
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thereunder, upon advice of counsel selected by the Administrative Agent or the
Syndication Agent, as the case may be.
12.06 Indemnification. To the extent the Administrative Agent
or the Syndication Agent is not reimbursed and indemnified by the Borrower or
any of its Subsidiaries, the Banks will reimburse and indemnify the
Administrative Agent and the Syndication Agent, in proportion to their
respective "percentages" as used in determining the Required Banks, for and
against any and all liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, costs, expenses or disbursements of whatsoever kind
or nature which may be imposed on, asserted against or incurred by the
Administrative Agent or the Syndication Agent in performing its respective
duties hereunder or under any other Credit Document, in any way relating to or
arising out of this Agreement or any other Credit Document; provided that no
Bank shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Administrative Agent's or the Syndication Agent's gross
negligence or willful misconduct.
12.07 The Administrative Agent and the Syndication Agent in
Their Individual Capacity. With respect to its obligation to make Loans, or
issue or participate in Letters of Credit, under this Agreement, the
Administrative Agent and the Syndication Agent shall have the rights and powers
specified herein for a "Bank" and may exercise the same rights and powers as
though it were not performing the duties specified herein; and the term "Banks,"
"Required Banks," "Majority Banks," "Supermajority Banks," "holders of Notes" or
any similar terms shall, unless the context clearly otherwise indicates, include
the Administrative Agent and the Syndication Agent in their individual capacity.
The Administrative Agent and the Syndication Agent and their affiliates may
accept deposits from, lend money to, and generally engage in any kind of
banking, investment banking, trust or other business with, or provide debt
financing, equity capital or other services (including financial advisory
services) to, any Credit Party or any Affiliate of any Credit Party (or any
Person engaged in a similar business with any Credit Party or any Affiliate
thereof) as if they were not performing the duties specified herein, and may
accept fees and other consideration from any Credit Party or any Affiliate of
any Credit Party for services in connection with this Agreement and otherwise
without having to account for the same to the Banks.
12.08 Holders. Any Agent may deem and treat the payee of any
Note as the owner thereof for all purposes hereof unless and until a written
notice of the assignment, transfer or endorsement thereof, as the case may be,
shall have been filed with the Administrative Agent. Any request, authority or
consent of any Person who, at the time of making such request or giving such
authority or consent, is the holder of any Note shall be conclusive and binding
on any subsequent holder, transferee, assignee or endorsee, as the case may be,
of such Note or of any Note or Notes issued in exchange therefor.
12.09 Resignation by the Administrative Agent and the
Syndication Agent. (a) The Administrative Agent and/or the Syndication Agent may
resign from the performance of all their respective functions and duties
hereunder and/or under the other Credit Documents at any time by giving 15
Business Days' prior written notice to the Banks and the Borrower (provided
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that no such notice shall be required to be given to the Borrower if a Default
or an Event of Default of the type described in Section 10.05 exists with
respect to the Borrower). Such resignation, in the case of the Administrative
Agent, shall take effect upon the appointment of a successor Administrative
Agent pursuant to clauses (b) and (c) below or as otherwise provided below, and
such resignation, in the case of the Syndication Agent, shall take effect
immediately.
(b) Upon any such notice of resignation by the Administrative
Agent, the Required Banks shall appoint a successor Administrative Agent
hereunder or thereunder who shall be a commercial bank or trust company
reasonably acceptable to the Borrower (it being understood and agreed that any
Non-Defaulting Bank is deemed to be acceptable to the Borrower).
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent with the
consent of the Borrower (which consent shall not be unreasonably withheld or
delayed), shall then appoint a successor Administrative Agent who shall serve as
Administrative Agent hereunder or thereunder until such time, if any, as the
Required Banks appoint a successor Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed
pursuant to clause (b) or (c) above by the 60th day after the date such notice
of resignation was given by the Administrative Agent, Administrative Agent's
resignation shall become effective and the Required Banks shall thereafter
perform all the duties of the Administrative Agent hereunder and/or under any
other Credit Document until such time, if any, as the Required Banks appoint a
successor Administrative Agent as provided above.
SECTION 13. Miscellaneous.
13.01 Payment of Expenses, etc. The Borrower shall: (i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses (w) of the Agents (including,
without limitation, the reasonable fees and disbursements of White & Case
(subject to the limitations agreed to by the Agents and the Borrower) and of the
Agents' local counsel and consultants) in connection with the preparation,
execution and delivery of this Agreement and the other Credit Documents and the
documents and instruments referred to herein and therein, (x) of the Agents
(including, without limitation, the reasonable fees and expenses of White & Case
or any other single law firm retained by the Agents) with respect to any
amendment, waiver or consent relating to this Agreement and/or the other Credit
Documents, (y) of the Agents in connection with their syndication efforts with
respect to this Agreement and (z) of the Agents and, after the occurrence of an
Event of Default, each of the Banks in connection with the enforcement of this
Agreement and the other Credit Documents and the documents and instruments
referred to herein and therein (including, without limitation, the reasonable
fees and disbursements of counsel for the Agents and, after the occurrence of an
Event of Default, for each of the Banks); (ii) pay and hold each of the Banks
harmless from and against any and all present and future stamp, excise and other
similar documentary taxes with respect to the foregoing matters and save each of
the Banks harmless from and against any and
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all liabilities with respect to or resulting from any delay or omission (other
than to the extent attributable to such Bank) to pay such taxes; and (iii)
indemnify each Agent and each Bank, and each of their respective officers,
directors, employees, representatives and agents from and hold each of them
harmless against any and all liabilities, obligations (including removal or
remedial actions), losses, damages, penalties, claims, actions, judgments,
suits, costs, expenses and disbursements (including reasonable attorneys' and
consultants' fees and disbursements) incurred by, imposed on or assessed against
any of them as a result of, or arising out of, or in any way related to, or by
reason of, (a) any investigation, litigation or other proceeding (whether or not
any Agent or any Bank is a party thereto) related to the entering into and/or
performance of this Agreement or any other Credit Document or the use of any
Letter of Credit or the proceeds of any Loans hereunder or the consummation of
the Transaction or any other transactions contemplated herein or in any other
Credit Document or the exercise of any of their rights or remedies provided
herein or in the other Credit Documents, or (b) the actual or alleged presence
of Hazardous Materials in the air, surface water or groundwater or on the
surface or subsurface of any Real Property owned or at any time operated by the
Borrower or any of its Subsidiaries, the generation, storage, transportation,
handling or disposal of Hazardous Materials at any location, whether or not
owned or operated by the Borrower or any of its Subsidiaries, the non-compliance
of any Real Property with foreign, federal, state and local laws, regulations,
and ordinances (including applicable permits thereunder) applicable to any Real
Property, or any Environmental Claim asserted against the Borrower, any of its
Subsidiaries or any Real Property owned or at any time operated by the Borrower
or any of its Subsidiaries, including, in each case, without limitation, the
reasonable fees and disbursements of counsel and other consultants incurred in
connection with any such investigation, litigation or other proceeding (but
excluding any losses, liabilities, claims, damages or expenses to the extent
incurred by reason of the gross negligence, bad faith or willful misconduct of
the Person to be indemnified). To the extent that the undertaking to indemnify,
pay or hold harmless any Agent or any Bank set forth in the preceding sentence
may be unenforceable because it is violative of any law or public policy, the
Borrower shall make the maximum contribution to the payment and satisfaction of
each of the indemnified liabilities which is permissible under applicable law.
13.02 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of an Event of Default, each
Bank is hereby authorized (to the extent not prohibited by applicable law) at
any time or from time to time, without presentment, demand, protest or other
notice of any kind to the Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and apply any and all
deposits (general or special) and any other Indebtedness at any time held or
owing by such Bank (including, without limitation, by branches and agencies of
such Bank wherever located) to or for the credit or the account of any Credit
Party against and on account of the Obligations and liabilities of the Credit
Parties to such Bank under this Agreement or under any of the other Credit
Documents, including, without limitation, all interests in Obligations purchased
by such Bank pursuant to Section 13.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other Credit
Document, irrespective of whether or not such Bank shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured. Notwithstanding anything to the contrary
contained in this Section 13.02, no
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Bank shall exercise any such right of set-off without the prior consent of the
Agents or the Required Banks so long as the Obligations shall be secured by any
Real Property located in the State of California, it being understood and
agreed, however, that this sentence is for the sole benefit of the Banks and
(notwithstanding anything to the contrary contained in Section 13.12) may be
amended, modified or waived in any respect by the Required Banks without the
requirement of prior notice to or consent by any Credit Party and does not
constitute a waiver of any right against any Credit Party or against any
Collateral.
13.03 Notices. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to any Credit Party,
at the address specified opposite its signature below or in the other relevant
Credit Documents; if to any Bank, at its address specified on Schedule II; if to
the Syndication Agent, at the address specified on Schedule II; and if to the
Administrative Agent, at its Notice Office; or, as to any Credit Party or any
Agent, at such other address as shall be designated by such party in a written
notice to the other parties hereto and, as to each Bank, at such other address
as shall be designated by such Bank in a written notice to the Borrower and the
Administrative Agent. All such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective when deposited in the mails, delivered to the telegraph company, cable
company or overnight courier, as the case may be, or sent by telex or
telecopier, except that notices and communications to any Agent or any Credit
Party shall not be effective until received by such Agent or such Credit Party.
13.04 Benefit of Agreement; Assignments; Participations. (a)
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto;
provided, however, the Borrower may not assign or transfer any of its rights,
obligations or interest hereunder without the prior written consent of the Banks
and, provided further, that, although any Bank may transfer, assign or grant
participations in its rights hereunder, such Bank shall remain a "Bank" for all
purposes hereunder (and may not transfer or assign all or any portion of its
Commitments hereunder except as provided in Sections 1.13 and 13.04(b)) and the
transferee, assignee or participant, as the case may be, shall not constitute a
"Bank" hereunder and, provided further, that no Bank shall transfer or grant any
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend the final scheduled
maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is
not extended beyond the Revolving Loan Maturity Date) in which such participant
is participating, or reduce the rate or extend the time of payment of interest
or Fees thereon (except in connection with a waiver of applicability of any
post-default increase in interest rates) or reduce the principal amount thereof,
or increase the amount of the participant's participation over the amount
thereof then in effect (it being understood that a waiver of any Default or
Event of Default or of a mandatory reduction in the Total Commitment, shall not
constitute a change in the terms of such participation, and that an increase in
any Commitment or Loan shall be permitted without the consent of any participant
if the participant's participation is not increased as a result thereof), (ii)
consent to the assignment or transfer by the Borrower of any of its rights
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and obligations under this Agreement or (iii) release all or substantially all
of the Collateral under all of the Security Documents (except as expressly
provided in the Credit Documents) supporting the Loans hereunder in which such
participant is participating. In the case of any such participation, the
participant shall not have any rights under this Agreement or any of the other
Credit Documents (the participant's rights against such Bank in respect of such
participation to be those set forth in the agreement executed by such Bank in
favor of the participant relating thereto) and all amounts payable by the
Borrower hereunder shall be determined as if such Bank had not sold such
participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank
together with one or more other Banks) may (x) assign all or a portion of its
Commitments and related outstanding Obligations hereunder to its parent company
and/or any affiliate of such Bank which is at least 50% owned by such Bank or
its parent company or to one or more Banks or (y) assign all, or if less than
all, a portion equal to at least $5,000,000 in the aggregate for the assigning
Bank or assigning Banks, of such Commitments and related outstanding Obligations
hereunder to one or more Eligible Transferees, each of which assignees shall
become a party to this Agreement as a Bank by execution of an Assignment and
Assumption Agreement, provided that, (i) at such time Schedule I shall be deemed
modified to reflect the Commitments (or outstanding Term Loans, as the case may
be) of such new Bank and of the existing Banks, (ii) upon the surrender of the
relevant Notes by the assigning Bank (or, upon such assigning Bank's
indemnifying the Borrower for any lost Note pursuant to a customary
indemnification agreement) new Notes will be issued, at the Borrower's expense,
to such new Bank and to the assigning Bank upon the request of such new Bank or
assigning Bank, such new Notes to be in conformity with the requirements of
Section 1.05 (with appropriate modifications) to the extent needed to reflect
the revised Commitments (or outstanding Term Loans, as the case may be), (iii)
the consent of the Agents shall be required in connection with any assignment to
an Eligible Transferee pursuant to clause (y) above (which consent shall not be
unreasonably withheld or delayed), (iv) so long as no Default or Event of
Default exists, the consent of the Borrower shall be required in connection with
any assignment to an Eligible Transferee pursuant to clause (y) above (which
consent shall not be unreasonably withheld or delayed, provided that the
Borrower may withhold its consent to a proposed assignment if such assignment
would result in increased costs to the Borrower under Section 1.10, 2.06 or
4.04), (v) the Administrative Agent shall receive at the time of each such
assignment, from the assigning or assignee Bank, the payment of a non-refundable
assignment fee of $3,500 and (vi) no such transfer or assignment will be
effective until recorded by the Administrative Agent on the Register pursuant to
Section 13.15. To the extent of any assignment pursuant to this Section
13.04(b), the assigning Bank shall be relieved of its obligations hereunder with
respect to its assigned Commitments. At the time of each assignment pursuant to
this Section 13.04(b) to a Person which is not already a Bank hereunder and
which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for Federal income tax purposes, the respective
assignee Bank shall, to the extent legally entitled to do so, provide to the
Borrower the appropriate Internal Revenue Service Forms (and, if applicable, a
Section 4.04(b) (ii) Certificate) described in Section 4.04(b). To the extent
that an assignment of all or any portion of a Bank's Commitments and related
outstanding Obligations pursuant to Section 1.13 or this Section 13.04(b) would,
at the time of such assignment, result in increased costs under Section 1.10,
2.06 or 4.04 from those being charged by the respective assigning Bank
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prior to such assignment, then the Borrower shall not be obligated to pay such
increased costs (although the Borrower, in accordance with and pursuant to the
other provisions of this Agreement, shall be obligated to pay any other
increased costs of the type described above resulting from changes after the
date of the respective assignment).
(c) Nothing in this Agreement shall prevent or prohibit any
Bank from pledging its Loans and Notes hereunder to a Federal Reserve Bank in
support of borrowings made by such Bank from such Federal Reserve Bank.
13.05 No Waiver; Remedies Cumulative. No failure or delay on
the part of the Administrative Agent or the Syndication Agent or any Bank in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower or any other Credit Party
and the Administrative Agent, the Syndication Agent or any Bank shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies herein or in any other
Credit Document expressly provided are cumulative and not exclusive of any
rights, powers or remedies which the Administrative Agent, the Syndication Agent
or any Bank would otherwise have. No notice to or demand on any Credit Party in
any case shall entitle any Credit Party to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent, the Syndication Agent or any Bank to any other or further
action in any circumstances without notice or demand.
13.06 Payments Pro Rata. (a) Except as otherwise provided in
this Agreement, the Administrative Agent agrees that promptly after its receipt
of each payment from or on behalf of the Borrower in respect of any Obligations
hereunder, it shall distribute such payment to the Banks (other than any Bank
that has consented in writing to waive its pro rata share of any such payment)
pro rata based upon their respective shares, if any, of the Obligations with
respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal of, or interest
on, the Loans, Unpaid Drawings, Commitment Commission or Letter of Credit Fees,
of a sum which with respect to the related sum or sums received by other Banks
is in a greater proportion than the total of such Obligation then owed and due
to such Bank bears to the total of such Obligation then owed and due to all of
the Banks immediately prior to such receipt, then such Bank receiving such
excess payment shall purchase for cash without recourse or warranty from the
other Banks an interest in the Obligations of the respective Credit Party to
such Banks in such amount as shall result in a proportional participation by all
the Banks in such amount; provided that if all or any portion of such excess
amount is thereafter recovered from such Bank, such purchase shall be rescinded
and the purchase price restored to the extent of such recovery, but without
interest.
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(c) Notwithstanding anything to the contrary contained herein,
the provisions of the preceding Sections 13.06(a) and (b) shall be subject to
the express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
13.07 Calculations; Computations; Accounting Terms. The
financial statements to be furnished to the Banks pursuant hereto shall be made
and prepared in accordance with generally accepted accounting principles in the
United States consistently applied throughout the periods involved (except (i)
as set forth in the notes thereto, (ii) for year-end adjustments in the case of
interim financial statements and (iii) as otherwise disclosed in writing by the
Borrower to the Banks) and consistent with those used to prepare the historical
financial statements of the Borrower delivered to the Banks pursuant to Section
7.05(a).
(b) All computations of interest, Commitment Commission and
other Fees hereunder, shall be made on the basis of a year of 360 days for the
actual number of days elapsed.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
OF JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS
OTHERWISE PROVIDED IN THE MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN
THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENT, THE BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. THE BORROWER HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT
ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER THE BORROWER, AND AGREES NOT TO
PLEAD OR CLAIM, IN ANY LEGAL ACTION PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER CREDIT DOCUMENTS BROUGHT IN ANY OF THE AFOREMENTIONED COURTS, THAT
SUCH COURTS LACK PERSONAL JURISDICTION OVER THE BORROWER. THE BORROWER FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS
SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS
AFTER SUCH MAILING. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH
SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT
DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR
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INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY AGENT, ANY BANK OR THE
HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY
OTHER JURISDICTION.
(b) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID
ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE
AND HEREBY FURTHER IRREVOCABLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Administrative Agent.
13.10 Effectiveness. This Agreement shall become effective on
the date (the "Restatement Effective Date") on which the Borrower, the
Administrative Agent, the Syndication Agent and each of the Banks shall have
signed a counterpart hereof (whether the same or different counterparts) and
shall have delivered the same to the Administrative Agent at its Notice Office
or, in the case of the Banks, shall have given to the Administrative Agent
telephonic (confirmed in writing), written or telex notice (actually received)
at such office that the same has been signed and mailed to it. The
Administrative Agent will give the Borrower and each Bank prompt written notice
of the occurrence of the Restatement Effective Date.
13.11 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
13.12 Amendment or Waiver; etc. Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit Parties party thereto and the
Required Banks, provided that no such change, waiver, discharge or termination
shall, without the consent of each Bank (other than a Defaulting Bank) (with
Obligations being directly affected in the case of following clause (i)), (i)
extend the
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final scheduled maturity of any Loan or Note or extend the stated expiration
date of any Letter of Credit beyond the Revolving Loan Maturity Date, or reduce
the rate of interest or Fees or extend the time of payment of interest or Fees,
or reduce the principal amount thereof (except to the extent repaid in cash) (it
being understood that any amendment or modification to the financial definitions
in this Agreement or to Section 13.07(a) shall not constitute a reduction in the
rate of interest or any Fees for purposes of this clause (i)), (ii) release all
or substantially all of the Collateral (except as expressly provided in the
Credit Documents) under all the Security Documents, (iii) release a Subsidiary
Guarantor from the Subsidiaries Guaranty (except as expressly provided in the
Subsidiaries Guaranty or in connection with the sale of such Subsidiary
Guarantor in accordance with the terms of this Agreement), (iv) amend, modify or
waive any provision of this Section 13.12, (v) reduce the percentage specified
in the definition of Required Banks (it being understood that, with the consent
of the Required Banks, additional extensions of credit pursuant to this
Agreement may be included in the determination of the Required Banks on
substantially the same basis as the extensions of Term Loans and Revolving Loan
Commitments are included on the Restatement Effective Date) or (vi) consent to
the assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement; provided further, that no such change, waiver, discharge
or termination shall (u) increase the Commitments of any Bank over the amount
thereof then in effect without the consent of such Bank (it being understood
that waivers or modifications of conditions precedent, covenants, Defaults or
Events of Default or of a mandatory reduction in the Total Commitments shall not
constitute an increase of the Commitment of any Bank, and that an increase in
the available portion of any Commitment of any Bank shall not constitute an
increase of the Commitment of such Bank), (v) without the consent of each
Issuing Bank, amend, modify or waive any provision of Section 2 or alter its
rights or obligations with respect to Letters of Credit, (w) without the consent
of each Agent, amend, modify or waive any provision of Section 12 or any other
provision as same relates to the rights or obligations of the Agents, (x)
without the consent of the Collateral Agent, amend, modify or waive any
provision relating to the rights or obligations of the Collateral Agent, (y)
without the consent of the Majority Banks of each Tranche which is being
allocated a lesser prepayment, repayment or commitment reduction as a result of
the actions described below (or without the consent of the Majority Banks of
each Tranche in the case of an amendment to the definition of Majority Banks),
amend the definition of Majority Banks (it being understood that, with the
consent of the Required Banks, additional extensions of credit pursuant to this
Agreement may be included in the determination of the Majority Banks on
substantially the same basis as the extensions of Term Loans and Revolving Loan
Commitments are included on the Restatement Effective Date) or alter the
required application of any prepayments or repayments (or commitment
reductions), as between the various Tranches, pursuant to Section 4.01(a) or
4.02 (excluding Section 4.02(b)) (although the Required Banks may waive, in
whole or in part, any such prepayment, repayment or commitment reduction, so
long as the application, as amongst the various Tranches, of any such
prepayment, repayment or commitment reduction which is still required to be made
is not altered) or (z) without the consent of the Supermajority Banks of the
respective Tranche, reduce the amount of, or extend the date of, any Scheduled
Repayment or without the consent of the Supermajority Banks of each Tranche,
amend the definition of Supermajority Banks (it being understood that, with the
consent of the Required Banks, additional extensions of credit pursuant to this
Agreement may be included in the
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determination of the Supermajority Banks on substantially the same basis as the
extensions of Term Loans and Revolving Loan Commitments are included on the
Restatement Effective Date).
(b) If, in connection with any proposed change, waiver,
discharge or termination to any of the provisions of this Agreement as
contemplated by clauses (i) through (vi), inclusive, of the first proviso to
Section 13.12(a), the consent of the Required Banks is obtained but the consent
of one or more of such other Banks whose consent is required is not obtained,
then the Borrower shall have the right, so long as all non-consenting Banks
whose individual consent is required are treated as described in either clauses
(A) or (B) below, to either (A) replace each such non-consenting Bank or Banks
(or, at the option of the Borrower if the respective Bank's consent is required
with respect to less than all Tranches of Loans (or related Commitments), to
replace only the respective Tranche or Tranches of Commitments and/or Loans of
the respective non-consenting Bank which gave rise to the need to obtain such
Bank's individual consent) with one or more Replacement Banks pursuant to
Section 1.13 so long as at the time of such replacement, each such Replacement
Bank consents to the proposed change, waiver, discharge or termination or (B)
terminate such non-consenting Bank's Commitments (if such Bank's consent is
required as a result of its Commitments) and/or repay outstanding Term Loans of
such Bank which gave rise to the need to obtain such Bank's consent, in
accordance with Sections 3.02(b) and/or 4.01(b), provided that, unless the
Commitments that are terminated, and Loans repaid, pursuant to preceding clause
(B) are immediately replaced in full at such time through the addition of new
Banks or the increase of the Commitments and/or outstanding Loans of existing
Banks (who in each case must specifically consent thereto), then in the case of
any action pursuant to preceding clause (B) the Required Banks (determined after
giving effect to the proposed action) shall specifically consent thereto,
provided further, that in any event the Borrower shall not have the right to
replace a Bank, terminate its Commitments or repay its Loans solely as a result
of the exercise of such Bank's rights (and the withholding of any required
consent by such Bank) pursuant to the second proviso to Section 13.12(a).
13.13 Survival. All indemnities set forth herein including,
without limitation, in Sections 1.10, 1.11, 2.06, 4.04, 12.06 and 13.01 shall
survive the execution, delivery and termination of this Agreement and the Notes
and the making and repayment of the Obligations.
13.14 Domicile of Loans. Each Bank may transfer and carry its
Loans at, to or for the account of any of its Lending Offices. Notwithstanding
anything to the contrary contained herein, to the extent that a transfer of
Loans pursuant to this Section 13.14 would, at the time of such transfer, result
in increased costs under Section 1.10, 1.11, 2.06 or 4.04 from those being
charged by the respective Bank prior to such transfer, then the Borrower shall
not be obligated to pay such increased costs (although the Borrower shall be
obligated to pay any other increased costs of the type described above resulting
from changes after the date of the respective transfer).
13.15 Register. The Borrower hereby designates the
Administrative Agent to serve as the Borrower's agent, solely for purposes of
this Section 13.15, to maintain a register (the "Register") on which it will
record the name and address of each Bank, the Commitments from time to time of
each of the Banks, the Loans made by each of the Banks and each
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repayment in respect of the principal amount of the Loans of each Bank. Failure
to make any such recordation, or any error in such recordation shall not affect
the Borrower's obligations in respect of such Loans. With respect to any Bank,
the transfer of the Commitments of such Bank and the rights to the principal of,
and interest on, any Loan made pursuant to such Commitments shall not be
effective until such transfer is recorded on the Register maintained by the
Administrative Agent with respect to ownership of such Commitments and Loans and
prior to such recordation all amounts owing to the transferor with respect to
such Commitments and Loans shall remain owing to the transferor. The
registration of assignment or transfer of all or part of any Commitments and
Loans shall be recorded by the Administrative Agent on the Register only upon
the acceptance by the Administrative Agent of a properly executed and delivered
Assignment and Assumption Agreement pursuant to Section 13.04(b). Coincident
with the delivery of such an Assignment and Assumption Agreement to the
Administrative Agent for acceptance and registration of assignment or transfer
of all or part of a Loan, or as soon thereafter as practicable, the assigning or
transferor Bank shall surrender the Note evidencing such Loan, and thereupon one
or more new Notes in the same aggregate principal amount shall be issued to the
assigning or transferor Bank and/or the new Bank. The Borrower agrees to
indemnify the Administrative Agent from and against any and all losses, claims,
damages and liabilities of whatsoever nature which may be imposed on, asserted
against or incurred by the Agent in performing its duties under this Section
13.15.
13.16 Confidentiality. (a) Subject to the provisions of clause
(b) of this Section 13.16, each Bank agrees that it will not disclose without
the prior consent of the Borrower (other than to its employees, auditors,
advisors or counsel or to another Bank if the Bank or such Bank's holding or
parent company in its sole discretion determines that any such party should have
access to such information, provided such Persons shall be subject to the
provisions of this Section 13.16 to the same extent as such Bank) any
information with respect to the Borrower or any of its Subsidiaries which is now
or in the future furnished pursuant to this Agreement or any other Credit
Document and which is designated by the Borrower to the Banks in writing as
confidential, provided that any Bank may disclose any such information (a) as
has become generally available to the public other than by virtue of a breach of
this Section 13.16(a) by the respective Bank, (b) as may be required or
reasonably appropriate in any report, statement or testimony submitted to any
municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Bank or to the Federal Reserve Board, the Federal Deposit
Insurance Corporation, the NAIC or similar organizations (whether in the United
States or elsewhere) or their successors, (c) as may be required or reasonably
appropriate in respect to any summons or subpoena or in connection with any
litigation, (d) in order to comply with any law, order, regulation or ruling
applicable to such Bank, (e) to the Agents and (f) to any prospective or actual
transferee or participant in connection with any contemplated transfer or
participation of any of the Notes or Commitments or any interest therein by such
Bank and to any direct or indirect contractual counterparties in Interest Rate
Protection Agreements or Other Hedging Agreements entered into by any Bank,
provided that such prospective transferee and each such contractual counterparty
agrees to be bound by the confidentiality provisions contained in this Section
13.16.
(b) The Borrower hereby acknowledges and agrees that each Bank
may share with any of its affiliates any information related to the Borrower or
any of its Subsidiaries
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(including, without limitation, any nonpublic customer information regarding the
creditworthiness of the Borrower and its Subsidiaries, provided such Persons
shall be subject to the provisions of this Section 13.16 to the same extent as
such Bank).
13.17 Limitation on Increased Costs. Notwithstanding anything
to the contrary contained in Section 1.10, 1.11, 2.06 or 4.04, unless a Bank
gives notice to the Borrower that it is obligated to pay an amount under any
such Section within 180 days after the later of (x) the date such Bank incurs
the respective increased costs, Taxes, loss, expense or liability, or reduction
in amounts received or receivable or reduction in return on capital or (y) the
date such Bank has actual knowledge of its incurrence of the respective
increased costs, Taxes, loss, expense or liability, or reductions in amounts
received or receivable or reduction in return on capital, then such Bank shall
only be entitled to be compensated for such amount by the Borrower pursuant to
said Section 1.10, 1.11, 2.06 or 4.04, as the case may be, to the extent the
costs, Taxes, loss, expense or liability, or reduction in amounts received or
receivable or reduction in return on capital are incurred or suffered on or
after the date which occurs 180 days prior to such Bank giving notice to the
Borrower that it is obligated to pay the respective amounts pursuant to said
Section 1.10, 1.11, 2.06 or 4.04, as the case may be. This Section 13.17 shall
have no applicability to any Section of this Agreement or any other Credit
Document other than said Sections 1.10, 1.11, 2.06 and 4.04.
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
222 East Main Street OMNIQUIP INTERNATIONAL, INC.
Port Washington, Wisconsin
53074
Telephone No.: (414) 268-8965
Telecopier No.: (414) 268-3100 By /s/ Allen J. Jablonsky
------------------------------------
Attention: Vice President Finance and Title: Assistant Treasurer
Chief Financial Officer
MORGAN STANLEY SENIOR FUNDING,
INC., Individually and as Syndication
Agent and Co-Arranger
By /s/ Michael Hart
------------------------------------
Title: Principal
FIRST UNION NATIONAL BANK,
Individually and as Administrative
Agent and Co-Arranger
By /s/ George L. Woolsey
------------------------------------
Title: Vice President
BANK OF SCOTLAND
By /s/Annie Chin Tat
------------------------------------
Title: Senior Vice President
CREDIT AGRICOLE INDOSUEZ
By /s/ Dennis M. Toolan
------------------------------------
Title: Senior Vice President
<PAGE>
By /s/ David Bouhl
------------------------------------
Title: Head of Corporate Banking
Chicago
FIRST BANK
By /s/ Ted Kraizer
------------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Jenny A. Gilpin
------------------------------------
Title: Vice President
FIRSTAR BANK MILWAUKEE, N.A.
By /s/ Jeff Janza
------------------------------------
Title: Assistant Vice President
FLEET CAPITAL CORPORATION
By /s/ Aleen M. Harte
------------------------------------
Title: Vice President
THE FUJI BANK, LIMITED
By /s/ Peter L. Chinnici
------------------------------------
Title: Joint General Manager
HARRIS TRUST AND SAVINGS BANK
By /s/ George Dluby
------------------------------------
Title: Vice President
M&I MARSHALL AND ILSLEY BANK
<PAGE>
By /s/ Kathleen T. Coleman
------------------------------------
Title: Vice President
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By /s/ Nobuo Tominaga
------------------------------------
Title: Chief Manager
NATIONAL CITY BANK
By /s/ Barry C. Robinson
------------------------------------
Title: Vice President
WACHOVIA BANK, N.A.
By /s/ Debra L. Coheley
------------------------------------
Title: Senior Vice President
RZB FINANCE LLC
By /s/ John A. Valiska /s/ Christopher Hoedl
---------------------------------------------------
John A. Valiska, Christopher Hoedl
Vice President Assistant Vice President
<PAGE>
TABLE OF CONTENTS
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SECTION 1. Amount and Terms of Credit......................................2
1.01 The Commitments.................................................2
1.02 Minimum Amount of Each Borrowing................................4
1.03 Notice of Borrowing.............................................4
1.04 Disbursement of Funds...........................................5
1.05 Notes...........................................................6
1.06 Conversions.....................................................8
1.07 Pro Rata Borrowings.............................................8
1.08 Interest........................................................8
1.09 Interest Periods................................................9
1.10 Increased Costs, Illegality, etc...............................10
1.11 Breakage.......................................................12
1.12 Change of Lending Office.......................................13
1.13 Replacement of Banks...........................................13
SECTION 2. Letters of Credit..............................................14
2.01 Letters of Credit..............................................14
2.02 Maximum Letter of Credit Outstandings; Final Maturities........15
2.03 Letter of Credit Requests......................................16
2.04 Letter of Credit Participations................................16
2.05 Agreement to Repay Letter of Credit Drawings...................18
2.06 Increased Costs................................................19
2.07 Existing Letters of Credit.....................................19
SECTION 3. Commitment Commission; Fees; Reductions of Commitment..........19
3.01 Fees...........................................................20
3.02 Voluntary Termination of Unutilized Commitments................21
3.03 Mandatory Reduction of Commitments.............................21
SECTION 4. Prepayments; Payments; Taxes...................................22
4.01 Voluntary Prepayments..........................................22
4.02 Mandatory Repayments and Commitment Reductions.................23
4.03 Method and Place of Payment....................................28
4.04 Net Payments...................................................28
SECTION 5. Conditions Precedent...........................................30
5.01 Execution of Agreement; Notes..................................30
(i)
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5.02 Officer's Certificate..........................................30
5.03 Opinions of Counsel............................................30
5.04 Corporate Documents; Proceedings; etc..........................30
5.05 Employee Benefit Plans; Shareholders' Agreements; Management
Agreements; Collective Bargaining Agreements; Existing
Indebtedness Agreements........................................31
5.06 Indebtedness; Original Credit Agreement........................31
5.07 Adverse Change, etc. ..........................................32
5.08 Litigation.....................................................32
5.09 Pledge Agreement...............................................32
5.10 Security Agreement.............................................33
5.11 Subsidiaries Guaranty..........................................33
5.12 Mortgages; Title Insurance; Survey, etc. ......................33
5.13 Projections; Pro Forma Balance Sheet...........................34
5.14 Solvency Certificate; Insurance Certificates...................34
5.15 Fees, etc......................................................34
SECTION 6. Conditions Precedent to All Credit Events......................34
6.01 No Default; Representations and Warranties.....................34
6.02 Notice of Borrowing; Letter of Credit Request..................35
SECTION 7. Representations, Warranties and Agreements.....................35
7.01 Corporate and Other Status.....................................35
7.02 Corporate and Other Power and Authority........................36
7.03 No Violation...................................................36
7.04 Approvals......................................................36
7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections, etc. ................................37
7.06 Litigation.....................................................38
7.07 True and Complete Disclosure...................................38
7.08 Use of Proceeds; Margin Regulations............................38
7.09 Tax Returns and Payments.......................................38
7.10 Compliance with ERISA..........................................39
7.11 The Security Documents.........................................40
7.12 Representations and Warranties in Acquisition Documents........41
7.13 Properties.....................................................41
7.14 Capitalization.................................................41
7.15 Subsidiaries...................................................42
7.16 Compliance with Statutes, etc. ................................42
7.17 Investment Company Act.........................................42
7.18 Public Utility Holding Company Act.............................42
7.19 Environmental Matters..........................................42
7.20 Labor Relations................................................43
7.21 Patents, Licenses, Franchises and Formulas.....................43
(ii)
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7.22 Indebtedness...................................................43
7.23 Transaction....................................................44
SECTION 8. Affirmative Covenants..........................................44
8.01 Information Covenants..........................................44
8.02 Books, Records and Inspections.................................47
8.03 Maintenance of Property; Insurance.............................47
8.04 Corporate Franchises...........................................48
8.05 Compliance with Statutes, etc. ................................48
8.06 Compliance with Environmental Laws.............................48
8.07 ERISA..........................................................49
8.08 End of Fiscal Years; Fiscal Quarters...........................50
8.09 Performance of Obligations.....................................50
8.10 Payment of Taxes...............................................50
8.11 Interest Rate Protection.......................................50
8.12 Additional Security; Further Assurances........................50
8.13 Foreign Subsidiaries Security..................................51
SECTION 9. Negative Comments..............................................52
9.01 Liens..........................................................52
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc. .......54
9.03 Dividends......................................................56
9.04 Indebtedness...................................................56
9.05 Advances, Investments and Loans................................58
9.06 Transactions with Affiliates...................................59
9.07 Capital Expenditures...........................................59
9.08 Consolidated Fixed Charge Coverage Ratio.......................61
9.09 Consolidated Interest Coverage Ratio...........................61
9.10 Maximum Leverage Ratio.........................................61
9.11 Limitation on Voluntary Payments and Modifications of
Subordinated Indebtedness; Modifications of Certificate
of Incorporation and Certain Other Agreements, etc. ...........62
9.12 Limitation on Certain Restrictions on Subsidiaries.............63
9.13 Limitation on Issuance of Capital Stock........................63
9.14 Business.......................................................63
9.15 Limitation on Creation of Subsidiaries.........................63
SECTION 10. Events of Default..............................................64
10.01 Payments.......................................................64
10.02 Representations, etc. .........................................64
10.03 Covenants......................................................64
10.04 Default Under Other Agreements.................................64
10.05 Bankruptcy, etc. ..............................................65
10.06 ERISA..........................................................65
(iii)
<PAGE>
Page
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10.07 Security Documents.............................................66
10.08 Subsidiaries Guaranty..........................................66
10.09 Judgments......................................................66
10.10 Change of Control..............................................66
SECTION 11. Definitions and Accounting Terms...............................67
11.01 Defined Terms..................................................67
SECTION 12. The Administrative Agent and the Syndication Agent.............91
12.01 Appointment....................................................91
12.02 Nature of Duties...............................................92
12.03 Lack of Reliance on the Administrative Agent and the
Syndication Agent..............................................92
12.04 Certain Rights of the Agents...................................92
12.05 Reliance.......................................................93
12.06 Indemnification................................................93
12.07 The Administrative Agent and the Syndication Agent in
Their Individual Capacity......................................93
12.08 Holders........................................................94
12.09 Resignation by the Administrative Agent and the
Syndication Agent..............................................94
SECTION 13. Miscellaneous..................................................94
13.01 Payment of Expenses, etc. .....................................94
13.02 Right to Setoff................................................95
13.03 Notices........................................................96
13.04 Benefit of Agreement; Assignments; Participations..............96
13.05 No Waiver; Remedies Cumulative.................................98
13.06 Payments Pro Rata..............................................98
13.07 Calculations; Computations; Accounting Terms...................99
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE;
WAIVER OF JURY TRIAL...........................................99
13.09 Counterparts..................................................100
13.10 Effectiveness.................................................100
13.11 Headings Descriptive..........................................100
13.12 Amendment or Waiver, etc. ....................................100
13.13 Survival......................................................102
13.14 Domicile of Loans.............................................102
13.15 Register......................................................102
13.16 Confidentiality...............................................103
13.17 Limitation on Increased Costs.................................104
SCHEDULE I Commitments
SCHEDULE II Bank Addresses
SCHEDULE III Real Property
SCHEDULE IV Indebtedness to be Refinanced
(iv)
<PAGE>
Page
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SCHEDULE V Subsidiaries
SCHEDULE VI Existing Indebtedness
SCHEDULE VII Insurance
SCHEDULE VIII Existing Liens
SCHEDULE IX Existing Investments
EXHIBIT A Notice of Borrowing
EXHIBIT B-1 Form of A Term Note
EXHIBIT B-2 Form of B Term Note
EXHIBIT B-3 Form of Revolving Note
EXHIBIT B-4 Form of Swingline Note
EXHIBIT C Form of Credit Request
EXHIBIT D Section 4.04(b)(ii) Certificate
EXHIBIT E Opinion of Dickstein, Shapiro, Morin &
Oshinsky LLP, counsel to the Credit
Parties
EXHIBIT F Officers' Certificate
EXHIBIT G Form of Pledge Agreement
EXHIBIT H Form of Security Agreement
EXHIBIT I Form of Subsidiaries Agreement
EXHIBIT J Solvency Certificate
EXHIBIT K Assignment and Assumption Agreement
EXHIBIT L Intercompany Note
EXHIBIT M Notice of Account Designation
(v)
OFFERING BASIS LOAN AGREEMENT
This Offering Basis Loan Agreement ("Agreement") is entered into this
fourteenth day of January, 1999, by and between First Union National Bank
("Bank"), 301 S. College Street, TW-5, Charlotte, North Carolina 28288-0745, and
OmniQuip International, Inc., a Delaware corporation ("Borrower").
In consideration of the mutual agreements contained herein, Bank may,
in its sole and absolute discretion, make available to Borrower, loan funds, the
aggregate principal amount of which shall not exceed ten million dollars
($10,000,000.00) at any time (the "Line of Credit") upon the following terms and
conditions:
1. Method of Borrowing. Each advance under the Line of Credit (the
"Advance") shall be offered to the Borrower through its representative(s) by a
duly authorized representative of the Bank, at a specific interest rate for a
specific maturity. Requests for, offers of, and acceptance of Advances between
the Bank and the Borrower may be made in writing (including facsimile
transmission) or orally (including telephonic communication). All Advances shall
be in immediately available funds. The terms of an offered Advance shall be open
for acceptance by the Borrower for a period of five minutes immediately
following notification to the Borrower by the Bank of such offering; and the
offering shall be deemed withdrawn if not accepted within that time period. All
terms offered with respect to the Advances shall be determined by Bank in its
sole discretion.
Any Advance shall be conclusively presumed to have been made to, for
the benefit of, and at the request of the Borrower when: (1)(a) the Advance is
deposited or credited to an account of the Borrower with the Bank,
notwithstanding that such Advance was requested, orally or in writing, by
someone other than a representative of Borrower, and (b) any part of such
Advance is withdrawn from the account; or (2) the Advance is made in accordance
with oral or written instructions of a representative of the Borrower.
2. Interest Rate. Each Advance shall bear interest at an "Offering
Rate" which shall mean such interest rates and terms offered by the Bank and
accepted by the Borrower. The term for Advances at the Offering Rate (the
"Offering Interest Period") shall not exceed seven days. Interest on Advances at
an Offering Rate shall be payable upon the last day of the respective Offering
Interest Period, and at such other time or times as may be agreed to by the Bank
and the Borrower. Any accrued and unpaid interest shall be paid on the last
business day of each month. Interest shall be computed on the basis of a 360 day
year for the actual number of days in the interest period ("Actual/360
Computation"). Bank's Actual/360 computation determines the annual effective
interest yield by taking the stated (nominal) interest rate for a year's period
and then dividing said rate by 360 to determine the daily periodic rate to be
applied for each day in the interest period.
3. Recordation of Advances. Bank will maintain records of the date,
amount, maturity, payment schedule, and interest rate applicable to each
Advance, the date and amount of any payment of principal or interest, and the
principal balance then remaining unpaid. The Borrower hereby agrees that the
Advances so evidenced in such records shall, for all purposes, constitute prima
facie evidence thereof and shall be binding upon the Borrower.
4. Payment of Advances. Borrower promises to pay to the order of the
Bank at Bank's offices located at 301 S. College Street, DC-5, Charlotte, North
Carolina 28288-0745, or at such other place as the Bank may designate in
writing, the unpaid principal amount of each Advance made by the Bank to the
Borrower, and accrued interest, on the maturity date of each respective Advance
and on such other dates and terms as may be set forth in the Bank records. All
payments shall be made in immediately available lawful money of the United
States.
<PAGE>
5. Prepayments. An Advance may be prepaid in whole or in part at any
time; provided, however, that if the Advance is prepaid in whole or in part,
whether voluntary, mandatory, upon acceleration or otherwise, the prepayment
shall be accompanied by an additional amount deemed necessary by Bank to
compensate Bank for any losses, costs or expenses which Bank may incur as a
result of such prepayment, pursuant to the following formula:
Prepayment Compensation = (A - B) x C x D
The terms used in the preceding formula shall have the following meanings:
A = The sum, determined as of the funding date of the Advance, of (i) the
Bond equivalent bid side yield of the U.S. Treasury Bill with a
maturity closest to the maturity of the fixed rate period (defined
below) as quoted by the Wall Street Journal (or other published
source), plus (ii) the corresponding bid side market swap spread as
determined by Bank from quotes generally available in the interbank
dealer market for interest rate swaps, plus (iii) one-half percent
(1/2%).
B = The sum, determined as of the prepayment date of the Advance, of (i)
the Bond equivalent bid side yield of the U.S. Treasury Bill with a
maturity closest to the remaining maturity of the fixed rate period as
quoted by the Wall Street Journal (or other published source), plus
(ii) the corresponding bid side market swap spread as determined by
Bank from quotes generally available in the interbank dealer market for
interest rate swaps.
C = Principal Amount Prepaid.
D = Number of days from the date of prepayment to the end of the fixed
rate period divided by a year base of 360 days.
As used herein, "the fixed rate period" shall be the period during
which the applicable fixed rate of interest on the Advance is to be in effect.
In the event the amount determined as variable B above is greater than the
amount determined as variable A above, no prepayment compensation shall be due
hereunder. The determination of prepayment compensation due Bank hereunder shall
be made by Bank in good faith using such methodology as Bank deems appropriate
and customary under the circumstances and shall be conclusive absent manifest
error.
Any prepayment in whole or in part shall include accrued interest and
all other sums then due with respect to the Advance. No partial prepayment shall
affect the obligation of Borrower to make any payment of principal or interest
due with respect to the Advance until the Advance has been paid in full.
6. Conditions Precedent. The obligation of the Bank to disburse
Advances as offered and accepted pursuant to this Agreement is subject to the
following conditions precedent:
a. Non-Default. The Borrower shall be in compliance
with all of the terms and conditions set forth
herein and an Event of Default as specified
herein, or an event which upon notice or lapse of
time or both would constitute such an Event of
Default shall not have occurred or be continuing
at the time of such Advance.
b. Borrowing Resolution. Bank shall have received a
certified resolution authorizing borrowings by
Borrower under this Agreement.
2
<PAGE>
c. Additional Documents. Receipt of such additional
supporting documents as the Bank may request.
7. Termination of Agreement. Either party may terminate this Agreement
immediately upon written notice to the other, provided however, the terms of
this Agreement with respect to the obligations then outstanding of the Borrower
under this Agreement as of the date of termination shall survive until the
obligations are fully satisfied.
8. Events of Default. Notwithstanding the term of an Advance or
Advances as set forth herein, the Bank, at its sole option and without notice,
may accelerate the maturity of the Advances and all Advances shall be
immediately due and payable, including accrued interest thereon, upon the
occurrence of any of the following events ("Events of Default"):
a. If the Borrower shall fail to pay any amounts when
due or shall fail to observe or perform any
obligation or covenant, as required under this
Agreement, or any other document furnished in
connection herewith, or contained in any other
agreement between Bank and Borrower.
b. If any representation or warranty made by Borrower in
connection with this Agreement shall be determined by
the Bank to have been or become false or misleading
in any material respect.
c. If the Borrower shall default in the payment of
interest, principal, or fees on any obligation to any
other party for borrowed money in excess of
$1,000,000.00, or Borrower fails to perform or
observe any term contained in any agreement governing
such other obligation for borrowed money and the
effect of such failure is to allow the holders of
such obligation to accelerate payment.
d. Final judgment for the payment of money shall be
rendered against the Borrower in excess of
$2,000,000.00 and shall remain undischarged for a
period of 30 days, unless execution on such judgment
shall be effectively stayed.
e. If the Borrower shall (i) become, either voluntarily
or involuntarily, a debtor under the Bankruptcy Code,
(ii) becomes the object of insolvency proceedings, or
(iii) makes an assignment for the benefit of
creditors.
f. The expiration of five (5) days after the Bank has
given the Borrower notice of the Bank's good faith
determination that a material adverse change in the
financial condition of the Borrower has occurred
since the date hereof.
9. Acceleration Upon Default. Upon any Event of Default, Bank may, at
Bank's discretion and without notice, accelerate the maturity of all Advances
and all other obligations of Borrower to Bank, and all such Advances and other
obligations shall be immediately due and payable.
10. Right of Setoff. Borrower grants Bank a security interest in all of
Borrower's accounts with Bank. Upon the occurrence and during the continuance of
any Event of Default, the Bank is hereby authorized at any time to exercise its
right of setoff or banker's lien as to Borrower's demand, checking, time
savings, certificate of deposit or other accounts of any nature maintained with
Bank, without advance notice, against any
3
<PAGE>
and all of the obligations due under this Agreement, or any other agreement with
the Bank, irrespective of whether or not the Bank shall have made any demand
hereunder and although such obligations may be unmatured. The rights of the Bank
under this section are in addition to other rights and remedies which the Bank
may have. The Bank agrees to notify the Borrower promptly after it exercises any
such right of setoff.
11. Default Rate. In addition to all other rights contained in this
Agreement, upon the occurrence and during the continuance of an Event of
Default, all outstanding Advances shall bear interest at Prime plus three
percent (3%) ("Default Rate"). The Default Rate shall apply from the occurrence
of an Event of Default until the Advances or any judgment thereon is paid in
full.
12. Attorneys' Fees. Debtor shall pay all of Bank's reasonable expenses
incurred to enforce or collect any of the Advances, including, without
limitation, reasonable arbitration, attorneys' and experts' fees and expenses,
whether incurred without the commencement of a suit, in any trial, arbitration,
or administrative proceeding, or in any appellate or bankruptcy proceeding.
13. Posting of Payments. All payments received during normal banking
hours after 2:00 P.M. Eastern time shall be deemed received at the opening of
the next banking day. Payments received by Bank under this Agreement may be
applied in any manner or order deemed appropriate by Bank.
14. Usury. Anything contained herein to the contrary notwithstanding,
if for any reason the effective rate of interest on any Advance should exceed
the maximum lawful rate, the effective rate shall be deemed reduced to and shall
be such maximum lawful rate, and (i) the amount which would be excessive
interest shall be deemed applied to the reduction of the principal balance of
the Advance and not to the payment of interest, and (ii) if the Advance has been
or is thereby paid in full, the excess shall be returned to the party paying
same, such application to the principal balance of the Advance or the refunding
of the excess to be a complete settlement and acquittance thereof.
15. Waivers. Borrower hereby waives presentment, protest, notice of
dishonor, demand for payment, notice of intention to accelerate maturity, notice
of acceleration of maturity, notice of sale and all other notices of any kind
whatsoever. Any failure by the Bank to exercise any right hereunder shall not be
construed as a waiver of the right to exercise the same or any other right at
any time.
16. Amendment and Severability. No amendment to or modification of this
Agreement shall be binding upon the Bank unless in writing and signed by it. If
any provision of this Agreement shall be prohibited or invalid under applicable
law, such provision shall be ineffective but only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
17. Miscellaneous. This Agreement is fully assignable by Bank and all
rights of Bank thereunder shall inure to the benefit of its successors and
assigns. This Agreement shall be binding upon the Debtor and its successors and
assigns. The captions contained in this Agreement are inserted for convenience
only and shall not affect the meaning or interpretation of the Agreement. This
Agreement shall be governed by and interpreted in accordance with the laws of
North Carolina without regard to its conflict of laws principles.
18. Arbitration. Upon demand of any party hereto, whether made before
or after institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to this Agreement and any
other documents executed in connection herewith ("Disputes") shall be resolved
by binding arbitration as provided herein. Institution of a judicial proceeding
by a party does not waive the right of that party to demand arbitration
hereunder. Disputes may include, without limitation, tort claims, counterclaims,
disputes as to
4
<PAGE>
whether a matter is subject to arbitration, claims brought as class actions,
claims arising from loan documents executed in the future, or claims arising out
of or connected with the transaction reflected by this Agreement.
Arbitration shall be conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA") and Title 9 of the U.S. Code. All arbitration hearings
shall be conducted in the city in which the Bank is located as stated herein.
The expedited procedures set forth in Rule 51 et seq. of the Arbitration Rules
shall be applicable to claims of less than $1,000,000. All applicable statutes
of limitation shall apply to any Dispute. A judgment upon the award may be
entered in any court having jurisdiction. The panel from which all arbitrators
are selected shall be comprised of licensed attorneys. The single arbitrator
selected for expedited procedure shall be a retired judge from the highest court
of general jurisdiction, state or federal, of the state where the hearing will
be conducted or if such person is not available to serve, the single arbitrator
may be a licensed attorney. Notwithstanding the foregoing, this arbitration
provision does not apply to disputes under or related to swap agreements.
19. Preservation and Limitation of Remedies. Notwithstanding the
preceding binding arbitration provisions, Bank and Borrower agree to preserve,
without diminution, certain remedies that any party hereto may employ or
exercise freely, independently or in connection with an arbitration proceeding
or after an arbitration action is brought. Bank and Borrower shall have the
right to proceed in any court of proper jurisdiction or by self-help to exercise
or prosecute the following remedies, as applicable: (I) all rights to foreclose
against any real or personal property or other security by exercising a power of
sale granted under any loan documents or under applicable law or by judicial
foreclosure and sale, including a proceeding to confirm the sale; (ii) all
rights of self-help including peaceful occupation of real property and
collection of rents, set-off, and peaceful possession of personal property;
(iii) obtaining provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and filing an
involuntary bankruptcy proceeding; and (iv) when applicable, a judgment by
confession of judgment. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in a
Dispute.
Borrower and Bank agree that they shall not have a remedy of punitive or
exemplary damages against the other in any Dispute and hereby waive any right or
claim to punitive or exemplary damages they have now or which may arise in the
future in connection with any Dispute whether the Dispute is resolved by
arbitration or judicially.
In Witness Whereof, the parties hereto have duly executed this agreement as of
the date stated above.
Witness/Attest: OmniQuip International, Inc.
/s/ Allan J. Jablonsky By: /s/ P. Enoch Stiff
- ------------------------ ----------------------------------
Allan J. Jablonsky P. Enoch Stiff
President and Chief Executive Officer
First Union National Bank
By: /s/ George L. Woolsey
----------------------------------
George L. Woolsey
Vice President
5
SUBLEASE AGREEMENT
between
OAKES ENHANCEMENT, INC.,
AS SUBLESSOR
and
OMNIQUIP INTERNATIONAL, INC.,
AS SUBLESSEE
Dated as of February 1, 1999
The interest of Oakes Enhancement, Inc., as Sublessor, in this Sublease
Agreement with OmniQuip International, Inc., as Sublessee, has been assigned and
pledged to Norwest Bank Minnesota, National Association, as Trustee under the
Indenture of Trust, dated as of February 1, 1999, by and between the City of
Oakes, North Dakota, and said Trustee.
<PAGE>
TABLE OF CONTENTS
-----------------
(Not a part of the Sublease)
Page
----
ARTICLE 1
DEFINITIONS, EXHIBITS, AND RULES OF INTERPRETATION
Section 1.01. Definitions....................................... 1
Section 1.02. Exhibits.......................................... 4
Section 1.03. Rules of Interpretation........................... 5
ARTICLE 2
REPRESENTATIONS
Section 2.01. Representations by Sublessor...................... 5
Section 2.02. Representation by the Sublessee................... 6
Section 2.03. Trustee May Rely on Representations............... 7
ARTICLE 3
CONSTRUCTION, ACQUISITION AND
INSTALLATION OF THE PROJECT
Section 3.01. Construction, Acquisition and Installation
of Project by Sublessor.......................... 7
Section 3.02. Payment of Costs of the Project by Sublessee...... 7
Section 3.03. Disbursement from Construction Fund............... 7
Section 3.04. Enforcement of Contract and Surety Bonds.......... 8
Section 3.05. Plans and Specifications.......................... 8
Section 3.06. Change Orders and Draw Requests................... 9
Section 3.07. Abandonment....................................... 9
Section 3.08. Establishment of Completion Date.................. 10
ARTICLE 4
USE AND RENTALS
Section 4.01. Possession and Use................................ 11
Section 4.02. Basic Rent........................................ 11
Section 4.03. Sublessee's Obligations Unconditional............. 12
Section 4.04 Sublessee's Remedies.............................. 13
ARTICLE 5
MAINTENANCE, MODIFICATIONS, TAXES, AND INSURANCE
Section 5.01. Maintenance....................................... 13
Section 5.02. Modifications..................................... 13
Section 5.03. Removal of Subleased Equipment.................... 13
-i-
<PAGE>
Section 5.04. Taxes, Special Assessments and Other Governmental
Charges and Utility Charges...................... 14
Section 5.05. Facilities Insurance Requirements................. 14
Section 5.06. Public Liability Insurance........................ 14
Section 5.07. Business Interruption Insurance................... 15
Section 5.08. Additional Provisions Respecting Insurance........ 15
Section 5.09. Advances.......................................... 15
ARTICLE 6
DAMAGE, DESTRUCTION, AND CONDEMNATION
Section 6.01. Damage or Destruction............................. 15
Section 6.02. Condemnation...................................... 16
Section 6.03. Cooperation of Sublessor.......................... 16
ARTICLE 7
SUBLESSEE'S COVENANTS
Section 7.01. Covenants for Benefit of Trustee and Holder
of Bonds......................................... 17
Section 7.02. Inspection and Access............................. 17
Section 7.03. Indemnity......................................... 17
Section 7.04. Continuing Existence and Qualification............ 18
Section 7.05. Annual Financial Statement........................ 18
Section 7.06. Sublessee Bound by Indenture...................... 19
Section 7.07. Tax-exempt Status of Bonds........................ 19
Section 7.08. No Warranty of Condition or Suitability
by Sublessor..................................... 19
Section 7.09. Granting Easements................................ 20
Section 7.10. Operation of Facilities........................... 20
Section 7.11. Redemption of Bonds............................... 20
Section 7.12. To Observe Laws, Ordinances and Regulations....... 20
Section 7.13. Recording and Filing Fees......................... 20
Section 7.14. Sublessee's Assurance of Tax Exemption............ 21
Section 7.15. Hazardous Waste................................... 24
ARTICLE 8
SUBLESSEE'S OPTIONS
Section 8.01. Prepayment of Rents and Bonds..................... 25
Section 8.02. Option to Terminate............................... 25
Section 8.03. Sublessee's Property, Sublessor's Property........ 26
Section 8.04. Condition of Leased Facilities and Sublessor's
Property at Termination.......................... 26
Section 8.05. Option to Purchase Facilities Prior to
Payment of the Bonds............................. 26
Section 8.06. Option to Purchase Facilities..................... 27
Section 8.07. Conveyance on Exercise of Option to Purchase...... 28
Section 8.08. Relative Position of this Article and Indenture... 28
-ii-
<PAGE>
ARTICLE 9
EVENTS OF DEFAULT AND REMEDIES
Section 9.01. Events of Default................................. 28
Section 9.02. Sublessor's Remedies.............................. 29
Section 9.03. Manner of Exercise................................ 30
Section 9.04. Attorneys' Fees and Expenses...................... 30
Section 9.05. Effect of Waiver.................................. 30
Section 9.06. Trustee's Exercise of Sublessor's Remedies........ 31
ARTICLE 10
ASSIGNMENT, SUBLEASING AND SELLING
Section 10.01. Assignment and Subleasing by Sublessee............ 31
Section 10.02. Assignment by Sublessor........................... 31
Section 10.03. Restrictions on Transfer and Encumbrances
of Project by Sublessor.......................... 32
ARTICLE 11
GENERAL
Section 11.01. Notices........................................... 32
Section 11.02. Binding Effect ................................... 32
Section 11.03. Subordination..................................... 33
Section 11.04. Estoppel Certificate ............................. 33
Section 11.05. Severability...................................... 33
Section 11.06. Amendments, Changes and Modifications ............ 33
Section 11.07. Execution Counterparts............................ 33
SIGNATURES.............................................................. 34, 35
EXHIBIT A - SUBLEASED EQUIPMENT....................................... A-1
EXHIBIT B - REAL PROPERTY............................................. B-1
EXHIBIT C - CERTIFICATE OF REQUISITION................................ C-1
EXHIBIT D - PRIME LEASE .............................................. D-1
-iii-
<PAGE>
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT dated as of February 1, 1999, between Oakes
Enhancement, Inc., a North Dakota nonprofit corporation, authorized and
qualified to do business in North Dakota (the "Sublessor"), and OmniQuip
International, Inc., a Delaware corporation, authorized and qualified to do
business in North Dakota (the "Sublessee").
WHEREAS, Sublessor is the tenant of those certain Facilities (as
defined herein) pursuant to that certain lease dated November 1, 1998, entered
into by and between the City of Oakes, North Dakota (defined as the "City"
therein), and the Sublessor (referred to as the "Tenant" therein) (referred to
hereinafter as the "Prime Lease"); and
WHEREAS, Sublessor is desirous of subleasing the Facilities to
Sublessee and the Sublessee is desirous of subleasing the Facilities from
Sublessor;
NOW THEREFORE, Sublessor demises and subleases to the Sublessee and the
Sublessee subleases from Sublessor the Facilities herein described, for a term
commencing as of the date of this Sublease and extending until the Bonds
hereinafter referred to are fully paid, unless sooner terminated as herein
provided, without option of renewal except by mutual consent, and at the rentals
and upon the further terms and conditions set forth; and that Sublessor and the
Sublessee, each in consideration of the representations, covenants, and
agreements of the other as set forth herein, mutually represent, covenant, and
agree as follows:
ARTICLE 1
DEFINITIONS, EXHIBITS, AND RULES OF INTERPRETATION
SECTION 1.01. DEFINITIONS. In this Sublease, the terms defined in the
Indenture shall have the same meaning herein, and the following terms have the
following respective meanings unless the context hereof clearly requires
otherwise:
"Act" means the Municipal Industrial Development Act of 1955, Chapter
4057, North Dakota Century Code.
"Assignment" means the Assignment of Leases and Rents from the
Sublessee to the Trustee dated as of the date hereof, as the same may be amended
from time to time.
"Basic Rent" means the amounts to be paid by the Sublessee pursuant to
Section 4.02 hereof.
"Bond" or "Bonds" means the City of Oakes, North Dakota Industrial
Development Revenue Bonds (OminiQuip International, Inc. Project), Series 1998,
to be issued by the City pursuant to the Resolution, in the aggregate principal
amount of $4,515,000.
1
<PAGE>
"Bond Counsel" means an attorney or firm of attorneys at law of
nationally recognized standing in the field of law relating to exemption from
federal income taxation with respect to interest on municipal bonds.
"Bond Documents" means the Lease, the Indenture, the Mortgage, the
Assignment, this Sublease, and all ancillary documents thereto.
"Bond Fund" means the fund created by Section 5.1 of the Indenture.
"Bondholder(s)" or "Holder(s)" means the registered owner(s) of Bonds.
"City" means the City of Oakes, North Dakota, its successors and
assigns.
"Code" means the United States Internal Revenue Code of 1986, as
amended, and all applicable Treasury Regulations.
"Completion Date" means the date of completion of acquisition,
construction and equipping of the Project as that date shall be certified by the
Sublessee.
"Construction Fund" means the fund created by Section 5.2 of the
Indenture.
"Costs of Issuance" means all items of expense directly or indirectly
related to the authorization, sale and issuance of the Bonds and including, but
not limited to printing costs, costs of preparation and reproduction of
documents, filing fees, initial fees and charges of the Trustee, legal fees and
charges, fees and disbursements of consultants and professionals, costs of
credit ratings, fees and charges for preparation, execution, transportation and
safekeeping of the Bonds, all costs associated with obtaining title opinions and
title insurance, other costs incurred by the Sublessee in anticipation of the
issuance of the Bonds and any other cost, charge or fee in connection with the
issuance of the Bonds.
"Costs of the Facilities" means all costs paid to purchase the Existing
Facilities, and construct and install the Project, including, but not limited
to, capitalized interest, all costs of labor, material, equipment, fixtures and
services paid or incurred by the Sublessee, and Costs of Issuance.
"Counsel" means an attorney or a firm of attorneys at law (who may be
counsel to or of the Sublessee or City) satisfactory to the Trustee.
"Event of Default" means any of the events described as such in Section
9.01 hereof.
"Existing Facilities" means the Land, warehouse, manufacturing
facilities and related property and equipment adjacent to the Project.
"Facilities" means the Project and the Existing Facilities.
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"Fiscal Year" means the oneyear period ending September 30 of each year
or any other period which constitutes the Sublessee's fiscal year from time to
time.
"Governmental Obligations" means direct general obligations of, or
obligations the payment of the principal of and interest on which are
unconditionally guaranteed by, the United States of America.
"Indenture" means the Indenture of Trust between the City and Trustee,
of even date herewith, as the same may be amended or supplemented in accordance
with its terms.
"Interest Payment Date" means the dates required under the Indenture
for payment of interest on the Bonds, i.e., February 1 and August 1 of each
year, until the Bonds are paid (or provisions made therefor) in accordance with
the Indenture, the first Interest Payment Date being August 1, 1999.
"Land" means the real estate described in Exhibit B attached hereto.
"Mandatory Redemption" means any mandatory redemption of the Bonds
pursuant to Section 2.9 of the Indenture.
"Mortgage" means the Mortgage, Security Agreement and Fixture Financing
Statement from the City and the Sublessor to the Trustee of even date herewith,
as the same may be amended or supplemented.
"Net Proceeds" means, with respect to any insurance payment or
condemnation award, the amount remaining therefrom after payment of all expenses
(including attorneys' fees and any extraordinary fee or expense of the Trustee)
incurred in the collection thereof.
"Original Purchaser" means, with respect to the Bonds, John G. Kinnard
and Company, Incorporated, Minneapolis, Minnesota.
"Plans" means the plans and specifications for the construction and
equipping of the Project.
"Prime Lease" means the Lease Agreement dated of even date herewith by
and between the City, as Lessor, and the Sublessor, as Tenant, as supplemented
and amended.
"Principal Payment Date" means the dates required under the Indenture
for the payment of principal on the Bonds, i.e., February 1 of each year until
the Bonds are paid in full (or provisions made therefore) in accordance with the
Indenture.
"Private Activity Bonds" means bonds within the meaning of Section 141
of the Code.
"Project" means the construction and equipping of an addition to the
Existing Facilities in accordance with the Plans.
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"Purchase Option" means the option to purchase the Facilities granted
to the Sublessee pursuant to Sections 8.05 and 8.06.
"Reserve Fund" means the fund created by Section 5.3 of the Indenture.
"Reserve Requirement" means an amount equal to $451,500.
"Resolution" means the Resolution of the City, adopted February 16,
1998, authorizing the issuance of the Bonds.
"Subleased Equipment" means those items of equipment or other personal
property described in Exhibit A attached hereto, and in general all items which
are acquired or refinanced in whole or in part with proceeds from the sale of
the Bonds, and any items of equipment or other personal property acquired and
installed in substitution therefor or replacement thereof. Subleased Equipment
shall not include any trade fixtures or equipment now owned or hereafter
acquired by the Sublessee or any equipment or trade fixtures acquired or leased
in substitution, replacement or exchange therefor.
"Sublease" means this Sublease, as the same may be amended or
supplemented in accordance with its terms or any other sublease entered into by
the Sublessee with respect to the Facilities.
"Sublessee" means OmniQuip International, Inc., a Delaware corporation,
its successors and assigns.
"Sublessor" means Oakes Enhancement, Inc., a North Dakota nonprofit
corporation, authorized to do business in North Dakota, its permitted successors
and assigns and any surviving, resulting or transferee entity which may assume
its obligations in accordance with the provisions of the Prime Lease.
"Sublessor Representative" means the person or persons designated in
the Prime Lease to act on behalf of the Sublessor by a written certificate
furnished to the Trustee containing a specimen signature of such person or
persons.
"Sublessee Representative" means the person or persons designated to
act on behalf of the Sublessee by a written certificate furnished to the Trustee
containing a specimen signature of such person or persons.
"Subordination Agreement" means the Subordination and Attornment
Agreement to be entered into of even date herewith whereby the Sublessor and the
Sublessee will subordinate their interests in the Prime Lease and Sublease to
the Mortgage.
"Title" means Chicago Title Insurance Company.
"Trustee" means Norwest Bank Minnesota, National Association, or any
successor trustee at the time serving as such under the Indenture.
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SECTION 1.02. EXHIBITS. The following Exhibits are attached to and by
reference made a part of this Sublease:
(a) Exhibit A: a list of the items of Subleased Equipment.
(b) Exhibit B: a legal description of the Land.
(c) Exhibit C: a form of certificate of requisition to the
Trustee for disbursement of Bond proceeds as required by Section 3.03.
(d) Exhibit D: the Prime Lease between the City and the
Sublessor.
SECTION 1.03. RULES OF INTERPRETATION.
(a) This Sublease shall be interpreted in accordance with and
governed by the laws of the State of North Dakota;
(b) The words "herein" and "hereof" and words of similar
import, without reference to any particular section or subdivision,
refer to this Sublease as a whole rather than to any particular section
or subsection hereof;
(c) Reference herein to any particular section or subdivision
hereof are to the section or subdivision of this instrument as
originally executed; and
(d) The rules of interpretation set forth in Section 1.3 of
the Indenture shall apply with the same force and effect in this
Sublease as if fully set forth herein.
ARTICLE 2
REPRESENTATIONS
SECTION 2.01. REPRESENTATIONS BY SUBLESSOR. Sublessor makes the
following representations as the basis for its covenants herein:
(a) the Sublessor is a North Dakota nonprofit corporation, is
authorized and qualified to do business in the State of North Dakota,
has authority to enter into this Sublease and has duly authorized the
execution and delivery of this Sublease;
(b) the execution and delivery of this Sublease and the
consummation of the transactions contemplated hereby, and the
fulfillment of the terms and conditions hereof, do not and will not
conflict with or result in a breach of any restriction of any agreement
or instrument to which the Sublessor is now a party and do not and will
not constitute a default under any of the foregoing, or result in the
creation or imposition of any lien,
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charge or encumbrance of any nature upon any of the property or assets
of the Sublessor contrary to the terms of any instrument or agreement;
and
(c) there is no litigation pending nor threatened questioning
the right of the Sublessor to acquire, construct, operate or maintain
the Facilities, questioning the validity of the Facilities, the Bonds,
or the pledging of security for the payment of the Bonds.
SECTION 2.02. REPRESENTATIONS BY THE SUBLESSEE. The Sublessee makes the
following representations as the basis for its covenants herein:
(a) the Sublessee is a Delaware corporation, is authorized and
qualified to do business in the State of North Dakota, has authority to
enter into this Sublease and has duly authorized the execution and
delivery of this Sublease;
(b) the execution and delivery of this Sublease and the
consummation of the transactions contemplated hereby, and the
fulfillment of the terms and conditions hereof, do not conflict with or
result in a breach of any restriction of any agreement or instrument to
which the Sublessee is now a party and do not constitute a default
under any of the foregoing, or result in the creation or imposition of
any lien, charge or encumbrance of any nature upon any of the property
or assets of the Sublessee contrary to the terms of any instrument or
agreement;
(c) the financing of the Facilities by Sublessor has been and
is a significant inducement to the Sublessee to lease the Facilities;
(d) the proceeds of the Bonds together with funds provided by
the Sublessee are estimated to be sufficient to acquire the Existing
Facilities, pay the costs of the Project, fund the Reserve Fund, and
pay the Costs of Issuance;
(e) the Sublessee does not rely on any warranty of Sublessor,
either express or implied, that the Facilities will be suitable to the
Sublessee's needs, and recognizes that under the Act Sublessor is not
authorized, except as lessor, to operate the Facilities or to expend
any funds thereon other than the revenues received by it therefrom or
the proceeds of the Bonds, or other funds granted to it for purposes
contemplated in the Act;
(f) neither the Sublessee nor any "related person" within the
meaning of Sections 144(a)(3) and 147(a) of the Code is or has been a
principal user of facilities other than the Facilities within the City,
acquired, in whole or in part, from proceeds of obligations of a
political subdivision;
(g) at least 95% of the net proceeds of the Bonds will be used
to acquire property of a character subject to the allowance for
depreciation, under current provisions of the Code;
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(h) the Sublessee currently intends to operate the Facilities
as a manufacturing facility until the date on which all of the Bonds
have been fully paid and are no longer Outstanding;
(i) the Sublessee will take no action which will impair the
tax exempt status of the Bonds;
(j) to the Sublessee's knowledge, the Facilities, as designed,
comply with all applicable building and zoning laws and ordinances, and
other applicable governmental regulations; and
(k) there is no litigation pending nor, to the Sublessee's
knowledge, threatened questioning the right of the Sublessee to lease,
operate or maintain the Facilities, questioning the validity of the
Bonds, or the pledging of security for the payment of the Bonds.
SECTION 2.03. TRUSTEE MAY RELY ON REPRESENTATIONS. Sublessor and the
Sublessee agree that the representations contained in this Article 2 are for the
use and benefit of the Trustee and Bondholders and the Trustee and Bondholders
shall be entitled to rely thereon.
ARTICLE 3
CONSTRUCTION, ACQUISITION AND
INSTALLATION OF THE PROJECT
SECTION 3.01. CONSTRUCTION, ACQUISITION AND INSTALLATION OF PROJECT BY
SUBLESSEE. The terms of the Prime Lease shall govern this provision, and
Sublessee, to the extent applicable, shall be subject to said terms. The
Sublessee hereby acknowledges and agrees that it will cooperate with the
Sublessor to (a) cause the Project to be constructed and equipped in accordance
with the Plans; (b) cause the insurance to be maintained during the construction
period in accordance with the provisions of Article 5 hereof; and (c) complete
construction and equipping of the Project by December 31, 1999.
SECTION 3.02. PAYMENT OF COSTS OF THE PROJECT BY SUBLESSEE. The
Sublessee agrees that it will provide promptly any and all sums of money
required to complete the acquisition, construction and equipping of the Project
to the extent not paid from the proceeds of the Bonds. Sublessee agrees to pay
from its own funds all Costs of Issuance in excess of 2.00% of the Bond
proceeds. Sublessee acknowledges that it shall be the responsible party for all
cost overruns associated with construction of the Project.
SECTION 3.03. DISBURSEMENT FROM CONSTRUCTION FUND. The City has
contracted for the sale of the Bonds and both the Sublessor and the Sublessee
have approved the terms of the sale of the Bonds. Forthwith upon the execution
of the Prime Lease and this Sublease, the City will execute the Bonds and cause
them to be delivered to the Original Purchaser. The proceeds of the Bonds
deposited in the Construction Fund will be disbursed by the Trustee upon receipt
of
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a certificate (substantially in the form of Exhibit C to the Prime Lease)
signed by a Sublessor Representative and a Sublessee Representative.
SECTION 3.04. ENFORCEMENT OF CONTRACT AND SURETY BONDS. In the event of
material default of any contractor or subcontractor under any contract made in
connection with the Project, or in the event of a material breach of warranty
with respect to any materials, workmanship or performance, the Sublessee will
cooperate with the Sublessor and the City and will diligently pursue, either
separately or in conjunction with others, such remedies of the Sublessee and
Sublessor as it deems reasonable against the contractor or subcontractor in
default and against any surety on a bond securing the performance of such
contract. If the Sublessee agrees to indemnify Sublessor and save it harmless
against any risks, claims or liabilities arising out of such action, the
Sublessee may, in the name of Sublessor or in its own name, prosecute or defend
any action or proceeding or take any other action involving any such contractor,
subcontractor or surety which the Sublessee on the advice of Counsel deems
reasonably necessary, and in such event Sublessor will cooperate fully with the
Sublessee and will take all action necessary to effect the substitution of the
Sublessee for Sublessor in any such action or proceeding. Any amounts recovered
by way of damages, refunds, adjustments or otherwise in connection with the
foregoing, after deduction of expenses incurred in such recovery, shall be paid
to the Trustee and, if prior to the Completion Date, deposited in the
Construction Fund, and otherwise in the Bond Fund.
SECTION 3.05. PLANS AND SPECIFICATIONS. The Sublessor and the Sublessee
have approved the Plans. The Sublessee may make any changes in or modifications
of the Plans as initially approved by the Sublessee and Sublessor, and may make
any deletions from or substitutions or additions to the Project, with the
written consent of the Sublessor and without the prior consent of the Trustee,
so long as such changes or modifications in the Plans, or deletions from or
substitutions or additions to the Project, do not, in the opinion of a Sublessor
Representative and a Sublessee Representative as noted on each change order,
materially and adversely alter the size, scope or cost of the Project,
materially impair the structural integrity or utility of the structures, or
materially impair the usefulness or character of the Project. No changes or
modifications in the Plans and no deletions from or substitutions or additions
to the Project may be made without prior approval of a contractor's sureties if
required by the terms of any indemnity bond. No change or modification, or
substitution, deletion or addition, shall be made if it would violate any
license, permit, or approval given by the City or the State with respect to the
Project or if it would disqualify the Project as a facility allowed to be
financed under the Act or the Code. Nothing herein shall be construed to prevent
the execution of a change order when required by any governmental order or
regulation.
SECTION 3.06. CHANGE ORDERS AND DRAW REQUESTS. The Sublessor and the
Sublessee hereby agree that all change orders associated with the construction
of the Project may be initiated by either the Sublessor or the Sublessee but no
change order shall be deemed approved until approved in writing by both the
Sublessor and Sublessee. Sublessor shall not unreasonably withhold or delay
approval of change orders initiated by Sublessee.
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Sublessor and Sublessee hereby agree that before any draw requests are
submitted for disbursement under the terms of the Disbursement Agreement, both
the Sublessor and Sublessee shall have approved each draw request in writing.
SECTION 3.07. ABANDONMENT. The Sublessee acknowledges and agrees that
if the Sublessor at any time prior to the completion of the Project abandons the
same or ceases work thereon and fails to resume work thereon within sixty (60)
days after written notice from the Trustee to both the Sublessor and the
Sublessee requesting that work on the Project be resumed (which sixty (60) day
period shall be tolled during the continuance of force majeure), or fails to
complete the Project in accordance with the Plans, or makes changes in the Plans
in violation of the requirements of Section 3.05 of the Prime Lease, the Trustee
may declare such failure to be an Event of Default, and, in addition to the
other remedies provided in this Prime Lease, it may enter into and take
possession of the Project and perform any and all work and labor necessary to
complete the Project substantially according to the Plans. The Sublessee hereby
grants the Trustee a right of entry for the foregoing purpose. For this purpose,
the Sublessee hereby constitutes and appoints the Trustee its true and lawful
attorneyinfact, with full power of substitution in the premises, to (but only
upon the occurrence and during the continuance of an Event of Default):
(a) complete the Project;
(b) to use any funds of the Sublessee, including any balance
which may be held in escrow, and any funds in the Construction Fund
which may remain unadvanced hereunder, for the purpose of completing
the Project in the manner called for by the Plans;
(c) to make such additions, changes, and corrections in the
Plans as shall be necessary or desirable to complete the Project in
substantially the manner contemplated by the Plans;
(d) to employ such contractors, subcontractors, agents,
architects, and inspectors as shall be required for such purposes;
(e) to pay, settle, or compromise all existing bills and
claims which may be liens against the Land, or as may be necessary or
desirable for the completion of the Project or clearance of title;
(f) to execute all applications and certificates in the name
of the Sublessee;
(g) to prosecute and defend in the name of the Sublessee all
actions or proceedings in connection with the Land or the construction
of the Project; and
(h) to do any and every act which the Sublessee might do in
its own behalf in connection with the Land and completion of the
Project.
It is further understood and agreed that this power of attorney, which
constitutes a power coupled with an interest, cannot be revoked. The rights and
powers granted to the Trustee
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pursuant to this Section 3.07 shall in no way alter or affect the rights of the
Trustee set forth in Section 3.06 and Article 9 of the Prime Lease or in Article
9 of this Sublease upon a default by the Sublessee under the terms hereof or by
the Sublessor under the terms of the Prime Lease.
SECTION 3.08. ESTABLISHMENT OF COMPLETION DATE. The Completion Date
shall be evidenced to the Trustee by a Certificate of Completion signed by both
a Sublessor Representative and a Sublessee Representative, as required by the
Prime Lease, and accepted by the Trustee stating that, except for amounts
retained by the Trustee at the direction of the Sublessor for any Costs of the
Project not then due and payable or the liability for which is being contested
in good faith by either the Sublessor or the Sublessee:
(a) construction of the Project has been completed in
accordance with the Plans, and all labor, services, materials and
supplies used in such construction have been paid for;
(b) all other facilities necessary in connection with the
Project have been constructed, acquired and installed in accordance
with the Plans and all costs and expenses incurred in connection
therewith have been paid; and
(c) Sublessee has conducted a final inspection of the Project
and approves and accepts the Project and the Facilities.
Notwithstanding the foregoing, the Certificate of Completion may state that it
is given without prejudice to any rights against third parties which exist at
the date of such certificate or which may subsequently come into being. The
Sublessee hereby agrees with the Sublessor to cooperate in causing such
Certificate of Completion to be furnished to the Trustee as promptly as
practicable after the occurrence of the events and conditions referred to in
clauses (a) and (b) of the first sentence of this Section 3.08. Moneys remaining
in the Construction Fund on the Completion Date, except for any moneys which
both the Sublessor and the Sublessee directs the Trustee in writing to retain
therein for the payment of any Costs of the Project not then due and payable or
the liability for which is being contested in good faith by either the Sublessor
or the Sublessee shall be transferred as set forth in the Indenture.
ARTICLE 4
USE AND RENTALS
SECTION 4.01. POSSESSION AND USE. Sublessor delivers to the Sublessee
sole and exclusive possession of the Facilities, subject to the rights of
Sublessor under Article 9 hereof and subject to the rights of the City and the
Trustee under the terms of the Prime Lease and the Bond Documents, and covenants
and agrees that the Sublessee shall have quiet and peaceable possession and
enjoyment of the Facilities during the term of this Sublease. Its right of
possession shall continue until the Sublease term expires or is terminated as
provided herein. The Sublessee shall have the right to use the Facilities
throughout the term of this Sublease provided that all uses shall conform to the
policies and purposes of the Act.
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SECTION 4.02. BASIC RENT. During the term of this Sublease, the
Sublessee will pay to the Trustee as Basic Rent a sum sufficient to pay when due
(i) principal (whether at maturity, or by redemption or acceleration as provided
in the Indenture, by declaration or otherwise), premium, if any, and interest on
the Bonds, (ii) the Trustee's fees and expenses, (iii) the amounts necessary to
replenish the Reserve Fund pursuant to the Indenture, (iv) the cost of obtaining
the rebate calculation pursuant to the Indenture and any amounts payable to the
United States government as a result thereof, and (v) payments in lieu of taxes
required to be paid by the Corporation pursuant to the Application for Property
Tax Incentives for New or Expanding Businesses dated October 2, 1998 (the "Pilot
Payment"), as follows:
(a) On or before the twenty-fifth day of each month during the
term of this Sublease, commencing March 25, 1999 and ending January 25,
2014, Sublessee shall pay to the Trustee the sum of Thirty-Eight
Thousand and No/100 Dollars ($38,000.00).
(b) If on any Interest Payment Date, Principal Payment Date or
any other date the balance in the Bond Fund is insufficient to make the
required payments of principal, premium, if any, and interest on the
Bonds, or if the balance in the _________ Fund is insufficient to pay
the Trustee Fees then due or the Pilot Payment then due, the Sublessee
shall pay immediately upon demand by the Trustee any such deficiency to
the Trustee. Any moneys on deposit in the Bond Fund on any Interest
Payment Date in excess of the amount required for payment of principal
and premium, if any, and interest on the Bonds on such Interest Payment
Date shall be credited to the Sublessee's next payment then due under
Section 4.02 and 4.03 hereof.
(c) The Sublessee shall pay and such amounts, if any, as may
become payable under Section 148(f) of the Code as rebatable arbitrage
with respect to the Bonds.
(d) In the event of a transfer by the Trustee of funds from
the Reserve Fund to the Bond Fund, pursuant to Section 6.4 of the
Indenture, due to a failure by the Sublessee to pay Basic Rent in the
amounts or at the times required under Section 4.02(a) above, the
Sublessee shall restore the Reserve Fund to its Reserve Requirement by
making additional Basic Rent payments in twelve equal monthly
installments, without interest, in or before the first Business Day of
each month commencing on the second month next succeeding the month on
which the funds are transferred from the Reserve Fund to the Bond Fund
pursuant to Section 6.4 of the Indenture. If, for any other reason, the
balance in the Reserve Fund is less that the Reserve Requirement, the
Sublessee shall, within twenty (20) days after its receipt of written
notice of such shortfall, pay to the Trustee Basic Rent in an amount
sufficient to restore the Reserve Fund to its Reserve Requirement.
The Sublessee may, pursuant to Section 8.01 hereof, prepay all or part
of the Basic Rent required under this Section 4.02. Such Basic Rent prepayments
shall not in any way alter or suspend any obligations of the Sublessee under
this Sublease except to the extent the same result in a credit against Basic
Rent as provided in this Section 4.02 or the payment and retirement of Bonds in
accordance with the Indenture.
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All Basic Rent payments shall be made directly to the Trustee at its
principal office, for the account of the City for deposit in the Bond Fund or
other appropriate Fund as provided in the Indenture. The Sublessee acknowledges
that the City and the Sublessor shall be under no obligation to operate,
maintain, replace, or improve the Facilities or pay the cost thereof, but shall
be entitled to receive the Basic Rent hereunder on an absolute net basis, and
such Basic Rent shall not be subject to abatement before retirement of the Bonds
except as contemplated in Article 8 hereof.
Overdue installments of Basic Rent shall bear interest at the rate then
borne by the Bonds, payable to the Trustee for the account of the City.
SECTION 4.03. SUBLESSEE'S OBLIGATIONS UNCONDITIONAL. All Basic Rent
payments and all other payments required of the Sublessee hereunder, shall be
paid without notice or demand and without set off, counterclaim, abatement,
deduction, or defense. The Sublessee will not suspend or discontinue any rent
payments, and will perform and observe all of its other agreements in this
Sublease, and, shall have no power to terminate the Sublease for any cause,
including, but not limited to, any acts or circumstances that may constitute
failure of consideration, destruction of or damage to the Facilities, eviction
by paramount title, commercial frustration of purpose, bankruptcy or insolvency
of Sublessor or the Trustee, change in the tax or other laws or administrative
rulings or actions of the United States of America or of the State of North
Dakota or any political subdivision thereof, or failure of Sublessor to perform
and observe any agreement, whether express or implied, or any duty, liability,
or obligation arising out of or connected with this Sublease. Further,
regardless of whether the Project has been completed as required by this
Sublease and the construction contracts entered into for construction of the
Project, Sublessor shall pay all Basic Rent due hereunder.
SECTION 4.04. SUBLESSEE'S REMEDIES. Nothing contained in this Article 4
shall be construed to release Sublessor from the performance of any of its
agreements in this Sublease, and if Sublessor should fail to perform any such
agreement, the Sublessee may institute such action against Sublessor as the
Sublessee may deem necessary so long as such action shall not violate the
Sublessee's agreements in Section 4.03. The Sublessee may, at its own cost and
expense and in its own name, prosecute or defend any action or proceeding
against third parties or take any other action which the Sublessee deems
reasonably necessary in order to insure the acquisition, construction, and
installation of the Facilities and to secure or protect its right of possession
and use thereof under this Sublease. In such event, Sublessor agrees to
cooperate fully and to cause the City to cooperate fully with the Sublessee and
to take all action necessary to effect the substitution of the Sublessee for
Sublessor and the City, as applicable, in any such action or proceeding if the
Sublessee shall so request and agree to any and all costs and expenses and agree
to indemnify the City and the Sublessor and save them harmless against any
risks, claims, or liabilities arising out of such action, except to the extent
that such costs and expenses arise out of the negligence, willful misconduct,
bad faith or breach by the City or the Sublessor of their respective obligations
under the Prime Lease or the Sublease.
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ARTICLE 5
MAINTENANCE, MODIFICATIONS, TAXES, AND INSURANCE
SECTION 5.01. MAINTENANCE. During the term of this Sublease the
Sublessee will at its own expense keep the Facilities in good repair and good
operating condition, reasonable wear and tear excepted, and in as safe condition
as its operations will reasonably permit, making all repairs thereto and
renewals and replacements thereof which may be necessary for this purpose, so
that the Facilities will remain suitable and efficient for use in the operation
of the Sublessee's business.
SECTION 5.02. MODIFICATIONS. The Sublessee may, from time to time at
its own expense, make any additions, modifications, or improvements to the
Facilities that it may deem desirable for its business purposes; provided that
such additions, modifications, improvements, or replacements do not materially
alter the scope, character or operation of the Facilities or impair the
exemption of interest on the Bonds from Federal income taxation. The cost of
such additions, modifications, or improvements shall be paid by the Sublessee
and the same shall become a part of the Facilities and be included under the
terms of this Sublease.
SECTION 5.03. REMOVAL OF SUBLEASED EQUIPMENT. So long as it is not in
default hereunder, the Sublessee may, without the consent of the City, the
Sublessor or the Trustee, remove, alter or modify any item of Subleased
Equipment, if (i) it is promptly replaced with equipment of equal or greater
value or (ii) the Sublessee certifies that the equipment is obsolete, no longer
functional because of wear and tear, or no longer required for the continued
operation of the Facilities. Any damage resulting to the Facilities therefrom
shall be repaired and the Facilities restored to its previous condition at the
sole expense of the party effecting such removal or at the sole expense of the
Sublessee. Such replacement equipment shall become part of the Facilities and
shall be subject to the lien of the Indenture. Except as provided for above, the
Sublessee will not remove or permit the removal of any items of Subleased
Equipment without the written consent of the Trustee.
SECTION 5.04. TAXES, SPECIAL ASSESSMENTS AND OTHER GOVERNMENTAL CHARGES
AND UTILITY CHARGES. The Sublessee will pay during the term of the Sublease, as
the same respectively become due, all taxes, special assessments and
governmental charges and utility charges of any kind whatsoever that may at any
time be lawfully assessed or levied against or with respect to the Facilities or
other property acquired by the Sublessee in substitution for, as a renewal or
replacement of, or a modification, improvement, or addition to, the Facilities
or Subleased Equipment and other charges incurred in the operation, maintenance,
use, and upkeep of the Facilities.
The Sublessee may, at its expense and in its own name, in good faith
contest any such taxes, assessments, and other charges and, in the event of any
such contest, may permit the taxes, assessments, or other charges so contested
to remain unpaid during the period of such contests and any appeal therefrom
unless the Trustee shall notify the Sublessee that, in the opinion of Counsel,
by nonpayment of any such items the Facilities or any essential part thereof
will be
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subject to loss or forfeiture, in which event such taxes, assessments or charges
shall be paid forthwith.
SECTION 5.05. FACILITIES INSURANCE REQUIREMENTS. The Sublessee agrees
to: (a) insure or cause to be insured the Facilities against fire, vandalism,
malicious mischief and other perils covered under the usual extended coverage
endorsement in an amount equal to the full insurable value thereof by means of
policies issued by reputable insurance companies duly qualified to do such
business in the State of North Dakota; (b) insure or cause to be insured the
Project with builder's risk insurance liability and workers' compensation during
the construction period; and (c) insure the real estate title of the Facilities
for an amount not less than the principal amount of the Bonds. As an
alternative, the Sublessee may insure the Facilities under a blanket policy or
policies which cover not only the Facilities but other properties including the
Facilities. All policies evidencing insurance required in this Section 5.05
shall be such as are acceptable to the Trustee, shall be carried in the names of
the Sublessee, the Sublessor, the City and Trustee as their respective interests
may appear and shall contain loss-payable clauses providing that all Net
Proceeds of insurance resulting from claims for loss or damage covered thereby
shall be paid to the Trustee and applied as provided in Section 6.01 hereof.
SECTION 5.06. PUBLIC LIABILITY INSURANCE. The Sublessee agrees that it
will carry or cause to be carried public liability insurance with respect to its
activities on the Land with one or more reputable insurance companies in amounts
not less than $1,000,000 for each occurrence and $2,000,000 aggregate. The
Trustee shall be made an additional insured under such policies. The insurance
provided by this Section 5.06 may be by blanket insurance policy or policies.
The Net Proceeds of the insurance required in this Section 5.06 shall be applied
toward extinguishment or satisfaction of the liability with respect to which
such insurance proceeds may be paid.
SECTION 5.07. BUSINESS INTERRUPTION INSURANCE. The Sublessee agrees
that it will carry or cause to be carried business interruption insurance with
respect to the Facilities in amounts not less than $21,000,000 with a reputable
insurance company. The Net Proceeds of the insurance required in this Section
5.07 shall be applied toward the Sublessee's Basic Rent payment and other
obligations under this Sublease.
SECTION 5.08. ADDITIONAL PROVISIONS RESPECTING INSURANCE. Each
insurance policy provided for in Sections 5.05, 5.06 and 5.07 hereof shall
contain a provision to the effect that the insurance company shall not cancel,
terminate, modify or amend the policy without first giving written notice
thereof to the Trustee at least ten days in advance of such cancellation or
modification. All insurance policies issued pursuant to Section 5.05, 5.06 and
5.07 or certificates evidencing such policies, shall be deposited with the
Trustee. Such policies may provide for reasonable deductible amounts but may not
provide for coinsurance.
SECTION 5.09. WAIVER OF SUBROGATION. Sublessee waives its right of
subrogation for damage to property in the Facilities, loss of use thereof,
and/or loss of income, up to the amount of insurance proceeds collected.
Sublessee shall notify its insurance carrier, in writing, of this provision and
if Sublessee cannot waive its subrogation rights, Sublessee shall notify
Sublessor immediately of that fact, in writing.
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SECTION 5.10. ADVANCES. If the Sublessee shall fail to make all
repairs, pay all liens, taxes, assessments and other charges and maintain all
insurance required in this Article 5, the Trustee may, but shall not be
obligated to, take such action as may be necessary to cure such failure,
including advancement of money, and the Sublessee shall be obligated to repay
all such advances on demand, with interest at the rate provided for in the
Indenture, from the date of each such advance.
ARTICLE 6
DAMAGE, DESTRUCTION, AND CONDEMNATION
SECTION 6.01. DAMAGE OR DESTRUCTION. In the event the Facilities or any
portion thereof is damaged or destroyed by fire or other casualty and the damage
or destruction is estimated to equal or exceed $100,000, then the Sublessee
shall within 90 days after such damage or destruction elect one of the following
two options by written notice of such election to both the Sublessor and the
Trustee, as required on the terms of the Prime Lease:
(a) Option A - Repair and Restoration. The Sublessee may elect
to repair, reconstruct and restore the damaged Facilities. In the event
the Sublessee shall elect this Option A, all Net Proceeds of insurance
shall be paid directly to the Trustee for deposit in the Repair and
Replacement Fund and applied to pay the costs of the repair,
reconstruction and restoration of the Facilities, as determined by the
Sublessee to be necessary or desirable. If the Net Proceeds of
insurance received by the Trustee for such purposes are not sufficient
to pay for the same, the Sublessee will deposit with the Trustee that
portion of the costs in excess of the amount of Net Proceeds. Any
balance of Net Proceeds remaining after paying the costs of repair,
reconstruction or restoration shall be transferred to the Bond Fund.
Such damage or destruction shall not serve to abrogate or abridge any
of the Sublessee's obligations hereunder, including its obligation to
make payments of Basic Rent and Additional Rent.
(b) Option B - Redemption of the Bonds. The Sublessee may
elect to cause the Bonds to be redeemed, in which event the Bonds shall
be redeemed in whole or in part on the next Interest Payment Date
occurring at least 45 days after the date of the notice given as to
exercise of this Option B. In such event, the Net Proceeds shall be
deposited in the Bond Fund and the Bonds shall be redeemed at a
redemption price equal to par, plus accrued interest, and the
redemption of the Bonds shall be effected pursuant to the provisions
of, in the manner, and with the effect provided in the Indenture.
SECTION 6.02. CONDEMNATION. If any material part of the Facilities or
any portion thereof is condemned or taken or conveyed under the threat of
eminent domain for any public or quasi-public use and title thereto vests in the
party condemning or taking the same, or such use or control thereof is taken by
eminent domain to such extent as to render the same unsatisfactory to the
Sublessee for continued operation, as determined by the Trustee, the Sublessee
shall, within 90 days after the date on which the Net Proceeds are finally
determined, elect one of the two following options by written notice of such
election to both the Sublessor and to the Trustee:
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(a) Option A - Repairs and Improvements. The Sublessee may
elect to make any necessary or desirable additions, repairs or
improvements to the Facilities, as determined by the Sublessee. In such
event, all Net Proceeds of such condemnation award shall be paid
directly to the Trustee for deposit in the Repair and Replacement Fund
and applied to pay the costs of such additions, repairs and
improvements as determined by the Sublessee to be necessary or
desirable. If the Net Proceeds are insufficient to pay the costs of
such additions, repairs and improvements, the Sublessee will deposit
with the Trustee that portion of the cost thereof in excess of the
amount of the Net Proceeds. The Sublessee's obligations hereunder shall
continue in full force and effect, including its obligation to make
payments of Basic Rent and Additional Rent.
(b) Option B - Redemption of the Bonds. The Sublessee may
elect to cause the Bonds to be redeemed in whole or in part at a
redemption price equal to par, plus accrued interest, on the next
Interest Payment Date occurring at least 45 days after the date of the
notice given by the Sublessee to the Sublessor and Trustee as to
exercise of this Option B. In such event, all Net Proceeds will be
deposited by the Trustee in the Bond Fund and redemption shall be
effected pursuant to the provisions of, in the manner, and with the
effect provided in the Indenture.
SECTION 6.03. COOPERATION OF SUBLESSOR. Sublessor will cooperate fully
with the Sublessee in filing any proof of loss with respect to any insurance
policy covering casualties referred to in Section 6.01, in the handling and
conduct of any litigation arising with respect thereto, and in the handling and
conduct of any prospective or pending condemnation proceeding affecting the
Facilities or any part thereof. Sublessor hereby acknowledges that it has no
interest in or claim upon the Net Proceeds of any insurance of condemnation
award except as provided in the Indenture and assigned to the Trustee pursuant
thereto.
ARTICLE 7
SUBLESSEE'S COVENANTS
SECTION 7.01. COVENANTS FOR BENEFIT OF TRUSTEE AND HOLDER OF BONDS.
Each of the terms and provisions of this Sublease is a covenant for the use and
benefit of the Trustee so long as any principal or interest due on the Bonds
shall remain Outstanding; but upon payment in full of the Bonds all references
in this Sublease to the Bonds and the Trustee shall be ineffective, and the
Trustee shall not thereafter have any rights hereunder.
SECTION 7.02. INSPECTION AND ACCESS. The Sublessee agrees that
Sublessor, the City and the Trustee, and their duly authorized agents shall have
the right at all reasonable times to examine and inspect the Facilities, and
shall have such rights of access thereto as may reasonably be necessary in order
to satisfy themselves that the provisions of the Sublease are being complied
with, and further, to have access thereto sufficient to cause the Facilities to
be properly maintained in accordance with Article 5 in the event of failure by
the Sublessee to perform its obligations thereunder.
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SECTION 7.03. INDEMNITY. The Sublessee will pay, and will protect,
indemnify, and save Sublessor, the City and Trustee harmless, from and against
all liabilities, losses, damages, costs, expenses (including reasonable
attorneys' fees), causes of action, suits, claims, demands, and judgments of any
nature arising from:
(a) Any injury to or death of any person during the term of
this Sublease growing out of or connected with the use, non-use, or
condition of the Facilities or a part thereof;
(b) Violation during the term of this Sublease of any
agreement or condition of this Sublease by the Sublessor;
(c) Violation during the term of this Sublease of any
contract, agreement, or restriction by the Sublessee relating to the
Facilities which shall have existed at the commencement of the Sublease
term;
(d) Violation during the term of this Sublease of any law,
ordinance, or regulation affecting the Facilities or a part thereof or
the ownership, occupancy, or use thereof; and
(e) Any statement or information relating to the Sublessee or
the expenditure of the proceeds of the Bonds contained in the Official
Statement which, at the time made, is misleading, untrue, or incorrect
in any material respect.
SECTION 7.04. CONTINUING EXISTENCE AND QUALIFICATION. During the term
of this Sublease, the Sublessee will maintain its corporate existence and will
not dissolve or otherwise dispose of all or substantially all of its assets and
will not consolidate with or merge into another corporation or permit one or
more other corporations to consolidate with or merge into it; except, that the
Sublessee may, without violating the foregoing, consolidate with or merge into
another corporation qualified to do business in the State, or permit one or more
other such corporations to consolidate with or merge into it, or transfer all or
substantially all of its assets to another such corporation or corporations (and
thereafter dissolve or not dissolve as the Sublessee may elect) if the following
requirements are complied with and there has been delivered to Sublessor, the
City and the Trustee an opinion of Bond Counsel acceptable to the Trustee
stating that there has been said compliance:
(a) The corporation (the "Surviving Corporation") surviving
such merger or resulting from such consolidation or transfer of assets
will own and operate the Facilities and has expressly assumed in
writing all of the obligations of the Sublessee contained in this
Sublease.
(b) The lien created by the Mortgage, the Indenture and the
Assignment and the pledge of the revenues contemplated by this Sublease
will not in any manner be adversely affected thereby.
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(c) An opinion of Bond Counsel is obtained that the
transaction will not adversely affect the validity of the Bonds or the
exemption from federal income tax of the interest paid on the Bonds.
(d) The Surviving Corporation will have a net worth
(determined in accordance with generally accepted accounting
principles) equal to or greater than that of the Sublessee prior to the
consolidation, merger or transfer of assets.
Upon compliance with the foregoing conditions and delivery to the
Trustee, the City and Sublessor of the opinion of Bond Counsel required
hereunder, Sublessor shall deliver to the predecessor Sublessee an instrument
releasing the predecessor Sublessee from its obligations under this Sublease.
If consolidation, merger or sale or other transfer is made as provided
in this Section 7.04, the provisions of this Section 7.04 shall continue in full
force and effect and no further consolidation, merger or sale or other transfer
shall be made except in compliance with the provisions of this Section 7.04.
SECTION 7.05. ANNUAL FINANCIAL STATEMENT. The Sublessee shall furnish
to the Sublessor, the Trustee and the Original Purchaser of the Bonds a copy of
its audited financial statements promptly upon their completion but not later
than 120 days after the end of the Fiscal Year. At the time the audited
financial statements are furnished as required above, a Sublessee Representative
shall certify to the Trustee that (i) nothing has come to his attention which
would constitute a breach, default or violation by the Sublessee of any of its
obligations under this Sublease or the Mortgage, or (ii) stating such breach,
default or violation.
SECTION 7.06. SUBLESSEE BOUND BY INDENTURE. The Indenture has been
submitted to the Sublessee for examination, and the Sublessee, by execution of
this Sublease, acknowledges that it has approved the Indenture and agrees that
it is bound by the terms and conditions thereof and covenants and agrees to
perform all acts, pay all moneys and give all notices required to be performed,
paid and given by it pursuant to the terms of the Indenture.
SECTION 7.07. TAXEXEMPT STATUS OF BONDS. It is the intention of the
parties hereto that the interest paid on the Bonds will not be included in the
gross income of the Bondholders by reason of Section 103(a) of the Code. In
order to confirm and carry out such intention:
(a) The Sublessee shall (i) provide such Sublessee
Certificates, opinions of counsel, and other evidence as may be
necessary or requested by Sublessor, the City, or the Trustee to
establish the exemption of the Bonds under Section 144(a)(4) and the
absence of arbitrage expectation under Section 148 of the Code, and
(ii) limit its capital expenditures, the capital expenditures of any
"principal user" or "related person" under Section 144(a)(4)(A) and (B)
of the Code and related provisions of law or regulation if and to the
extent required to prevent inclusion of Bond interest in the gross
income of Bondholders (other than substantial users and persons related
to substantial users); and
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(b) The Sublessee agrees to furnish to the Trustee within
thirty (30) days after the first, second and third anniversary dates of
the issuance and delivery of the Bonds (i) a certificate showing the
amount of capital expenditures of the Sublessee and each other
principal user and related person with respect to the Facilities and
with respect to other applicable projects or facilities, if any, within
Sublessor, for the period beginning three years prior to the issuance
and delivery of the Bonds and ending on such anniversary date, and (ii)
if requested by the Trustee, an opinion of Bond Counsel stating
whether, by reason of such capital expenditures, interest on the Bonds
shall have become includable in gross income of the Bondholders (other
than substantial users and related person) within the meaning of
Section 103(a) of the Code.
SECTION 7.08. NO WARRANTY OF CONDITION OR SUITABILITY BY SUBLESSOR. The
Sublessee recognizes that the Plans for the Project have been prepared to its
order, and since the Project is being constructed and equipped by contractors
and suppliers approval by the Sublessee, Sublessor has not made an inspection of
the Facilities or of any fixture or other item constituting a portion thereof,
and Sublessor makes no warranty or representation, express or implied or
otherwise, with respect to the same or the location, use, description, design,
merchantability, fitness for use for any particular purpose, condition, or
durability thereof, or as to the quality of the material or workmanship therein,
or as to the title of Sublessor thereto or ownership thereof or otherwise, it
being agreed that all risks incident thereto are to be borne by the Sublessee,
in the event of any defect or item constituting a portion thereof, whether
patent or latent, Sublessor shall have no responsibility or liability with
respect thereto. The provisions of this Section 7.08 have been negotiated and
are intended to be a complete exclusion and negation of any warranties or
representations by Sublessor, express or implied, with respect to the Facilities
or any fixture or other item constituting a portion thereof, whether arising
pursuant to the Uniform Commercial Code or another law now or hereafter in
effect or otherwise.
SECTION 7.09. GRANTING EASEMENTS. Sublessor, at the request of the
Sublessee from time to time, shall grant, or cause the City to grant, easements,
licenses, rights-of-way (including the dedication of public highways) and other
rights or privileges in the nature of easements with respect to the Land, or may
release existing easements, licenses, rights-of-way and other rights or
privileges with or without consideration, and Sublessor agrees that it shall
execute and deliver any instrument necessary or appropriate to grant or release
any such easement, license, right-of-way or other right or privilege upon
receipt of: (a) a copy of the instrument of grant or release, and (b) a written
application signed by the authorized Sublessee Representative requesting such
instrument, and certifying that in his opinion such grant or release is not
detrimental to the proper use or operation of the Facilities.
SECTION 7.10. OPERATION OF FACILITIES. The Sublessee will operate the
Facilities or cause the Facilities to operated as a manufacturing facility and
will not change the use of the Facilities without the prior written consent of
the Sublessor and the Trustee and a written opinion from Bond Counsel that such
change in use will not affect the tax exempt status of the Bonds.
SECTION 7.11. REDEMPTION OF BONDS. Sublessor, at the request at any
time of the Sublessee and if the Bonds are then callable, shall forthwith take
all steps that may be necessary under the applicable redemption provisions of
the Indenture to cause the City to effect
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redemption of all or part of the then Outstanding Bonds, as may be specified by
the Sublessee, on the earliest redemption date on which such redemption may be
made under such applicable provisions, provided that the Sublessee shall have
made available funds in adequate amount therefor or shall have made arrangements
satisfactory to the Trustee therefor. As set forth in Section 7.11 of the Lease,
the Sublessee has the right to request that the City take all steps necessary
under the applicable redemption provisions of the Indenture to effect redemption
of all or part of the then outstanding Bonds. Except as otherwise provided in
Sections 3.2, 3.3(b) and 3.4 of the Indenture, Bonds shall be called for
redemption by the City or the Sublessor only upon the direction of the
Sublessee. Notice of any optional redemption of Bonds shall be provided by the
Sublessee to the Sublessor and the Trustee not less than 45 days in advance of
the applicable redemption date.
SECTION 7.12. TO OBSERVE LAWS, ORDINANCES AND REGULATIONS. The
Sublessee will observe in all material respects all applicable laws,
regulations, ordinances and orders of the United States, State of North Dakota
and agencies and political subdivisions thereof and each department or agency
thereof, applicable to the Sublessee, its business and property. The Sublessee
shall have the right to contest by appropriate procedures the adoption, validity
or applicability of any laws, regulations, ordinances and orders referred to in
this Section.
SECTION 7.13. RECORDING AND FILING FEES. The Sublessee shall pay all
recording, filing and registration taxes and fees, together with all expenses
incidental to the preparation, execution, acknowledgment, filing, registering
and recording of this Sublease, the Mortgage, the Assignment and of any notice
pursuant to the Uniform Commercial Code and of any instrument of further
assurance, including any filing or instrument required of Sublessor, and all
taxes, duties imposts, assessments and charges lawfully imposed upon the Bonds
or upon the Indenture, the Prime Lease or this Sublease.
SECTION 7.14. SUBLESSEE'S ASSURANCE OF TAX EXEMPTION. In order to
assure that the interest on the Bonds shall at all times be free from federal
income taxation, the Sublessee represents and covenants with Sublessor, the
Trustee and all Bondholders that it will comply with the applicable provisions
of Federal income tax law as follows:
(a) the Sublessee will assure that the aggregate of (i)
capital expenditures with respect to facilities in or attributable to
the City which are or were used by the Sublessee, or any other
principal user of the Facilities or by a person related to the
Sublessee or such other principal user paid or incurred within a period
of 36 months prior to the date of issuance of the Bonds, whether
allocable or attributable to the Facilities or any other facility
within or attributable to the City, plus (ii) the aggregate principal
amount of the Bonds, plus (iii) the capital expenditures made with
respect to facilities in or attributable to the City by the Sublessee
or such other principal user or related person, within a period of 36
months after the date of issuance of the Bonds, whether allocable or
attributable to the Facilities or any other facility within or
attributable to the City, within the meaning of Section 144 of the
Code, and regulations thereunder, as applicable, will not exceed
$10,000,000;
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(b) the Sublessee will not cause any "working capital
expenses" to exceed 3% of the "net bond proceeds" in violation of the
requirement in Section 144(a) of the Code that substantially all (95%)
of the proceeds of the Bonds be used for the acquisition or improvement
of land or depreciable property;
(c) the Sublessee has not permitted and will not permit any
obligation or obligations other than the Bonds to be issued within the
meaning of Section 144(a)(6) of the Code so as to cause such
obligations to become part of the same "issue of obligations," so as to
impair the tax exempt status of the Bonds;
(d) the Bonds are not issued as part of an issue of
obligations (other than an issue to which Section 144 of the Code
applies) for which the interest on any other obligations which is part
of such issue is excluded from gross income under any other provision
of law other than Section 144(a) of the Code;
(e) no portion of the Bond proceeds will be used to provide
the following: any private or commercial golf course, country club,
massage parlor, tennis club, skating facility (including roller
skating, skateboard and ice-skating), racquet sport facility (including
handball or racquetball court), hot tub facility, suntan facility or
racetrack, land (or interest therein) to be used for farming purposes,
and no more than 25% (or 24.9% in the case of land) of the net Bond
proceeds, be used to acquire or otherwise provide a facility the
primary purpose of which is either retail food and beverage services,
automobile sales or service, or the provision of recreation or
entertainment, or land (other than land used for farming purposes), all
within the meaning of Sections 144(a)(8) of the Code; no portion of the
Bond proceeds will be used to provide any airplane, sky box or other
private luxury box, any health club facility, any facility primarily
used for gambling, or any store the principal business of which is the
sale of alcoholic beverages for consumption off premises, all within
the meaning of Section 147(e) of the Code;
(f) the Sublessee has not permitted and will not permit any
other Private Activity Bond to be issued with respect to a single
building, an enclosed shopping mall, or a strip of offices, stores or
warehouses, of which the Facilities are a part and which use
substantial common facilities, so as to (i) treat the Bonds and such
other Private Activity Bond as one (1) issue, within the meaning of
Section 144(a)(9) of the Code and (ii) thereby impair the tax exempt
status of the Bonds;
(g) the face amount of the Bonds allocated to the Sublessee as
a test-period beneficiary, when increased by other taxexempt facility
related bonds outstanding at Bond Closing and also allocated to the
Sublessee as a test-period beneficiary, does not and will not exceed
$40,000,000; and the Sublessee will not permit any other person or
entity to become an owner or other "principal user" of the Facilities
if such person or entity is or will be a test-period beneficiary to
whom is allocated other taxexempt facility related bonds outstanding at
the time of Bond Closing which other taxexempt facility related bonds,
together with the face amount of the Bonds allocated to such
test-period beneficiary, exceed $40,000,000, all within the meaning of
Section 144(a)(10) of the Code;
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(h) within the meaning of Section 144(a)(11) of the Code, no
proceeds of the Bonds will be used to acquire depreciable farm
property;
(i) 95% or more of the net proceeds of the Bonds will be or
were used to provide a manufacturing facility within the meaning of
Section 144(a)12 of the Code;
(j) the Bonds have received proper allocation of authority for
the entire amount of the issue in accordance with Section 146 of the
Code;
(k) the average maturity of the Bonds does not exceed 120% of
the average reasonably expected economic life of the Facilities within
the meaning of Section 147(b) of the Code;
(l) within the meaning of Section 147(c) of the Code, no
portion of the proceeds of the Bonds will be used (directly or
indirectly) for the acquisition of land (or an interest therein) to be
used for farming purposes and not more than twenty-five percent (25%)
of the net proceeds of the Bonds will be used (directly or indirectly)
for the acquisition of any other land (or interest therein);
(m) no portion of the net proceeds of the Bonds will be used
for the acquisition of any property (or any interest therein) unless
(i) the first use of such property is pursuant to such acquisition,
other than land, or (ii) the property is a building (and the equipment
therefor) and rehabilitation expenditures with respect to such building
equal or exceed fifteen percent (15%) of the portion of the cost of
acquiring such building (and equipment) financed with the proceeds of
the Bonds, or (iii) the property is a structure other than a building
and rehabilitation expenditures with respect to such facility equal or
exceed one hundred percent (100%) of the portion of cost of acquiring
such facility financed with net bond proceeds, all within the meaning
of Section 147(d) of the Code;
(n) the Bonds have satisfied the public approval requirements
of Section 147(f) of the Code since they have been approved by the City
by its elected legislative body after reasonable public notice
published in a newspaper of general circulation in Sublessor not less
than 14 days prior to the date of a public hearing with respect to the
Facilities;
(o) no more than two percent of the aggregate face amount of
the Bonds allocable to the Facilities shall be used to finance "costs
of issuance," within the meaning of Section 147(g) of the Code;
(p) the Sublessee will not use (or permit to be used) the
Facilities or use or invest (or permit to be used or invested) the
proceeds of the Bonds or any other sums treated as "bond proceeds"
under Section 148 of the Code including "investment proceeds,"
"invested sinking funds" and "replacement proceeds," in such a manner
as to cause the Bonds to be classified "arbitrage bonds" under Section
148(a) of the Code;
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(q) at no time during any Bond year shall the amount invested
in taxable nonpurpose obligations with a yield higher than the yield on
the Bonds exceed one hundred fifty percent (150%) of the debt service
on the Bonds for the bond year, all within the meaning of Section
148(d)(3) of the Code; provided, however, that the Sublessee may take
advantage of exceptions to such requirement provided for the investment
sums for temporary periods;
(r) the Sublessee on behalf of the Sublessor and the City
shall pay the United States, as a rebate, an amount equal to the sum of
(i) the excess of (A) the amount earned on all nonpurpose investments
(other than investments attributable to an excess described in this
clause), over (B) the amount which would have been earned if all
nonpurpose investments were invested at a rate equal to the yield on
the Bonds, plus (ii) any income attributable to the excess described in
clause (i), at the times and in the amounts required by Sections
148(f)(2) and (3) of the Code, all within the meaning of Section 148(f)
of the Code. The Sublessor and Trustee shall maintain records of the
Bonds and the investments of Bond proceeds and earnings thereon in
adequate detail to enable the Sublessor to calculate the amount of any
rebate required to be made to the United States. The Sublessee shall
pay the rebate to the United States at times and in installments which
satisfy Section 148(f)(3) of the Code and the regulations, at least
once every five (5) years and within sixty (60) days after the day on
which the last of the Bonds is redeemed. Calculations of the amount to
be rebated shall be made at least every fifth (5th) year, and the
Trustee shall be furnished with such calculations within sixty (60)
days of the time they are made. Such calculations shall be retained
until six (6) years after the retirement of the last Bond. The rebate
shall be calculated as provided in Section 1.1480 through 1.1487 of the
Treasury Regulations;
(s) the payment of principal and interest on the Bonds is not
guaranteed (in whole or in part) by the United States (or any agency or
instrumentality thereof) and no moneys in the Bond Fund, Reserve Fund
or Construction Fund shall be invested in investments which cause the
Bonds to be federally guaranteed within the meaning of Section 149(b)
of the Code. If at any time the moneys in such Funds exceed, within the
meaning of Section 148 of the Code, (i) amounts invested for an initial
temporary period until the moneys are needed for the purpose for which
the Bonds are issued, (ii) investments of a bona fide debt service
fund, and (iii) investments of a reserve which meet the requirement of
Section 148(d) of the Code, such excess moneys shall be invested in
only those permitted investments or Government Obligations, as
otherwise appropriate, which are (A) obligations issued by the United
States Treasury, (B) other investments permitted under regulations, or
(C) obligations which are (1) not issued by, or guaranteed by, or
insured by, the United States or any agency or instrumentality thereof
or (2) not federally insured deposits or accounts, all within the
meaning of Section 149(b)(2) of the Code;
(t) the Sublessee shall provide both the Sublessor and the
City at closing with all information required to satisfy the
informational requirements set forth in Section 149(e) of the Code
including the information necessary to complete Internal Revenue
Service Form 8038;
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(u) the Sublessee will not otherwise use Bond proceeds,
including earnings thereon, or take, or permit or cause to be taken,
any action that would adversely affect the exemption from federal
income taxation of the interest on the Bonds, nor otherwise omit to
take or cause to be taken any action necessary to maintain such tax
exempt status; and, if it should take or permit, or omit to take or
cause to be taken, as appropriate, any such action, the Sublessee shall
take all lawful actions necessary to rescind or correct such actions or
omissions promptly upon having knowledge thereof.
SECTION 7.15. HAZARDOUS WASTE. Sublessee shall not cause or permit to
exist, as a result of any intentional or unintentional act or omission on its
part, a releasing, spilling, leaking, pumping, emitting, pouring, seeping,
leaching, emptying or dumping of "Toxic Materials, " "Hazardous Substance" or
"Hazardous Waste" in the Facilities or on the Land (the above terms shall have
the meaning ascribed to such terms in state or federal statutes and/or
regulations promulgated in relation thereto).
Sublessee, and Sublessee's respective successors and assigns, agree to
defend, indemnify and hold harmless the City, Sublessor and the Trustee, and
their respective successors and assigns from and against any and all claims,
demands, judgments, damages, actions, causes of action, injuries, administrative
orders, consent agreements and orders, liabilities, penalties, costs and
expenses of any kind whatsoever, including claims arising out of loss of life,
injury to persons, property or business or damage to natural resources arising
out of the use or discharge of Toxic Materials, Hazardous Substances or
Hazardous Waste by Sublessee. Such activities shall include any condition,
accident or event caused by any act or omission which:
(a) Arises out of the actual, alleged or threatened discharge,
dispersal, release, storage, treatment, generation, disposal or escape
of pollutants or other toxic or hazardous substances, including any
solid, liquid, gaseous or thermo-irritant or contaminant, including,
smoke, vapor, soot, fumes, acids, alkalis, chemicals and wastes or
waste (including materials to be recycled, reconditioned, or
reclaimed); or
(b) Actually, or allegedly arises out of use, specification or
inclusion of any product, material or process containing chemicals, a
failure to detect the existence or proportion of chemicals in the soil,
air, surface water or ground water, or the performance or failure to
perform the abatement of any pollution source or the replacement or
removal of any soil, water, surface water, or groundwater containing
chemicals.
Sublessee and Sublessee's respective heirs, executors, successors and
assigns, shall bear, pay and discharge when and as the same become due and
payable, any and all such judgments or claims for damages, penalties or
otherwise against the City, the Trustee or the Sublessor described above, shall
hold the City, the Trustee, and the Sublessor harmless for those judgments or
claims, and shall assume the burden and expense of defending all suits,
administrative proceedings and negotiations of any description with any and all
persons, political subdivisions or government agencies arising out of any of the
occurrences set forth above.
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ARTICLE 8
SUBLESSEE'S OPTIONS
SECTION 8.01. PREPAYMENT OF RENTS AND BONDS. The Sublessee may, at any
time, transmit funds to the Trustee, in addition to amounts, if any, otherwise
required at that time pursuant to this Sublease, and direct that said money be
utilized for the prepayment or redemption of the Bonds or installments thereof
which are then or will be redeemable under the terms of the Indenture. In the
event that the Bonds are subject to Mandatory Redemption under the terms of the
Indenture and there are insufficient moneys on deposit, or required by the
Indenture to be on deposit, in the Bond Fund, the Sublessee shall promptly
transmit funds to the Trustee as necessary to comply with the terms of such
redemption including, upon a Determination of Taxability, the necessary funds to
pay the three percent (3.0%) premium together with funds to pay principal of and
accrued interest on the Bonds.
SECTION 8.02. OPTION TO TERMINATE. The Sublessee shall have the option
to cancel or terminate the term of this Sublease at any time when all the Bonds
shall be deemed to have been paid and discharged under the provisions of Article
3 of the Indenture or defeased in accordance with the provisions of the
Indenture, and when all Additional Rent payable to the Trustee has been paid.
Such option shall be exercised by giving Sublessor notice in writing and such
cancellation or termination shall forthwith become effective. Upon such
termination, any funds or investments then remaining on deposit to the credit of
any Fund maintained under the Indenture (not set aside for the payment of Bonds
and interest thereon pursuant to the Indenture) shall be paid over by the
Trustee to the Sublessee.
SECTION 8.03. SUBLESSEE'S PROPERTY, SUBLESSOR'S PROPERTY. At the
termination of the Sublease if Sublessee has not exercised the Purchase Option
granted herein all improvements permanently affixed to the Facilities, and all
heating and air conditioning equipment, plumbing and electrical pipes, wiring,
connections and fittings, which are necessary to the mechanical, plumbing and
electrical operation and maintenance of the Facilities, shall be the property of
the City, without compensation to Sublessee, whether owned, purchased or
constructed by the City, the Sublessor, or by Sublessee. Sublessee hereby grants
to the City and to the Sublessor reasonable access to the Facilities, which
access shall not unreasonably interfere with Sublessee's use thereof, for the
inspection, installation, maintenance, replacement and repair of the
above-described property of the City.
All other furniture, fixtures, equipment, and property, put in at the
expense of Sublessee shall be the property of Sublessee, and may be removed by
Sublessee at any time. All of such property shall be removed on or before the
termination of the term hereof, and all property not so removed shall be deemed
abandoned by Sublessee to Sublessor and the City, as applicable. Sublessee, at
its cost and expense, shall repair any damage done to the Facilities by such
removal. If Sublessee chooses not to remove its property, then title to such
property shall vest in the City.
SECTION 8.04. CONDITION OF LEASED FACILITIES AND SUBLESSOR'S PROPERTY
AT TERMINATION.. If this Sublease is terminated prior to its stated expiration
date, and if Sublessee fails to exercise its Purchase Option under Section 8.09,
then Sublessee shall quit and deliver the
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Facilities and all property of the City and Sublessor to Sublessor in as good
condition as when Sublessee took possession or as the Facilities were thereafter
placed in by the City, the Sublessor or Sublessee, excepting only ordinary wear
and tear, and damage or destruction which is required by the terms hereof to be
repaired, maintained or replaced by Sublessor. If Sublessee fails to do so,
Sublessor may make repairs, and any expenditures by Sublessor shall be due and
payable from Sublessee upon demand and shall be deemed Additional Rent for
purposes of this Sublease.
SECTION 8.05. OPTION TO PURCHASE FACILITIES PRIOR TO PAYMENT OF THE
BONDS. The Sublessee shall have, and is hereby granted, the option to purchase
the Facilities prior to the expiration of the Sublease term and prior to the
full payment of the Bonds (or provision for payment thereof having been made in
accordance with the provisions of the Indenture), if any of the following shall
have occurred:
(a) The Facilities shall have been damaged or destroyed and
the Sublessee shall determine that it is not practical or desirable to
rebuild, repair or restore the Facilities.
(b) Title to, or the use or control of the Facilities shall
have been taken under the exercise of the power of eminent domain by
any governmental authority, or person, firm or corporation acting under
governmental authority to the extent the Facilities are rendered
unsatisfactory to the Sublessee for continued operation.
(c) As a result of any changes in the Constitution of the
State of North Dakota or the Constitution of the United States of
America or of legislative or administrative action (whether state or
federal) or by final decree, judgment or order of any court or
administrative body (whether state or federal) entered after the
contest thereof by Sublessor or the Trustee in good faith, this
Sublease shall have become void or unenforceable or impossible of
performance in accordance with the intent and purpose of the parties as
expressed in this Sublease, or unreasonable burdens or excessive
liabilities shall have been imposed upon the Sublessee or Sublessor in
connection with the Facilities, as a result of which the Sublessee
determines to discontinue operation of the Facilities.
To exercise such option, the Sublessee shall, within one hundred eighty (180)
days following the event authorizing the exercise of such option, give written
notice to Sublessor, to the City and to the Trustee if any of the Bonds shall
then be unpaid, and shall specify therein the date of closing such purchase and
(if any Bonds are Outstanding) the redemption date; the redemption date shall be
not less than fortyfive (45) days from the date such notice is received by
Sublessor and the Trustee, and the date of closing the purchase shall take place
on or before the redemption date; and in case of a redemption of the Bonds in
accordance with the provisions of the Indenture, the Sublessee shall deposit the
purchase price with the Trustee on or before the redemption date and make
arrangements satisfactory to the Trustee for the giving of the required notice
of redemption, in which arrangements Sublessor shall cooperate. The purchase
price payable by the Sublessee in the event of its exercise of the option
granted in this Section, shall be the sum of the following:
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<PAGE>
(1) an amount of money which, when added to the moneys and
investments held to the credit of the Bond Fund and Reserve Fund, will
be sufficient pursuant to the provisions of Section 3.3 of the
Indenture to pay and discharge all then Outstanding Bonds on the first
possible date for redemption, plus
(2) an amount of money equal to the Additional Rent payable to
the Trustee, pursuant to the terms of the Prime Lease and this Sublease
and any paying agent's fees and expenses under the Indenture, plus
(3) the sum of One Dollar ($1.00) to Sublessor.
In the event of the exercise of the option granted in this Section, any Net
Proceeds of insurance or condemnation shall be paid to the Trustee, and
Sublessor will deliver to the Trustee the documents referred to in Section 8.05
hereof.
The mutual agreements contained in this Section 8.05 are independent
of, and constitute an agreement separate and distinct from, any and all
provisions of this Sublease and shall be unaffected by any fact or circumstance
which might impair or be alleged to impair the validity of any other provisions.
SECTION 8.06. OPTION TO PURCHASE FACILITIES. The Sublessee shall have,
and is hereby granted, an option to purchase the Facilities for One Dollar
($1.00) at the expiration of the Sublease term or at any prior time that full
payment of the Bonds or provision for payment or defeasance thereof has been
made in accordance with the provisions of the Indenture and all Additional Rent
payable to Sublessor and Trustee hereunder shall have been paid. In the event
that the Sublessee exercises its option to purchase, the option to purchase
granted in this Section 8.04 shall be exercised in the manner as is provided for
exercise of option to purchase granted in Section 8.03, and Sublessor shall
caused to be delivered to the Sublessee the documents referred to in Section
8.05 hereof. The Sublessee's option rights under this Section 8.04 may also be
exercised at any time after expiration of the Sublease term.
SECTION 8.07. CONVEYANCE ON EXERCISE OF OPTION TO PURCHASE. On the
exercise of any option to purchase granted herein, Sublessor will deliver
payment of the purchase price received from the Sublessee to the City and will
deliver or cause to be delivered to the Sublessee documents conveying to the
Sublessee all of the right, title and interest of the City and the Sublessor in
and to the property being purchase, as such property then exists, subject to the
following: (i) those liens and encumbrances created by the Sublessee or to the
creation or suffering of which the Sublessee consented; (ii) those liens and
encumbrances resulting from the failure of the Sublessee to perform or observe
any of the agreements on its part contained in this Sublease; and (iii) if the
option is exercised pursuant to the provisions of Section 8.03(b) hereof, the
rights and title of the condemning authority.
SECTION 8.08. RELATIVE POSITION OF THIS ARTICLE AND INDENTURE. The
rights and options granted to the Sublessee in this Article shall be and remain
subordinate to the Indenture and the Mortgage as evidenced by the Subordination
Agreement.
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ARTICLE 9
EVENTS OF DEFAULT AND REMEDIES
SECTION 9.01. EVENTS OF DEFAULT. Any one or more of the following
events shall constitute a Default or an Event of Default under this Sublease:
(a) Failure by the Sublessee to pay the Basic Rent required
under Section 4.02 hereunder on or before the date the payment is due
and the continuance of such nonpayment for a period ending on the last
day of the month following the date the payment is due, except that the
payment for the month next preceding each Interest Payment Date shall
be paid on the date payment is due.
(b) Failure by the Sublessee to deliver to the Trustee the
moneys needed to redeem any Outstanding Bonds in the manner and upon
the date required by the terms of the Prime Lease, the Bonds or the
Indenture.
(c) Failure by the Sublessee to observe and perform any
covenant, condition, or agreement on its part to be observed or
performed, other than as referred to in subsections (a) or (b) of this
Section 9.01, for a period of 30 days after notice of such failure
requesting such failure to be remedied, given to the Sublessee by the
Trustee or Sublessor, unless the Trustee and Sublessor shall agree in
writing to an extension of such time prior to its expiration; provided,
however, that if and so long as the Sublessee is proceeding with due
diligence to cure the default, such 30day period shall be extended to
such period as is required to permit the Sublessee proceeding with due
diligence to cure such default.
(d) The dissolution or liquidation of the Sublessee or the
filing by the Sublessee of a voluntary petition in bankruptcy, or
failure by the Sublessee promptly to lift any execution, garnishment,
or attachment of such consequence as will impair its ability to carry
out its obligations under this Sublease, or the commission by the
Sublessee of any act of bankruptcy, or adjudication of the Sublessee as
a bankrupt, or assignment by the Sublessee into an agreement of
composition with its creditors, or the approval by a court of competent
jurisdiction of a petition applicable to the Sublessee in any
proceeding for its reorganization or arrangement instituted under the
provisions of the Federal Bankruptcy Code, or under any similar act
which may hereafter be enacted. The term "dissolution or liquidation of
the Sublessee," as used in this subsection, shall not be construed to
include the cessation existence of the Sublessee resulting either from
a merger or consolidation of the Sublessee into or with another
corporation or other entity or a dissolution or liquidation of the
Sublessee of allowing a transfer of all or substantially all of its
assets as an entirety, under the conditions permitting such actions
contained in Section 7.04.
(e) The occurrence of an Event of Default under the Indenture
or the Mortgage.
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The provisions of subsection (c) of this Section are subject to the
following limitations: If by reason of acts of God; fire; epidemics; landslides;
floods; strikes; lockouts; or other industrial disturbances; acts of public
enemies; acts or orders of any kind of any governmental authority;
insurrections; riots; civil disturbances; explosions; breakage; or accident to
machinery, transmission pipes or canals; partial or entire failure of utilities;
or any cause or event not reasonably within the control of the Sublessee, the
Sublessee is unable in whole or in part to carry out the agreements on its part
herein contained, other than the obligations on the part of the Sublessee to pay
rent, additional payments and taxes and to carry insurance, all under the
provisions of Article 4 and Article 5 hereof, the Sublessee shall not be deemed
in default during the continuance of such inability. The Sublessee shall,
however, use its best efforts to remedy with all reasonable dispatch the cause
or causes preventing it from carrying out its agreements; provided, that the
Sublessee shall in no event be required to settle strikes, lockouts, or other
industrial disturbances by acceding to the demands of the opposing party or
parties when such course is, in the judgment of the Sublessee, unfavorable to
it.
SECTION 9.02. SUBLESSOR'S REMEDIES. Whenever any Event of Default shall
have happened and be subsisting, Sublessor may, and Sublessor hereby authorizes
the Trustee, on behalf of Sublessor (without prior written notice to Sublessor)
to, take at its discretion any one or more of the following remedial steps:
(a) Declare all installments of Basic Rent and other amounts
payable under Section 4.02 hereof for the remainder of the term of the
Sublease (being an amount equal to the sum necessary to pay in full the
remaining principal of premium, if any, and interest on the Bonds,
assuming acceleration of the Bonds, and to pay all other obligations
and indebtedness hereunder and thereunder) to be immediately due and
payable, whereupon the same shall become immediately due and payable by
the Sublessee;
(b) Take possession of the Facilities without termination of
this Sublease, and use its best efforts to sublease the Facilities for
the account of the Sublessee, holding the Sublessee liable for the
difference between the rent and other amounts received from the
Sublessee and the rents and other amounts payable by the Sublessee
hereunder;
(c) Terminate this Sublease, exclude the Sublessee from
possession of the Facilities, and use its best efforts to lease or sell
the Facilities to another for the account of the Sublessee, holding the
Sublessee liable for the difference between the rentals or purchase
price received and the amounts which would have been receivable
hereunder;
(d) Require the Sublessee to furnish copies of all books and
records of the Sublessee pertaining to the Facilities; and
(e) Take whatever action at law or in equity may appear
necessary or appropriate to collect the rent and other amounts and
additional payments then due and thereafter to become due hereunder, or
to enforce performance and observance of any obligation, agreement, or
covenant of the Sublessee under this Sublease.
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In exercising the remedies provided in subsections (b) and (c) above,
Sublessor and the Trustee, acting on behalf of Sublessor, may require the
Sublessee to assemble the Subleased Equipment and make it available to Sublessor
or Trustee at a reasonably convenient place as designated by Sublessor or the
Trustee.
SECTION 9.03. MANNER OF EXERCISE. No remedy herein conferred upon or
reserved to Sublessor is intended to be exclusive of any other available remedy
or remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Sublease or now or hereafter
existing at law or in equity. No delay or omission to exercise any right or
power occurring upon any default shall impair any such right or power or shall
be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to
entitle Sublessor to exercise any remedy reserved to it in this Article 9, it
shall not be necessary to give any notice, other than such notice as may be
herein expressly required. The obligation of the Sublessee to pay Basic Rent
sufficient to pay amounts payable for principal of, premium, if any (whether at
maturity, or by redemption or acceleration as provided in the Indenture by
declaration or otherwise) and interest on the Bonds and other amounts due under
the Indenture or this Sublease shall survive the termination of this Sublease.
SECTION 9.04. ATTORNEYS' FEES AND EXPENSES. In the event the Sublessee
should default under any of the provisions of this Sublease and the Trustee or
Sublessor should employ attorneys or incur other expenses for the collection of
Rent or the enforcement of performance of any obligation or agreement on the
part of the Sublessee, the Sublessee will on demand pay to the Trustee or
Sublessor the reasonable fee of such attorneys and such other expenses so
incurred.
SECTION 9.05. EFFECT OF WAIVER. In the event any agreement contained in
this Sublease should be breached by either party and the breach is thereafter
waived by the other party, such waiver shall be limited to the particular breach
so waived and shall not be deemed to waive any other breach hereunder.
SECTION 9.06. TRUSTEE'S EXERCISE OF SUBLESSOR'S REMEDIES. Whenever any
Event of Default shall have happened and be subsisting, the Trustee may, but
except as otherwise provided shall not be obliged to, exercise any or all of the
rights of Sublessor under this Article 9, upon giving the Sublessee such notice
as is required of Sublessor unless Sublessor has already given the required
notice.
ARTICLE 10
ASSIGNMENT, SUBLEASING AND SELLING
SECTION 10.01. ASSIGNMENT AND SUBLEASING BY SUBLESSEE. This Sublease
may be assigned in whole or in part, and the Facilities may be subleased as a
whole or in part, by the Sublessee only upon the condition that:
(a) no assignment or subleasing shall relieve the Sublessee
from primary liability for any of its obligations hereunder, and in the
event of any such assignment or
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subleasing the Sublessee shall continue to remain primarily liable for
the payment of all obligations under this Sublease or the Indenture and
for performance and observance of the other agreements on its part
herein provided to be performed and observed by it;
(b) any assignment or sublease from the Sublessee must retain
for the Sublessee such rights and interests as will permit it to
perform its obligations under this Sublease, and any assignee from the
Sublessee shall assume the obligations of the Sublessee hereunder to
the extent of the interest assigned;
(c) any sublease from the Sublessee must be subject and
subordinate to the lien of the
Mortgage; and
(d) the Sublessee shall furnish the Trustee an opinion of Bond
Counsel confirming the continuation of the validity of the Bonds, the
Prime Lease, this Sublease, the Mortgage and the Indenture and stating
that the assignment shall not result in interest on any Bonds becoming
includable in the gross income of the Holders thereof for federal
income tax purposes.
SECTION 10.02. ASSIGNMENT BY SUBLESSOR. Sublessor may assign its rights
and grant a security interest in, and pledge any monies receivable under or
pursuant to, this Sublease to the Trustee pursuant to the Indenture as security
for payment of the principal of and interest on the Bonds.
SECTION 10.03. RESTRICTIONS ON TRANSFER AND ENCUMBRANCES OF FACILITIES
BY THE CITY. The Terms of the Prime Lease shall govern this provision and
Sublessor and Sublessee each agree that the Sublessee shall have all of the
rights and privileges of Sublessor, as Tenant, under the terms of Section 10.03
of the Prime Lease.
ARTICLE 11
GENERAL
SECTION 11.01. NOTICES. All notices, certificate or other
communications hereunder shall be sufficiently given and shall be deemed given
when mailed by certified or registered mail, postage prepaid, with proper
address as indicated below. Sublessor, the Sublessee, the Trustee and the City
may, by written notice given by each to the others, designate any address or
addresses to which notices certificates or other communications to them shall be
sent when required as contemplated by this Sublease. All notices and other
communications given hereunder to any party shall also be given to the Original
Purchaser. Until otherwise provided by the respective parties, all notices
certificates and communications to each of them shall be addressed as follows:
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To the Sublessor: Oakes Enhancement, Inc.
Ms. Geri A. Coyne
Division Manager
OtterTail Power Company
103 South 5th Street
Oakes, ND 58474
To the Sublesse: OmniQuip International, Inc.
369 West Western Avenue
Port Washington, WI 53074
Attn: Chief Financial Officer
To the Trustee: Norwest Bank Minnesota, National Association
Sixth and Marquette
Minneapolis, Minnesota 55479
Attn: Corporate Trust
To the City : City of Oakes
115 South 5th Street
Oakes, ND 58474
Attn: City Auditor
To The Original
Purchaser: John G. Kinnard and Company, Incorporated
920 Second Avenue South
Minneapolis, Minnesota 55402
Attn: Trading
SECTION 11.02. BINDING EFFECT. This Sublease shall inure to the benefit
of and shall be binding upon Sublessor and the Sublessee and their respective
successors and assigns.
SECTION 11.03. SUBORDINATION. Sublessee hereby agrees that this
Sublease is, and shall be, subordinate to the Prime Lease, and the Mortgage
without any further act by Sublessee. Sublessee agrees hereby to execute upon
demand any and all further documents or instruments in addition to the Sublease
which may be deemed necessary or requisite or desired to effectuate such
subordination including the Subordination Agreement; provided, such
subordination shall be upon the express condition that this Sublease be
recognized and that the rights of Sublessee shall remain in full force and
effect during the term of this Sublease, provided, Sublessee shall continue to
perform all of the covenants and conditions of this Sublease.
SECTION 11.04. ESTOPPEL CERTIFICATE. Within twenty (20) days after
request therefor by either the City, the Trustee, or the Sublessor, Sublessee
will deliver in recordable form an Estoppel Certificate certifying (if such be
the case) that this Sublease is in full force and effect and that there are no
defenses or offsets thereto, or stating those claimed by Sublessee. If Sublessee
fails to do so, Sublessor shall have the right, as attorney-in-fact for
Sublessee, to make
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such a certificate. Sublessor, its mortgagee, lenders and/or
purchasers shall be entitled to rely upon any document executed pursuant to this
Section 11.05.
SECTION 11.05. SEVERABILITY. In the event any provision of this
Sublease shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision thereof.
SECTION 11.06. AMENDMENTS, CHANGES AND MODIFICATIONS. Except as
otherwise provided in this Sublease, subsequent to the initial issuance of the
Bonds and before the Indenture is satisfied and discharged in accordance with
its terms, this Sublease may not be effectively amended, changed, modified,
altered, or terminated without the written consent of the Trustee.
SECTION 11.07. EXECUTION COUNTERPARTS. This Sublease may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
(Remainder of this page intentionally left blank)
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IN WITNESS WHEREOF, Sublessor and the Sublessee have caused this
Sublease to be executed and attested by their duly authorized officers, all as
of the date first above written.
OAKES ENHANCEMENT, INC.
By: /s/ Dale Skjefte
--------------------------------------
President
ATTEST:
By: /s/ Bradley Ness
--------------------------------
Treasurer
(SEAL)
OMNIQUIP INTERNATIONAL, INC.
By: /s/ Allan Jablonsky
-------------------------------------
Its: Assistant Treasurer
ATTEST:
By: /s/ Glenda K. Moehlenpah
--------------------------------
Its: Assistant Secretary
(SEAL)
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STATE OF NORTH DAKOTA )
) ss.
COUNTY OF DICKEY )
On this 19th day of February, 1999, before me, a Notary Public within
and for said County, personally appeared Dale Skjefte and Dale Bradley Ness, the
President and Treasurer, respectively, of Oakes Enhancement, Inc., a North
Dakota nonprofit corporation, the corporation that is described in, and that
executed the foregoing instrument and acknowledged to me that they executed the
foregoing instrument on behalf of the corporation.
/s/ G.A. Coyne
----------------------------------------
Notary Public
My Commission Expires:
(SEAL)
STATE OF WISCONSIN )
) ss.
COUNTY OF OZAUKEE )
On this 23rd day of February, 1999, before me, a Notary Public within
and for said County, personally appeared Allan J. Jablonsky and Glenda K.
Moehlenpah, the Asst. Treasurer and Asst. Secretary, respectively, of OmniQuip
International, Inc., a Delaware corporation, and that each executed the
foregoing instrument and acknowledged to me that they executed the foregoing
instrument on behalf of the corporation.
/s/ Michelle Larson
----------------------------------------
Notary Public Michelle M. Larson
My Commission Expires: is permanent
(SEAL)
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EXHIBIT A
SUBLEASED EQUIPMENT
1. Pangborn Blast System, Model No. ED 1846
2. Paint Systems, including oven
3. Monorail Systems
4. Crane and Hoist System
A-1
<PAGE>
EXHIBIT B
REAL PROPERTY
That real property lying and being in the County of Dickey and State of
North Dakota, and described as follows, to-wit:
All of Lots 1, 5, 6 and 7, Oakes Industrial Park Addition to the City
of Oakes, North Dakota.
B-1
LEASE
THIS LEASE is made as of March 1, 1999 between PARK STREET INDUSTRIAL
LLC, a Wisconsin limited liability company ("Landlord") and TRAK INTERNATIONAL,
INC., a Delaware corporation ("Tenant").
DATA SHEET
The following terms shall have the meanings set forth in this section,
unless otherwise specifically modified elsewhere in this Lease:
(1) "Facility": Approximately 269,400 square foot office/manufacturing
facility located at 215 South Park Street, Port Washington, Wisconsin consisting
of the Buildings and the Land legally described in Exhibit A, as may be adjusted
from time to time.
(2) "Land": The real property, legally described in Exhibit A, on which
the Buildings are situated consisting of an approximately ten and one-half
(10.5) acre parcel as depicted on Exhibit A-1 and an additional seven (7) acre
parcel to the south of the Facility as depicted on Exhibit A-2 as the
"Additional Parcel".
(3) "Buildings": The approximately 269,400 rentable square feet of
buildings situated on the Land, as depicted on Exhibit B, as may be adjusted
from time to time.
(4) "New Building": The approximately 40,880 square foot manufacturing
facility to be built on the area depicted on Exhibit B-1 as the "New Building
Location Area", all in accordance with the Work Letter attached as Exhibit D.
(5) "Premises": The area outlined on the Floor Plan of the Buildings
attached as Exhibit B. For purposes of this Lease, the Premises shall be deemed
to contain 182,400 rentable square feet of space (177,700 square feet of
manufacturing space and 4,700 square feet of office space). The Premises shall
initially consist of buildings 1, 2, 3, 3A, 3B, 4, 4A, 5, 8, 8A, 8B, 13, 14, 15,
16A and 22 (the "Temporary Space"), buildings 17 and 25 ("Office Buildings") and
buildings 21, 23 and 24 (the "Base Buildings"), all as depicted on Exhibit B.
Upon completion of the New Building as set forth below, the Premises shall
consist of the New Building, the Office Buildings and the Base Buildings.
(6) "Commencement Date": April 1, 1999 or such earlier or later date as
provided in Section 2.2.
(7) "Expiration Date": March 31, 2009, unless otherwise extended or
terminated as provided in this Lease.
(8) "Term": Ten (10) years from the Commencement Date, as may be
extended or terminated as provided in this Lease. Tenant shall have two (2)
options to extend the Term for five (5) years each following the Expiration
Date.
(9) "Permitted Uses": Manufacturing and testing of construction
equipment and related accessories, service training and product display and
general office.
(10) "Base Rent": Base Rent shall be payable in equal monthly
installments commencing on April 1, 1999 and on the first day of each month
thereafter (calculated as follows: $2.50 per square foot of rentable square feet
of Base Buildings; $7.00 per rentable square foot of Office Buildings; $2.00 per
rentable square feet of Temporary Space; and upon delivery and acceptance by
Tenant, $4.00 per square foot of rentable square feet of New Building, and
demolition charges and
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construction adjustments), all as set forth in the
attached Exhibit F. Base Rent shall be adjusted as provided in this Lease.
(11) "Tenant's Percentage": 69%.
(12) "Security Deposit": $0.
(13) Addresses for notices, consents, and payments:
Landlord: Tenant:
Park Street Industrial LLC Trak International, Inc.
c/o Paul Weise Real Estate Corp. d/b/a Sky Trak International
342 North Water Street, Suite 200 369 West Western Avenue
Milwaukee, Wisconsin 53202 Port Washington, Wisconsin 53074
Article 1. PREMISES
1.1 Demise. Landlord leases to Tenant and Tenant rents from Landlord
the Premises and the Land, for the Term and in accordance with the provisions of
this Lease.
1.2 Landlord's Title; Covenant of Quiet Enjoyment. Landlord warrants
that it owns the Facility free and clear of any easements or other encumbrances
or restrictions that might impair Tenant's rights under this Lease. As long as
no uncured Event of Default (defined below) exists and the Lease is in full
force, Landlord covenants that Tenant shall peaceably and quietly enjoy the
Premises free from any claims of Landlord or persons claiming through Landlord,
subject to the provisions of the Lease.
1.3 Utilities. Tenant shall pay for all utilities or services furnished
to the Premises or used by Tenant, including water, sewer, gas, electricity,
fuel, light, heat, power and cable television, whether determined by separate
metering (which Landlord may provide at Landlord's option and expense) or billed
by Landlord to Tenant as Tenant's Share of Operating Expenses. Landlord shall
not be liable for any interruption or failure in the supply of utilities to the
Premises. To the extent Tenant has control of the thermostat regulating the
level of heat in the Premises, Tenant shall maintain a sufficient level of heat
in the Premises to prevent freezing and other damages to the Premises and the
Facility.
1.4 Signs. Tenant may, at Tenant's expense, install and maintain one
sign at the entry to the Premises identifying Tenant and any other permitted
occupants as the occupants of the Premises. The appearance and location of the
sign must conform, in Landlord's reasonable judgment, with Facility standards.
Installation and maintenance of the sign shall be subject to the provisions
governing improvements and alterations to the Premises below. Landlord approves
Tenant's signs in existence as of the date of this Lease.
1.5 Common Areas. Tenant's use and occupancy of the Premises shall
include the reasonable nonexclusive use of the "Common Areas," defined as the
parking areas, service roads, sidewalks, landscaped areas, lobbies, atriums,
elevators, stairways, corridors, restrooms and other areas so designated by
Landlord within the Facility. Tenant shall not encumber or obstruct the Common
Areas, nor allow them to be obstructed or encumbered, nor place anything in the
Common Areas without Landlord's prior consent.
1.6 Facility Systems. Landlord may install, use, maintain, repair and
replace pipes, cables, conduits, plumbing, vents and telephone, electric and
other wires and other items in the Premises to the extent Landlord deems
appropriate for the proper operation and maintenance of the Facility. Except in
the case of an emergency,
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Landlord shall give Tenant at least 24 hours prior notice to the installation,
maintenance, repair or replacement of facility systems pursuant to this Section
1.6 and Landlord shall use its best efforts to complete such work without
material interruption of Tenant's operations.
1.7 No Easements. No implied easements are granted by this Lease.
Landlord may close any portion of Building or Land areas to the extent as may,
in Landlord's opinion, be necessary to prevent a dedication of or accrual of
rights in those areas to any person or the public.
1.8 Landlord's Access. Landlord shall have access to the Premises at
all reasonable times on 24 hours prior notice, and at any time in an emergency,
for inspection, showing for lease or sale, performing maintenance and repairs
and for all other purposes contemplated elsewhere in this Lease.
Article 2. TERM
2.1 Commencement Date. The Term shall begin on the Commencement Date
specified in the Data Sheet. This Lease shall be null and void if Landlord fails
to purchase the Premises and Land and obtain all necessary governmental
approvals of the Permitted Uses on or before April 1, 1999.
2.2 Delayed or Early Possession.
(a) If Landlord fails to deliver possession by the
Commencement Date set forth in the Data Sheet, Tenant's obligation to pay Base
Rent and Additional Rent (defined below; referred to collectively with Base Rent
as "Rent") shall not commence until possession is delivered. However, this Lease
shall remain in full force and the Expiration Date shall not be modified.
Landlord shall not be subject to any claims or liability for failure to deliver
possession of the Premises on the Commencement Date set forth in the Data Sheet.
(b) If Tenant is given and accepts possession of the Premises
before the Commencement Date set forth in the Data Sheet, the Term and all
Tenant's obligations under this Lease, including Tenant's obligation to pay
Rent, shall begin on the date possession is accepted, but the Expiration Date
shall not be modified.
2.3 Expiration Date. The Term of this Lease shall end on the Expiration
Date specified in the Data Sheet.
2.4 Options to Extend. Tenant shall have two (2) options to extend the
Term for a period of five (5) years each. Tenant shall exercise its options to
extend by providing Landlord with written notice at least six (6) months prior
to the expiration of the then current Term. The Term, if extended, shall be on
the same terms and conditions set forth in this Lease, including annual
adjustment to Base Rent and Additional Rent.
2.5 Rent Prorations. In any partial month or year during the Term, or
if Tenant is unable to operate its business in the Premises in the manner and on
each day as required under this Lease due to fire or other casualty or
condemnation of any part of the Facility, Rent for the partial month, year or
the time affected by Tenant's inability to operate shall be prorated on a daily
basis.
Article 3. USE
3.1 Permitted Uses. Tenant shall use the Premises only for Permitted
Uses and for no other purpose without Landlord's prior consent, which may be
withheld in Landlord's reasonable discretion.
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3.2 Exclusive Uses. Landlord may grant other occupants of the Facility
exclusive rights to engage in particular uses at the Facility, provided such
uses do not impair the Permitted Uses granted to Tenant pursuant to this Lease.
3.3 Compliance with Law, Etc. Tenant shall not commit at the Facility
or permit on the Premises any (a) violation of law (including, without
limitation, the Americans With Disabilities Act) or private restriction; (b)
public or private nuisance; (c) act or condition in the Premises that would
invalidate or conflict with any insurance policy covering the Facility, the
Premises or property in either or make insurance unavailable or more expensive;
(d) waste; or (e) other act or thing that could injure the reputation of the
Facility or disturb any other occupant of the Facility.
3.4 Signs. Tenant shall not place on the Premises signs, lettering,
displays, advertising or pictures visible from outside the Premises (including
on windows or doors) without Landlord's prior approval, which shall not be
unreasonably withheld.
3.5 Locks. Tenant shall not change any locks in the Premises without
Landlord's prior consent. This provision shall not apply to Tenant's safes or
other areas maintained by Tenant for the safety and security of money,
securities, negotiable instruments, confidential business information, trade
secrets and practices or other valuables.
3.6 Floor Loads. Tenant shall not use the Facility in any manner that
would exceed recommended floor load limits.
3.7 Notice of Conditions. Landlord gives Tenant exclusive control of
the Premises and shall have no obligation to inspect the Premises. Tenant shall
promptly report to Landlord any defective condition in the Facility known to
Tenant. If Tenant fails to report any known defective condition, Tenant shall be
responsible to Landlord for any liability or expense (including reasonable
attorney's fees) incurred by Landlord that would not have been incurred had
Tenant promptly reported the defective condition to Landlord.
Article 4. BASE RENT
4.1 Base Rent. Tenant shall pay to Landlord, without set off, deduction
or demand, Base Rent, as adjusted from time to time, in monthly installments in
advance on or before the first day of each month.
4.2 Base Rent Adjustment. Commencing on April 1, 2002 and the same day
each year thereafter (each an "Adjustment Date"), including any extension of
time, Base Rent shall be adjusted to be an annual amount equal to the greater of
(a) Base Rent payable by Tenant immediately preceding the Adjustment Date, and
(b) Base Rent plus the CPI Adjustment (as defined below). The "CPI Adjustment"
means the amount determined by multiplying the figure being adjusted by a
fraction, (a) the numerator of which is the difference between (1) the Index
(defined below) as of the date of the adjustment and (b) the Index as of the
date of this Lease; and (b) the denominator of which is the Index as of the date
of this Lease. The "Index" is the Consumer Price Index, United States City
Average, All Urban Consumers and All Items (19821984 = 100), published by the
Bureau of Labor Statistics of the United States Department of Labor, provided
that Landlord shall have the right to choose a reasonably comparable substitute
index if this Index ceases to be available or undergoes a material change in its
method of computation. Notwithstanding the foregoing, the Base Rent shall not be
increased more than ten percent (10%) in any one year during the Term or any
extension thereof.
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Article 5. ADDITIONAL RENT
5.1 Definition of "Taxes".
(a) For purposes of this Lease, "Taxes" shall mean the
following items:
(1) General real estate taxes relating to the
Facility.
(2) Installments of special assessments,
including interest, relating to the
Facility, in the smallest annual amount
permitted to be paid by law or Landlord's
mortgage lender or ground lessor.
(3) Personal property taxes relating to
Landlord's fixtures at the Facility or
Landlord's personal property used in
connection with operation or maintenance of
the Facility.
(4) Landlord's expenses for professional and
other services (including but not limited to
fees and expenses of consultants, attorneys,
appraisers and experts) in connection with
efforts to secure lowered real estate tax
assessments on the Facility or to resist
increased assessments.
(b) Notwithstanding the foregoing definition,
(1) If any component of Taxes payable during any
calendar year relates to a period in excess
of twelve calendar months, the prorated
portions applicable to the excess periods
shall be included in Taxes for the years to
which they relate rather than the current
year.
(2) Taxes shall not include any income, excess
profits, franchise, estate, inheritance,
succession, capital levy or transfer taxes,
except to the extent any of these taxes are
imposed in lieu of real estate or other ad
valorem taxes.
(3) Taxes shall not include any utility
connection charges or special assessments
the amount of which is based on the use of
the Premises, the number or sizes of utility
meters dedicated to the Premises or any
other characteristic specific to the
Premises rather than to the Building, the
Land or the Facility as a whole. Tenant
shall pay 100% of all such sums to Landlord
as Additional Rent as provided below.
5.2 Definition of "Operating Expenses".
(a) For purposes of this Lease, "Operating Expenses" shall
mean all expenses incurred by Landlord with respect to the ownership and
operation of the Facility as determined by Landlord in accordance with
accounting principles consistently followed. The term includes, but is not
limited to, the following expenses:
(1) Premiums for fire, extended coverage and
general liability insurance required of
Landlord under this Lease.
(2) Costs of services, supplies and materials
incurred in connection with and cleaning,
maintenance, repairs, redecorating,
utilities and other services provided by
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Landlord under this Lease, to the extent not
separately charged to occupants of the
Facility, excluding Tenant Improvements to
be completed by Landlord under this Lease.
(3) Electricity, telephone, cable, water, sewer,
gas and other fuel, air conditioning and
other utility charges, all to the extent
provided and not separately paid by
occupants of the Facility directly to the
utility providers.
(4) Expenses allocated to the Facility under
easement agreements, service or operating
agreements, declarations, covenants or other
instruments providing for sharing of
facilities or payment for services.
(5) Reasonable charges to amortize, over their
reasonable life on a straight line basis,
any and all improvements or alterations to
the Facility, or equipment installed in it,
solely for the purpose of reducing Operating
Expenses or complying with legal or
insurance requirements that were not
mandatory as of the Commencement Date.
(6) The total cost, including compensation and
fringe benefits, of Landlord's employees
whose duties are connected with the
operation and maintenance of the Facility
(but only for the portion of their time
allocable to work related to the Facility).
(7) Management fees equal to two percent (2%) of
gross collections for the Premises (Base and
Additional Rent).
(b) Notwithstanding the foregoing definition, Operating
Expenses shall not include the following expenses:
(1) Taxes, as defined above.
(2) Costs paid to Landlord's affiliates to the
extent they exceed competitive levels.
(3) Costs of any capital improvement to the
Facility or depreciation allowance or
expense, except as specifically included
above.
(4) Costs of repairing or replacing any items
covered by insurance or warranty, to the
extent insurance or warranty proceeds are
made available to Landlord to pay the costs.
(5) Costs of leasing, procuring or renovating
space for occupants of the Facility.
(6) Legal expenses incident to enforcement of
any lease.
(7) Interest and principal payments on any loan
or ground rental payments.
(8) Reserves for future expenses.
(9) Bad debt expenses or reserves.
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(10) Costs related to any refinancing or sale of
the Facility.
(11) Costs in connection with any dispute
relating to Landlord's title to the
Facility.
(12) Costs resulting from Landlord's or its
agents' negligence, violation of law,
violation of any lease in the Facility or
failure to pay any bill before delinquency.
(c) If Landlord selects the accrual method of accounting
rather than the cash method for operating expense purposes, Operating Expenses
shall be deemed to have been paid when accrued.
5.3 Payment. Tenant shall pay as "Additional Rent," without set off,
deduction or demand, Tenant's Percentage of Taxes, Tenant's Percentage of
Operating Expenses and all other amounts permitted to be imposed against Tenant
under any other provision of this Lease concurrently with the next succeeding
installment of Base Rent following notice of the amount of the Additional Rent,
unless a different time for payment is specified in this Lease.
5.4 Estimate. Before the Commencement Date and during December of each
year during the Term or as soon afterward as is practicable, Landlord shall
notify Tenant of Landlord's estimate of the Additional Rent payable to Landlord
under this Article during the first year and for the following year of the Term,
respectively. On or before the first day of each month after each notice, Tenant
shall pay to Landlord 1/12th of the estimated Additional Rent for that year. If
notice is not given when required, Tenant shall continue to pay on the basis of
the prior estimate until the first day of the month after the month in which
notice is given, at which time Tenant shall pay any shortage, or receive a
credit for any overage, arising from the payments that should have been made
according to the new estimate. If at any time it appears to Landlord that the
Additional Rent payable for the current year will vary from Landlord's estimate,
Landlord shall notify Tenant of Landlord's revised estimate for that year, and
Tenant's subsequent payments during that year shall be based on the revised
estimate. Landlord estimates Additional Rent for the initial year of the Lease
at less than $1.00 per square foot.
5.5 Annual Adjustment.
(a) Within 90 days after the end of each year during the Term
or as soon afterward as is practicable, Landlord shall notify Tenant of the
total Additional Rent payable to Landlord under this Article for that year. If
the Additional Rent payable exceeds the Additional Rent paid by Tenant, Tenant
shall pay the excess to Landlord within 30 days after Landlord's notice. If the
Additional Rent owed is less than the Additional Rent paid, Landlord shall
credit the overpayment toward the next accruing Rent.
(b) Tenant may, by notice to Landlord within 30 days after
Landlord's notice of Additional Rent, require an audit of Landlord's books and
records relating to Additional Rent for the preceding calendar year. Landlord
shall have the option of either providing Tenant with an audit prepared by an
independent certified public accountant or allowing Tenant access to Landlord's
books and records for purposes of performing the audit. If the audit indicates
Landlord has overstated Additional Rent by more than 5%, Landlord shall pay the
cost of the audit. Otherwise, Tenant shall pay the cost of the audit, provided
that if more than one occupant of the Facility has requested an audit, the cost
shall be divided among Tenant and the other occupants in proportion to their
Percentage Interests.
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5.6 Other Adjustments.
(a) Whenever the Facility is not 100% occupied during any part
of any calendar year during the Term, Tenant's Percentage as to that part of the
year shall be adjusted to the ratio the rentable square footage of the Premises
bears to the greater of (1) the total average rentable area leased (pursuant to
leases under which the term has commenced) in the Facility for that year, or (2)
95% of the total average rentable area of the Facility for that year.
(b) Whenever the Facility is not 100% occupied during any part
of any calendar year, the components of Taxes and Operating Expenses that vary
in relation to the level of occupancy of the Facility shall be "grossed up" as
to that part of the year so that Tenant is allocated its proportionate share of
actual Taxes and Operating Expenses.
(c) Whenever Landlord receives a property tax credit or
reduced assessment on the Facility during any part of any calendar year during
the Term, and the credit or reduction is granted under any law providing
favorable tax treatment for another tenant or tenant(s) of the Facility,
Tenant's Percentage of Excess Taxes shall be based on what Taxes would have been
without the credit or reduction.
(d) Notwithstanding anything in this Article to the contrary,
Landlord may specially assess Tenant for cost of additional electricity,
utilities, services or other items of Taxes or Operating Expenses (and shall
accordingly reduce the total amount of Taxes or Operating Expenses on which
Tenant's Percentage of Taxes or Tenant's Percentage of Operating Expense is
calculated) to the extent Tenant's use or consumption of these items warrants
such an assessment.
(e) Tenant's Percentage shall be equitably adjusted in the
event of a change in the number of rentable square feet of space in the Facility
or in the Premises.
5.7 Tenant's Personal Property Taxes. Tenant shall pay prior to
delinquency all taxes imposed on Tenant's improvements, fixtures or personal
property in the Premises. Tenant shall request a separate assessment and billing
for these taxes. If taxing authorities include in calculating Taxes on the
Facility the value of any property belonging to Tenant, Tenant shall pay all
Taxes attributable to that property directly to the taxing authorities; provided
such payment is not a duplication of Taxes separately billed and paid by Tenant.
5.8 Extension. Landlord's failure to notify Tenant of an amount due
from Tenant under this Article shall not be a waiver of Landlord's right to
collect that amount, but shall only extend the time for Tenant's payment to a
date allowing Tenant the period of time otherwise allowed for making the payment
had Landlord notified Tenant on time.
Article 6. INSURANCE, RELEASES, AND INDEMNIFICATIONS
6.1 Definitions. As used in this Article and elsewhere in this Lease:
(a) A party's "Indemnitees" are (1) its shareholders, members,
partners, venturers, beneficiaries or other principals, and (2) its directors,
officers, managers, trustees, employees, agents and other persons authorized to
act on its behalf; and
(b) A party's "Users" are (1) its Indemnitees, (2) its
customers, business associates and other invitees and licensees, and (3) in the
case of Tenant,
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its subtenants, and in the case of Landlord, its lessees (other than Tenant) and
their subtenants.
6.2 Landlord's Insurance.
(a) Landlord shall keep the Facility insured for Landlord's
own benefit in an amount equal to the Facility's replacement value (excluding
deductibles, coinsurance and foundation, grading and excavation costs) against
loss or damage by fire, windstorms, hail, explosion, vandalism, malicious
mischief, civil commotion and such other risks and coverages, including rental
interruption insurance, as are now or may in the future be customarily covered
with respect to buildings and improvements similar in construction, general
location, use, occupancy and design to the Facility ("Comparable Properties").
(b) Landlord shall maintain, for its benefit and the benefit
of its managing agent (if any), general public liability insurance against
claims for personal injury, death or property damage occurring at the Facility.
(c) These insurance provisions shall not limit or modify
Tenant's obligations under any provision of this Lease. All insurance premiums
paid by Landlord with respect to the Facility shall be considered "Operating
Expenses."
6.3 Tenant's Insurance.
(a) Tenant shall at its expense keep all machinery, equipment,
furniture, fixtures, personal property and business interests located at the
Premises and not belonging to Landlord insured for Tenant's benefit, in an
amount equal to the lesser of their full replacement value or insurable value,
against loss or damage by fire and such other risks as are now or may in the
future be customarily insured against by tenants in Comparable Properties
including, without limitation, windstorms, hail, explosions, vandalism, theft,
malicious mischief, civil commotion, water damage, sprinkler leakage and such
other coverage as Landlord or Tenant may deem appropriate or necessary.
(b) Tenant shall at its expense maintain general public
liability insurance for the mutual benefit of Landlord, mortgagees of the
Facility, Landlord's managing agent (if any) and Tenant against claims for
personal injury, death or property damage (including contractual liability
coverage applicable to this Lease and insuring Tenant's indemnification
obligations provided for below) occurring at the Premises, to the limits of at
least $2,000,000 in respect to the injury or death to a single person, at least
$2,000,000 in respect to any one accident and at least $5,000,000 in respect to
any property damage.
(c) Insurance policies maintained pursuant to this section
shall be written by companies reasonably satisfactory to Landlord that are
licensed or authorized to do business and in good standing in the state where
the Facility is located and have a rating issued by an insurance rating
organization (including, without limitation, A.M. Best & Company) of not less
than the second-best rating. The certificates evidencing such insurance, and
renewals or replacements at least 30 days before expiration of coverage, shall
be delivered to Landlord with evidence satisfactory to Landlord that the
premiums have been paid. The policies shall not be terminable without 30 days
prior written notice to Landlord. Any such coverage shall be deemed primary to
any liability coverage secured by Landlord.
6.4 Releases.
(a) Insurance policies maintained pursuant to this Article for
loss or damage by fire or other risks shall permit releases of liability as
provided below and
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include waiver of subrogation clauses as to Tenant and Landlord respectively.
Landlord and Tenant waive and release and discharge each other from all claims
or demands arising out of damage to destruction or loss of use of property
caused by fire or other casualty arising due to any act or omission of the other
or its Users and agree to look only to their respective insurance coverages in
the event of such a loss. Notwithstanding the foregoing releases, if any damage
to the Facility results from any act or omission of Tenant or its Users and any
of Landlord's loss is deductible, Tenant shall pay to Landlord the deductible
amount (not to exceed $5,000 per event). This paragraph shall not affect
Tenant's repair obligations under other provisions of this Lease.
(b) Except for claims arising out of Landlord's or its User's
intentional acts or omissions, to the extent not prohibited by law, Tenant
waives all claims, and Landlord and its Indemnitees shall not be liable to
Tenant, for damage during the Term to Tenant's property or business, including
consequential damages, occurring at the Facility. This paragraph shall apply
especially, but not exclusively, to damage caused by water, snow, frost, steam,
refrigerators, sprinkling devices, air conditioning apparatus, excessive heat or
cold, falling plaster, broken glass, sewage, gas, odors, noise, bursting or
leaking of pipes or plumbing fixtures or the flooding of basements or other
subsurface areas and shall apply equally whether damage results from the
negligent acts or omissions of Landlord's Users or any other persons and whether
damage results from any of the foregoing causes or otherwise.
(c) All property in the Facility belonging to Tenant or its
Users shall be at Tenant's sole risk. Except for the intentional acts of
omissions of Landlord or its Users, Landlord shall not be liable for damage,
theft or loss affecting this property and Tenant shall defend and indemnify
Landlord and its Indemnitees against claims and liability for injuries to this
property.
(d) Landlord does not warrant that any of the services
Landlord may supply will be free from interruption and these services are
subject to all laws, ordinances, regulations and guidelines of governmental
authorities. Tenant acknowledges that any one or more of these services may be
suspended by reason of accident, repairs, alterations, improvements or causes
beyond Landlord's reasonable control. Any such interruption of service shall not
be deemed an eviction or disturbance of Tenant's use and possession of the
Premises or any part of it or render Landlord liable to Tenant for damages by
abatement of Rent or relieve Tenant from performance of its obligations under
this Lease.
6.5 Indemnifications.
(a) Subject to Paragraph (c), Tenant shall indemnify Landlord
and Landlord's Indemnitees against any and all damages claimed to be suffered by
third parties (including reasonable attorneys' fees and all other costs and
liabilities incurred in connection with any action or proceeding brought with
respect to such a claim) arising from any (1) default by Tenant under this
Lease, (2) condition inconsistent with any representation or warranty made by
Tenant under this Lease, except to the extent caused by Landlord or its Users,
(3) act or negligence by Tenant or its Users, or (4) accident, injury or damage
in or about the Premises or the Facility to the extent caused by Tenant or its
Users. If an action or proceeding is brought against Landlord or any of its
Indemnitees with respect to such a claim, Tenant, on notice from Landlord, shall
resist or defend the action or proceeding by counsel reasonably satisfactory to
Landlord.
(b) Subject to Paragraph (c), Landlord shall indemnify Tenant
and Tenant's Indemnitees against any and all damages claimed to be suffered by
third parties (including reasonable attorneys' fees and all other costs and
liabilities incurred in connection with any action or proceeding brought with
respect to such a
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claim) arising from any (1) default by Landlord under this Lease, (2) condition
inconsistent with any representation or warranty made by Landlord under this
Lease, except to the extent caused by Tenant or its Users, (3) act or negligence
by Landlord or its Users, or (4) accident, injury or damage in or about the
Facility to the extent caused by Landlord or its Users. If an action or
proceeding is brought against Tenant or any of its Indemnitees with respect to
such a claim, Landlord, on notice from Tenant, shall resist or defend the action
or proceeding by counsel reasonably satisfactory to Tenant.
(c) Whenever Landlord and Tenant are jointly responsible
(whether with each other or with others) for damages suffered by a third party,
their indemnification obligations under this Section shall be limited to their
respective percentages of responsibility for the damages.
(d) These indemnification obligations do not apply to the
extent Landlord and Tenant have released each other from claims elsewhere in
this Lease.
(e) These indemnification obligations shall survive expiration
or earlier termination of this Lease.
Article 7. HAZARDOUS MATERIALS
7.1 Definitions. For purposes of this Lease:
(a) "Hazardous Material" is used in its broadest sense and
means any asbestos, petroleum based products, pesticides, paints and solvents,
polychlorinated biphenyl, lead, cyanide, DDT, acids, ammonium compounds and
other chemical products and any substance or material defined or designated as a
hazardous or toxic substance, material, waste, or other similar term, by any
Environmental Law.
(b) "Environmental Law" is used in its broadest sense and
means any federal, state, or local statute, ordinance, regulation, or court or
administrative order affecting the Facility presently in effect or promulgated
in the future, as amended from time to time, regulating hazardous or toxic
substances, including but not limited to the following statutes:
(1) Resource Conservation and Recovery Act of
1976, 42 U.S.C. ' 6901 et seq.
(2) Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 40
U.S.C. ' 1801 et seq.
(3) Clean Air Act, 42 U.S.C. " 74017626.
(4) Water Pollution Control Act (Clean Water Act
of 1977), 33 U.S.C. ' 1251 et seq.
(5) Insecticide, Fungicide and Rodenticide Act
(Pesticide Act of 1987), 7 U.S.C. ' 135 et
seq.
(6) Toxic Substances Control Act, 15 U.S.C. '
2601 et seq.
(7) Safe Drinking Water Act, 42 U.S.C. ' 300(f)
et seq.
(8) National Environmental Policy Act (NEPA) 42
U.S.C. ' 4321 et seq.
(9) Refuse Act of 1899, 33 U.S.C. ' 407 et seq.
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7.2 Tenant's Covenants. Tenant shall not cause or permit any Hazardous
Material to be brought on, kept, stored or used in or about the Facility by
Tenant or its Users, unless the Hazardous Material is necessary for Permitted
Uses and will at all times be used, kept, stored and disposed of in a manner
that complies at all times with all Environmental Laws and will not create an
undue risk to other occupants of the Building, giving consideration to the
nature of the Building. Tenant shall promptly notify Landlord of any possible
contamination of the Facility that becomes known to Tenant. Tenant shall
indemnify and hold Landlord harmless from and against any and all claims,
actions, damages, liabilities, costs, disbursements and costs and expenses of
investigation (including reasonable attorneys' fees) incurred by Landlord or its
agents arising out of or from the contamination by Hazardous Materials of the
Premises or Facility or violation of Environmental Laws which is permitted or
caused by Tenant, its agents or invitees after the date of this Lease, except to
the extent such contamination or violation is caused by Landlord, its agents or
third parties.
7.3 Remediation. In addition to Tenant's other obligations under this
Lease, if the presence of any Hazardous Material at the Facility caused or
permitted by Tenant results in any contamination of the Facility or the
violation of law, Tenant shall be responsible for the cost of all actions
necessary to return the Facility to the condition existing prior to the
introduction of the Hazardous Material or the violation of law. Landlord shall
have the option of taking such actions at Tenant's expense or requiring Tenant
to do so itself. If Landlord requires Tenant to take any such action, any work
required on the Facility shall be treated as if it were an alteration to the
Facility subject to Article 9 below. Further, Tenant shall on demand pay
Landlord the amount, if any, by which the Facility's value has decreased as a
result of the contamination or violation. Tenant's obligations under this
Paragraph shall survive expiration or earlier termination of this Lease.
7.4 Representation by Landlord. Except as disclosed in the Phase I
Environmental Site Assessment dated January 12, 1999 and prepared by Northern
Environmental and the Soil and Ground-Water Sampling Results dated February 19,
1999 and prepared by Northern Environmental, Landlord represents that to
Landlord's knowledge, the Premises and the Facility are free from contamination
by Hazardous Materials. Landlord shall not cause or permit any Hazardous
Material to be brought on, kept, stored or used in or about the Facility in
violation of any Environmental Laws. Landlord shall indemnify and hold Tenant
harmless from and against any and all claims, actions, damages, liabilities and
costs (including reasonable attorneys' fees, disbursements, costs and expenses
of investigation) incurred by Tenant or its agents arising out of or from the
contamination by Hazardous Materials of the Premises or Facility or violation of
Environmental Laws which occurred prior to the date of Tenant's initial
occupancy of the Facility, except to the extent such contamination or violation
was caused by Tenant or its agents.
Article 8. MAINTENANCE AND REPAIRS
8.1 Facility. Landlord shall maintain the exterior and structural
components of the Facility (including heating, air conditioning, electrical and
plumbing systems), the Common Areas and any signage shared by Tenant and others
in good order and repair and in compliance with applicable law. Landlord may,
upon reasonable prior notice (except in the case of an emergency, no notice
shall be required), temporarily close off Common Areas or entries to the
Facility or temporarily suspend services or amenities to facilitate maintenance
and repair work. Landlord shall schedule and perform maintenance and repairs so
as to minimize interference with Tenant's use of the Premises.
8.2 Premises. Tenant shall at its expense keep the Premises and
Tenant's signage (if any) in as good order, condition and repair as existed when
the Tenant Improvements were completed, reasonable wear and tear and damage from
casualties
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against which Landlord is required to insure excepted. Notwithstanding any
provisions of this Lease to the contrary, unless caused by a casualty against
which Landlord is required to insure, Tenant shall at its expense promptly
repair to Landlord's satisfaction all damage to the Facility caused by any act
or omission of Tenant or its Users. All repairs shall be in quality and class at
least equal to the original work and shall comply with all applicable laws.
8.3 Refuse. Tenant shall keep the Premises clean inside and out and
remove all refuse resulting from Tenant's operations. Tenant shall segregate
refuse as Landlord may reasonably require for recycling purposes, keep it in
covered containers and have it removed regularly to designated areas at the
Facility.
Article 9. IMPROVEMENTS AND ALTERATIONS
9.1 Consent Required. Tenant shall not make any improvements or
alterations to the Premises ("Work") without Landlord's prior consent, which
shall not be unreasonably withheld. Landlord may condition its consent on its
receipt of copies of contracts, plans, specifications, permits and licenses, and
on third party indemnifications, performance bonds and evidence of insurance
reasonably satisfactory to Landlord. Tenant shall defend and indemnify Landlord
against any and all claims and liability connected with the Work.
9.2 Labor. All Work shall be done by contractors or mechanics
reasonably satisfactory to Landlord. Tenant shall do no Work of a nature or in a
manner likely to result in a labor dispute or materially interfere with
operation of the Facility.
9.3 Compliance and Quality. All Work shall comply with all applicable
laws and insurance requirements (including, without limitation, worker's
compensation insurance laws and requirements) and shall be performed in a good
and workmanlike manner. All materials shall be new and of at least as good a
quality as those installed in the Premises on the Commencement Date. Tenant
shall permit Landlord to inspect construction operations in connection with the
Work. Landlord's approval and inspection of the Work shall not constitute an
assumption of responsibility for the accuracy and sufficiency of Tenant's plans
and specifications, or their compliance, or the compliance of any Work, with
applicable law, all of which shall be entirely Tenant's responsibility.
9.4 Expenses. Tenant shall pay the cost of all Work and the cost of
restoring the Facility to the condition that existed before commencement of the
Work. On completion of the Work, Tenant shall furnish Landlord with contractor's
affidavits, full and final lien waivers and receipted bills covering all labor
and materials.
9.5 Liens. Tenant shall notify all contractors that their lien rights
attach only to Tenant's interest in the Premises, and Landlord shall be entitled
to post a notice in the Premises to that effect during any Work. Tenant shall
cause to be discharged or bonded over, within 10 business days after filing, any
construction lien claim filed against the Facility for work or materials claimed
to have been performed for or furnished to or on behalf of Tenant.
9.6 Title to Improvements. All improvements constructed by Tenant on
the Premises shall be Landlord's property.
9.7 Removal of Improvements. Landlord, by notice to Tenant, may require
Tenant to remove at Tenant's expense (1) at any time, any improvements made by
Tenant in the Premises and not included in Tenant's Improvements or consented to
by Landlord pursuant to this Article; (2) on termination of this Lease or
Tenant's right of possession, any improvements made by Landlord or Tenant whose
removal is necessary to permit releasing; and (3) in either case, to repair any
damage caused by installation or
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removal; provided, however, Tenant may remove only those items specified in
Landlord's notice and any items that are Tenant's property.
9.8 Survival of Obligations. Tenant's obligations under this Article
shall survive expiration or earlier termination of this Lease.
Article 10. ASSIGNMENT AND SUBLETTING
10.1 Notice to Landlord. Tenant may, with Landlord's prior consent, (a)
assign this Lease or any interest under it by voluntary act, operation of law or
otherwise; (b) sublet the Premises or any part of it; or (c) permit the use of
the Premises by any parties other than Tenant, its previously approved assignees
and subtenants and these parties' Users. Tenant shall notify Landlord of
Tenant's intent, as of a stated date (the "Transfer Date") at least 30 days
after notice, to assign this Lease or sublet part or all of the Premises for the
balance or part of the Term. Tenant's notice shall state the consideration for
and all other terms of the proposed assignment or sublease and the name and
address of the proposed assignee or subtenant and shall include a complete copy
of the proposed assignment or sublease.
10.2 Landlord's Consent. Landlord's consent to a proposed assignment or
subletting shall not be unreasonably withheld. If Landlord does not consent
within 10 business days after Tenant's notice, Landlord's consent shall be
deemed withheld.
10.3 Landlord's Expenses. Tenant shall promptly on demand pay
Landlord's reasonable attorneys' fees and other expenses incident to a review of
any documentation related to any proposed assignment or sublease. If this Lease
is terminated as to all or any part of the Premises pursuant to this Article,
Tenant shall at its expense discharge any commission due and owing as a result
of any proposed assignment or subletting, whether or not the applicable part of
the Premises is recaptured and rented by Landlord to the proposed occupant or
anyone else.
10.4 Deemed Assignments. An assignment within the meaning of this
Article shall be deemed to have occurred on a cumulative Change in Ownership
(defined below) of more than 50% of the equity interests in Tenant since the
date of this Lease or on a sale of all or substantially all of Tenant's assets,
regardless of whether such sale includes an assignment of Tenant's rights under
this Lease or a sublease of the Premises. "Change in Ownership" means (a) if
Tenant is a partnership (which term shall include joint ventures) or limited
liability company, any change in the partners or members of Tenant, or (b) if
Tenant is a corporation whose outstanding voting stock is not listed on a
recognized securities exchange, any transfer of the shares of stock of Tenant.
However, a Change in Ownership does not include changes in partners or members
or transfers of stock for estate planning purposes to a family member, a trust,
a family partnership, or any similar estate planning transfer.
10.5 No Release. Tenant and any and all guarantors of this Lease shall
remain fully liable under this Lease and their guaranties, respectively, despite
any sublease or assignment.
10.6 Documentation. Subtenants shall agree in a form reasonably
satisfactory to Landlord to comply with this Lease to the extent of the space
sublet. Tenant shall deliver to Landlord promptly an executed copy of each
sublease or assignment and an agreement of compliance by each subtenant.
Landlord's consent to any assignment or sublease shall not be a waiver of
Landlord's rights under this Article as to any subsequent assignment or
sublease.
10.7 Financing Statements. Tenant shall not enter into, execute, or
deliver any financing statement or security agreement that can be given priority
over any mortgagee given by Landlord or its successors.
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10.8 Effect of Noncompliance. Any sale, assignment, mortgage, transfer
or sublease of the Premises by Tenant not in compliance with this Article shall
be void.
Article 11. DAMAGE
11.1 Repairs. If damage to the Facility renders a material part of the
Premises unusable for Permitted Uses and the damage can be substantially
repaired within 120 days using standard working methods, then unless this Lease
is terminated pursuant to this Article, Landlord shall promptly and diligently
(and in any event no later than 120 days after the date of the damage) restore
the damaged areas (excluding any improvements not included in the Tenant
Improvements) to substantially the same condition that existed before the
damage. If the damage was not caused or contributed to by any act or omission of
Tenant or its Users, Rent shall be apportioned on a daily and square footage
basis and abated proportionately until repairs are completed. If Landlord does
not timely complete repairs, Tenant may terminate this Lease by notice to
Landlord within 30 days after the deadline for completion, unless repairs are
completed before notice of termination. However, Tenant may not terminate this
Lease if its willful misconduct caused the damage unless Landlord is not
promptly and diligently repairing the Facility.
11.2 Termination.
(a) Either party may terminate this Lease if damage to the
Facility renders a material part of the Premises unusable for Permitted Uses and
the damage cannot be substantially repaired within 120 days using standard
working methods.
(b) Landlord may also terminate this Lease, provided Landlord
also terminates all similarly affected leases in the Facility, if (1) more than
33% of the Facility is damaged and Landlord elects not to repair the damage; (2)
a mortgagee of the Facility does not allow adequate insurance proceeds to repair
damage to the Facility; (3) damage to the Facility is not covered by insurance
Landlord is required to maintain under this Lease; (4) Landlord in good faith
settles its insurance claims relative to the damage for less than the amount
required to make repairs; or (5) the Facility is damaged during the last 12
months of the Term.
(c) To terminate the Lease under this Section, a party must
notify the other party within 30 days after discovery of the event allowing
termination and before the damage is repaired, specifying a termination date at
least 30 but not more than 60 days after the notice date.
Article 12. EMINENT DOMAIN
12.1 Definition. "Taken" means acquisition by the power of eminent
domain or any similar governmental power or any other acquisition in lieu of
condemnation.
12.2 Termination.
(a) If the entire Premises, or portions of the Facility
sufficient to render the entire Premises unusable for Permitted Uses, are
permanently taken, this Lease shall terminate as of the date title vests in the
condemning authority or the date the Premises become unusable, whichever occurs
first.
(b) If any part of the Facility is permanently taken and
Landlord elects to restore the Facility in a manner that materially alters the
Premises, Landlord or Tenant may terminate this Lease. If sufficient portions of
the Facility are permanently taken so as to materially interfere with Tenant's
use of the Premises for Permitted Uses, Tenant may terminate this Lease. To
terminate the Lease under this Paragraph, a party must notify the other party
within 30 days after the date title
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vests in the condemning authority, specifying the termination date at least 30
but not more than 60 days after the notice date.
12.3 Damages. All damages awarded for any taking of the fee and
leasehold interests in the Facility shall belong to Landlord. Tenant may prove
in any proceedings and receive a separate award for any other condemnation
awards available under applicable law.
12.4 Restoration. If a partial taking of the Facility occurs and this
Lease is not terminated pursuant to this Article, Rent and Tenant's Percentage
shall be adjusted based on the remaining size, character, and value of the
Premises and the Facility and Landlord shall restore the Facility (excluding any
improvements in the Premises that are not included in the Tenant Improvements)
as nearly as reasonably possible to a complete architectural unit with all due
diligence, but only to the extent of available condemnation proceeds.
Article 13. MORTGAGEES AND PURCHASERS
13.1 Priority. Tenant's rights under this Lease are and shall always be
subordinate to any and all mortgages, deeds of trust, ground leases and other
security instruments (each a "Mortgage") now or in the future encumbering the
Facility or any part of it and to amendments, replacements, renewals and
extensions of Mortgages, provided that Tenant's use and occupancy of the
Premises shall not be disturbed by any mortgagee, trustee, ground lessor or
other secured party (each a "Mortgagee") under any Mortgage as long as no
uncured Event of Default (defined below) exists and the Lease is in full force.
This clause shall be selfoperative and no further instrument of subordination
shall be required, but Tenant shall execute such further assurance, containing
such reasonable provisions, as Landlord or any Mortgagee may request. Any
Mortgagee may elect that this Lease shall have priority over its Mortgage and on
notification of this election by a Mortgagee to Tenant, this Lease shall be
deemed to have such priority whether the Lease is dated before or after the date
of the Mortgage.
13.2 Estoppel Certificates. Tenant shall, from time to time on
Landlord's written request, execute, acknowledge and deliver to Landlord or its
designee a written certification stating: (a) the date this Lease was executed
and the date it expires; (b) the date Tenant entered into occupancy of the
Premises; (c) the amounts of each component of Rent and any Security Deposit and
the date to which each component of Rent has been paid; (d) that this Lease is
unmodified and in full force and effect (or if modified that the Lease as
modified is in full force and effect and stating the modifications); (e) that
Landlord is not in default under this Lease (or if in default the specific
nature of the default); and (f) other matters as may be reasonably requested by
Landlord or any Mortgagee or prospective purchaser of the Facility. Tenant shall
modify the foregoing certification to reflect accurately the status of this
Lease. Any prospective purchaser or Mortgagee may rely on any certification
delivered pursuant to this paragraph. If Tenant fails to respond within 10
business days after request by Landlord for a certification, Tenant shall be
conclusively deemed to have admitted the accuracy of any information Landlord
supplies to a prospective purchaser or Mortgagee to the effect that this Lease
is in full force and effect, that there are no uncured defaults in Landlord's
performance, that any Security Deposit is as stated in this Lease and that not
more than one month's Base Rent has been paid in advance, unless Landlord has
actual knowledge to the contrary.
13.3 Mortgagee's Right to Cure. Provided a Mortgagee notifies Tenant in
writing of its address, Tenant shall give the Mortgagee, by certified or
registered mail, a copy of any notice of default served on Landlord and agrees
that the Mortgagee may, but need not, cure any such defaults.
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13.4 Transfer of Landlord's Interest. If Landlord's interest in the
Facility or any part of it is transferred (other than transfers for security
purposes only, but including transfers via foreclosure), Landlord shall have no
responsibility for the Landlord's obligations accruing after the transfer, and
the transferee shall have no responsibility for Landlord's obligations accruing
before the date of transfer, including liability for any Security Deposit
(unless the transferee receives a credit from Landlord for any Security
Deposit). Tenant shall attorn in writing to the transferee, provided the
transferee assumes, in writing, the future Landlord's obligations under the
Lease.
Article 14. ADDITIONAL OBLIGATIONS OF LANDLORD
14.1 Compliance with Law, Etc. Landlord shall ensure that the Facility
complies with applicable laws, private restrictions and insurance requirements,
provided that if any noncompliance is caused by Tenant or its Users, Tenant
shall pay the cost of eliminating the noncompliance.
14.2 Services. Landlord shall provide the following services to Tenant:
(a) Air conditioning and heating service for comfortable
occupancy of the Premises.
(b) Electricity consistent with the electricity provided to
comparable properties used for purposes similar in nature to the Permitted Uses.
(c) Water for drinking, lavatory and toilet purposes from the
regular Building supply through existing fixtures (or fixtures installed by
Tenant with Landlord's prior consent) at temperatures in accordance with
applicable law.
(d) Maintenance of exterior plantings and removal of snow,
ice, debris and unsafe conditions from the exterior of the Facility and the
adjacent sidewalks.
(e) Sewer service for sewage emanating from plumbing fixtures
located in the Premises.
14.3 Tenant Improvements. Landlord shall complete the improvements
described on the attached Exhibit C ("Tenant Improvements") within 30 days after
the Commencement Date.
14.4 Construction of New Building. Landlord shall construct the New
Building in accordance with the Work Letter attached as Exhibit D.
Article 15. RIGHTS RESERVED TO LANDLORD
Landlord reserves the following rights exercisable without notice or
liability to Tenant and without effecting a constructive or actual eviction or
disturbance of Tenant's use or possession or giving rise to any claim for set
off or abatement of Rent:
15.1 Identification of Facility. Except as otherwise provided elsewhere
in this Lease, to change the name, address, number or designation by which the
Facility is commonly known.
15.2 Service Contractors. To reasonably restrict and control any
service in or to the Premises including, but not limited to, provision of sign
painting and lettering.
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15.3 Control of Facility. Provided Tenant's access to and use of the
Premises for Permitted Uses is not materially impaired, to reduce, increase,
enclose or otherwise change the size, number and location of buildings, layout
and nature of the Facility and the other tenancies, premises and buildings
included in the Facility, construct additional buildings and additions to any
building, increase the size of the Facility by adding parcels of land to it,
create additional rentable areas through use or enclosure of Common Areas or
otherwise, convey portions of the Facility and reduce the size or restrict
Tenant's use of the Common Areas.
Article 16. SURRENDER OF PREMISES
16.1 Condition of Premises.
(a) Tenant shall notify Landlord at least 30 days before
vacating the Premises to arrange for a joint inspection of the Premises. If
Tenant fails to give notice and arrange an inspection, Landlord's inspection
after Tenant vacates the Premises shall be conclusively deemed correct for
purposes of determining Tenant's responsibility for repairs to the Premises.
(b) On or before the Expiration Date or the date of earlier
termination of this Lease, Tenant shall, at its expense, remove all property
owned by or in the custody of Tenant from the Premises; all property not timely
removed shall be deemed abandoned at Landlord's option. Tenant appoints Landlord
its agent to remove its property from the Premises on termination of this Lease
and to cause transportation and storage of Tenant's property for Tenant's
benefit, all at Tenant's sole cost and risk, and Landlord shall not be liable
for any damage to or loss or theft of any of the property.
(c) On the Expiration Date or on earlier termination of this
Lease, Tenant shall peaceably surrender the Premises in good order, reasonable
wear and tear excepted, and in a condition consistent with Tenant's repair
obligations under this Lease, and shall surrender at the place then fixed for
payment of Rent all keys for the Premises and shall inform Landlord of
combinations of any vaults, locks and safes left at the Premises.
(d) Tenant shall reimburse Landlord on demand for any expenses
incurred by Landlord with respect to removal, transportation or storage of
abandoned property or with respect to restoring the Premises to the condition
required on surrender.
16.2 Holdover.
(a) If Tenant remains in possession of the Premises after
expiration or earlier termination of this Lease without the execution of a new
lease, but with Landlord's consent, Tenant shall be deemed to be occupying the
Premises from monthtomonth, subject to all the provisions of this Lease as
applicable to a monthtomonth tenancy, except that Landlord may adjust Base Rent
according to Landlord's then current rental rate schedule for new tenants in the
Facility.
(b) If Tenant remains in possession of the Premises after
expiration or earlier termination of this Lease without the execution of a new
lease and without Landlord's consent, Tenant shall be deemed to be occupying the
Premises without claim of right and Tenant shall pay Landlord for all costs or
liability resulting from delay in surrendering the Premises (including, without
limitation, claims made by any succeeding tenants and reasonable attorneys' fees
in connection with those claims) and in addition shall pay for each day of
occupancy an amount equal to double the daily rate of Rent immediately preceding
the holdover.
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Article 17. DEFAULT AND REMEDIES
17.1 Default By Tenant.
(a) Each of the following events is an "Event of Default":
(1) Tenant fails to pay to Landlord any payments
due under this Lease when due and nonpayment
continues for 10 business days after notice
from Landlord.
(2) Tenant fails to perform any of Tenant's
other obligations under this Lease and
nonperformance continues for 30 days after
notice from Landlord, provided that if the
nonperformance cannot be cured within 30
days, the cure period shall be extended for
as long as reasonably necessary as long as
Tenant is diligently pursuing cure.
(3) This Lease or any of Tenant's rights under
it is levied on under any attachment or
execution and the attachment or execution is
not vacated within 30 days.
(4) Tenant or any guarantor of this Lease dies,
is dissolved or becomes the subject of a
petition in bankruptcy or insolvency or for
liquidation, reorganization or involuntary
dissolution or for the appointment of a
receiver or trustee of all or any of its
property (which such petition or appointment
is not dismissed or vacated within thirty
(30) days) or makes an assignment for the
benefit of its creditors or petitions for or
enters into an arrangement with its
creditors.
(5) Tenant vacates or abandons the Premises for
30 consecutive days.
(b) If an event occurs that, with the giving of notice and the
passage of time, would be an Event of Default, Landlord may, without notice and
in addition to all other rights and remedies available to Landlord by law or
other provision of this Lease, exercise any or all of the following remedies:
(1) If any Rent is not paid on time, charge
Tenant 5% of the amount of the overdue
payment as liquidated damages for Landlord's
extra expense in handling the past due
account.
(2) If any other obligation is not performed on
time, without waiving or releasing Tenant
from any obligations, perform the obligation
for the account and at the expense of
Tenant.
(3) Restrain by injunction the attempted or
threatened violation of this Lease.
(c) If an Event of Default occurs, Landlord may, in addition
to all other rights and remedies available to Landlord by law or other provision
of this Lease, exercise any or all of the following remedies:
(1) Take any of the actions specified in
paragraph (b) above, to the extent not
already taken.
(2) Restrain by injunction the violation of this
Lease.
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(3) Without legal process or notice to Tenant
(except to the extent required by applicable
law), immediately reenter the Premises, and
remove all persons and property.
(4) Subject to Landlord's obligation, if any, to
mitigate its damages under applicable law,
terminate this Lease and recover from Tenant
all unpaid Rent, with interest at the rate
set forth below; and the present value of
the excess (if any) of the Rent for the rest
of the Term over the fair market rental
value of the Premises for the rest of the
Term, discounted at 2.0% below the publicly
announced prime rate of interest at
Landlord's then current depository
institution.
(d) Tenant waives any and all rights of redemption or
reinstatement granted by law if Tenant is declared in default and given notice
of termination or evicted or dispossessed for any cause or if Landlord obtains
possession of the Premises by reason of Tenant's violation of this Lease or
otherwise.
(e) Subject to Landlord's obligation, if any, to mitigate its
damages under applicable law, Tenant shall indemnify Landlord against all
damages Landlord may incur by reason of termination of this Lease including, but
not limited to, loss or diminution of rents; reasonable costs of recovering,
restoring, and repairing the Premises; and reasonable costs of renting the
Premises to another tenant (including brokers' commissions, reasonable
attorneys' fees, and necessary rent concessions).
17.2 Default by Landlord.
(a) If Landlord fails to perform any of Landlord's obligations
under this Lease and nonperformance continues for 30 days after notice from
Tenant, Landlord shall be in default, and Tenant may (but shall not be required)
to cure the default. If Tenant exercises this right, Landlord shall reimburse
Tenant on demand for reasonable costs incurred by Tenant in curing the default.
This right shall be in addition to any other right or remedy Tenant has by law,
except the right to terminate this Lease, which Tenant waives.
(b) Anything in this Lease to the contrary notwithstanding,
Landlord's obligations, representations and warranties in this Lease are not
personal obligations, representations and warranties or binding on any of
Landlord's assets except Landlord's interest in the Facility, as it may from
time to time be encumbered. No personal liability arising from this Lease or
Landlord's obligations under it shall be asserted or enforceable against
Landlord or its partners, coventurers, shareholders, directors or officers or
their respective heirs, legal representatives, successors or assigns.
17.3 Interest. Any amounts owing from one party to the other under this
Lease and not paid within any applicable grace period after the date due shall
bear interest from the date due until paid at the lesser of (a) 4% over the
publicly announced prime rate of interest at Landlord's then current depository
institution, if different), adjusted from time to time as this prime rate
changes or (b) the highest rate of interest permitted in the state where the
Facility is located for similar obligations.
17.4 Attorneys' Fees. In any litigation or alternative dispute
resolution brought by reason of an alleged default under this Lease, the losing
party shall pay court (or alternative forum) costs and all the other party's
expenses, including reasonable attorneys' fees (including allocated costs of
in-house attorneys, if any).
17.5 Forbearance. A party's failure to insist on the strict performance
of any of the other's obligations under this Lease, or to exercise any option
under this Lease, shall not be deemed to be a waiver of the obligation or
option, regardless, with
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respect to Landlord, of Landlord's knowledge of the preceding breach at the time
of acceptance of Rent.
17.6 Waiver of Jury Trial and Counterclaims. The parties waive trial by
jury in any action, proceeding or counterclaim brought by either of them against
the other (except for personal injury or property damage) on all matters
connected with this Lease, their relationship as landlord and tenant, Tenant's
use or occupancy of the Premises and any statutory or other remedy. Tenant shall
not interpose any noncompulsory counterclaims in a summary proceeding or other
action based on termination or holdover.
17.7 No Accord and Satisfaction. No payment or receipt by either party
of a lesser amount than the monetary obligations due under this Lease shall be
deemed to be other than on account of the earliest obligations due, nor shall
any endorsement or statement on any check or any letter accompanying any check
or payment be deemed an accord and satisfaction, and either party may accept any
check or payment without prejudice to its right to recover the balance of the
obligations or pursue any other remedy. No receipt for money from any person
after termination of this Lease, service of any notice, commencement of any suit
or final judgment for possession of the Premises shall reinstate, continue or
extend the Term or affect any such notice, demand or suit or imply consent for
any action for which a party's consent is required, unless specifically agreed
by that party in writing. Any amounts received by either party may be allocated
to any specific amounts due from the other as the recipient determines.
Article 18. TENANT'S OPTION TO PURCHASE AND RIGHTS OF FIRST REFUSAL
18.1 Option to Purchase. Commencing on April 1, 2005 and upon providing
Landlord written notice, Tenant shall have the following options to purchase:
(a) Tenant shall have the option to purchase the real estate
and buildings described and depicted on Exhibit E and Exhibit E-1 as the
"Partial Option Area" (which includes the New Building and the approximately 2
most northern acres of the Additional Parcel) at a purchase price equal to the
average net operating income for the Partial Option Area over the term of the
Lease divided by a capitalization rate of 10.75%; or
(b) Tenant shall have the option to purchase the entire
Facility (including the New Building and the Additional Parcel) at a purchase
price equal to the average net operating income for the entire Facility over the
term of the Lease divided by a capitalization rate of 10.00%.
18.2 Right of First Refusal to Lease. Upon completion and delivery to
Tenant of the New Building and/or Tenant's surrender of the Temporary Space, and
except during the last year of the Term, as may be extended from time to time,
provided Tenant is not in default and this Lease is in full force, whenever
Landlord receives a bona fide offer to lease the Temporary Space, Landlord shall
offer to lease the Temporary Space to Tenant at the rental rate contained in the
bona fide offer to lease and otherwise on the terms and conditions of this
Lease. Tenant shall have 10 business days from receipt of Landlord's notice
(which shall contain a copy of the bona fide offer to lease) within which to
notify Landlord of its acceptance of the offer to lease.
18.3 Other Terms and Conditions.
(a) Landlord shall convey the Partial Option Area and/or the
Facility including the Additional Parcel, as applicable, by Warranty Deed,
excepting from the warranty of title only municipal and zoning ordinances and
agreements entered under them, recorded easements for the distribution of
utilities and municipal services, recorded building and use restrictions and
covenants, general taxes levied in the year
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<PAGE>
of closing, installments of special assessments due after the date of closing,
rights of parties in possession of any part of the applicable real estate,
matters that would be disclosed by a survey of the Facility and matters that are
Tenant's responsibility under this Lease ("Permitted Encumbrances").
(b) Except for compliance with Landlord's maintenance and
repair obligations under this Lease (if any), Landlord shall be deemed to have
made no warranties or representations with respect to the physical condition of
the Partial Option Area and/or the Facility, as applicable, in connection with
the conveyance. Tenant shall have 45 days from the date Tenant exercises its
option to purchase the Facility pursuant to Subsection 18.1(b) to conduct such
physical inspections of that portion of the Facility not leased by Tenant to
evaluate the physical condition of such applicable real estate and improvements.
Landlord shall provide reasonable access or obtain necessary permissions for
reasonable access by Tenant to the Facility for purposes of inspection. Except
for claims relating to or arising out of Landlord's failure to provide required
access, Tenant shall indemnify and hold Landlord harmless from and against any
and all claims, demands, liabilities, damages, costs of expenses (including,
without limitation, reasonable attorneys' fees) arising out of or relating to
Tenant's inspection of the Facility pursuant to this Subsection 18.3(b). Tenant
may, within such 45 day period, terminate its obligation to purchase the
Facility by providing Landlord with written notice of its objection to the
physical condition of the applicable portion of the Facility. Tenant
acknowledges that Landlord would not have agreed to the purchase price set forth
above except in connection with an "as is" sale, and that its rights under this
Lease shall provide sufficient opportunity to examine the physical condition of
the Premises.
(c) Closing of the conveyance of the Option Area and/or the
Facility shall occur no earlier than 180 days or later than 270 days after
Tenant notifies Landlord of its intention to exercise its option or accept the
offer, whichever is applicable. In addition to the Warranty Deed described
above, Landlord shall execute any and all documents necessary to record the Deed
and such documents as may be necessary to cause Tenant's title insurance company
to insure against matters that are not Permitted Encumbrances, including matters
covered by "gap" title insurance. To the extent they do not accrue to Tenant
under this Lease, all income and expenses in connection with the applicable real
estate and improvements shall be prorated as of the closing date. Landlord shall
pay the real estate transfer fee on the conveyance, any and all obligations
resulting in encumbrances on title that are not Permitted Encumbrances, all
title insurance charges and the recording and filing fees for instruments
eliminating any and all such encumbrances. Except as otherwise may be agreed,
Tenant shall pay the recording fees for the Deed and all costs of any other due
diligence performed by Tenant (including the costs of any survey, inspection, or
environmental assessment).
Article 19. MISCELLANEOUS PROVISIONS
19.1 No Reservation. Submission of this Lease for examination does not
constitute a reservation or option to lease the Premises. This Lease becomes
effective as a lease only on execution and delivery by Landlord and Tenant.
Landlord's employees and agents have no authority to make or agree to make a
lease or other agreement.
19.2 Persons Bound. This Lease binds and benefits Landlord and Tenant
and their successors and assigns. If multiple parties execute this Lease as
Tenant, their liability shall be joint and several.
19.3 Interpretation.
(a) This Lease shall be interpreted according to and governed
by the internal laws of the state in which the Facility is located.
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<PAGE>
(b) Captions to the Articles and Sections of this Lease are
not a part of the Lease and shall have no effect on the interpretation of any
part of it.
(c) The relationship of Landlord and Tenant created by this
Lease shall not constitute or be construed as a partnership, principalagent
relationship, joint venture or other cooperative enterprise.
(d) If any provision of this Lease is proven to be illegal or
unenforceable, it shall be deemed modified to the minimum extent and for the
minimum amount of time necessary to eliminate the illegality or
unenforceability. If the intent of any provision of this Lease specifically
indicates, the parties' respective obligations under such provision shall
survive expiration or earlier termination of the Lease.
(e) This Lease contains all agreements between Landlord and
Tenant relating to its subject matter. Any and all prior agreements or
understandings are superseded. Each party acknowledges that neither the other
party nor its agents have made any promises or representations in connection
with this Lease except as set forth in this Lease and agrees that no claim or
liability shall be asserted for, and neither party shall be liable for, breach
of any promise or representation not stated in this Lease.
19.4 Managing Agent. Landlord's rights and remedies under this Lease or
provided by law may be executed in Landlord's own name or in the name of its
managing agent (if any) and all legal proceedings for the enforcement of rights
or remedies may be commenced and prosecuted to final judgment and execution in
Landlord's own name or in the name of its managing agent.
19.5 Dates; Force Majeure.
(a) Whenever this Lease requires payment of money on demand or
without specifying a deadline, payment shall be required by the next date an
installment of Rent is due or within 10 business days, whichever is later.
(b) Whenever this Lease requires performance of an obligation
other than payment of money on demand or without specifying a deadline,
performance shall be required within 30 days, or within a reasonable time if
such performance cannot be accomplished within 30 days.
(c) Except where otherwise indicated, time is of the essence
of this Lease. However, if weather conditions, natural disaster, fire, war,
civil unrest, labor unrest, or similar circumstances beyond a party's reasonable
control prevent timely performance of an obligation other than payment of money,
the time for performance shall be extended by the amount of time performance is
prevented.
19.6 Authority. Each party warrants that it has the power and authority
to enter into this Lease, and shall furnish to the other on reasonable demand
evidence of this power and authority.
19.7 Memorandum. Either party shall, at the request of the other,
execute a recordable memorandum of this Lease, to be prepared and recorded at
the expense of the requesting party.
19.8 Brokers. Each party warrants that it has not engaged any broker,
finder or other person (except as previously disclosed in writing, if any) who
would be entitled to any commission or fees in respect of the negotiation,
execution or delivery of this Lease. Each party shall be solely responsible for
compensating its own broker (if any), and shall defend and indemnify the other
against any claims, expenses or
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<PAGE>
liabilities incurred by the other as a result of any brokerage arrangements or
agreements made or alleged to have been made by or on behalf of the indemnifying
party.
19.9 Early Termination; Amendment. Whenever any provision of this Lease
terminates the Lease before the Expiration Date, or changes any other provision
of the Lease, the termination or change shall promptly be confirmed by written
agreement between Landlord and Tenant. However, until the parties execute such
an agreement, the Lease shall nevertheless be deemed terminated or amended.
Otherwise, this Lease may not be modified except in writing signed by Landlord
and Tenant, and by an mortgagee of the Facility if the mortgagee so requires.
19.10 Notices and Consents. All notices and consents required or
permitted under this Lease must be in writing served either personally, by
registered or certified mail, postage prepaid, or by overnight courier service,
and shall be deemed given when personally delivered, postmarked or given to the
courier service. The parties' respective addresses for notices, consents, and
payments are set forth in the Data Sheet. Either party may change its address
for notices, consents and payments at any time by notice to the other.
19.11 Exhibits. The following Exhibits are attached to and by reference
incorporated in this Lease:
(a) Exhibit A: Legal Description of Land
Exhibit A-1: Depiction of 10.5 Acre Parcel
Exhibit A-2: Depiction of Additional Parcel
(b) Exhibit B: Site Plan of Premises
Exhibit B-1: New Building Location
(c) Exhibit C: Description of Tenant Improvements
(d) Exhibit D: Work Letter for New Building
(e) Exhibit E: Description of Partial Option Area
(f) Exhibit F: Rent Schedule
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<PAGE>
LANDLORD: TENANT:
PARK STREET INDUSTRIAL LLC TRAK INTERNATIONAL, INC. d/b/a SKY TRAK
INTERNATIONAL
By: Paul Weise Real Estate Corp., By: /s/ Curtis J. Laetz
Manager ----------------------------------
Curtis J. Laetz
Vice President and Secretary
By: /s/ Paul Weise
-------------------------- Attest: /s/ Michelle Larson
Paul C. Weise, President --------------------------
-27-
OMNIQUIP INTERNATIONAL, INC.
222 East Main Street
Port Washington, Wisconsin 53074
April 19, 1999
Mr. Thomas K. Breslin
6601 Kingsbridge
Cary, Illinois 60013
Dear Mr. Breslin:
OmniQuip International, Inc. (the "Company") considers the
establishment and maintenance of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and its shareholders.
In this regard, the Company recognizes that, as is the case with many publicly
held corporations, the possibility of a change in control may exist and that
such possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its shareholders. Accordingly, the Company's
Board of Directors has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including yourself, to their assigned duties without
distraction in the face of the potentially disturbing circumstances arising from
the possibility of a change in control of the Company.
In order to induce you to remain in the employ of the company,
this letter agreement sets forth the severance benefits which the Company agrees
will be provided to you in the event your employment with the Company is
terminated subsequent to a "change in control of the Company" (as defined in
Section 2 hereof) under the circumstances described below.
1. TERM. This Agreement shall commence on the date hereof and
shall continue until December 31, 2000; provided, however, that commencing on
January 1, 2001 and each January 1st thereafter, the term of this Agreement
shall automatically be extended for one additional year unless at least 30 days
prior to such January 1st date, the Company shall have given notice that it does
not wish to extend this Agreement, and provided, further, that following a
change in control of the Company (as hereinafter defined) the term of this
Agreement shall automatically extend to the date which is two years following
such change in control.
2. CHANGE IN CONTROL. No benefits shall be payable hereunder
unless there shall have been a change in control of the Company, as set forth
below, and your employment by the Company shall thereafter have been terminated
in accordance with Section 3 below. For purposes of this Agreement, a "change in
control of the Company" shall mean a change in control of a nature that would be
required to be reported in response to Item 1 of Form 8-K promulgated under the
Securities Exchange Act of 1934,
<PAGE>
Mr. Thomas K. Breslin
April 19, 1999
Page 2
as amended ("Exchange Act"); provided that, without limitation, such a change in
control shall be deemed to have occurred if (a) any "person" (as such term is
used in Section 13(d) and 14(d)(2) of the Exchange Act) is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing a majority of the combined voting power of the Company's then
outstanding securities; or (b) during any period of two consecutive years
(including periods commencing prior to the date hereof), individuals who at the
beginning of such period constitute the Board of Directors of the Company (the
"Board") cease for any reason to constitute at least a majority thereof unless
the election, or the nomination for election by the Company's shareholders, of
each new director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period.
3. TERMINATION FOLLOWING CHANGE OF CONTROL. If any of the events
described in Section 2 hereof constituting a change in control of the Company
shall have occurred, you shall be entitled to the benefits provided in Section 4
hereof upon the subsequent termination of your employment within a period of two
(2) years following such change in control unless such termination is because of
your death or Retirement, by the Company for Cause or Disability or by you other
than for Good Reason.
(a) Disability; Retirement.
(i) If, as a result of your incapacity due to physical or
mental illness, you shall have been absent from your duties with the Company on
a full time basis for 130 consecutive business days, and within thirty (30) days
after written notice of termination is given you shall not have returned to the
full time performance of your duties, the Company may terminate this Agreement
for "Disability."
(ii) Termination by the Company or you of your employment
based on "Retirement" shall mean termination in accordance with the Company's
retirement policy, including early retirement, generally applicable to its
salaried employees or in accordance with any retirement arrangement established
with your consent with respect to you.
(b) Cause. The Company may terminate your employment for Cause.
For the purposes of this Agreement, the Company shall have "Cause" to terminate
your employment hereunder upon (i) the willful and continued failure by you to
substantially perform your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness), after a
demand for substantial performance is delivered to you by the Board which
specifically identifies the manner in which the Board believes that you have not
substantially performed you duties, or (ii) the willful engaging by you in gross
misconduct materially and demonstrably injurious to the Company. For purposes of
this paragraph, no act, or failure to act, on your part shall be considered
"willful" unless done, or omitted to be done, by you not in good faith and
without reasonable belief that your action or omission was in the best interest
of the Company. Notwithstanding the foregoing, you shall not be deemed to have
been terminated for
<PAGE>
Mr. Thomas K. Breslin
April 19, 1999
Page 3
Cause unless and until there shall have been delivered to you a copy of a
resolution duly adopted by the affirmative vote of not less than two-thirds of
the entire membership of the Board at a meeting of the Board called and held for
the purpose (after reasonable notice to you and an opportunity for you, together
with your counsel, to be heard before the Board), finding that in the good faith
opinion of the Board you were guilty of conduct set forth above in clauses (i)
or (ii) of the first sentence of this paragraph and specifying the particulars
thereof in detail.
(c) Good Reason. You may terminate your employment for Good
Reason. For purposes of this Agreement "Good Reason" shall mean:
(i) without your express written consent, the assignment to
you of any duties materially inconsistent with your positions, duties,
responsibilities and status with the Company immediately prior to a change in
control;
(ii) a reduction by the Company in your base salary as in
effect on the date hereof or as the same may be increased from time to time;
(iii) without your express written consent, the Company's
requiring you to be based anywhere other than the Company's facility where you
performed your duties for the Company immediately prior to a change in control;
and;
(iv) the failure by the Company to continue in effect any
benefit or compensation plan, pension plan, life insurance plan, health and
accident plan or disability plan in which you are participating at the time of a
change in control of the Company (or plans providing you with substantially
similar benefits), the taking of any action by the Company which would adversely
affect your participation in or materially reduce your benefits under any of
such plans or deprive you of any material fringe benefit enjoyed by you at the
time of the change in control, or the failure by the Company to provide you with
the number of paid vacation days to which you are then entitled on the basis of
years of service with the Company in accordance with the Company's normal
vacation policy in effect on the date hereof;
(v) the failure of the Company to obtain the assumption of
the agreement to perform this Agreement by any successor as contemplated in
Section 6 hereof; or
(vi) any purported termination of your employment which is
not effected pursuant to a Notice of Termination satisfying the requirements of
subparagraph (d) below (and, if applicable, subparagraph (b) above); and for
purposes of this Agreement, no such purported termination shall be effective.
(d) Notice of Termination. Any termination by the Company
pursuant to subparagraphs (a) or (b) above or by you pursuant to subparagraph
(c) above shall be communicated by written Notice of Termination to the other
party hereto. For purposes
<PAGE>
Mr. Thomas K. Breslin
April 19, 1999
Page 4
of this Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision so
indicated.
(e) Date of Termination. "Date of Termination" shall mean (i)
if this Agreement is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have returned to the
performance of your duties on a full-time basis during such thirty (30) day
period), (ii) if your employment is terminated pursuant to subparagraph (c)
above, the date specified in the Notice of Termination, and (iii) if your
employment is terminated for any other reason, the date on which a Notice of
Termination is given; provided that if within thirty (30) days after any Notice
of Termination one party notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be the date on which
the dispute is finally determined, either by mutual written agreement of the
parties, by a binding and final arbitration award or by a final judgment, order
or decree of a court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected).
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) During any period that you fail to perform your duties
hereunder as a result of incapacity due to physical or mental illness, you shall
continue to receive your full base salary at the rate then in effect until this
Agreement is terminated pursuant to Section 3(a) hereof. Thereafter, your
benefits shall be determined in accordance with the Company's long term
disability plan, or a substitute plan then in effect.
(b) If your employment shall be terminated for Cause, the
Company shall pay you your full base salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given and the Company
shall have no further obligations to you under this Agreement.
(c) If the Company shall terminate your employment other than
pursuant to Section 3(a) or 3(b) hereof or if you shall terminate your
employment for Good Reason, then the Company shall pay to you as severance pay
in a lump sum on the fifth day following the Date of Termination, the following
amounts:
(i) your full base salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given;
(ii) if the Date of Termination occurs on or prior to the
first anniversary date of the change in control of the Company, then in lieu of
any further salary payments to you for periods subsequent to the Date of
Termination, an amount equal to two (2) times your annual base salary in effect
as of the Date of Termination;
<PAGE>
Mr. Thomas K. Breslin
April 19, 1999
Page 5
(iii) if the Date of Termination occurs after the first
anniversary date of the change in control of the Company, then in lieu of any
further salary payments to you for periods subsequent to the Date of
Termination, an amount equal to (A) two (2) times your annual base salary in
effect as of the Date of Termination less (B) an amount equal to one-twelfth
(1/12) of your annual base salary in effect as of the Date of Termination for
each month (or portion of a month) which has elapsed between the first
anniversary of the date of the change in control and the Date of Termination.
For example, if a change in control occurs on January 1, 1999 and the Date of
Termination occurs on January 10, 2000, a portion of one month shall have
elapsed between the first anniversary of the date of the change in control and
the Date of Termination, and you would be eligible to receive an amount equal to
approximately 1.917 (or 23/12ths) of your annual base salary in effect as of the
Date of Termination. If the Date of Termination occurs on November 10, 2000, ten
months and a portion of one additional month shall have elapsed between the
first anniversary of the date of the change in control and the Date of
Termination, and you would be eligible to receive an amount equal to
approximately 1.083 (or 13/12ths) of your annual base salary in effect as of the
Date of Termination;
(iv) in lieu of a bonus under the Company's executive
incentive plan (or any successor bonus plan or arrangement), an amount in cash
equal to 50% of the average bonus payment awarded under such plan (or any
predecessor bonus plan or arrangement) for the three years prior to the Date of
Termination (or such lesser period of years as you have been employed by the
Company);
(v) in lieu of shares of common stock of the Company, par
value $.01 per share ("Company Shares"), issuable under the Company's 1996
Long-Term Incentive Plan, as amended, or any other stock option plan adopted
from time to time by the Company for its key executives (the "Plan"), issuable
upon exercise of options ("Options") granted to you under the Company's Plan,
(which Options shall be cancelled upon the making of the payment referred to
below), you shall receive an amount in cash equal to the aggregate spread
between the exercise prices of all Options held by you whether or not then fully
exercisable, and the higher of (a) the closing price of Company Shares as
reported on the National Association of Securities Dealers Automatic Quotation
System National Market System ("NASDAQ") on the Date of Termination (or the
closing price on any exchange on which the Company Shares are then traded, if
applicable), or (b) the highest price per Company Share actually paid in
connection with any change in control of the Company;
(vi) the Company shall also pay all legal fees and expenses
incurred by you as a result of such termination (including all such fees and
expenses, if any, incurred in contesting or disputing any such termination or in
seeking to obtain or enforce any right or benefit provided by this Agreement).
(d) Unless you are terminated for Cause, the Company shall
maintain in full force and effect, for the continued benefit of you for one year
after the Date of Termination, all employee benefit plans and programs or
arrangements in which you were
<PAGE>
Mr. Thomas K. Breslin
April 19, 1999
Page 6
entitled to participate immediately prior to the Date of Termination provided
that your continued participation is possible under the general terms and
provisions of such plans and programs. In the event that your participation in
any such plan or program is barred, the Company shall arrange to provide you
with benefits substantially similar to those which you are entitled to receive
under such plans and programs. At the end of the period of coverage, you shall
have the option to have assigned to you at no cost and with no apportionment of
prepaid premiums, any assignable insurance policy owned by the Company and
relating specifically to you.
(e) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or otherwise,
nor shall the amount of any payment provided for in this Section 4 be reduced by
any compensation earned by you as the result of employment by another employer
after the Date of Termination, or otherwise.
5. OTHER AGREEMENTS. Until the occurrence of a change in control
of the Company as defined herein, the Company's obligation for the payment of
severance or other benefits upon termination of your employment shall be
governed by such other agreement, if any, between you and the Company or any
subsidiary thereof. Following the occurrence of a change in control of the
Company, as defined herein, this Agreement shall supersede any such other
agreement and such other agreement shall have no further force or effect.
6. SUCCESSORS, BINDING AGREEMENT.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to you, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms as you
would be entitled hereunder if you terminated your employment for Good Reason,
except that for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Company" shall mean the Company as hereinbefore defined
and any successor to its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 6 or which otherwise becomes
bound by all the terms and provisions of this Agreement by operation of law.
(b) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amounts would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise
<PAGE>
Mr. Thomas K. Breslin
April 19, 1999
Page 7
provided herein, shall be paid in accordance with the terms of this Agreement to
your devisee, legatee, or other designee or, if there be no such designee, to
your estate.
7. NOTICE. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Chief
Executive Officer of the Company with a copy to the Secretary of the Company, or
to such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
8. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by you and such officer as may be specifically designated by
the Board of Directors of the Company. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Wisconsin.
9. VALIDITY. The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original but both of which
together will constitute one and the same instrument. Any such counterpart may
be executed by facsimile signature with only verbal confirmation, and when so
executed and delivered shall be deemed an original and such counterpart(s)
together shall constitute only one original.
11. ARBITRATION. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration in
Milwaukee, , Wisconsin in accordance with the rules of the American Arbitration
Association then in effect. Notwithstanding the pendency of any such dispute or
controversy, the Company will continue to pay you your full compensation in
effect when the notice giving rise to the dispute was given (including, but not
limited to, base salary) and continue you as a participant in all compensation,
benefit and insurance plans in which you were participating when the notice
giving rise to the dispute was given, until the dispute is finally resolved in
accordance with Section 3(e) hereof. Amounts paid under this Section 11 are in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any
<PAGE>
Mr. Thomas K. Breslin
April 19, 1999
Page 8
other amounts due under this Agreement. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that you
shall be entitled to seek specific performance of your right to be paid until
the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Mr. Thomas K. Breslin
April 19, 1999
Page 9
If this letter correctly sets forth our agreement on the subject
matter hereof, kindly sign and return to the Company the enclosed copy of this
letter which will then constitute our agreement on this subject.
Sincerely,
OMNIQUIP INTERNATIONAL, INC.
By: /s/ P. Enoch Stiff
-------------------------------------
P. Enoch Stiff
President and Chief Executive Officer
AGREED TO AS OF THIS
19TH DAY OF APRIL, 1999
/s/ Thomas K. Breslin
- ----------------------------------
Thomas K. Breslin
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This document contains summary financial information extracted from the attached
quarterly report on Form 10-Q for the six months ended March 31, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 893
<SECURITIES> 0
<RECEIVABLES> 79,261
<ALLOWANCES> 1,422
<INVENTORY> 98,888
<CURRENT-ASSETS> 188,560
<PP&E> 57,958
<DEPRECIATION> 11,110
<TOTAL-ASSETS> 395,162
<CURRENT-LIABILITIES> 110,228
<BONDS> 174,739
0
0
<COMMON> 143
<OTHER-SE> 42,508
<TOTAL-LIABILITY-AND-EQUITY> 395,162
<SALES> 235,238
<TOTAL-REVENUES> 235,238
<CGS> 186,277
<TOTAL-COSTS> 211,073
<OTHER-EXPENSES> 428
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,927
<INCOME-PRETAX> 18,376
<INCOME-TAX> 7,442
<INCOME-CONTINUING> 10,934
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,934
<EPS-PRIMARY> 0.77
<EPS-DILUTED> 0.77
</TABLE>
