<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 24,100
<SECURITIES> 0
<RECEIVABLES> 135,000
<ALLOWANCES> 7,100
<INVENTORY> 197,200
<CURRENT-ASSETS> 403,800
<PP&E> 211,800
<DEPRECIATION> 6,300
<TOTAL-ASSETS> 1,105,500
<CURRENT-LIABILITIES> 443,500
<BONDS> 102,800
<COMMON> 200
0
0
<OTHER-SE> 260,500
<TOTAL-LIABILITY-AND-EQUITY> 1,105,500
<SALES> 211,200
<TOTAL-REVENUES> 211,200
<CGS> 173,700
<TOTAL-COSTS> 173,700
<OTHER-EXPENSES> 41,900
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,700
<INCOME-PRETAX> (12,100)
<INCOME-TAX> 800
<INCOME-CONTINUING> (12,900)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,900)
<EPS-PRIMARY> (0.63)
<EPS-DILUTED> (0.63)
</TABLE>
<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 31, 1997.
or
( ) Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 1-2883
OUTBOARD MARINE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-1589715
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
100 Sea Horse Drive
Waukegan, Illinois 60085
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 847-689-6200
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
------- -------
Number of shares of Common Stock of $0.01 par value outstanding at January 30,
1998 was 20,425,554 shares.
Exhibit Index Page 16.
-1-
<PAGE> 2
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART I, ITEM 1
FINANCIAL INFORMATION
FINANCIAL STATEMENTS
December 31, 1997
Financial statements required by this form:
Page
----
Statements of Consolidated Earnings 3
Condensed Statements of Consolidated Financial Position 4
Statements of Consolidated Cash Flows 6
Notes to Consolidated Financial Statements 7
-2-
<PAGE> 3
OUTBOARD MARINE CORPORATION
Statements of Consolidated Earnings
(Unaudited)
Three Months Ended
December 31
-----------------------------
Post-Merger | Pre-Merger
Company | Company
------- | -------
(Dollars in millions except amounts per share) 1997 | 1996
------- | -------
|
Net Sales $ 211.2 | $ 197.1
|
Cost of Goods Sold 173.7 | 174.4
------- | -------
|
Gross earnings 37.5 | 22.7
|
Selling, General and Administrative Expense 44.3 | 42.4
------- | -------
|
Earnings (Loss) from operations (6.8) | (19.7)
|
Non-Operating Expense (Income): |
Interest expense 7.7 | 4.4
Other, net (2.4) | (10.6)
------- | -------
|
5.3 | (6.2)
------- | --------
|
Earnings (Loss) before provision for income |
taxes (12.1) | (13.5)
|
Provision for Income Taxes 0.8 | 0.8
------- | -------
|
Net earnings (loss) $ (12.9) | $ (14.3)
======= | =======
|
Net Earnings (Loss) Per Share of Common Stock |
|
Basic $ (0.63) | $ (0.71)
======= | =======
|
Diluted $ (0.63) | $ (0.71)
======= | =======
|
Average Shares of Common Stock Outstanding 20.4 | 20.2
The accompanying notes are an integral part of these statements.
-3-
<PAGE> 4
Outboard Marine Corporation
Condensed Statements of Consolidated Financial Position
<TABLE>
<CAPTION>
(Unaudited)
-----------
Post-Merger Post-Merger
Company Company
December 31, September 30,
(Dollars in millions) 1997 1997
--------- ---------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 24.1 $ 54.4
Receivables 127.9 153.2
Inventories
Finished Products 82.2 62.1
Raw Material, Work in Process
and Service Parts 115.0 114.8
--------- ---------
Total Inventories 197.2 176.9
Other current assets 54.6 86.5
--------- ---------
Total Current Assets 403.8 471.0
Product Tooling, net 33.9 34.2
Goodwill 248.6 250.2
Trademarks, Patents and Other Intangibles 83.0 83.9
Other Assets 130.7 129.5
Plant and Equipment at cost 211.8 210.2
Less Accumulated Depreciation (6.3) --
--------- ---------
205.5 210.2
--------- ---------
Total Assets $ 1,105.5 $ 1,179.0
========= =========
-4-
<PAGE> 5
Liabilities and Shareholders' Investment
Current Liabilities:
Short-term debt $ 175.7 $ 96.0
Accounts payable 67.9 142.0
Accrued and other 199.9 261.5
--------- ---------
Total Current Liabilities 443.5 499.5
Long-Term Debt 102.8 103.8
Postretirement Benefits Other than Pensions 96.0 96.0
Other Non-Current Liabilities 202.5 202.7
Shareholders' Investment:
Common stock and capital surplus 277.0 277.0
Accumulated earnings employed in the business (12.9) --
Cumulative translation adjustments (3.4) --
--------- ---------
Total shareholders' investment 260.7 277.0
--------- ---------
Total Liabilities and Shareholders'
Investment $ 1,105.5 $ 1,179.0
========= =========
The accompanying notes are an integral part of these statements.
</TABLE>
-5-
<PAGE> 6
Outboard Marine Corporation
Statements of Consolidated Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31
-----------------------------------
Post-Merger | Pre-Merger
Company | Company
---------------------------------
(Dollars in millions) 1997 | 1996
-------- | --------
<S> <C> <C>
Cash Flows from Operating Activities: |
|
Net earnings (loss) $ (12.9) | $ (14.3)
Adjustments to reconcile net earnings (loss) to net |
cash provided by operations: |
Depreciation and amortization 13.3 | 12.7
Changes in current accounts excluding the effects |
of acquisitions and noncash transactions: |
Decrease in receivables 24.4 | 25.9
Increase in inventories (21.3) | (9.6)
Decrease (increase) in other current assets 31.8 | (1.5)
Decrease in accounts payable and accrued |
liabilities (68.5) | (38.9)
Other, net (3.4) | 0.1
------- | -------
Net cash provided by (used for) operating |
activities (36.6) | (25.6)
|
Cash Flows from Investing Activities: |
|
Expenditures for plant and equipment, and tooling (6.3) | (12.1)
Proceeds from sale of plant and equipment 0.1 | 5.5
Other, net 0.8 | --
------- | -------
Net cash used for investing activities (5.4) | (6.6)
|
Cash Flows from Financing Activities: |
|
Net increase in short-term debt 79.7 | --
Payments of long-term debt, including current maturities (67.7) | --
Cash dividends paid -- | (4.0)
Other, net -- | 0.3
------- | -------
Net cash used for financing activities 12.0 | (3.7)
|
Exchange Rate Effect on Cash (0.3) | 0.3
------- | -------
Net decrease in Cash and Cash Equivalent (30.3) | (35.6)
Cash and Cash Equivalents at Beginning of Period 54.4 | 95.5
------- | -------
Cash and Cash Equivalents at End of Period $ 24.1 | $ 59.9
======= | =======
|
Supplemental Cash Flow Disclosures: |
Interest paid $ 7.2 | $ 4.2
Income taxes paid $ 1.3 | $ 2.7
======= | =======
The accompanying notes are an integral part of these statements
</TABLE>
-6-
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. MERGER WITH GREENMARINE ACQUISITION CORP.
On September 12, 1997, Greenmarine Acquisition Corp. ("Greenmarine") acquired
control of Outboard Marine Corporation (the "Pre-Merger Company") when
shareholders tendered approximately 90 percent of the outstanding shares of
the Pre-Merger Company's common stock to Greenmarine for $18 per share in
cash. Greenmarine was formed solely to purchase the shares of the Pre-Merger
Company and merged with and into the Pre-Merger Company in a non-taxable
transaction on September 30, 1997. Outboard Marine Corporation was the
surviving entity of the merger with Greenmarine (the "Post-Merger Company")
(in either case, unless specifically referenced, Pre-Merger Company or
Post-Merger Company are also defined as "OMC" or the "Company"). All of the
outstanding Pre-Merger Company common stock was cancelled on September 30,
1997 and 20.4 million shares of new common stock were issued to Greenmarine
Holdings LLC (the "Parent") the parent company of Greenmarine. Greenmarine's
total purchase price of common stock and related acquisition costs amounted to
$373.0 million.
The Post-Merger Company Condensed Statement of Consolidated Financial Position
as of December 31, 1997 and the related Post-Merger Company Statements of
Consolidated Earnings and Consolidated Cash Flow for the three months ended
December 31, 1997 are not comparable to the prior year because of purchase
accounting adjustments. The acquisition and the merger were accounted for
using the purchase method of accounting. Accordingly, the purchase price at
September 30, 1997 has been allocated to assets acquired and liabilities
assumed based on fair market values at the date of acquisition. The fair
values of tangible assets acquired and liabilities assumed were $844.9 million
and $902.0 million, respectively. In addition, $83.9 million of the purchase
price was allocated to intangible assets for trademarks, patents and dealer
network. Purchase accounting included liabilities of $136.9 million for
implementation and execution of business reorganizations. The financial
statements reflect the preliminary allocation of purchase price as the
purchase price allocation has not been finalized. The excess purchase price
over fair value of the net assets acquired was $250.2 million and has been
classified as goodwill in the Statement of Consolidated Financial Position at
September 30, 1997. The goodwill related to the acquisition will be amortized
using the straight-line method over a period of 40 years.
2. BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements present
information in accordance with generally accepted accounting principles for
interim financial information and have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Accordingly, they do
not include all information or footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, the information furnished reflects all adjustments necessary for a
fair statement of the results of the interim periods and all such adjustments
are of a normal recurring nature. These financial statements should be read
in conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K/A for the year ended September 30, 1997.
The 1998 interim results are not necessarily indicative of the results which
may be expected for the remainder of the year.
-7-
<PAGE> 8
3. SHORT-TERM BORROWINGS
The Company became obligated under a credit agreement, as amended, which
provides for loans of up to $150 million (the "Acquisition Debt"). Amounts
outstanding under this credit agreement are secured by 20.4 million shares of
common stock of the Post-Merger Company and bear interest at 10%. The
Acquisition Debt matures on June 16, 1998. On November 12, 1997, the Company
borrowed the remaining $54.0 million principal amount of Acquisition Debt in
connection with the purchase of all properly tendered 7% convertible
subordinated debentures of Outboard Marine Corporation due 2002. At December
31, 1997, the full $150 million principle amount of the Acquisition Debt was
outstanding.
The full amount of the Acquisition Debt matures on June 16, 1998. The Company
and its Parent believe the Company will be able to raise funds to refinance
such debt through the sale of debt or equity in the public or private markets
by the maturity date of the Acquisition Debt.
The Company entered into a Financing and Security Agreement effective
November 12, 1997, which provided for loans of up to $50 million and at
December 31, 1997, $25.7 million was outstanding. Effective January 6, 1998,
the Company entered into a $150 million Amended and Restated Loan and Security
Agreement which expires December 31, 2000 which replaced the November 12, 1997
agreement. Any loans outstanding under the January 6, 1998 agreement will be
secured by the Company's inventory, receivables, intellectual property and
other current assets and are guaranteed by certain of the Company's operating
subsidiaries.
Under the various credit agreements, the Company is required to meet certain
financial covenants throughout the year. The Company is in compliance with
terms and conditions of these agreements.
4. CONTINGENT LIABILITIES
As a normal business practice, the Company has made arrangements with
financial institutions by which qualified retail dealers may obtain inventory
financing. Under these arrangements, the Company will repurchase its products
in the event of repossession upon a retail dealer's default. These
arrangements contain provisions which limit the Company's repurchase
obligation to $40 million per model year for a period not to exceed 30 months
from the date of invoice. The Company resells any repurchased products.
Losses incurred under this program have not been material. The company
accrues for losses which are anticipated in connection with expected
repurchases.
The Company is engaged in a substantial number of legal proceedings arising in
the ordinary course of business. While the result of these proceedings, as
well as those discussed below, cannot be predicted with any certainty, based
upon the information presently available, management is of the opinion that
the final outcome of all such proceedings should not have a material effect
upon the Company's Consolidated Financial Position or the Consolidated
Earnings of the Company.
Under the requirements of Superfund and certain other laws, the Company is
potentially liable for the cost of clean-up at various contaminated sites
identified by the United States Environmental Protection Agency and other
agencies. The Company has been notified that it is named a potentially
responsible party ("PRP") at various sites for study and clean-up costs. In
some cases there are several named PRPs and in others there are hundreds. The
-8-
<PAGE> 9
Company generally participates in the investigation or clean-up of these sites
through cost sharing agreements with terms which vary from site to site.
Costs are typically allocated based upon the volume and nature of the
materials sent to the site. However, under Superfund, and certain other laws,
as a PRP the Company can be held jointly and severally liable for all
environmental costs associated with a site.
Once the Company becomes aware of its potential liability at a particular
site, it uses its experience to determine if it is probable that a liability
has been incurred and whether or not the amount of the loss can be reasonably
estimated. Once the Company has sufficient information necessary to support a
reasonable estimate or range of loss for a particular site, an amount is added
to the company's aggregate environmental contingent liability accrual. The
amount added to the accrual for the particular site is determined by analyzing
the site as a whole and reviewing the probable outcome for the remediation of
the site. This is not necessarily the minimum or maximum liability at the
site but, based upon the Company's experience, most accurately reflects the
Company's liability based on the information currently available. The Company
takes into account the number of other participants involved in the site,
their experience in the remediation of sites and the Company's knowledge of
their ability to pay.
As a general rule, the Company accrues remediation costs for continuing
operations on an undiscounted basis and accrues for normal operating and
maintenance costs for site monitoring and compliance requirements. The
Company also accrues for environmental close-down costs associated with
discontinued operations or facilities, including the environmental costs of
operation and maintenance until disposition. At December 31, 1997, the
Company has accrued approximately $23 million for costs related to remediation
at contaminated sites including operation and maintenance for continuing and
closed-down operations. The possible recovery of insurance proceeds has not
been considered in estimating contingent environmental liabilities.
In the quarter ended December 31, 1996, the Company recovered insurance
proceeds of $6.1 million for prior environmental charges which is included in
non-operating expense (income) in the Statement of Consolidated Earnings.
Each site, whether or not remediation studies have commenced, is reviewed on a
quarterly basis and the aggregate environmental contingent liability accrual
is adjusted accordingly. Because the sites are reviewed and the accrual
adjusted quarterly, the Company is confident the accrual accurately reflects
the Company's liability based upon the information available at the time.
5. PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (UNAUDITED)
The following unaudited pro forma Condensed Statement of Consolidated Earnings
(the "Pro Forma Statement") was prepared to illustrate the estimated effects
of the merger with Greenmarine Acquisition Corp. as if the transaction had
occurred for statement of consolidated earnings purposes as of the beginning
of fiscal 1997.
The pro forma adjustments are based upon available information and upon
certain assumptions that the Company believes are reasonable. The Pro Forma
Statement does not purport to represent what the Company's results of
operations would actually have been if such transactions in fact had occurred
at the beginning of the period indicated or to project the Company's results
of operation for any future period.
The Pro Forma Statement includes adjustments, with respect to the merger, to
reflect additional interest expense, depreciation expense and amortization of
goodwill.
-9-
<PAGE> 10
Three Months Ended
December 31, 1996
(In millions, except per share data) (Unaudited)
Net sales $ 197.1
Cost of goods sold 174.1
-------
Gross earnings 23.0
Selling, general and administrative expense 44.3
-------
Earnings (Loss) from operations (21.3)
Interest expense 7.4
Other (income) expense, net (10.6)
-------
Loss before provision for income taxes (18.1)
Provision for income taxes 0.8
-------
Net loss $ (18.9)
=======
Net loss per share of common stock
(basic and diluted) $ (0.93)
=======
Shares outstanding 20.4
=======
-10-
<PAGE> 11
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART I, ITEM 2
FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
December 31, 1997
MERGER WITH GREENMARINE ACQUISITION CORP.
On September 12, 1997, Greenmarine acquired control of the Pre-Merger Company
when shareholders tendered approximately 90 percent of the outstanding shares
of the Pre-Merger Company's common stock to Greenmarine for $18 per share in
cash. Greenmarine was formed solely to purchase the shares of the Pre-Merger
Company and merged with and into the Pre-Merger Company in a non-taxable
transaction on September 30, 1997. Outboard Marine Corporation was the
surviving entity of the merger with Greenmarine. All of the outstanding
Pre-Merger Company common stock was cancelled on September 30, 1997 and 20.4
million shares of new common stock were issued to the Parent. Greenmarine's
total purchase price of common stock and related acquisition costs amounted to
$373.0 million.
RESULTS OF OPERATIONS
The Post-Merger Company had a net loss of $12.9 million, or 63 cents per share
(basic and diluted), on sales of $211.2 million during the first quarter of
fiscal 1998. During the first quarter of fiscal 1997, the Pre-Merger Company
had a net loss of $14.3 million, or 71 cents per share (basic and diluted), on
sales of $197.1 million.
Sales increased over last year due primarily to higher marine engine sales.
Softness in marine engine and boat sales in the fall of 1996 kept dealer
inventories relatively high resulting in lower OMC sales while OMC assisted
dealers in reducing field inventories.
Cost of goods sold was 82.2 percent of sales during the first quarter of
fiscal 1998 as compared with 88.5 percent of sales during the first quarter of
fiscal 1997. The improvement in cost of goods sold is due primarily to better
absorption of costs in the current quarter. In the previous year's first
quarter the Company suspended production of many of its larger engines for
nearly a month in order to make changes to equipment and processes necessary
in order to significantly improve the quality of those engines. This resulted
in both sales decreases and unabsorbed costs last year.
Selling, general and administrative expenditures increased to $44.3 million
during the first quarter of fiscal 1998 from $42.4 million in the previous
year's first quarter. The increase is due primarily to higher amortization of
goodwill and intangibles due to purchase accounting and higher warranty
expense due to extended warranty coverage on certain new models.
Interest expense increased $3.3 million to $7.7 million for the three months
ended December 31, 1997 as a result of the new debt structure in place after
the merger.
Non-operating income - other was lower $8.2 million due primarily to $1.6
million in gains from the sale of assets and an insurance recovery of $6.1
million in an environmental matter both in the previous year's first quarter.
The provision for income taxes for the three months ended December 31, 1997
-11-
<PAGE> 12
and 1996 resulted from the net of expected taxes payable and benefits relating
to certain international subsidiaries. No tax benefit is allowed for domestic
losses because they are not realizable, at this time, under Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
It is not appropriate to compare the results of operations for the current
quarter with those of the preceding quarter because of the seasonal nature of
the Company's business.
FINANCIAL CONDITION
As a result of the merger with Greenmarine Acquisition Corp., the Statement of
Consolidated Financial Position as of September 30, 1997 was prepared using
the purchase method of accounting which reflects the fair values of assets
acquired and liabilities assumed. The excess of the total acquisition cost
over the estimated fair value of assets acquired and liabilities assumed at
the date of acquisition was initially estimated at $250.2 million. The
financial statements reflect the preliminary allocation of purchase price as
the purchase price allocation has not been finalized.
The Post-Merger Company Statement of Condensed Consolidated Financial Position
as of December 31, 1997 is not comparable to the prior year because of the
purchase accounting adjustments. The Company's business is seasonal in nature
with receivable and inventory levels normally increasing in the first fiscal
quarter and peaking in the second fiscal quarter. Current assets at
December 31, 1997 decreased $67.2 million from September 30, 1997. Cash and
cash equivalents decreased $30.3 million. Receivables decreased $25.3 million
due primarily to the switch to more domestic outside financing and inter-
national independent distributor sales. Inventories at December 31, 1997
increased $20.3 million from September 31, 1997 due to the seasonal nature of
OMC's business but were lower than the December 31, 1996 levels due primarily
to efforts to reduce quantities of work in process and service parts
inventories. Other current assets decreased $31.9 million due primarily to
a reduction in a trust depository that funded the remaining untendered
outstanding shares of the Pre-Merger Company's common stock.
Expenditures for plant, equipment and tooling were $6.3 million for the three
months ended December 31, 1997, down $5.8 million from the prior year level of
$12.1 million as a result of deferred capital expenditures.
Short-term debt was $175.7 million at December 31, 1997 including $150.0
million as described in Note 3 to the Consolidated Financial Statements.
Accounts payable decreased $74.1 million from September 30, 1997 due to
payments to Pre-Merger Company shareholders for untendered outstanding stock
and also due to payments due to change of control. Accrued liabilities
decreased $61.6 million due primarily to the redemption of the Pre-Merger
Company's convertible subordinated debentures due 2002.
LIQUIDITY AND CAPITAL RESOURCES
Due to the seasonal nature of the Company's business, receivables, inventory
and accompanying short-term borrowing to satisfy working capital requirements
are usually at their highest levels in the second fiscal quarter, and decline
thereafter as the Company's products enter the peak consumer selling seasons.
Cash provided by (used by) operations was $(36.6) million for the three months
ended December 31, 1997 compared with $(25.6) million for the three months
ended December 31, 1996. Expenditures for plant and equipment and tooling
were $6.3 million for the three months ended December 31, 1997 compared to
$12.1 million for the three months ended December 31, 1996. The lower level
-12-
<PAGE> 13
of expenditures is due to prior capital programs being completed while
reorganization programs are in the process of being developed in the current
year.
The Post-Merger Company has a $150 million loan and security agreement which
expires December 31, 2000 (see Note 3 to the Consolidated Financial
Statements).
In connection with the merger, the Post-Merger Company assumed the obligations
under a credit agreement for up to $150 million (the "Acquisition Debt")
borrowed for the purposes of acquiring shares of the Pre-Merger Company and
the purchase of some $67.7 million principal amount of Convertible Debentures
which the Company had an obligation to offer to purchase because of the change
of control at a price of 100% of the outstanding principal amount plus accrued
interest. At September 30, 1997, $96 million principal amount of the
Acquisition Debt was outstanding. The remaining $54 million principal amount
of the Acquisition Debt was borrowed on November 12, 1997 in connection with
the purchase of the Convertible Debentures. At December 31, 1997, the full
$150 million principle amount of the Acquisition Debt was outstanding.
The full amount of the Acquisition Debt matures on June 16, 1998. The Company
and its Parent believe the Company will be able to raise funds to refinance
such debt through the sale of debt or equity in the public or private markets
by the maturity date of the Acquisition Debt.
Based on the Company's current expectations of financial performance, the
revolving credit agreement, and other available sources of capital, the
Company believes it has available sufficient internal and external financial
resources to continue making long term investments for future growth through
the next few years.
TRENDS AND FORWARD-LOOKING FACTORS
With new ownership and new management in place, the Company is in the process
of implementing and executing business reorganizations.
Since the completion of the merger in September, 1997, a new executive
management team has been put in place and sees many opportunities for the
future and has completed many strategic decisions which will be implemented in
the next few months.
Some key actions have already been taken. In October, it was announced that
the Four Winns boat brand would be the Company's premier boat brand and a new
general manager was announced to ensure that the manufacturing efficiencies of
the Four Winns facilities in Cadillac, Michigan would be achieved.
In December, 1997, the Company announced the rationalization of its fishing
boat operations, closing a facility in Old Hickory, Tennessee, and moving the
freshwater fishing operations to Murfreesboro, Tennessee, and its saltwater
fishing boat operations to Columbia, South Carolina. This was done so that
the Company could better focus its resources on these unique markets.
In January 1998, the Company also announced that a strategic purchasing
program had been put into place and that it expected substantial savings to be
derived from that effort. A team of internal managers to coordinate this
program is expected to be operational by the end of February, 1998.
A challenge facing all two-stroke marine engine manufacturers is meeting the
U.S. EPA emissions standards for the year 2006, which require an average
reduction in air emissions by 75% beginning with the 1998 model year. To meet
those requirements, the Company has invested $100 million into the development
-13-
<PAGE> 14
of FICHT fuel injection technology, an advanced technology which reduces
emissions by 80% on average and increases fuel economy by approximately 35%.
In January, 1997, the Company put the first 150hp FICHT fuel injected engines
into the marketplace where they received rave reviews from the trade press and
consumers. Since then, the Company has introduced 175hp, 115hp and 90hp FICHT
fuel injection engines. All FICHT fuel injected engines on the market today
meet or exceed the 2006 requirements.
In addition, the Company has a strategic alliance with Suzuki to produce
certain four-stroke engines in specified horsepower levels to meet market
demands for these products without investing in re-tooling and engineering
costs. The Company believes the combination of the FICHT fuel injection
technology and the addition of the four-strokes to the engine line will allow
OMC to offer the broadest range of low emission marine engine technology in
the world.
FICHT fuel injection technology has also proven to be easily adapted to other
two-stroke engines and in February, 1998, the Company debuted its FICHT
technology application to personal watercraft. Demonstrations of the
applicability of the technology to other products is expected later this year.
Some of the foregoing statements are forward-looking in nature and made in
reliance upon the Safe Harbor provisions of the Private Securities Litigation
Reform Act of 1995. These statements involve risks and uncertainties,
including but not limited to the impact of competitive products and pricing,
product demand and market acceptance, new product development, availability of
raw materials, the availability of adequate financing on terms and conditions
acceptable to the Company, and general economic conditions including interest
rates and consumer confidence. Investors are also directed to other risks
discussed in documents filed by the Company with the Securities and Exchange
Commission. The Company assumes no obligation to update the information
included in this statement.
OUTBOARD MARINE CORPORATION
FORM 10-Q
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Pursuant to his employment agreement with the Company, Andrew P. Hines
purchased 14,444 shares of the Company's common stock. Mr. Hines paid
$50,000 in cash for 2,777 of those shares and purchased the remaining 11,667
shares with $210,000 borrowed from the Company pursuant to the terms of a
Promissory Note between the Company and Mr. Hines. Mr. Hines has pledged
his 14,444 shares to the Company to secure his obligations under that
Promissory Note.
On October 1, 1997, as a result of the change in control which occurred
September 11, 1997 from the purchase by Greenmarine Acquisition Corp. of in
excess of 90% of the Company's outstanding common stock, the Company offered
to purchase for cash, upon the terms and conditions set forth in the offer to
purchase, any and all of the outstanding 7% Convertible Subordinated
Debentures due 2002 of the Company that were properly tendered on or before
November 12, 1997. The purchase price for each debenture was 100% of the
outstanding principal amount of such debenture plus any accrued and unpaid
interest thereon up to and including the date of purchase.
Section 1209 of the Indenture dated as of June 22, 1992 between the Company
and LaSalle National Bank, as Trustee, provides that each holder of a
debenture, upon the occurrence of an event such as the merger which took place
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<PAGE> 15
September 30, 1997 between the Company and Greenmarine, will have the right at
such holder's option to convert all or any portion of such holder's debentures
during the period such debenture is convertible into the same kind and amount
of securities, cash or other property receivable upon the occurrence of an
event such as the merger by a holder of the number of shares of common stock
into which such debentures might have been converted immediately prior to the
occurrence of such event. Accordingly, as a result of the consummation of the
merger, debentures which were not put to the Company by the November 12, 1997
purchase date are now convertible at the conversion price, which was $22.25
per share, into the merger consideration of $18.00 per share into which the
debentures would have been convertible had the debentures been converted into
common stock immediately prior to the effective date of the merger. All
debentures which remain outstanding after the November 12, 1997 purchase date
continue to be obligations of the Company and will continue to be convertible
at the option of the holder thereof solely into the merger consideration.
Holders of debentures choosing to convert their debentures into the merger
consideration must comply with Section 1202 of the Indenture, including the
requirements that they deliver a Conversion Notice (as defined in the
Indenture) to the Company.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits reference is made to the Exhibit Index on Page 16.
(b) Reports on Form 8-K. The Registrant did not file any reports on
Form 8-K for the fiscal quarter ended December 31, 1997.
S I G N A T U R E
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.
OUTBOARD MARINE CORPORATION
Signature Title Date
_____________________________ _________________________ _________________
By: /s/: Andrew P. Hines Executive Vice President February 16, 1998
& Chief Financial Officer
_____________________________ _________________________ _________________
ANDREW P. HINES
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<PAGE> 16
EXHIBIT INDEX
Exhibit 3: Articles of Incorporation and By-Laws:
(A) With respect to the Registrant's Certificate of Incorporation,
reference is made to Exhibit 3(A) to the Registrant's Annual
Report on Form 10-K/A for the fiscal year ended September 30,
1997, which is incorporated herein by reference.
(B) With respect to the Registrant's By-Laws, as amended and restated
October 1, 1997, reference is made to Exhibit 3(B) to the
Registrant's Annual Report on Form 10-K/A for the fiscal year
ended September 30, 1997, which is incorporated herein by
reference.
Exhibit 4: Instruments defining the rights of security holders including
indentures:
(A) With respect to the Agreement of Outboard Marine Corporation to
furnish copies upon request of the Securities and Exchange
Commission covering unregistered long-term debt, reference is made
to Exhibit 4(A) to the Registrant's Annual Report on Form 10-K for
the fiscal year ended September 30, 1996, which is incorporated
herein by reference.
(B) With respect to rights of holders of the Registrant's 9-1/8%
Sinking Fund Debentures due 2017, reference is made to Exhibit
4(A) in the Registrant's Registration Statement Number 33-12759
filed on March 20, 1987, which is incorporated herein by
reference.
(C) With respect to rights of holders of Registrant's 7% Convertible
Subordinated Debentures due 2002, reference is made to
Registrant's Registration Statement Number 33-47354 filed on April
28, 1992, which is incorporated herein by reference and with
respect to the Supplemental Indenture dated September 30, 1997
reference is made to Exhibit 4(C) to the Registrant's Annual
Report on Form 10-K/A for the fiscal year ended September 30,
1997, which is incorporated herein by reference.
Exhibit 10: Material contracts:
(A) With respect to Severance Agreements between the Registrant and
certain elected and appointed officers and certain other
executives of the Registrant, reference is made to Exhibits 99.3
and 99.4 of the Registrant's Schedule 14D-9 filed with the
Securities and Exchange Commission on July 15, 1997, which is
incorporated herein by reference.
(B) With respect to the Consulting Agreement for Mr. Bowman dated
September 24, 1997, reference is made to Exhibit 10(I) to the
Registrant's Annual Report on Form 10-K/A for the fiscal year
ended September 30, 1997, which is incorporated herein by
reference.
(C) With respect to the Employment Agreement of Mr. Hines dated
October 6, 1997, reference is made to Exhibit 10(J) to the
Registrant's Annual Report on Form 10-K/A for the fiscal year
ended September 30, 1997, which is incorporated herein by
reference.
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<PAGE> 17
(D) With respect to the Credit Agreement between the Registrant and
American Annuity Group and Great American Insurance Company dated
August 13, 1997, reference is made to Exhibit (b)(2) of the
Schedule 14D-1, Amendment No. 1, filed by Greenmarine Acquisition
Corp. with the Securities and Exchange Commission September 12,
1997, which is incorporated hereby reference and with respect to
the First Amendment to Credit Agreement dated September 10, 1997,
Second Amendment to Credit Agreement dated September 12, 1997 and
Third Amendment to Credit Agreement dated November 10, 1997
reference is made to Exhibit 10(L) to the Registrant's Annual
Report on Form 10-K/A for the fiscal year ended September 30,
1997, which is incorporated herein by reference.
(E) With respect to the Amended and Restated Loan and Security
Agreement between the Registrant and NationsBank of Texas, N.A.
dated January 6, 1998, reference is made to Exhibit 10(E) attached
hereto.
Exhibit 11: Statements regarding computation of per share earnings:
A statement regarding the computation of per share earnings is
attached hereto as Exhibit 11.
Exhibit 19: Report furnished to security holders:
Not applicable.
Exhibit 27: Financial data schedule:
This information is filed only in the electronic filing.
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<PAGE> 18
EXHIBIT 10 (E)
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
------------------------------------------------
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT ("Agreement"), dated
effective as of January 6, 1998, is executed and entered into by and among
OUTBOARD MARINE CORPORATION, a Delaware corporation ("OMC"), OMC ALUMINUM BOAT
GROUP, INC., a Delaware corporation ("ABG"), OMC FISHING BOAT GROUP, INC., a
Delaware corporation ("FBG"), OMC LATIN AMERICA/CARIBBEAN, INC., a Delaware
corporation ("LAC"), RECREATIONAL BOAT GROUP LIMITED PARTNERSHIP, a Delaware
limited partnership ("RBG"), OMC RECREATIONAL BOAT GROUP, INC., a Delaware
corporation ("GP"), and each of the other Persons (as defined herein), if any,
who hereafter may become party hereto as a Borrower (as defined herein) and/or
Guarantor (as defined herein) pursuant to any agreement among the parties
hereto and such Person, each of the lending institutions which is a party
hereto or any permitted successor or assignee thereof permitted pursuant to
Section 14.1 (individually, a "Lender" and collectively, the "Lenders"), the
L/C Issuer (as such term is defined herein) and NATIONSBANK OF TEXAS, N.A., a
national banking association, as agent for itself and the other Lenders (in
such capacity, together with its successors and assigns in such capacity,
"Agent").
RECITALS:
A. OMC, ABG, FBG, LAC, RBG and NationsBank of Texas, N. A. (acting in
its individual capacity as a lender) entered into that certain Financing and
Security Agreement, dated as of November 11, 1997 (the "Original Agreement"),
whereby certain credit facilities were made available to OMC on the term and
conditions set forth therein.
B. OMC, ABG, FBG, LAC, GP and RBG have requested that the Original
Agreement be amended and restated to make additional financing available to
Borrowers (as defined below).
C. Agent and the Lenders have agreed to amend and restate the Original
Agreement and to provide such additional financing to Borrowers upon and
subject to the terms and conditions set forth in this Agreement and the other
Loan Documents (as defined below).
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
Definitions
-----------
Section 1.1 Definitions. As used in this Agreement, the following terms
have the following meanings:
"ABG" means OMC Aluminum Boat Group, Inc., a Delaware corporation, with its
chief executive office located at 100 Sea-Horse Drive, Waukegan, Illinois
60085, and whose tax identification number is 36-3695740.
"Account Debtor" means a Person who is obligated on a Receivable.
"Acquire" or "Acquisition", as applied to any Business Unit or Investment,
means the acquiring or acquisition of such Business Unit or Investment by
purchase, exchange, issuance of stock or other securities, or by merger,
reorganization or any other method.
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any Interest
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<PAGE> 19
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by Agent to be equal to the quotient obtained
by dividing (a) the Eurodollar Rate for such Eurodollar Loan for such Interest
Period by (b) one (1) minus the Reserve Requirement for such Eurodollar Loan
for such Interest Period.
"Affected Loans" has the meaning set forth in Section 5.4 of this
Agreement.
"Affected Type" has the meaning set forth in Section 5.4 of this Agreement.
"Affiliate" means, with respect to any Person, (a) any partner, officer,
shareholder (if holding more than ten percent (10.0%) of the outstanding
Capital Stock of such Person), director, employee or managing agent of such
Person, (b) any other Person (other than a Subsidiary) that, (i) directly or
indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with, such Person, (ii) directly or indirectly
beneficially owns or holds ten percent (10.0%) or more of any class of Voting
Stock of such Person or any Subsidiary of such Person, or (iii) ten percent
(10.0%) or more of the Voting Stock of which is directly or indirectly
beneficially owned or held by such Person or a Subsidiary of such Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of Voting Stock, by contract or otherwise.
"Agency Account" means an account of any Loan Party maintained by such
Person with a Clearing Bank pursuant to an Agency Account Agreement.
"Agency Account Agreement" means any agreement (if required pursuant to
Section 9.1) among any Loan Party, Agent and a Clearing Bank, in form and
substance satisfactory to Agent, which designates an Agency Account for the
deposit of checks and items constituting proceeds of such Loan Party's
Receivables or any other Collateral, and establishes the terms for
transferring balances therein to Agent.
"Agent" means NationsBank in its capacity as agent for the Credit Parties
as provided by this Agreement, and any successor agent appointed pursuant to
Section 15.7 hereof.
"Agreement" means and includes this Agreement and all exhibits, schedules,
addenda and other attachments hereto, and any renewal, extension, amendment,
modification, restatement or supplement hereof.
"Agreement Date" means the date as of which this Agreement is dated.
"Applicable Law" means, with respect to any Person, all provisions of
constitutions, statutes, rules, regulations and orders of any Governmental
Authority applicable to such Person or its property, including, without
limitation, all orders and decrees of all courts and arbitrators in
proceedings or actions to which such Person is a party and all Environmental
Laws.
"Applicable Lending Office" means, for each Lender and for each Type of
Loan, the "Lending Office" of such Lender (or of an Affiliate or Subsidiary of
such Lender) designated for such Type of Loan on the signature pages hereof or
such other office of such Lender (or an Affiliate or Subsidiary of such
Lender) as such Lender may from time to time specify to Agent and Borrowers by
written notice in accordance with the terms hereof as the office by which its
Loans of such Type are to be made and maintained.
"Applicable Margin" means, for the period from the Agreement Date through
the end of the fiscal quarter of OMC in which Agent receives OMC's financial
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<PAGE> 20
statements dated September 30, 1998, pursuant to Section 11.1(a), two percent
(2.0%) with respect to Eurodollar Loans and one-half percent (0.5%) with
respect to Base Rate Loans, subject to adjustment from time to time thereafter
to the percentage specified for each Type of Loan, corresponding to the
Leverage Ratio, as set forth below, respectively:
--------------------------------------------------------------------
| Leverage Ratio | Eurodollar Loans | Base Rate Loans |
|-------------------------|--------------------|--------------------
| | | |
| Greater than or equal | | |
| to 4.0 to 1.0 | 2.00% | 0.50% |
| | | |
|-------------------------|--------------------|--------------------
| | | |
| Less than 4.0 to 1.0 | | |
| but greater than or | | |
| equal to 3.0 to 1.0 | 1.75% | 0.00% |
| | | |
|-------------------------|--------------------|--------------------
| | | |
| Less than 3.0 to 1.0 | 1.25% | 0.00% |
| | | |
--------------------------------------------------------------------
For the purpose of determining the Applicable Margin, OMC's Leverage Ratio
shall be determined based upon OMC's Consolidated financial statements for the
months of March, June, September and December delivered to Agent as required
by Section 11.1, and any resulting change, if any, in the Applicable Margin,
shall become effective (i) as to Base Rate Loans, as of the first day of the
calendar month following the month in which such financial statements are
delivered to Agent and (ii) as to Eurodollar Loans, as of the date (on or
after the effective date as referenced in clause (i) preceding) when any such
Eurodollar Loan is made, Continued or Converted, as the case may be.
"Applicable Rate" means, at any time, (i) with respect to Base Rate Loans,
the Base Rate plus the Applicable Margin and (ii) with respect to Eurodollar
Loans, the Adjusted Eurodollar Rate plus the Applicable Margin, as the case
may be, in effect at any time pursuant to a Notice of Borrowing or otherwise
pursuant to the terms of this Agreement.
"Asset Disposition" means, with respect to any Person, the disposition of
any asset of such Person other than sales of Inventory in the ordinary course
of business.
"Assignment and Acceptance" means an Assignment and Acceptance Agreement in
the form attached hereto as Exhibit "C" assigning all or a portion of a
Lender's interests, rights and obligations under this Agreement to an Eligible
Assignee pursuant to Section 14.1.
"Availability" means, as of the date of any determination thereof, (a) the
Borrowing Base at such time, minus (b) the aggregate outstanding principal
balance of all Revolving Credit Loans as of such date.
"Base Rate" means, for any day, the rate per annum equal to the higher of
(a) the Federal Funds Rate for such day plus one-half of one percent (0.5%) or
(b) the Prime Rate for such day. Any change in the Base Rate due to a change
in the Federal Funds Rate or the Prime Rate shall be effective on the
effective date of such change in the Federal Funds Rate or the Prime Rate;
provided that, adjustments, if any, of the Applicable Rate resulting from any
change in the Base Rate shall become effective as provided in Section 4.2(d).
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<PAGE> 21
"Base Rate Loan" means any Loan that bears interest at a rate based on the
Base Rate.
"Benefit Plan" means, with respect to any Person, an "employee pension
benefit plan" as defined in Section 3(2) of ERISA (other than a Multiemployer
Plan) in respect of which such Person or any Related Company is, or within the
immediately preceding six (6) years was, an "employer" as defined in Section
3(5) of ERISA, including, without limitation, such plans as may be established
after the Agreement Date.
"Benefitted Lender" has the meaning set forth in Section 16.4 of this
Agreement.
"Borrower" means each of OMC, ABG, FBG, LAC, RBG and each other Person, if
any, who may become a party hereto as a borrower hereunder pursuant to any
agreement among the parties hereto and such additional Person, in form and
substance satisfactory to such parties, and "Borrowers" means all of such
Persons, collectively.
"Borrowing Base" means, at any time, an amount equal to the lesser of:
(a) the maximum principal amount of the Revolving Credit Facility,
minus the sum of (i) the Letter of Credit Reserve, plus (ii) the
Reserve, or
(b) an amount equal to the sum of
(i) 85% (or such lesser percentage as Agent may determine
pursuant to Section 2.5) of the face value of Eligible
Receivables that are determined by Agent in its discretion
to be Qualified L/C Supported Receivables at such time, plus
(ii) 85% (or such lesser percentage as Agent may determine
pursuant to Section 2.5) of the face value of Eligible
Receivables that are determined by Agent in its discretion
to be Qualified Guaranteed Receivables at such time, plus
(iii) 85% (or such lesser percentage as Agent may determine
pursuant to Section 2.5) of the face value of Eligible
Domestic Receivables (other than Qualified L/C Supported
Receivables or Qualified Guaranteed Receivables) at such
time, plus
(iv) 75% (or such lesser percentage as Agent may determine
pursuant to Section 2.5) of the Dollar Equivalent face
value of Eligible Foreign Receivables (other than
Qualified L/C Supported Receivables or Qualified
Guaranteed Receivables) at such time,
plus
(v) the lesser of
(A) 60% with respect to Eligible Domestic Inventory and 50%
with respect to Eligible Foreign Inventory (or such
lesser percentage as Agent may determine pursuant to
Section 2.5) of the lesser of cost determined on a FIFO
(or first-in-first-out) accounting basis or fair market
value of such Eligible Inventory, as applicable, net of
the Loan Parties' reserve for obsolescence (if any), at
such time, plus, during the period of January 1, through
April 30, 35% (or such lesser percentage as Agent may in
its discretion determine from time to time) of the
lesser of cost determined on a FIFO (or
first-in-first-out) accounting basis or fair market
value of Eligible Work-In-Process Inventory, net of the
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<PAGE> 22
Loan Parties' reserve for obsolescence (if any), at such
time or
(B) $75,000,000, minus
(vi) the Letter of Credit Reserve;
provided that with respect to clause (b) preceding, Agent may deduct any
Reserve prior to application of the relevant percentages used to calculate the
Borrowing Base as set forth herein.
"Borrowing Base Certificate" means a certificate, signed by an authorized
representative of each Borrower, in substantially the form attached hereto as
Exhibit "B".
"Broker" means any "broker," as such term is defined in Chapter 8 (or
Article 8) of the UCC, and in any event shall include, but not be limited to,
any Person defined as a broker or dealer under the federal securities laws,
but without excluding a bank acting in that capacity.
"Business Day" means (a) any calendar day other than Saturday, Sunday or
other day on which banks in Dallas, Texas are authorized to close, and (b)
with respect to all Loans, payments, Conversions, Continuations, Interest
Periods and notices in connection with any Eurodollar Loan, any day which is a
Business Day described in clause (a) above and which is also a day on which
dealings in Dollar deposits are carried out in the London interbank Eurodollar
market.
"Business Unit" means all or substantially all of the assets constituting
the business, or an operating unit thereof, of any Person.
"Capital and Tooling Expenditures" means, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets
(including, without limitation, all equipment, dies, tooling, motor vehicles,
tractors, trailers, rolling stock, fittings, fixtures and other tangible
personal property (other than Inventory and assets which constitute a Business
Unit)) which are not, in accordance with GAAP, treated as expense items for
such Person in the year made or incurred or as a prepaid expense applicable to
a future year or years.
"Capital Stock" means corporate stock and any and all shares, partnership
interests, membership interests, equity interests, rights, securities or other
equivalent evidences of ownership (however designated) issued by any entity
(whether a corporation, partnership, limited liability company, limited
partnership or other type of entity).
"Capitalized Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means Indebtedness represented by
obligations under a Capitalized Lease, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Cash Collateral" means Collateral consisting of cash or Cash Equivalents
on which Agent, for the benefit of the Credit Parties, has a first priority
Lien.
"Cash Equivalents" means, with respect to any Person:
(a) marketable direct obligations issued or unconditionally guaranteed
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<PAGE> 23
by the U.S. or issued by any agency thereof and backed by the full faith
and credit of the U.S., in each case maturing within one (1) year from the
date of acquisition thereof;
(b) commercial paper maturing no more than one (1) year from the date
issued and, at the time of acquisition thereof, having a rating of at least
A-1 from Standard & Poor's Corporation or at least P-1 from Moody's
Investors Service, Inc.;
(c) certificates of deposit or bankers' acceptances issued in Dollar
denominations and maturing within one (1) year from the date of issuance
thereof issued by any commercial bank organized under the laws of the U.S.
or any state thereof or the District of Columbia having combined capital
and surplus of not less than $100,000,000 and, unless issued by Agent or a
Lender, not subject to set-off or offset rights in favor of such bank
arising from any banking relationship with such bank;
(d) repurchase agreements in form and substance and for amounts
satisfactory to Agent; and
(e) any other investments which comply with the Outboard Marine
Corporation Short-Term Investment Policy and Guidelines, dated as of July
27, 1994, a copy of which is attached hereto as Schedule 1.1D.
"Clearing Bank" means any banking institution with which an Agency Account
has been established pursuant to an Agency Account Agreement.
"Clearing Corporation" means any "clearing corporation," as such term is
defined in Chapter 8 (or Article 8) of the UCC, and in any event shall
include, but not be limited to, any (i) Person that is registered as a
"clearing agency" under the federal securities laws, (ii) federal reserve
bank, or (iii) other Person that provides clearance or settlement services
with respect to Financial Assets that would require it to register as a
clearing agency under the federal securities laws but for an exclusion or
exemption from the registration requirement, if its activities as a clearing
corporation, including promulgation of rules, are subject to regulation by a
federal or state Governmental Authority.
"Collateral" means and includes all of each Loan Party's right, title and
interest in and to each of the following, wherever located and whether now or
hereafter existing or now owned or hereafter acquired or arising:
(a) all Receivables;
(b) all Inventory;
(c) all Contract Rights;
(d) all General Intangibles;
(e) all Investment Property;
(f) all goods and other property, whether or not delivered,
(i) the sale or lease of which gives or purports to give rise to
any Receivable, including, but not limited to, all
merchandise returned or rejected by or repossessed from
customers, or
(ii) securing any Receivable,
including, without limitation, all rights as an unpaid vendor or lienor
(including, without limitation, stoppage in transit, replevin and
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<PAGE> 24
reclamation) with respect to such goods and other property;
(g) all mortgages, deeds to secure debt and deeds of trust on real or
personal property, guaranties, leases, security agreements and other
agreements and property which secure or relate to any Receivable or other
Collateral, or are acquired for the purpose of securing and enforcing any
item thereof;
(h) all documents of title, policies and certificates of insurance,
securities, chattel paper and other documents and instruments evidencing or
pertaining to any and all items of Collateral;
(i) all files, correspondence, computer programs, tapes, discs and
related data processing software which contain information identifying or
pertaining to any of the Receivables or any Account Debtor, or showing the
amounts thereof or payments thereon or otherwise necessary or helpful in
the realization thereon or the collection thereof;
(j) all deposit accounts and all cash deposited with any Clearing
Bank, Agent or any Lender or any Affiliate or Subsidiary of Agent or any
Lender or which Agent, for the benefit of the Credit Parties, or any Lender
or such Affiliate or Subsidiary is entitled to retain or otherwise possess
as collateral pursuant to the provisions of this Agreement or any of the
Security Documents or any agreement relating to any Letter of Credit;
(k) all Receivables Guaranties;
(l) all Receivables L/Cs; and
(m) any and all products and proceeds of the foregoing (including, but
not limited to, any claim to any item referred to in this definition, and
any claim against any third party for loss of, damage to or destruction of
any or all of, the Collateral or for proceeds payable under, or unearned
premiums with respect to, policies of insurance) in whatever form,
including, but not limited to, cash, negotiable instruments and other
instruments for the payment of money, chattel paper, security agreements
and other documents.
"Collateral Assignment of Receivables Guaranties" means a security
agreement and collateral assignment in form and substance satisfactory to
Agent, pursuant to which each of the Loan Parties shall further evidence
Agent's continuing security interest, lien and collateral assignment, for the
benefit of the Credit Parties, in and to all Receivables Guaranties at any
time existing, as such agreement may be renewed, extended, continued,
modified, amended or restated from time to time.
"Collateral Assignment of Receivables L/Cs" means a security agreement and
collateral assignment in form and substance satisfactory to Agent, pursuant to
which each of the Loan Parties shall further evidence Agent's continuing
security interest, lien and collateral assignment, for the benefit of the
Credit Parties, in and to all Receivables L/Cs at any time existing, as such
agreement may be renewed, extended, continued, modified, amended or restated
from time to time.
"Commitment" means, as to each Lender, the amount set forth opposite such
Lender's name on the signature pages hereof or, from and after the date
hereof, in the Register, representing such Lender's obligation, upon and
subject to the terms and conditions of this Agreement (including the
applicable provisions of Section 14.1), to make Revolving Credit Loans and to
purchase participations in Letters of Credit.
"Commitment Percentage" means, as to any Lender, the percentage obtained by
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<PAGE> 25
dividing such Lender's Commitment by the Total Commitment.
"Compliance Certificate" means a certificate signed by each Loan Party's
president or a Financial Officer, in substantially the form of Exhibit "F",
containing the information required by Section 11.3 of this Agreement.
"Consolidated", when used in connection with any accounting term with
reference to a Person, means such accounting term determined with reference to
such Person and its Subsidiaries, as consolidated according to GAAP (and, in
the case of Net Income, Net Worth and Tangible Net Worth, after appropriate
deductions for any minority interests in any Subsidiaries).
"Consolidated Subsidiaries" means, as to any Loan Party, the Subsidiaries
of such Loan Party whose accounts are at the time in question, in accordance
with GAAP consolidated with those of such Loan Party.
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste as may
be controlled or regulated by Applicable Law.
"Continue", "Continuation" and "Continued" mean the continuation pursuant
to Section 4.3(b) hereof of a Eurodollar Loan as a Eurodollar Loan from one
Interest Period to the next Interest Period.
"Contract Rights" means any rights under contracts not yet earned by
performance and not evidenced by an instrument or chattel paper, whether now
existing or hereafter arising, to the extent that such rights may be lawfully
assigned.
"Convert", "Conversion" and "Converted" mean a conversion pursuant to
Section 4.3(c), Section 5.4 or Article 5 of one Type of Loan into another Type
of Loan.
"Copyright Security Agreement" means a Copyright Security Agreement
executed by any Loan Party in favor of Agent, for the benefit of the Credit
Parties, as such agreement may be amended, modified, restated or supplemented
from time to time.
"Copyrights" means and includes with respect to any Person, in each case
whether now existing or hereafter arising, all of such Person's right, title
and interest in and to the following:
(a) all copyrights, rights and interests in copyrights, works
protectable by copyright, copyright registrations and copyright
applications;
(b) all renewals of any of the foregoing;
(c) all income, royalties, damages and payments now or hereafter due
and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements of any of the
foregoing;
(d) the right to sue for past, present and future infringements of any
of the foregoing; and
(e) all rights corresponding to any of the foregoing throughout the
world.
"Credit Party" means each of Agent, L/C Issuer and the Lenders, and "Credit
Parties" means all of such Persons, collectively.
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"Current Assets" means, with respect to any Person, the aggregate amount of
assets of such Person which should properly be classified as current assets in
accordance with GAAP, after deducting adequate reserves in each case where a
reserve is appropriate in accordance with GAAP.
"Current Liabilities" means, with respect to any Person, the aggregate
amount of all Liabilities of such Person which should properly be classified
as current liabilities in accordance with GAAP.
"Current Maturities" means, when used in connection with Long Term
Liabilities, as of any date of determination, the principal amount of such
Liabilities coming due on such date or during the twelve (12) month period
following such date in accordance with the terms of any instrument or
agreement evidencing such Liabilities or relating thereto.
"Default" means any of the events specified in Section 13.1 which with the
passage of time or giving of notice or both would constitute an Event of
Default.
"Default Margin" means two percent (2.0%).
"Disbursement Account" means one or more accounts maintained by and in the
name of Borrowers with a Disbursing Bank for the purposes of disbursing
Revolving Credit Loan proceeds and amounts deposited to such account or
accounts.
"Disbursing Bank" means any commercial bank with which a Disbursement
Account is maintained after the Effective Date.
"Dollar" and "$" each means freely transferable U.S. dollars.
"Dollar Equivalent" means, with respect to any amount denominated in a
currency other than Dollars, on the date of determination thereof, the
equivalent of such amount in Dollars determined at a rate of exchange equal to
the Spot Rate on such date of determination.
"EBITDA" means Net Income, plus, (a) for each of the fiscal quarters in the
period beginning October 1, 1997, through and including September 30, 1998, to
the extent deducted in the determination of Net Income, (i) any expense
resulting from amortization of goodwill recorded on OMC's financial statements
pursuant to purchase accounting adjustments under GAAP, and (ii) up to
$3,000,000 of "other income" (as determined in accordance with GAAP)
cumulatively for each fiscal quarter, plus, (b) for each fiscal quarter to the
extent deducted in the determination of Net Income, each of the following:
(i) interest expense; (ii) income taxes; and (iii) depreciation and
amortization expense.
"ERISA" means the Employee Retirement Income Security Act of 1974 (as
amended), as in effect from time to time, any regulation promulgated
thereunder and any successor statute.
"Effective Date" means the later of:
(a) the Agreement Date; or
(b) the first date on which all of the conditions set forth in Article
6 shall have been fulfilled or waived in accordance with the provisions of
Section 16.9.
"Effective Interest Rate" means each rate of interest per annum on the
Revolving Credit Loans in effect from time to time pursuant to the provisions
of Sections 4.2(a) and (b).
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"Eligible Assignee" means (i) a Lender, (ii) any Affiliate or Subsidiary of
a Lender, and (iii) any other Person approved by Agent and, unless a Default
or an Event of Default has occurred and is continuing at the time any
assignment is effected in accordance with Section 14.1, each of the Loan
Parties, such approval not to be unreasonably withheld or delayed by the Loan
Parties and such approval to be deemed given by the Loan Parties if no
objection is received by the assigning Lender and Agent from the Loan Parties
within four (4) Business Days after notice of such proposed assignment has
been provided by the assigning Lender to the Loan Parties; provided, however,
neither any Loan Party nor an Affiliate of any Loan Party shall qualify as an
Eligible Assignee.
"Eligible Domestic Inventory" means any Eligible Inventory which is not
located outside the U.S.
"Eligible Domestic Receivable" means any Eligible Receivable which is not
owing by an Account Debtor that is located outside of the U.S. (for this
purpose, the Commonwealth of Puerto Rico and other possessions of the U.S.
shall be considered located within the U.S.) or Canada.
"Eligible Foreign Inventory" means any Eligible Inventory which is located
in the Kingdom of Belgium at one of the locations set forth in the most recent
Schedule of Inventory.
"Eligible Foreign Receivable" means any Eligible Receivable which is not an
Eligible Domestic Receivable.
"Eligible Inventory" means Inventory which Agent, in its discretion
determines to meet all of the following requirements:
(a) such Inventory is owned by a Loan Party, is stored at a location
listed on Schedule 7.1(u), is subject to the Security Interest which is
perfected as to such Inventory and is subject to no other Lien whatsoever
other than a Permitted Lien;
(b) such Inventory consists of finished goods or raw materials and not
supplies or work-in-process;
(c) such Inventory is in good condition and meets all standards
imposed by any Governmental Authority having regulatory authority over such
goods, their use or sale;
(d) such Inventory is currently either usable or salable, at prices
approximating at least the cost of such Inventory, in the normal course of
business and is not slow moving or stale;
(e) such Inventory is not obsolete or returned, repossessed (unless
such repossessed Inventory was manufactured in the current model year) or
used goods taken in trade;
(f) such Inventory is located within the U.S. at one of the locations
set forth in the most recent Schedule of Inventory;
(g) such Inventory is in the possession and control of a Loan Party
and not any third party or if such Inventory is held by a third party
bailee and a negotiable instrument has not been issued with respect thereto
(i) a financing statement which names the third party bailee as the
debtor/bailee, names such Loan Party as the secured party/bailor, names
Agent as assignee of the secured party/bailor and contains a description of
such Inventory acceptable to Agent and otherwise in compliance with the
requirements of Section 9-304(c) of the UCC has been filed in the
appropriate filing office, (ii) if requested by Agent, a waiver and access
agreement, in form and substance satisfactory to Agent, shall have been
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executed and delivered to Agent by such bailee and such Loan Party, and
(iii) such other steps as Agent may reasonably require in order to
establish and preserve the priority of the Security Interest against
secured creditors of the third party bailee or such Loan Party shall have
been taken;
(h) if such Inventory is located in a warehouse or other facility
leased by a Loan Party, the lessor has delivered to Agent, on behalf of the
Credit Parties, a waiver and consent in form and substance satisfactory to
Agent; and
(i) such Inventory is not determined by Agent, on behalf of the Credit
Parties, in its discretion to be ineligible for any other reason.
"Eligible Receivable" means a Receivable that consists of the unpaid
portion of the obligation stated on the invoice issued to an Account Debtor
with respect to Inventory sold and shipped to or services performed for such
Account Debtor in the ordinary course of any Loan Party's business, net of any
credits or rebates owed by any Loan Party to the Account Debtor and net of any
commissions payable by any Loan Party to third parties and that Agent, in its
discretion, determines to meet all of the following requirements:
(a) such Receivable is owned by a Loan Party and represents a complete
bona fide transaction which requires no further act under any circumstances
on the part of any Loan Party to make such Receivable payable by the
Account Debtor;
(b) such Receivable is not more than sixty (60) days past due from the
stated due date of the original invoice;
(c) not more than ninety (90) days have elapsed from the date of the
original invoice (other than any Receivable which arose in the ordinary
course of business pursuant to any Borrower's "seasonal dating program" (as
the same exists and has been disclosed to Agent (or is similar thereto) as
of the Agreement Date));
(d) the goods the sale of which gave rise to such Receivable were
shipped or delivered to the Account Debtor on an absolute sale basis and
not on a bill and hold sale basis, a consignment sale basis, a guaranteed
sale basis, a sale or return basis or on the basis of any other similar
understanding, and no material part of such goods has been returned or
rejected;
(e) such Receivable is not evidenced by chattel paper or an instrument
of any kind unless such chattel paper or instrument has (i) been
collaterally assigned to Agent, for the benefit of the Credit Parties,
pursuant to an assignment in form and substance satisfactory to Agent and
(ii) except as otherwise may be provided by Section 9.5 or Section 9.12(b),
is in the possession of Agent;
(f) the Account Debtor with respect to such Receivable is not
insolvent or the subject of any bankruptcy or insolvency proceedings of any
kind or of any other proceeding or action, threatened or pending, which
might, in Agent's sole judgment, have a Materially Adverse Effect on such
Account Debtor, and is not, in the reasonable discretion of Agent, deemed
ineligible for credit or other reasons;
(g) such Receivable is not owing by an Account Debtor having fifty
percent (50.0%) or more in face value of its then existing aggregate total
accounts owing to a Loan Party, in the aggregate, which do not meet the
requirements of clause (b) or clause (c) above;
(h) if such Receivable arises from the performance of services, such
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services have been fully rendered and do not relate to any warranty claim
or obligation;
(i) such Receivable is a valid, legally enforceable obligation of the
Account Debtor with respect thereto and is not subject to any present or
contingent (and no facts exist which are the basis for any future) offset,
deduction or counterclaim, dispute or other defense on the part of such
Account Debtor;
(j) such Receivable is subject to the Security Interest, which is
perfected as to such Receivable in form and substance satisfactory to
Agent, and is subject to no other Lien whatsoever other than a Permitted
Lien;
(k) such Receivable is evidenced by an invoice or other documentation
in the form currently used by the Loan Parties or other form acceptable to
Agent;
(l) such Receivable is not subject to the Assignment of Claims Act of
1940, as amended from time to time, or any Applicable Law now or hereafter
existing similar in effect thereto, or to any other prohibition (under
Applicable Law, by contract or otherwise) against its assignment or
requiring notice of or consent to such assignment, unless all such required
notices have been given, all such required consents have been received and
all other procedures have been complied with such that such Receivable
shall have been duly and validly assigned to Agent, for the benefit of the
Credit Parties;
(m) the goods giving rise to such Receivable were not, at the time of
the sale thereof, subject to any Lien, except the Security Interest and
Permitted Liens;
(n) no Loan Party is in breach of any express or implied
representation or warranty with respect to the goods the sale of which gave
rise to such Receivable nor in breach of any representation or warranty,
covenant or other agreement contained in the Loan Documents with respect to
such Receivable;
(o) such Receivable does not arise out of any transaction with any
Subsidiary, Affiliate, creditor, tenant, lessor or supplier of any Loan
Party;
(p) unless such Receivable is determined by Agent to be a Qualified
L/C Supported Receivable or a Qualified Guaranteed Receivable, no Loan
Party is the beneficiary of any letter of credit, nor has any bond or other
undertaking by a guarantor or surety been obtained, supporting such
Receivable and the Account Debtor's obligations in respect thereof;
(q) such Receivable does not arise out of finance or similar charges
by any Loan Party or other fees for the time value of money;
(r) the Account Debtor with respect to such Receivable is not located
in New Jersey or any other state denying creditors access to its courts in
the absence of qualification to transact business in such state or the
filing of a Notice of Business Activities Report or other similar filing,
unless the Loan Party which owns such Receivable has either qualified as a
foreign corporation authorized to transact business in such state or has
filed a Notice of Business Activities Report or similar filing with the
applicable Governmental Authority for the then current year; and
(s) neither the Account Debtor with respect to such Receivable, nor
such Receivable, is determined by Agent in its absolute discretion to be
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ineligible for any other reason.
"Eligible Work-In-Process Inventory" means Inventory consisting of
work-in-process of any Loan Party, as determined according to GAAP, which,
except for clause (b) of the definition of Eligible Inventory, meets all of
the requirements of Eligible Inventory:
"Entitlement Holder" means any Person identified in the records of a
Securities Intermediary as the Person having a Security Entitlement against
the Securities Intermediary.
"Environmental Laws" means all federal, state, local and foreign laws now
or hereafter in effect relating to pollution or protection of the environment,
including laws relating to emissions, discharges, Releases or threatened
Releases of pollutants, Contaminants, chemicals or industrial, toxic or
hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, removal, transport or handling of pollutants, Contaminants,
chemicals or industrial, toxic or hazardous substances or wastes, and any and
all regulations, notices or demand letters issued, entered, promulgated or
approved thereunder, including, but not limited to, the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 et seq., as amended, the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 6901 et seq., as amended, the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq., as amended, the Clean Air Act, 46 U.S.C.
Section 7401 et seq., as amended, and state and federal lien and environmental
cleanup programs.
"Environmental Lien" means a Lien in favor of any Governmental Authority
for (a) any liability under Environmental Laws or (b) damages arising from, or
costs incurred by such Governmental Authority in response to, a Release or
threatened Release of Contaminant into the environment.
"Equipment" means and includes with respect to any Person, all equipment,
including, without limitation, all machinery, apparatus, equipment, motor
vehicles, tractors, trailers, rolling stock, fittings, fixtures and other
tangible personal property (other than Inventory) of every kind and
description used in such Person's business operations or owned by such Person
or in which such Person has an interest, and all parts, accessories and
special tools and all increases and accessions thereto and substitutions and
replacements therefor.
"Eurodollar Business Day" means a Business Day on which dealings in Dollars
are carried out in the London interbank Eurodollar market.
"Eurodollar Loans" means Loans that bear interest at rates based upon the
Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two (2) Eurodollar Business Days prior to the first day of
such Interest Period for a term comparable to such Interest Period. If for
any reason such rate is not available, the term "Eurodollar Rate" shall mean,
for any Eurodollar Loan for any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two (2) Eurodollar Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period; provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
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all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%).
"Event of Default" means any of the events specified in Section 13.1,
provided that any requirement for notice or lapse of time or any other
condition has been satisfied.
"Existing Lien" means the continuing security interest and lien in property
constituting the Collateral, previously granted by OMC to NationsBank, and
existing, pursuant to the Original Agreement.
"Existing Obligations" means all "Obligations" (including, without
limitation, all indebtedness and obligations evidenced by the Existing
Revolving Note) as defined by the Original Agreement and existing as of the
Agreement Date.
"Existing Revolving Note" means the certain Master Revolving Note dated
November 11, 1997, executed and delivered by OMC under the Original Agreement
payable to the order of NationsBank in the face amount of $50,000,000.00.
"FBG" means OMC Fishing Boat Group, Inc., a Delaware corporation, with its
chief executive office located at 100 Sea-Horse Drive, Waukegan, Illinois
60085, and whose tax identification number is 36-3516449.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate charged to
Agent (in its individual capacity) on such day on such transactions as
determined by Agent.
"Financial Asset" means any financial asset, and in any event shall
include, but not be limited to, any (i) Security, (ii) obligation of a Person
or a share, participation or other interest in a Person or in property or an
enterprise of a Person, which is, or is of a type, dealt in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment, and (iii) any property that is held by a
Securities Intermediary for another Person in a Securities Account if the
Securities Intermediary has expressly agreed with the other Person that the
property is to be treated as a Financial Asset under Chapter 8 (or Article 8)
of the UCC.
"Financial Officer" means, with respect to any Loan Party, the chief
financial officer, treasurer or controller of such Loan Party.
"Financing Statements" means any and all UCC financing statements, in form
and substance satisfactory to Agent, executed and delivered by any Loan Party
to Agent, naming Agent, for the benefit of the Credit Parties, as secured
party and such Loan Party as debtor, in connection with this Agreement.
"Foreign Employee Benefit Plan" means (i) any employee benefit plan as
defined in Section 3(3) of ERISA which is maintained or contributed to for the
benefit of the employees of any Loan Party, or any ERISA Affiliate of any Loan
Party, which is not covered by ERISA pursuant to Section 4(b)(4) of ERISA, and
(ii) any other employee benefit plan which is established under any Applicable
Law of a foreign Governmental Authority and is maintained or contributed to
for the benefit of the employees of any Loan Party.
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"Foreign Security Documents" means each security agreement, collateral
assignment, mortgage, pledge, certificate, filing, notice, instrument or
agreement, or any equivalent or similar writing, for the purpose of creating,
evidencing or perfecting the Security Interest in any Collateral pursuant to
any Applicable Law other than laws of the U.S. or any state thereof.
"GAAP" means generally accepted accounting principles (existing as of the
Agreement Date as promulgated by opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements of
the Financial Accounting Standards Board, including, without limitation
principles of purchase accounting) consistently applied and maintained
throughout the period indicated and, when used with reference to any Loan
Party, consistent with the prior financial practice of such Loan Party, as
reflected on the financial statements referred to in Section 7.1(n); provided,
however, that, in the event that changes shall be mandated by the Financial
Accounting Standards Board or any similar accounting authority of comparable
standing, or shall be recommended by any Loan Party's independent public
accountants, such changes shall be included in GAAP as applicable to such Loan
Party only from and after such date as the Loan Parties, the Required Lenders
and Agent shall have amended this Agreement to the extent necessary to reflect
any such changes in the financial covenants set forth in Article 12.
"GP" means OMC Recreational Boat Group, Inc., a Delaware corporation, the
general partner of RBG, with its chief executive office located at 100
Sea-Horse Drive, Waukegan, Illinois 60085, and whose tax identification number
is 36-3918531.
"General Intangibles" means, with respect to any Person, all of such
Person's now owned or hereafter acquired general intangibles, chooses in
action and causes of action (whether arising in contract, tort or otherwise
and whether or not currently in litigation) and all judgments in favor of such
Person and all other intangible personal property of every kind and nature
(other than Receivables), including, without limitation, all Proprietary
Rights, corporate or other business records, inventions, designs, blueprints,
plans, specifications, goodwill, computer software, customer lists,
registrations, licenses, franchises, tax refunds and tax refund claims,
reversions or any rights thereto and any other amounts payable to such Person
from any Plan or other employee benefit plan, rights and claims against
carriers and shippers, rights and claims under warranties, rights to
indemnification, business interruption insurance and proceeds thereof,
property, liability, casualty or any similar type of insurance and any
proceeds thereof, and any letter of credit, Guaranty, claim, security interest
or other security held by or granted to such Person to secure payment by an
Account Debtor of any Receivable.
"Government Acts" has the meaning set forth in Section 3.8(a)(ii) of this
Agreement.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to,
any Governmental Authority.
"Governmental Authority" means any nation or government, any federal,
state, county, municipal, parish, provincial or other political subdivision
thereof and any department, commission, board, court, agency or other
instrumentality or entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Guarantor" means each Borrower, GP and each other Person, if any, who may
become a party hereto as a guarantor hereunder pursuant to any agreement among
the parties hereto and such Person, in form and substance satisfactory to
Agent, and "Guarantors" means all of such Persons, collectively.
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"Guaranty", "Guaranteed" or to "Guarantee" as applied to any obligation of
another Person shall mean and include:
(a) any guaranty (other than by endorsement of negotiable instruments
for collection in the ordinary course of business), directly or indirectly,
in any manner, of any part or all of such obligation of such other Person;
and
(b) any agreement, direct or indirect, contingent or otherwise, and
whether or not constituting a guaranty, the practical effect of which is to
assure the payment or performance (or payment of damages in the event of
nonperformance) of any part or all of such obligation of such other Person
whether by
(i) the purchase of securities or obligations,
(ii) the purchase, sale or lease (as lessee or lessor) of
property or the purchase or sale of services primarily for
the purpose of enabling the obligor with respect to such
obligation to make any payment or performance (or payment of
damages in the event of nonperformance) of or on account of
any part or all of such obligation, or to assure the owner
of such obligation against loss,
(iii) the supplying of funds to or in any other manner investing
in the obligor with respect to such obligation,
(iv) repayment of amounts drawn down by beneficiaries of letters
of credit, or
(v) the supplying of funds to or investing in a Person on
account of all or any part of such Person's obligation under
a Guaranty of any obligation or indemnifying or holding
harmless, in any way, such Person against any part or all of
such obligation.
"Guaranty Agreement" means any Guaranty Agreement executed by a Guarantor
in favor of Agent, for the benefit of the Credit Parties, as such Guaranty
Agreement may be amended, modified, restated or supplemented from time to
time.
"IRS" means the Internal Revenue Service.
"Indebtedness" of any Person means, without duplication, all Liabilities of
such Person, and to the extent not otherwise included in Liabilities, the
following:
(a) all obligations for Money Borrowed or for the deferred purchase
price of property or services;
(b) all obligations (including, during the noncancellable term of any
lease in the nature of a title retention agreement, all future payment
obligations under such lease discounted to their present value in
accordance with GAAP) secured by any Lien to which any property or asset
owned or held by such Person is subject, whether or not the obligation
secured thereby shall have been assumed by such Person;
(c) all obligations of other Persons which such Person has Guaranteed,
including, but not limited to, all obligations of such Person consisting of
recourse liability with respect to accounts receivable sold or otherwise
disposed of by such Person;
(d) all obligations of such Person in respect of Interest Rate
Protection Agreements; and
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(e) in the case of any Borrower (without duplication) all obligations
of such Borrower under the Revolving Credit Loans.
"Indemnified Party" has the meaning set forth in Section 16.12 of this
Agreement.
"Interest Coverage Ratio" means, for any period, the ratio of (i) Net
Income, plus, (a) for each of the fiscal quarters in the period beginning
October 1, 1997, through and including September 30, 1998, to the extent
deducted in the determination of Net Income, (i) any expense resulting from
amortization of goodwill recorded on OMC's balance sheet pursuant to purchase
accounting adjustments under GAAP, and (ii) up to $3,000,000 of "other income"
(as determined in accordance with GAAP) cumulatively for each fiscal quarter,
plus, (b) to the extent deducted in the determination of Net Income, net
interest expense and income taxes, to (ii) the aggregate amount of interest
expense paid during such period.
"Interest Payment Date" means, with respect to the Loans, the first day of
each calendar month, and with respect to any Eurodollar Loan, the last day of
each corresponding Interest Period, commencing on January 1, 1998 and
continuing thereafter until the Secured Obligations have been irrevocably paid
in full.
"Interest Period" means the period beginning on the day any Eurodollar Loan
is made and ending one (1), two (2), three (3) or six (6) months thereafter
(as Borrowers may designate pursuant to a Notice of Borrowing); provided,
however:
(a) if any Interest Period would otherwise end on a day which is not a
Eurodollar Business Day, such Interest Period shall be extended to the next
succeeding Eurodollar Business Day, unless the result of such extension
would be to extend such Interest Period into another calendar month, in
which event such Interest Period shall end on the immediately preceding
Eurodollar Business Day;
(b) any Interest Period with respect to a Eurodollar Loan that begins
on the last Eurodollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last Eurodollar Business
Day of a calendar month; and
(c) Borrowers may not select any Interest Period which ends after the
date of a scheduled principal payment on the Loans unless, after giving
effect to such selection, the aggregate unpaid principal amount of the
Eurodollar Loans for which Interest Periods end after such scheduled
principal payment shall be equal to or less than the principal amount to
which the Loans are required to be reduced after such scheduled principal
payment is made.
"Interest Rate Protection Agreement" means an agreement between a Person
and any Lender, or any Subsidiary or Affiliate of such Lender, now existing or
hereafter entered into, which provides for an interest rate swap, cap, floor,
collar, forward foreign exchange transaction, currency swap, cross-currency
rate swap, currency option or any combination of, or option with respect to,
any such or similar transactions, for the purpose of hedging such Person's
exposure to fluctuations in interest rates or currency valuations.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.
"Inventory" means, with respect to any Person, all of such Person's
inventory and shall include, without limitation:
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(a) all goods held or intended for sale or lease, or for display or
demonstration;
(b) all work-in-process;
(c) all raw materials and other materials and supplies of every nature
and description used or which might be used in connection with the
manufacture, packing, shipping, advertising, selling, leasing or furnishing
of such goods or otherwise used or consumed in such Person's business; and
(d) all documents evidencing and general intangibles relating to any
of the foregoing.
"Investment" means, with respect to any Person:
(a) the acquisition or ownership by such Person of any share of
Capital Stock, evidence of Indebtedness or other security issued by any
other Person;
(b) any loan, advance or extension of credit to, or contribution to
the capital of, any other Person, excluding advances to employees in the
ordinary course of business for business expenses;
(c) any Guaranty of the obligations of any other Person;
(d) any other investment (other than the Acquisition of a Business
Unit) in any other Person; and
(e) any commitment or option (where the consideration for such option
exceeds $100) to make any of the investments listed in clauses (a) through
(d) above.
"Investment Property" means any investment property, now owned or hereafter
acquired, and, in any event, shall include, without limitation, each of the
following: (a) any Security, whether certificated or uncertificated, (b) any
Security Entitlement, (c) any Securities Account, and (d) all proceeds of any
of the foregoing; provided that with respect to the Loan Parties, "Investment
Property" shall exclude any Capital Stock owned by OMC or any of such Loan
Parties in any Subsidiary of OMC or its Subsidiaries.
"Issuer" means any "issuer," as such term is defined in Chapter 8 (or
Article 8) of the UCC, and in any event shall include, but not be limited to,
any Person that, with respect to an obligation on or a defense to a Security,
(i) places or authorizes the placing of its name on a Security Certificate,
other than as authenticating trustee, registrar, transfer agent or the like,
to evidence a share, participation or other interest in its property or in an
enterprise, or to evidence its duty to perform an obligation represented by
the certificate, (ii) creates a share, participation or other interest in its
property or in an enterprise, or undertakes an obligation, that is an
Uncertificated Security; (iii) directly or indirectly creates a fractional
interest in its rights or property, if the fractional interest is represented
by a Security Certificate, or (iv) becomes responsible for, or in the place
of, another Issuer.
"LAC" means OMC Latin America/Caribbean, Inc., a Delaware corporation, with
its chief executive office located at 100 Sea-Horse Drive, Waukegan, Illinois
60085, and whose tax identification number is 36-24366154.
"L/C Issuer" means NationsBank and any Affiliate or Subsidiary of
NationsBank that issues any Letter of Credit pursuant to this Agreement.
"Lender" means, at any time, any financial institution party to this
Agreement at such time, including any Person becoming a party hereto pursuant
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to the provisions of Article 14, and in each case its successors and assigns,
and "Lenders" means, at any time, all such Persons and their successors and
assigns.
"Letter of Credit" means any letter of credit issued by L/C Issuer for the
account of a Borrower pursuant to Article 3 and any renewal, extension,
modification, amendment, restatement or replacement thereof.
"Letter of Credit Amount" means, with respect to any Letter of Credit, the
aggregate maximum amount at any time available for drawing under such Letter
of Credit.
"Letter of Credit Facility" means the facility provided under Article 3 of
this Agreement for issuance of one or more Letters of Credit for the account
of a Borrower in an aggregate face amount not to exceed $25,000,000 at any
time.
"Letter of Credit Obligations" means, at any time, the sum of (a) the
Reimbursement Obligations of all Borrowers at such time, plus (b) the
aggregate of all Letter of Credit Amounts outstanding at such time, plus (c)
the aggregate of all Letter of Credit Amounts of Letters of Credit the
issuance of which has been authorized by L/C Issuer pursuant to Section 3.4(b)
but that have not yet been issued, in each case as determined by Agent.
"Letter of Credit Reserve" means, at any time, the Letter of Credit
Obligations at such time, other than Letter of Credit Obligations that are
fully secured by Cash Collateral.
"Leverage Ratio" means, at any time, the ratio of (i) the sum of
Indebtedness for Money Borrowed, determined as of such time, to (ii) EBITDA,
determined for the preceding four (4) completed fiscal quarters.
"Liabilities" means, with respect to any Person, all items (excluding
Capital Stock, additional paid-in capital, retained earnings and general
contingency items and deferred tax reserves) which in accordance with GAAP
would be included in determining total liabilities as shown on a balance sheet
of such Person as at the date for which Liabilities are to be determined.
"Licenses" means and includes, with respect to any Person, in each case
whether now existing or hereinafter arising, all of such Person's right, title
and interest in and to (a) any and all licensing agreements or similar
arrangements in and to any Patents, Copyrights or Trademarks; (b) all income,
royalties, damages, claims and payments now or hereafter due and/or payable
under and with respect thereto, including, without limitation, damages and
payments for past and future breaches thereof; and (c) all rights to sue for
past, present and future breaches thereof.
"Lien" as applied to the property of any Person means:
(a) any security interest, mortgage, deed to secure debt, deed of
trust, collateral assignment, lien, pledge, charge, lease constituting a
Capitalized Lease Obligation, conditional sale or other title retention
agreement, or other security interest, security title or encumbrance of any
kind in respect of any property of such Person, or upon the income or
profits therefrom;
(b) any arrangement, express or implied, under which any property of
such Person is transferred, sequestered or otherwise identified for the
purpose of subjecting the same to the payment of Indebtedness or
performance of any other obligation in priority to the payment of the
general, unsecured creditors of such Person;
(c) any Indebtedness which is unpaid more than thirty (30) days after
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the same shall have become due and payable and which if unpaid might by law
(including, but not limited to, bankruptcy and insolvency laws), or
otherwise, be given any priority whatsoever over the claims of general
unsecured creditors of such Person; and
(d) the filing of, or any agreement to give, any financing statement
under the UCC, or its equivalent, in any jurisdiction, excluding
informational or precautionary financing statements relating to property
leased by such Person.
"Loan" means any Revolving Credit Loan, as well as all such loans
collectively, as the context requires, and in any case includes, without
limitation, any and all renewals, extensions, modifications or replacements
thereof.
"Loan Account" and "Loan Accounts" shall have the meanings ascribed thereto
in Section 4.7.
"Loan Documents" means collectively this Agreement, each Reimbursement
Agreement, the Notes, the Security Documents, the Collateral Assignment of
Receivables L/Cs, the Collateral Assignment of Receivables Guaranties, each
Notice and Acknowledgment, the Postclosing Agreement and each other
instrument, agreement, certificate or document executed by any Loan Party or
any Affiliate or Subsidiary of any Loan Party in connection with this
Agreement whether prior to, on or after the Effective Date and each other
instrument, agreement, certificate or document referred to herein or
contemplated hereby.
"Loan Party" means each Borrower and each other Person that at any time is
a Guarantor under this Agreement, respectively, and "Loan Parties" means all
of such Persons, collectively.
"Loan Year" means each annual period commencing on the Effective Date, or
any anniversary thereof, and ending on the day preceding the next successive
anniversary of such commencement date.
"Lockbox" means a U.S. post office box specified in, or pursuant to, an
Agency Account Agreement or a Lockbox Agreement.
"Lockbox Agreement" means any agreement established among Agent, any Loan
Party and a Clearing Bank concerning the establishment of a Lockbox for the
receipt and collection of checks and other items constituting proceeds of such
Loan Party's Receivables.
"Long Term Liabilities" means, with respect to any Person, the aggregate
amount of all Liabilities of such Person other than Current Liabilities.
"Make-Whole Amount" shall have the meaning set forth in Section 4.9(b) of
this Agreement.
"Margin Stock" means margin stock as defined in Section 221.1(h) of
Regulation U.
"Materially Adverse Effect" means, with respect to any Person, a materially
adverse effect upon the business, assets, liabilities, condition (financial or
otherwise), results of operations or business prospects of such Person and its
Consolidated Subsidiaries taken as a whole, and in addition (i) with respect
to any Loan Party means a materially adverse effect upon the Loan Parties',
taken as a whole, ability to perform their obligations hereunder or under any
other Loan Document to which any Loan Party is a party or upon the
enforceability of such obligations against any such Loan Party, and (ii) with
respect to any other Person which is a party to any Loan Document, means a
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materially adverse effect upon such Person's ability to perform its
obligations under any Loan Document to which such Person is a party or upon
the enforceability of such obligations against such Person.
"Maximum Rate" shall have the meaning set forth in Section 4.2(e) of this
Agreement.
"Money Borrowed" means, as applied to Indebtedness:
(a) Indebtedness for money borrowed;
(b) Indebtedness, whether or not in any such case the same was for
money borrowed,
(i) represented by notes payable, and drafts accepted, that
represent extensions of credit,
(ii) constituting obligations evidenced by bonds, debentures,
notes or similar instruments, or
(iii) upon which interest charges are customarily paid or that was
issued or assumed as full or partial payment for property
(other than trade credit that is incurred in the ordinary
course of business);
(c) Indebtedness that constitutes a Capitalized Lease Obligation, and
(d) Indebtedness that is such by virtue of clause (c) of the
definition thereof, but only to the extent that the obligations Guaranteed
are obligations that would constitute Indebtedness for money borrowed.
"Multiemployer Plan" means, with respect to any Person, a "multiemployer
plan" as defined in Section 3(37) or Section 4001(a)(3) of ERISA to which such
Person or any Related Company is required to contribute or has contributed
within the immediately preceding six (6) years.
"NationsBank" means NationsBank of Texas, N.A., a national banking
association whose principal office is located at 901 Main Street, Dallas,
Dallas County, Texas 75202, and each of its successors and assigns.
"Net Income" means, as applied to any Person, the net income (or net loss)
of such Person for the period in question after giving effect to deduction of
or provision for all operating expenses, all taxes and reserves (including,
without limitation, reserves for deferred taxes) and all other proper
deductions, all determined in accordance with GAAP, provided that there shall
be excluded:
(a) the net income (or net loss) of any Person accrued prior to the
date it becomes a Subsidiary of, or is merged into or Consolidated with,
the Person whose Net Income is being determined or a Consolidated
Subsidiary of such Person;
(b) the net income (or net loss) of any Person in which the Person
whose Net Income is being determined or any Subsidiary of such Person has
an ownership interest, except, in the case of net income, to the extent
that any such income has actually been received by such Person or such
Subsidiary in the form of cash dividends or similar distributions;
(c) any restoration of any contingency reserve, except to the extent
that provision for such reserve was made out of income during such period;
(d) any net gains or losses on the sale or other disposition, not in
the ordinary course of business, of Investments, Business Units and other
capital assets, provided that there shall also be excluded any related
charges for taxes thereon;
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(e) any net gain arising from the collection of the proceeds of any
insurance policy;
(f) any write-up of any asset; and
(g) any other extraordinary item.
"Net Outstandings" of any Lender means, at any time, the sum of (a) all
amounts paid by such Lender (other than pursuant to Section 15.5) to Agent in
respect of Revolving Credit Loans under this Agreement, minus (b) all amounts
paid by Agent to such Lender which are received by Agent and which, pursuant
to this Agreement, are paid over to such Lender for application in reduction
of the outstanding principal balance of the Revolving Credit Loans.
"Net Proceeds" means proceeds received by any Loan Party in cash from any
Asset Disposition (including, without limitation, payments under notes or
other debt securities received in connection with any Asset Disposition), net
of: (a) the transaction costs of such Asset Disposition; (b) any tax
liability arising from such Asset Disposition; and (c) amounts applied to
repayment of Indebtedness (other than the Secured Obligations) secured by a
Lien on the asset or property disposed of.
"Net Worth" means, with respect to any Person, such Person's total
shareholder's equity (including, without limitation, Capital Stock, additional
paid-in capital and retained earnings, after deducting treasury stock), or
other form of equity (i.e., partner's capital, membership interests, etc.)
which would appear as such on a balance sheet of such Person prepared in
accordance with GAAP.
"Non-Ratable Loan" means a Revolving Credit Loan made by NationsBank in
accordance with the provisions of Section 4.10.
"Note" means any of the Revolving Credit Notes and "Notes" means more than
one or all of such Notes, as the context may indicate.
"Notice and Acknowledgment" means a written notice and acknowledgment as
contemplated and required by the proviso of clause (vi) of the definition of
"Qualified L/C Supported Receivable" or clause (vi) of the definition of
"Qualified Guaranteed Receivable," as the case may be.
"Notice of Borrowing" means a Notice of Borrowing, Prepayment, Conversion
or Continuation, signed by the president or a Financial Officer of each Loan
Party, in substantially the form attached hereto as Exhibit "E".
"OMC" means Outboard Marine Corporation, a Delaware corporation, whose
chief executive office is located at 100 Sea-Horse Drive, Waukegan, Illinois
60085, whose tax identification number is 36-1589715, and its successors and
permitted assigns.
"Operating Lease" means any lease, excluding any lease constituting a
Capitalized Lease Obligation, of real or personal property.
"Original Agreement" shall have the meaning set forth in Recital A of this
Agreement.
"Other Taxes" shall have the meaning set forth in Section 5.6(b) of this
Agreement.
"Overadvance" shall have the meaning set forth in Section 2.6 of this
Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
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succeeding to any or all of its functions under ERISA.
"Patent Security Agreement" means a Patent Security Agreement executed by
any Loan Party to Agent, for the benefit of the Credit Parties, as such
agreement may be amended, modified, restated or supplemented from time to
time.
"Patents" means and includes with respect to any Person, in each case
whether now existing or hereafter arising, all of such Person's right, title
and interest in and to:
(a) any and all patents and patent applications;
(b) all inventions and improvements described and claimed therein;
(c) all reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof;
(d) all income, royalties, damages, claims and payments now or
hereafter due and/or payable under and with respect thereto, including,
without limitation, damages and payments for past and future infringements
thereof;
(e) all rights to sue for past, present and future infringements
thereof; and
(f) all rights corresponding to any of the foregoing throughout the
world.
"Permitted Investments" means Investments of any Loan Party in:
(a) cash or Cash Equivalents;
(b) Receivables arising from sales of Inventory on credit in the
ordinary course of business;
(c) shares of Capital Stock, evidence of Indebtedness or other
security acquired by such Loan Party in consideration for or as evidence of
past due or restructured Receivables in an aggregate face amount of such
Receivables at any time not to exceed $1,000,000;
(d) Guaranties permitted pursuant to Section 12.3;
(e) those items described on Schedule 1.1A ("Permitted Investments");
and
(f) other Investments, the net aggregate amount of which does not at
any time exceed $1,000,000 individually or $5,000,000 in the aggregate in
any fiscal year of such Loan Party.
"Permitted Liens" means:
(a) Liens securing taxes, assessments and other charges or levies of a
Governmental Authority (excluding any Environmental Lien or any Lien
imposed pursuant to any of the provisions of ERISA) or the claims of
materialmen, mechanics, carriers, warehousemen or landlords for labor,
materials, supplies or rentals incurred in the ordinary course of business,
but (i) in all cases only if payment shall not at the time be required to
be made in accordance with Section 10.6, and (ii) in the case of
warehousemen or landlords, only if such Liens are junior to the Security
Interest in any of the Collateral;
(b) Liens consisting of deposits or pledges made in the ordinary
course of business in connection with, or to secure payment of, obligations
under workers' compensation, unemployment insurance, social security or
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similar legislation or obligations under payment, bid, surety, appeal or
performance bonds;
(c) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of
Real Estate, which do not materially detract from the value of such
property or impair the use thereof in the business of any Loan Party;
(d) Purchase Money Liens securing Permitted Purchase Money
Indebtedness incurred for the purchase of Equipment by a Loan Party after
the Agreement Date;
(e) Liens shown on Schedule 1.1B ("Permitted Liens"); and
(f) Liens of Agent, for the benefit of the Credit Parties arising
under this Agreement and the other Loan Documents.
"Permitted Purchase Money Indebtedness" means Purchase Money Indebtedness
of a Loan Party incurred after the Agreement Date:
(a) which is secured by a Purchase Money Lien which constitutes a
Permitted Lien;
(b) the aggregate principal amount of which does not exceed an amount
equal to one hundred percent (100%) of the lesser of
(i) the cost (including the principal amount of such
Indebtedness, whether or not assumed) of the property
(excluding Inventory) subject to such Lien, and
(ii) the fair value of such property (excluding Inventory) at the
time of its acquisition, and
(c) which, when aggregated with the principal amount of all other such
Indebtedness and Capitalized Lease Obligations of the Loan Parties at the
time outstanding, does not exceed $50,000,000.
For the purposes of this definition, the principal amount of any Purchase
Money Indebtedness consisting of Capitalized Leases shall be computed as a
Capitalized Lease Obligation.
"Person" means any individual, corporation, limited liability company,
joint venture, general or limited partnership, association, trust,
unincorporated organization or Governmental Authority, or other similar
entity.
"Plan" means, with respect to any Person, any employee benefit plan as
defined in Section 3(3) of ERISA in respect of which such Person or any
Related Company is, or within the immediately preceding six (6) years was, an
"employer" as defined in Section 3(5) of ERISA, including, without limitation,
a Multiemployer Plan.
"Postclosing Agreement" means the certain Postclosing Agreement, dated as
of the Agreement Date, among Borrowers, Agent and NationsBank, in its capacity
as the sole Lender on the Agreement Date, as such agreement may be amended or
supplemented from time to time hereafter.
"Prime Rate" means the per annum rate of interest established from time to
time by NationsBank as its "prime rate", which rate may not be the lowest rate
of interest charged by NationsBank to its customers.
"Principal Office" means the principal office of Agent specified in or
determined in accordance with the provisions of Section 16.1.
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"Projections" means the forecasted (a) balance sheets, (b) income
statements and (c) cash flow statements of the Loan Parties for OMC's fiscal
year ended September 30, 1998, prepared on a monthly basis, and for OMC's
fiscal years ended 1998, 1999, 2000, 2001 and 2002 and on an annual basis for
each fiscal year thereafter, in form consistent with such forecasted financial
statements delivered to Agent on or prior to the Agreement Date, together with
appropriate supporting details and a statement of underlying assumptions.
"Proprietary Rights" means, with respect to any Person, all of such
Person's now owned and hereafter arising or acquired: Patents, Copyrights,
Trademarks and Licenses (and with respect to the Loan Parties includes,
without limitation, each Loan Party's Proprietary Rights as set forth on
Schedule 7.1(z) hereto) and all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations and
continuations-in-part of any of the foregoing, and all rights to sue for past,
present and future infringement of any of the foregoing.
"Purchase Money Indebtedness" means:
(a) Indebtedness created to secure the payment of all or any part of
the purchase price of any property (excluding Inventory);
(b) any Indebtedness incurred at the time of or within thirty (30)
days prior to or after the acquisition of any property (excluding
Inventory) for the purpose of financing all or any part of the purchase
price thereof; and
(c) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time of any
such renewal, extension or refinancing.
"Purchase Money Lien" means any Lien securing Purchase Money Indebtedness,
but only if such Lien shall at all times be confined solely to the property
(excluding Inventory) the purchase price of which was financed through the
incurrence of the Purchase Money Indebtedness secured by such Lien.
"Qualified Guaranteed Receivable" means a Receivable with respect to which
a Receivables Guaranty has been issued (and which is specifically so
identified in a Schedule of Receivables and with respect to which all
information required by Section 9.12(b)(ii) has been timely delivered to
Agent), which Receivables Guaranty (i) is issued by a Person located in the
U.S. and which is satisfactory to Agent, (ii) by its terms does not prohibit
transfer or assignment of the rights to enforce payment thereunder, (iii) is
irrevocable with respect to such Receivable, notwithstanding any revocation or
notice of revocation of such Receivables Guaranty, (iv) contains provisions
for Guaranteeing payment of such Receivable which are satisfactory to Agent
and is otherwise in form and substance satisfactory to Agent, (v) is subject
to a first priority, perfected (subject to Section 9.12(b)(ii)) security
interest, lien and collateral assignment in favor of Agent, for the benefit of
the Credit Parties, pursuant to the Collateral Assignment of Receivables
Guaranties or other applicable requirements, if any, of Applicable Law, and
(vi) if required by Section 9.12(b)(ii), written notice of such security
interest, lien and collateral assignment, duly executed by Agent and the
applicable Loan Party, shall have been given to and acknowledged in writing by
the Person obligated on such Receivables Guaranty, in form and substance
satisfactory to Agent.
"Qualified L/C Supported Receivable" means a Receivable with respect to
which a Receivables L/C has been issued (and which is specifically so
identified in a Schedule of Receivables and with respect to which all
information required by Section 9.12(b)(i) has been timely delivered to
Agent), which Receivables L/C (i) is issued by a Person located in the U.S.
and which is satisfactory to Agent, (ii) contains conditions for drawing
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satisfactory to Agent, (iii) expressly states that it is transferrable, (iv)
expressly states that it is irrevocable, (v) is otherwise in form and
substance satisfactory to Agent, (vi) is subject to a first priority,
perfected (subject to Section 9.12(b)(i)) security interest, lien and
collateral assignment in favor of Agent, for the benefit of the Credit
Parties, pursuant to the Collateral Assignment of Receivables L/Cs or other
applicable requirements, if any, of Applicable Law, and (vii) if required by
Section 9.12(b)(ii), written notice of such security interest, lien and
collateral assignment, duly executed by Agent and the applicable Loan Party,
shall have been given to and acknowledged in writing by the Person who is the
issuer of such Receivables L/C, in form and substance satisfactory to Agent.
"RBG" means Recreational Boat Group Limited Partnership, a Delaware limited
partnership, with its chief executive office located at 100 Sea-Horse Drive,
Waukegan, Illinois 60085, and whose tax identification number is 36-3925608.
"Real Estate" means all of each Loan Party's now or hereafter owned or
leased estates in real property, including, without limitation, all fees,
leaseholds and future interests, together with all of such Loan Party's now or
hereafter owned or leased interests in the improvements thereon, the fixtures
attached thereto and the easements appurtenant thereto, including, without
limitation the real property described on Schedule 1.1C.
"Receivables" means and includes:
(a) any and all rights to the payment of money or other forms of
consideration of any kind (whether classified under the UCC as accounts,
contract rights, chattel paper, general intangibles or otherwise)
including, but not limited to, accounts receivable, letters of credit and
the right to receive payment thereunder, chattel paper, tax refunds,
insurance proceeds, Contract Rights, notes, drafts, instruments, documents,
acceptances and all other debts, obligations and liabilities in whatever
form from any Person;
(b) all rights to payment under any and each Receivables Guaranty,
Receivables L/C and each other Guaranty, security and Lien for payment of
any Receivables listed in clause (a);
(c) all goods, whether now owned or hereafter acquired, and whether
sold, delivered, undelivered, in transit or returned, which may be
represented by, or the sale or lease of which may have given rise to, any
such right to payment or other debt, obligation or liability; and
(d) all proceeds of any of the foregoing.
"Receivables Guaranty" means a Guaranty or indemnity agreement issued by a
Person in favor of a Loan Party guaranteeing the prompt payment and
performance of a Receivable, or indemnifying such Loan Party against loss by
reason of nonpayment thereof, together with and including all rights of such
Loan Party to payment thereunder and all proceeds thereof.
"Receivables L/C" means a letter of credit issued by a Person for the
benefit of a Loan Party as support for payment and performance of any
Receivable(s), together with and including all rights of such Loan Party to
payment thereunder and all proceeds thereof.
"Register" has the meaning set forth in Section 14.1(b) of this Agreement.
"Regulation U" means Regulation U as promulgated by the Board of Governors
of the Federal Reserve System (or any successor Governmental Authority), as
the same may be amended or supplemented from time to time.
"Reimbursement Agreement" means, with respect to a Letter of Credit, such
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form of application therefor and form of reimbursement agreement therefor
(whether in a single document or several documents), in each case jointly and
severally executed by Borrowers, as L/C Issuer may employ in the ordinary
course of business for its own account, with such modifications thereto as may
be agreed upon by L/C Issuer and Borrowers, provided that such application and
agreement and any modifications thereto are not inconsistent with the terms of
this Agreement.
"Reimbursement Obligations" means the reimbursement or repayment
obligations of Borrowers to the Credit Parties pursuant to Section 3.6 or
pursuant to a Reimbursement Agreement with respect to amounts that have been
drawn under Letters of Credit.
"Related Company" means, with respect to any Person, any (i) corporation
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Internal Revenue Code) as any such Person or
any of its Subsidiaries, (ii) partnership or other trade or business (whether
or not incorporated) under common control (within the meaning of Section
414(c) of the Internal Revenue Code) with any such Person or any of its
Subsidiaries, or (iii) member of the same affiliated service group (within the
meaning of Section 414(m) of the Internal Revenue Code) as any such Person or
any of its Subsidiaries, any corporation described in clause (i) above or any
partnership, trade or business described in clause (ii) above.
"Release" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment or into or out of any property, including, without
limitation, the movement of Contaminants through or in the air, soil, surface
water or groundwater.
"Remedial Action" means actions required to (i) clean up, remove, treat or
in any other way address Contaminants in the indoor or outdoor environment,
(ii) prevent the Release or threat of Release or minimize the further Release
of Contaminants so they do not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment, or (iii)
perform pre-remedial studies and investigations and post-remedial monitoring
and care.
"Reportable Event" has the meaning set forth in Section 4043(b) of ERISA,
but shall not include a Reportable Event as to which the provision for thirty
(30) days' notice to the PBGC is waived under applicable regulations.
"Required Lenders" means, at any time, any combination of Lenders whose
Commitment Percentages at such time aggregate in excess of fifty percent
(50.0%).
"Reserve" at any time means an amount from time to time established by
Agent in its discretion, pursuant to this Agreement (notice thereof having
been given to Borrower by Agent in the ordinary course of Agent's business,
provided that any failure or delay in Agent's giving of such notice shall not
impair the validity of such Reserve or give rise to any liability of Agent),
as a reserve in reduction of the Borrowing Base in respect of costs, expenses,
liens, risks, claims, contingencies or other potential factors which, in the
event they should occur, could adversely affect or otherwise reduce the
anticipated amount of timely collections in payment of Eligible Domestic
Receivables or Eligible Foreign Receivables or the anticipated amount of
proceeds which could be realized upon liquidation of Eligible Inventory or any
other Collateral. The Reserve, if any from time to time, does not represent
cash funds.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental
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or emergency reserves) are required to be maintained under regulations issued
from time to time by the Board of Governors of the Federal Reserve System (or
any successor) by member banks of the Federal Reserve System against, in the
case of Eurodollar Loans, "Eurocurrency liabilities" (as such term is used in
Regulation D). Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by such
member banks with respect to (i) any category of liabilities which includes
deposits by reference to which the Adjusted Eurodollar Rate is to be
determined, or (ii) any category of extensions of credit or other assets which
include Eurodollar Loans. The Adjusted Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Requirement.
"Restricted Purchase" means any payment on account of the purchase,
redemption or other acquisition or retirement by a Person of any shares of
such Person's Capital Stock (except shares acquired on the conversion thereof,
or pursuant to the terms of any indenture, into other shares of Capital Stock
of such Person).
"Revolving Credit Facility" means the facility provided by Article 2 of
this Agreement for Revolving Credit Loans up to the maximum principal sum of
One Hundred Fifty Million Dollars ($150,000,000).
"Revolving Credit Loans" means the Loans made to Borrowers pursuant to
Section 2.1, and each of such Loans, respectively, as the context requires.
"Revolving Credit Note" means a Revolving Credit Note made by Borrowers
payable to the order of a Lender evidencing the obligation of Borrowers to pay
the aggregate unpaid principal amount of the Revolving Credit Loans made to it
by such Lender (and any promissory note or notes that may be issued from time
to time in substitution, renewal, extension, replacement or exchange therefor
whether payable to such Lender or to a different Lender in connection with a
Person becoming a Lender after the Effective Date or otherwise) substantially
in the form of Exhibit "A" hereto, with all blanks properly completed, either
as originally executed or as the same may from time to time be supplemented,
modified, amended, renewed, extended or refinanced.
"Schedule of Inventory" means a schedule delivered by the Loan Parties to
Agent pursuant to the provisions of Section 9.12(c).
"Schedule of Receivables" means a schedule delivered by the Loan Parties to
Agent pursuant to the provisions of Section 9.12(a).
"Secured Obligations" means, in each case whether now in existence or
hereafter arising:
(a) the principal of, and interest and premium, if any, on, the Loans;
(b) the Reimbursement Obligations and all other obligations owing to
L/C Issuer or any other Credit Party arising in connection with the
issuance of any Letter of Credit;
(c) all obligations of any Loan Party under any Interest Rate
Protection Agreement;
(d) all indebtedness, liabilities, obligations, covenants and duties
of any Loan Party to the Credit Parties, or any of them, of every kind,
nature and description arising under or in respect of this Agreement, the
Notes or any of the other Loan Documents, whether direct or indirect,
absolute or contingent, due or not due, contractual or tortious, liquidated
or unliquidated, and whether or not evidenced by any note, and whether or
not for the payment of money, including, without limitation, fees required
to be paid pursuant to Article 4 and expenses required to be paid or
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reimbursed pursuant to Section 16.2.
"Securities Account" means any account to which a Financial Asset is or may
be credited in accordance with an agreement under which the Person maintaining
the account undertakes to treat the Person for whom the account is maintained
as entitled to exercise the rights that comprise the Financial Asset.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Securities Intermediary" means any (i) Clearing Corporation, or (ii)
Person, including a bank or Broker, that in the ordinary course of its
business maintains Securities Accounts for others and is acting in that
capacity.
"Security" means any "security," as such term is defined in Chapter 8 (or
Article 8) of the UCC and, in any event, shall include, but not be limited to,
any obligation of an Issuer or a share, participation or other interest in an
Issuer or in property or an enterprise of an Issuer: (i) which is represented
by a Security Certificate in bearer or registered form, or the transfer of
which may be registered upon books maintained for that purpose by or on behalf
of the Issuer; (ii) which is one of a class or series or by its terms is
divisible into a class or series of shares, participations, interests or
obligations; and (iii) which (a) is, or is of a type, dealt in or traded on
securities exchanges or securities markets or (b) is a medium for investment
and by its terms expressly provides that it is a security governed by Chapter
8 (or Article 8) of the UCC.
"Security Certificate" means any certificate representing a Security.
"Security Documents" means each of the following:
(a) the Financing Statements;
(b) the Guaranty Agreements;
(c) the Patent Security Agreements;
(d) the Trademark Security Agreements;
(e) the Copyright Security Agreements;
(f) the Foreign Security Documents;
(g) the Collateral Assignment of Receivables L/Cs;
(h) the Collateral Assignment of Receivables Guaranties; and
(i) each other writing executed and delivered by any Loan Party or any
other Person securing or Guaranteeing the Secured Obligations.
"Security Entitlement" means any of the rights and property interests of an
Entitlement Holder with respect to a Financial Asset.
"Security Interest" means the Liens of Agent, for the benefit of the Credit
Parties, on and in the Collateral effected by this Agreement or by any of the
Security Documents or pursuant to the terms hereof or thereof.
"Settlement Date" means each Business Day after the Effective Date selected
by Agent in its sole discretion subject to and in accordance with the
provisions of Section 4.10(b)(i) as of which a Settlement Report is delivered
by Agent and on which settlement is to be made among the Lenders in accordance
with the provisions of Section 4.10.
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"Settlement Report" means each report, substantially in the form attached
hereto as Exhibit "D", prepared by Agent and delivered to each Lender and
setting forth, among other things, as of the Settlement Date indicated thereon
and as of the next preceding Settlement Date, the aggregate principal balance
of all Revolving Credit Loans outstanding, each Lender's Commitment Percentage
thereof, each Lender's Net Outstandings and all Non-Ratable Loans made, and
all payments of principal, interest and fees received by Agent from Borrowers
during the period beginning on such next preceding Settlement Date and ending
on such Settlement Date.
"Solvent" means, as to any Loan Party that on the Agreement Date and as of
the Effective Date (both before and after the granting of all security
interests and liens contemplated hereby and the funding of the initial Loan(s)
under this Agreement) (a) the sum of such Loan Party's debts is not greater
than all of such Loan Party's property, at a fair valuation, (b) the sum of
such Loan Party's debts is not greater than all of such Loan Party's assets,
at a fair valuation, (c) such Loan Party is generally paying its debts as they
become due, (d) such Loan Party is not engaged or about to engage in any
business or any transaction for which (i) its property is an unreasonably
small capital or (ii) the remaining assets of such Loan Party are unreasonably
small in relation to any such business or transaction, (e) such Loan Party
does not intend to incur, and does not believe that it will incur, debts that
are or would be beyond its ability to pay as such debts mature or become due,
and (f) such Loan Party does not intend to hinder, delay or defraud any
creditor of such Loan Party. For this purpose (i) "debts" includes anything
included within the definition of "debt" as used in Section 548 of the United
States Bankruptcy Code or as defined or used by Section 24.002 or Section
24.003 of the Texas Uniform Fraudulent Transfer Act, and "assets" has the
meaning defined or used by Section 24.002 of the Texas Uniform Fraudulent
Transfer Act. Contingent, unliquidated or disputed obligations or liabilities
(if any) are valued at the amount which, in light of all relevant facts and
circumstances, is reasonably expected to become absolute, liquidated or
mature.
"Spot Rate" means, as of any date of determination with respect to the
conversion of an amount denominated in one currency (the "Original Currency")
to another currency (the "Other Currency"), the rate of exchange at which, in
accordance with customary banking procedures and at such time and in such
foreign exchange market as Agent shall determine consistent with such
procedures, Agent on such date could purchase such amount of the Original
Currency with such Other Currency.
"Subordinated Indebtedness" means any Indebtedness for Money Borrowed of
any Loan Party which is subordinated in writing to the Secured Obligations in
form and substance satisfactory to Agent.
"Subsidiary" shall
(a) when used to determine the relationship of a Person to another
Person, mean a Person of which an aggregate of more than fifty percent
(50%) of the Capital Stock is owned of record or beneficially by such other
Person, or by one or more Subsidiaries of such other Person, or by such
other Person and one or more Subsidiaries of such Person,
(i) if the holders of such Capital Stock (A) are ordinarily, in
the absence of contingencies, entitled to vote for the
election of a majority of the directors (or other
individuals performing similar functions) of such Person,
even though the right so to vote has been suspended by the
happening of such a contingency, or (B) are entitled, as
such holders, to vote for the election of a majority of the
directors (or individuals performing similar functions) of
such Person, whether or not the right so to vote exists by
reason of the happening of a contingency, or
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(ii) in the case of Capital Stock which is not issued by a
corporation, if such ownership interests constitute a
majority voting interest, and
(b) when used with respect to a Plan, ERISA or a provision of the
Internal Revenue Code pertaining to employee benefit plans, also mean any
corporation, trade or business (whether or not incorporated) which is under
common control with such Person and is treated as a single employer with
such Person under Section 414(b) or (c) of the Internal Revenue Code and
the regulations thereunder.
"Supporting Letter of Credit" shall have the meaning set forth in Section
3.9 of this Agreement.
"Tangible Net Worth" means the Net Worth of OMC and its Consolidated
Subsidiaries at the time in question, plus Subordinated Indebtedness,
excluding (i) any amounts due from Affiliates, (ii) the amount of all
intangible items reflected therein, including, without limitation, all
unamortized debt discount and expense, unamortized research and development
expense, unamortized deferred charges, goodwill, patents, trademarks, service
marks, trade names, copyrights, unamortized excess cost of investment in
non-Consolidated Subsidiaries over equity at dates of acquisition and all
similar items which should properly be treated as intangibles in accordance
with GAAP, (iii) purchase accounting adjustments to OMC's balance sheet which
would otherwise be required pursuant to GAAP, and (iv) non-cash currency
translation adjustments which would otherwise be required pursuant to GAAP.
"Taxes" shall have the meaning set forth in Section 5.6(a) of this
Agreement.
"Termination Date" means December 31, 2000, such earlier date as all
Secured Obligations shall have been irrevocably paid in full and the Revolving
Credit Facility shall have been terminated, or such later date as to which the
same may be extended pursuant to the provisions of Section 2.7.
"Termination Event" means
(a) a Reportable Event, or
(b) the filing of a notice of intent to terminate a Plan or the
treatment of a Plan amendment as a termination under Section 4041 of ERISA,
or
(c) the institution of proceedings to terminate a Plan by the PBGC
under Section 4042 of ERISA, or the appointment of a trustee to administer
any Plan.
"Total Commitment" means the sum of the Commitments.
"Trademark Security Agreement" means any Trademark Security Agreement
executed by any Loan Party in favor of Agent, for the benefit of the Credit
Parties, as the same may be amended, modified, restated or supplemented from
time to time.
"Trademarks" means and includes with respect to any Person, in each case
whether now existing or hereafter arising, all of such Person's right, title
and interest in and to the following:
(a) all trademarks (including service marks), trade names, trade dress
and trade styles and the registrations and applications for registration
thereof and the goodwill of the business symbolized by such trademarks;
(b) all licenses of the foregoing, whether as licensee or licensor;
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(c) all renewals of the foregoing;
(d) all income, royalties, damages and payments now or hereafter due
and/or payable with respect thereto, including, without limitation,
damages, claims and payments for past and future infringements thereof;
(e) all rights to sue for past, present and future infringements of
the foregoing, including the right to settle suits involving claims and
demands for royalties owing; and
(f) all rights corresponding to any of the foregoing throughout the
world.
"Type" means any type of Loan (i.e., Base Rate Loan or a Eurodollar Loan).
"UCC" means (i) the Uniform Commercial Code as in effect from time to time
in the State of Texas, as amended from time to time, and (ii) the Uniform
Commercial Code as in effect from time to time in such other states as any
Collateral may be located, as and to the extent applicable.
"U.S." means the United States of America.
"Uncertificated Security" means any "uncertificated security," as such term
is defined in Chapter 8 (or Article 8) of the UCC, and in any event shall
include, but not be limited to, any Security that is not represented by a
certificate.
"Unfunded Capital and Tooling Expenditures" means Capital and Tooling
Expenditures which are paid for by a Person other than with the proceeds of
Indebtedness for Money Borrowed (other than the Loans) incurred to finance
such Capital and Tooling Expenditures and other than those represented by
Capitalized Lease Obligations.
"Unfunded Vested Accrued Benefits" means with respect to any Plan at any
time, the amount (if any) by which
(a) the present value of all vested nonforfeitable benefits under such
Plan exceeds,
(b) the fair market value of all Plan assets allocable to such
benefits,
all determined as of the then most recent valuation date for such Plan.
"Voting Stock" means Capital Stock of a Person having ordinary voting power
for the election of a majority of the members of its board of directors or
other governing body (not including shares having such power only in the event
of a contingency).
"Wholly-Owned Subsidiary" when used to determine the relationship of a
Subsidiary to a Person, means a Subsidiary all of the issued and outstanding
Capital Stock (other than directors' qualifying shares) of which shall at the
time be owned by such Person or one or more of such Person's Wholly-Owned
Subsidiaries or by such Person and one or more of such Person's Wholly-Owned
Subsidiaries.
Section 1.2 General. All terms of an accounting nature not specifically
defined herein shall have the meaning ascribed thereto by GAAP. The terms
accounts, chattel paper, contract rights, documents, equipment, instruments,
general intangibles and inventory, as and when used in this Agreement or the
Security Documents, shall have the meanings given those terms in the UCC.
Unless otherwise specified, a reference in this Agreement to a particular
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section or subsection is a reference to that section or subsection of this
Agreement, and the words "hereof," "herein," "hereunder" and words of similar
import, when used in this Agreement, refer to this Agreement as a whole and
not to any particular provision, section or subsection of this Agreement.
Wherever from the context it appears appropriate, each term stated in either
the singular or plural shall include the singular and plural, and pronouns
stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter. Words denoting individuals include
corporations, limited liability companies, partnerships, joint ventures and
other business entities and vice versa. References to any legislation or
statute or code, or to any provisions of any legislation or statute or code,
shall include any modification or reenactment of, or any legislative,
statutory or code provision substituted for, such legislation, statute or code
or provision thereof. References to any document or agreement (including this
Agreement) shall include references to such document or agreement as amended,
restated, novated, supplemented, modified or replaced from time to time, so
long as and to the extent that such amendment, restatement, novation,
supplement, modification or replacement is either not prohibited by the terms
of this Agreement or is consented to by the Required Lenders and Agent.
References to any Person include its successor or permitted substitutes and
assigns. Standards of reasonableness or requirements of similar import, and
the conduct of any Credit Party or any Loan Party in connection with the Loan
Documents, shall be measured according to applicable standards prescribed by
the UCC.
Section 1.3 Exhibits and Schedules. All Exhibits and Schedules attached
hereto are incorporated fully herein by reference thereto.
ARTICLE 2
Revolving Credit Facility
-------------------------
Section 2.1 Revolving Credit Loans. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, each of the Lenders agrees, severally, but not jointly,
to make Revolving Credit Loans to Borrowers from time to time from the
Effective Date to but not including the Termination Date, as requested or
deemed requested by Borrowers in accordance with the terms of Section 2.2, in
amounts equal to such Lender's Commitment Percentage of each such Loan
requested or deemed requested hereunder up to an aggregate amount at any one
time outstanding equal to such Lender's Commitment Percentage of the sum of
the Borrowing Base plus any Overadvance pursuant to Section 2.6; provided,
however, that the aggregate principal amount of all outstanding Revolving
Credit Loans (after giving effect to the Loans requested) shall not exceed the
Borrowing Base plus any Overadvance pursuant to Section 2.6). It is expressly
understood and agreed that the Lenders may and at present intend to use the
Borrowing Base as a maximum ceiling on Revolving Credit Loans to Borrowers
(subject to increase by any Overadvance pursuant to Section 2.6); provided,
however, that it is agreed that should the Revolving Credit Loans exceed the
ceiling so determined or any other limitation set forth in this Agreement
(whether by reason of an Overadvance pursuant to Section 2.6 or otherwise),
such Revolving Credit Loans shall nevertheless constitute Secured Obligations
and, as such, shall be entitled to all benefits thereof and security therefor.
The principal amount of any Revolving Credit Loan which is repaid by any
Borrower may be reborrowed by Borrowers, subject to the terms and conditions
of this Agreement, in accordance with the terms of this Section 2.1. Agent's
and each Lender's books and records reflecting the date and the amount of each
Revolving Credit Loan and each repayment of principal thereof shall constitute
prima facie evidence of the accuracy of the information contained therein,
subject to the provisions of Section 4.10.
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Section 2.2 Manner of Borrowing Revolving Credit Loans. Borrowings under
the Revolving Credit Facility shall be made as follows:
(a) Requests for Borrowing. A request by Borrowers for a borrowing
shall be made, or shall be deemed to be made, in the following manner:
(i) requests for a Revolving Credit Loan shall be made in the
manner prescribed by Article 4 (with respect to the initial
Revolving Credit Loan, Borrowers shall give Agent reasonable
prior written notice of the occurrence of the Effective
Date, which notice shall be irrevocable);
(ii) whenever a check or other item is presented to a Disbursing
Bank for payment against a Disbursement Account in an amount
greater than the then available balance in such account,
such Disbursing Bank shall, and is hereby irrevocably
authorized by Borrowers to, give Agent notice thereof, which
notice shall be deemed to be a request for a Revolving
Credit Loan on the date of such notice in an amount equal to
the excess of such check or other item over such available
balance;
(iii) unless payment is otherwise timely made, the becoming due of
any amount required to be paid under this Agreement or any
of the Notes as interest shall be deemed to be a request for
a Revolving Credit Loan on the due date in the amount
required to pay;
(iv) unless payment is otherwise timely made, the becoming due of
any other Secured Obligation shall be deemed to be a request
for a Revolving Credit Loan on the due date in the amount
then so due, and such request shall be irrevocable; and
(v) the receipt by Agent of notification from L/C Issuer to the
effect that a drawing has been made under a Letter of Credit
and that the Borrower for whose account such Letter of
Credit was issued has failed to reimburse L/C Issuer
therefor in accordance with the terms of the Letter of
Credit, the related Reimbursement Agreement and Article 3,
shall be deemed to be a request for a Revolving Credit Loan
on the date such notification is received in the amount of
such drawing which is so unreimbursed.
(b) Disbursement of Loans. Each Borrower hereby irrevocably
authorizes Agent to disburse the proceeds of each borrowing requested, or
deemed to be requested, pursuant to this Section 2.2 as follows:
(i) the proceeds of each borrowing requested under Sections
2.2(a)(i) or (ii) shall be disbursed by Agent in Dollars in
immediately available funds, (A) in the case of the initial
borrowing under the Revolving Credit Facility, in accordance
with the terms of the certificate from Borrowers to Agent
referred to in Section 7.1(c)(xii), and (B) in the case of
each subsequent borrowing, by wire transfer to a
Disbursement Account or, in the absence of a Disbursement
Account, by wire transfer to such other account as may be
agreed upon by any Borrower and Agent from time to time;
(ii) the proceeds of each borrowing deemed requested under
Section 2.2(a)(iii) or (iv) shall be disbursed by Agent by
way of direct payment of the relevant interest or Secured
Obligation, as the case may be; and
(iii) the proceeds of each borrowing deemed requested under
Section 2.2(a)(v) shall be disbursed by Agent directly to
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L/C Issuer in payment of the Reimbursement Obligations
referenced therein.
Section 2.3 Repayment of Revolving Credit Loans. Borrowers jointly and
severally hereby agree to repay the Revolving Credit Loans as follows:
(a) Whether or not any Default or Event of Default has occurred, the
outstanding principal amount of all the Revolving Credit Loans is due and
payable, and shall be repaid by Borrowers in full, on the Termination Date;
(b) Except as provided by Section 2.6, if at any time the aggregate
outstanding unpaid principal amount of the Revolving Credit Loans exceeds
the Borrowing Base in effect at such time, Borrowers shall repay the
Revolving Credit Loans in an amount sufficient to reduce the aggregate
unpaid principal amount of such Revolving Credit Loans by an amount equal
to such excess, together with accrued and unpaid interest on the amount so
repaid to the date of repayment; and
(c) Borrowers hereby instruct Agent to repay the Revolving Credit
Loans outstanding on any day in an amount equal to the amount received by
Agent on such day pursuant to Section 9.1(b).
Section 2.4 Revolving Credit Note. Each Lender's Revolving Credit Loans
and the obligation of Borrowers to repay such Revolving Credit Loans shall be
evidenced by a Revolving Credit Note payable to the order of such Lender.
Each Revolving Credit Note shall be dated the Effective Date, or with respect
to any Lender which is a party to an Assignment and Acceptance the date of
such Assignment and Acceptance, and be duly and validly executed and
delivered, jointly and severally, by Borrowers.
Section 2.5 Borrowing Base. At any time after the occurrence, and during
the continuance, of a Default or an Event of Default, the percentages
specified in this Agreement for determination of the Borrowing Base may be
adjusted from time to time based upon such considerations as Agent may deem
appropriate in its discretion. Percentages used from time to time in
calculating the Borrowing Base are for the sole purpose of determining the
maximum amount of Revolving Credit Loans that may be outstanding from time to
time under this Agreement, and shall not be evidentiary of or binding upon the
Credit Parties with respect to the market value or liquidation value of any
Collateral. Agent shall have the right at any time in its reasonable credit
judgment to establish a Reserve against Eligible Domestic Receivables,
Eligible Foreign Receivables or Eligible Inventory in reduction of the
Borrowing Base in respect of costs, expenses, liens, risks, claims,
contingencies or other potential factors which, in the event they should
occur, could reasonably be expected to materially and adversely affect or
otherwise reduce the anticipated net amount of timely collections in payment
of Eligible Domestic Receivables or Eligible Foreign Receivables or the
anticipated amount of proceeds which could be realized upon liquidation of
Eligible Inventory. Funding of Revolving Credit Loans hereunder shall at all
times remain subject to confirmation of existence of Eligible Domestic
Receivables, Eligible Foreign Receivables and Eligible Inventory, and the
Borrowing Base, in Agent's discretion. Any request for a Revolving Credit
Loan which, if funded, would result in the unpaid balance of the Revolving
Credit Loans being in excess of the amount allowed by this Agreement may be
declined by Agent in its sole discretion without prior notice.
Section 2.6 Overadvances. Unless instructed otherwise by notice in writing
to Agent by Required Lenders, in Agent's sole discretion, any Loan requested
by Borrowers under this Agreement may be advanced to Borrowers notwithstanding
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that the amount thereof, upon funding, would cause the aggregate unpaid
balance of the Revolving Credit Loans to exceed the Borrowing Base (the amount
of any such excess being called an "Overadvance"), provided that (i) the
amount of such excess shall not exceed $10,000,000, and (ii) Borrower hereby
agrees to make payment in reduction of the Revolving Credit Loans sufficient
to eliminate such Overadvance within such time, not to exceed thirty (30)
days, as Agent in its discretion shall instruct Borrowers at the time of
making such Overadvance.
Section 2.7 Extension of Revolving Credit Facility. Upon the request of
Borrowers, the Lenders may, from time to time, in their sole discretion agree
to extend the Revolving Credit Facility for a period of up to twelve months at
a time with the effect that the Termination Date shall be extended
accordingly. Each such extension shall be effected by the delivery by the
Credit Parties to the Loan Parties of a written notice to that effect, not
less than thirty (30) days prior to the date which otherwise would constitute
the Termination Date, provided, that the Loan Parties and the Credit Parties
shall execute an amendment, and such related agreements, in form and substance
satisfactory to Agent, as Agent shall determine necessary in connection with
any such extension.
ARTICLE 3
Letter of Credit Facility
-------------------------
Section 3.1 Agreement to Issue. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, L/C Issuer agrees to issue for the account of any
Borrower one or more Letters of Credit in accordance with this Article 3, from
time to time during the period commencing on the Effective Date and ending on
the Termination Date.
Section 3.2 Amounts. L/C Issuer shall not have any obligation to issue any
Letter of Credit at any time:
(a) if, after giving effect to the issuance of the requested Letter of
Credit, (i) the aggregate Letter of Credit Obligations would exceed the
maximum amount of the Letter of Credit Facility then in effect or (ii) the
aggregate principal amount of the Revolving Credit Loans outstanding would
exceed the Borrowing Base (after reduction for the Letter of Credit Reserve
in respect of such Letter of Credit); or
(b) which has a term longer than one (1) calendar year or an
expiration date after the last Business Day that is more than thirty (30)
days prior to the Termination Date.
Section 3.3 Conditions. The obligation of L/C Issuer to issue any Letter
of Credit is subject to the satisfaction of (i) the conditions precedent
contained in Article 6 and (ii) the following additional conditions precedent
in a manner satisfactory to Agent and L/C Issuer:
(a) Borrowers shall have delivered to L/C Issuer and Agent, at such
times and in such manner as L/C Issuer or Agent may prescribe, an
application in form and substance satisfactory to L/C Issuer and Agent for
the issuance of the proposed Letter of Credit, a Reimbursement Agreement
and such other documents as may be required pursuant to the terms thereof,
and the form and terms of the proposed Letter of Credit shall be
satisfactory to L/C Issuer and Agent; and
(b) as of the date of issuance, no order of any court, arbitrator or
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other Governmental Authority having jurisdiction or authority over L/C
Issuer shall purport by its terms to enjoin or restrain banks generally
from issuing letters of credit of the type and in the amount of the
proposed Letter of Credit, and no law, rule or regulation applicable to
banks generally and no request or directive (whether or not having the
force of law) from any Governmental Authority with jurisdiction over banks
generally shall prohibit or request that L/C Issuer refrain from the
issuance of letters of credit generally or the issuance of such Letter of
Credit.
(c) L/C Issuer shall have received from Agent authorization to issue
the requested Letter of Credit.
Section 3.4 Issuance of Letters of Credit.
(a) Request for Issuance. Borrowers shall give L/C Issuer and Agent
written notice of each request for the issuance of a Letter of Credit no
later than six (6) Business Days prior to the proposed date of issuance of
the Letter of Credit. Such notice shall be irrevocable and shall specify
the original face amount of the Letter of Credit requested, the effective
date (which date shall be a Business Day) of issuance of such requested
Letter of Credit, whether such Letter of Credit may be drawn in a single or
in multiple draws, the date on which such requested Letter of Credit is to
expire (which date shall be a Business Day that is more than thirty (30)
days prior to the Termination Date), the purpose for which such Letter of
Credit is to be issued and the beneficiary of the requested Letter of
Credit. Borrowers shall attach to such notice the form of the Letter of
Credit that Borrowers request to be issued.
(b) Responsibilities of Agent; Issuance. Agent shall determine, as of
the Business Day immediately preceding the requested effective date of
issuance of the Letter of Credit set forth in the notice from Borrowers
pursuant to Section 3.4(a), the amount of the unused portion of the Letter
of Credit Facility and the Borrowing Base. If (i) the form of the Letter
of Credit delivered by Borrowers to Agent is acceptable to L/C Issuer and
Agent in their sole discretion, (ii) the undrawn face amount of the
requested Letter of Credit is less than or equal to the lesser of (A) the
amount of the unused portion of the Letter of Credit Facility and (B) the
unused Borrowing Base, and (iii) Agent has received a certificate from
Borrowers stating that the applicable conditions set forth in Article 6
have been satisfied, then L/C Issuer will cause the Letter of Credit to be
issued. NationsBank in its sole discretion may cause any Affiliate or
Subsidiary of NationsBank to issue any requested Letter of Credit,
whereupon such Affiliate or Subsidiary shall be L/C Issuer with respect to
such Letter of Credit and shall have all of the rights, benefits and
interests of L/C Issuer as are specified by the Loan Documents in
connection therewith. Each such Affiliate or Subsidiary, if any, shall be
a third party beneficiary of the Loan Documents and shall be entitled to
rely upon all representations, warranties and covenants contained herein
and therein. The Loan Parties hereby authorize NationsBank and Agent to
deliver or otherwise disclose to L/C Issuer copies of any of the Loan
Documents and any other information from time to time in NationsBank's or
Agent's possession concerning any of the Loan Parties or the transactions
contemplated by the Loan Documents.
(c) Notice of Issuance. Promptly after the issuance of any Letter of
Credit, L/C Issuer shall give Agent written or facsimile notice, or
telephonic notice confirmed promptly thereafter in writing, of the issuance
of such Letter of Credit, and Agent shall give each Lender written or
facsimile notice, or telephonic notice confirmed promptly thereafter in
writing, of the issuance of such Letter of Credit; provided that any
failure or delay in giving or confirming any such notice shall not impair
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the obligations of L/C Issuer, any Lender or Borrowers with respect to any
such Letter of Credit.
(d) No Extension or Amendment. No Letter of Credit shall be extended
or amended unless the requirements of this Section 3.4 are met as though a
new Letter of Credit were being requested and issued.
Section 3.5 Duties of L/C Issuer. Any action taken or omitted to be taken
by L/C Issuer under or in connection with any Letter of Credit, if taken or
omitted in the absence of gross negligence or willful misconduct, shall not
result in any liability of L/C Issuer to any Lender or relieve any Lender of
its obligations hereunder to L/C Issuer. In determining whether to pay under
any Letter of Credit, L/C Issuer shall have no obligation to any Lender other
than to confirm that any documents required to be delivered under such Letter
of Credit in connection with such drawing have been presented and appear on
their face to comply with the requirements of such Letter of Credit.
Section 3.6 Payment of Reimbursement Obligations.
(a) Payment to Issuer. Notwithstanding any provisions to the contrary
in any Reimbursement Agreement, Borrowers jointly and severally agree to
reimburse L/C Issuer for any drawings (whether partial or full) under each
Letter of Credit issued by L/C Issuer and jointly and severally agree to
pay to L/C Issuer the amount of all other Reimbursement Obligations and
other amounts payable to L/C Issuer under or in connection with such Letter
of Credit immediately when due, irrespective of any claim, set-off, defense
or other right which any Borrower may have at any time against L/C Issuer
or any other Person.
(b) Recovery or Avoidance of Payments. In the event any payment by or
on behalf of any Borrower with respect to any Letter of Credit (or any
Reimbursement Obligation relating thereto) received by L/C Issuer, or by
Agent, and distributed by Agent to the Lenders on account of their
respective participations therein, is thereafter set aside, avoided or
recovered from L/C Issuer or Agent in connection with any receivership,
liquidation or bankruptcy proceeding, the Lenders shall, upon demand by
Agent pay to Agent, for the account of Agent or L/C Issuer, their
respective Commitment Percentages of such amount set aside, avoided or
recovered together with interest at the rate required to be paid by L/C
Issuer, or by Agent, upon the amount required to be repaid by it.
Section 3.7 Participations.
(a) Purchase of Participations. Immediately upon issuance by L/C
Issuer of a Letter of Credit, each Lender shall be deemed to have
irrevocably and unconditionally purchased and received without recourse or
warranty, an undivided interest and participation in such Letter of Credit,
equal to such Lender's Commitment Percentage of the face amount thereof
(including, without limitation, all obligations of Borrowers with respect
thereto).
(b) Sharing of Letter of Credit Payments. In the event that L/C
Issuer makes a payment under any Letter of Credit and L/C Issuer shall not
have been repaid such amount pursuant to Section 3.6, then NationsBank may
make such repayment to L/C Issuer and thereupon be deemed to have made a
Non-Ratable Loan in the amount of such repayment, and notwithstanding the
occurrence or continuance of a Default or Event of Default at the time of
such repayment, such Non-Ratable Loan shall be subject to the provisions of
Section 4.10 and the absolute obligations of the Lenders to pay for their
respective participation interests therein.
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(c) Sharing of Reimbursement Obligation Payments. Whenever L/C Issuer
receives a payment from or on behalf of Borrowers on account of a
Reimbursement Obligation as to which Agent has previously received for the
account of L/C Issuer payment from a Lender pursuant to this Section 3.7,
L/C Issuer shall promptly pay to Agent, for the benefit of such Lender,
such Lender's Commitment Percentage of the amount of such payment from such
Borrower in Dollars. Each such payment shall be made by L/C Issuer on the
Business Day on which L/C Issuer receives immediately available funds
pursuant to the immediately preceding sentence, if received prior to 11:00
a.m. (Dallas, Texas time) on such Business Day and otherwise on the next
succeeding Business Day.
(d) Documentation. Upon the request of any Lender, Agent shall
furnish to such Lender copies of any Letter of Credit, Reimbursement
Agreement or application for any Letter of Credit and such other
documentation as may reasonably be requested by such Lender.
(e) Obligations Irrevocable. The obligations of each Lender to make
payments to Agent with respect to any Letter of Credit and their
participations therein pursuant to the provisions of Section 4.10 hereof or
otherwise and the obligations of Borrowers to make payments to L/C Issuer
or to Agent, for the account of the Lenders, shall be irrevocable and joint
and several, shall not be subject to any qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of
this Agreement (assuming, in the case of the obligations of the Lenders to
make such payments, that the Letter of Credit has been issued in accordance
with Section 3.4), including, without limitation, any of the following
circumstances:
(i) Any lack of validity or enforceability of this Agreement or
any of the other Loan Documents;
(ii) The existence of any claim, set-off, defense or other right
which any Borrower may have at any time against a
beneficiary named in a Letter of Credit or any transferee of
any Letter of Credit (or any Person for whom any such
transferee may be acting), any Lender, Agent, L/C Issuer 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
transactions between a Borrower or any other Person and the
beneficiary named in any Letter of Credit);
(iii) Any draft, certificate or any other document presented under
the Letter of Credit upon which payment has been made in
good faith and according to its terms 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 Collateral or any other
security for the Secured Obligations or the performance or
observance of any of the terms of any of the Loan Documents;
(v) The occurrence of any Default or Event of Default; or
(vi) Agent's failure to deliver to the Lenders the notice
provided for in Section 3.4(c).
Section 3.8 Indemnification, Exoneration.
(a) Borrowers' Indemnification. WITHOUT LIMITING SECTION 16.12 AND IN
ADDITION TO AMOUNTS PAYABLE AS ELSEWHERE PROVIDED IN THIS ARTICLE 3, EACH
BORROWER JOINTLY AND SEVERALLY AGREES TO PROTECT, INDEMNIFY, PAY AND SAVE
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EACH OF THE CREDIT PARTIES HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, LIABILITIES, DAMAGES, LOSSES, COSTS, CHARGES AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES) WHICH ANY CREDIT PARTY MAY INCUR OR
BE SUBJECT TO AS A CONSEQUENCE, DIRECTLY OR INDIRECTLY, OF THE FOLLOWING:
(i) THE ISSUANCE OF ANY LETTER OF CREDIT, OTHER THAN AS A RESULT OF ITS
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, AS DETERMINED BY A COURT OF
COMPETENT JURISDICTION, OR (ii) THE FAILURE OF L/C ISSUER TO HONOR A
DRAWING UNDER ANY LETTER OF CREDIT AS A RESULT OF ANY ACT OR OMISSION,
WHETHER RIGHTFUL OR WRONGFUL, OF ANY PRESENT OR FUTURE DE JURE OR DE FACTO
GOVERNMENTAL AUTHORITY (ALL SUCH ACTS OR OMISSIONS BEING HEREINAFTER
REFERRED TO COLLECTIVELY AS "GOVERNMENT ACTS").
(b) Assumption of Risk by Borrowers. As among Borrowers and the
Credit Parties, Borrowers assume all risks of the acts and omissions of, or
misuse of any of the Letters of Credit by, the respective beneficiaries of
such Letters of Credit. In furtherance and not in limitation of the
foregoing, subject to the provisions of the applications for the issuance
of Letters of Credit, the Credit Parties shall not be responsible for:
(i) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any Person in
connection with the application for and issuance of and
presentation of drafts with respect to any of the Letters
of Credit, even if it should prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or
forged;
(ii) the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any Letter
of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid
or ineffective for any reason;
(iii) the failure of the beneficiary of any Letter of Credit to
comply duly with conditions required in order to draw upon
such Letter of Credit;
(iv) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms;
(vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any
Letter of Credit or of the proceeds thereof;
(vii) the misapplication by the beneficiary of any Letter of
Credit of the proceeds of any drawing under such Letter of
Credit; or
(viii) (a) any consequences arising from causes beyond the control
of any Credit Party, including, without limitation, any
Government Acts.
None of the foregoing shall affect, impair or prevent the vesting of
any rights or powers of any Credit Party under this Section 3.8.
(c) Exoneration. In furtherance and extension, and not in limitation,
of the specific provisions set forth above, any action taken or omitted by
any of the Credit Parties under or in connection with any of the Letters of
Credit or any related certificates, if taken or omitted in good faith,
shall not result in any liability of any Credit Party to any Borrower or
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relieve any Borrower of any of its obligations hereunder to any such
Person.
(d) Lenders' Indemnification. WITHOUT LIMITING SECTION 15.5, THE
LENDERS AGREE TO INDEMNIFY L/C ISSUER (TO THE EXTENT NOT REIMBURSED UNDER
SECTION 16.2 HEREOF, BUT WITHOUT LIMITING THE OBLIGATIONS OF ANY BORROWER
UNDER SUCH SECTION) RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE
COMMITMENTS, FOR ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS'
FEES) OR DISBURSEMENTS OF ANY KIND AND NATURE WHATSOEVER THAT MAY BE
IMPOSED ON, INCURRED BY OR ASSERTED AGAINST L/C ISSUER (INCLUDING BY ANY
LENDER) AS DESCRIBED IN THIS SECTION 3.8 OR OTHERWISE IN ANY WAY RELATING
TO OR ARISING OUT OF ANY LETTER OF CREDIT OR THE TRANSACTIONS CONTEMPLATED
THEREBY OR ANY ACTION TAKEN OR OMITTED BY L/C ISSUER UNDER ANY LETTER OF
CREDIT OR ANY LOAN DOCUMENT IN CONNECTION THEREWITH (INCLUDING ANY OF THE
FOREGOING ARISING FROM THE NEGLIGENCE OF L/C ISSUER); PROVIDED THAT NO
LENDER SHALL BE LIABLE FOR ANY OF THE FOREGOING TO THE EXTENT THEY ARISE
FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PERSON TO BE
INDEMNIFIED. WITHOUT LIMITATION OF THE FOREGOING, EACH LENDER AGREES TO
REIMBURSE L/C ISSUER PROMPTLY UPON DEMAND FOR ITS RATABLE SHARE OF ANY
COSTS OR EXPENSES PAYABLE BY ANY BORROWER TO L/C ISSUER UNDER SECTION 16.2,
TO THE EXTENT THAT L/C ISSUER IS NOT PROMPTLY REIMBURSED FOR SUCH COSTS AND
EXPENSES BY BORROWERS. THE AGREEMENTS CONTAINED IN THIS SECTION SHALL
SURVIVE PAYMENT IN FULL OF ALL SECURED OBLIGATIONS.
Section 3.9 Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 3.2(b), any Letter of Credit is
outstanding on the Termination Date, then on or prior to such Termination
Date, or in any case upon the occurrence of an Event of Default, Borrowers
shall, promptly on demand by Agent, deposit with Agent, for the ratable
benefit of the Credit Parties, with respect to each Letter of Credit then
outstanding, as Agent shall specify, either (a) a standby letter of credit (a
"Supporting Letter of Credit") in form and substance satisfactory to Agent,
issued by an issuer reasonably satisfactory to Agent in an amount equal to the
greatest amount for which such Letter of Credit may be drawn, under which
Supporting Letter of Credit Agent is entitled to draw amounts necessary to
reimburse the Credit Parties for payments made by the Credit Parties resulting
from any drawing under such Letter of Credit or under any reimbursement or
guaranty agreement with respect thereto, or (b) Cash Collateral in an amount
necessary to reimburse the Credit Parties for payments made by the Credit
Parties resulting from any drawing under such Letter of Credit or under any
reimbursement or guaranty agreement with respect thereto. Such Supporting
Letter of Credit or Cash Collateral shall be held by Agent for the benefit of
the Credit Parties, as security for, and to provide for the payment of, the
Reimbursement Obligations. In addition, Agent may at any time after the
Termination Date apply any or all of such Cash Collateral to the payment of
any or all of the Secured Obligations then due and payable. At Borrowers'
request, but subject to Agent's reasonable approval, Agent shall invest any
Cash Collateral consisting of cash or any proceeds of Cash Collateral
consisting of cash in Cash Equivalents, and any commissions, expenses and
penalties incurred by Agent in connection with any investment and redemption
of such Cash Collateral shall be Secured Obligations hereunder secured by the
Collateral, shall bear interest at the rates provided herein for the Loans and
shall be charged to Borrowers' Loan Accounts, or, at Agent's option, shall be
paid out of the proceeds of any earnings received by Agent from the investment
of such Cash Collateral as provided herein or out of such cash itself. Agent
makes no representation or warranty as to, and shall not be responsible for,
the rate of return, if any, earned on any Cash Collateral. Any earnings on
Cash Collateral shall be held as additional Cash Collateral on the terms set
forth in this Section 3.9.
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ARTICLE 4
General Loan Provisions
-----------------------
Section 4.1 Procedure for Borrowing.
(a) In order to receive any Loan, Borrowers shall notify Agent of a
request for a Loan by means of a Notice of Borrowing or other notice on
behalf of Borrowers acceptable to Agent, therein designating the amount of
the Loan requested and the date on which funding is requested. Each
request for a Loan shall be delivered to Agent not later than 11:00 a.m.
(Dallas, Texas time) (i) in the case of a Base Rate Loan on the Business
Day on which funding of such Loan is requested and (ii) in the case of a
Eurodollar Loan, at least two (2) Eurodollar Business Days prior to the
Business Day on which funding of such Loan is requested. Such notice may
be made in any manner prescribed by Section 16.1, provided that for this
purpose each Loan Party irrevocably authorizes Agent to rely upon any
Person whom Agent believes to be an authorized officer of any Borrower and
any such officer shall be deemed to be authorized to request any such Loan
on behalf of all Borrowers. Any such notice shall be irrevocable upon
receipt by Agent. Without limiting the other terms and conditions of this
Agreement, at the time of each borrowing hereunder, the Loan Parties must
be current in the delivery of all Compliance Certificates and Borrowing
Base Certificates required to be delivered to Agent and the Lenders
pursuant to this Agreement.
(b) Unless Agent has elected periodic settlements pursuant to Section
4.10, Agent shall promptly notify the Lenders of any Notice of Borrowing
given or deemed given pursuant to this Agreement by 12:00 noon (Dallas,
Texas time) on the proposed borrowing date. Not later than 1:00 p.m.
(Dallas, Texas time) on the proposed borrowing date, each Lender will make
available to Agent, for the account of Borrowers, at Agent's Principal
Office in funds immediately available to Agent, an amount equal to such
Lender's Commitment Percentage of the Revolving Credit Loans to be made on
such date.
Section 4.2 Interest.
(a) Subject to the provisions of Section 4.2(b), Borrowers jointly and
severally agree to pay interest on the unpaid principal amount of the
Loans, for each day from the day each such Loan was made until such Loan is
due (whether upon demand, at maturity, by reason of acceleration or
otherwise) at a rate per annum equal to the lesser of the Applicable Rate
or the Maximum Rate. Interest shall be payable monthly in arrears as it
accrues on each Interest Payment Date.
(b) If Borrowers shall fail to pay when due (whether upon demand, at
maturity, by reason of acceleration or otherwise) all or any portion of the
principal amount of any Loan or if there shall occur any other Event of
Default, at Agent's election the balance of the Loans shall no longer bear
interest in accordance with the terms of Section 4.2(a), but shall bear
interest for each day from the date of such failure to pay or other Event
of Default, as the case may be, until such failure to pay or other Event of
Default shall have been cured or waived in compliance with the terms of
this Agreement, at a rate per annum equal to the lesser of (i) the sum of
(1) the Default Margin and (2) the Applicable Rate, or (ii) the Maximum
Rate, payable on demand. The interest rate provided for in the preceding
sentence shall, to the extent permitted by Applicable Law, apply to and
accrue on the amount of any judgment entered with respect to any Secured
Obligation and shall continue to accrue at such rate during any proceeding
described in Section 13.1(g) or (h).
(c) Borrowers jointly and severally agree to pay, to the extent
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permitted by Applicable Law, interest on the unpaid principal amount of any
Secured Obligation that is due and payable other than the Loans in
accordance with Sections 4.2(a) or (b), as applicable, as if such Secured
Obligation were a Loan.
(d) The interest rates provided for in Section 4.2(a), Section 4.2(b)
and Section 4.2(c) shall be computed on the basis of a year of 360 days and
the actual number of days elapsed, and with respect to any Base Rate Loan
shall be adjusted automatically as of the first day of the calendar month
next following the calendar month of the effective date of each change in
the Base Rate.
(e) It is not intended by the Lenders, and nothing contained in this
Agreement or the Notes shall be deemed, to establish or require the payment
of a rate of interest in excess of the maximum rate permitted by Applicable
Law (the "Maximum Rate"). If, in any month, the Effective Interest Rate,
absent such limitation, would have exceeded the Maximum Rate, then the
Effective Interest Rate for that month shall be the Maximum Rate, and, if
in future months, the Effective Interest Rate would otherwise be less than
the Maximum Rate, then the Effective Interest Rate shall remain at the
Maximum Rate until such time as the amount of interest paid hereunder
equals the amount of interest which would have been paid if the same had
not been limited by the Maximum Rate. In the event, upon payment in full
of the Secured Obligations, the total amount of interest paid or accrued
under the terms of this Agreement is less than the total amount of interest
which would have been paid or accrued if the Effective Interest Rate had at
all times been in effect, then Borrowers shall, to the extent permitted by
Applicable Law, pay to the Lenders an amount equal to the excess, if any,
of (i) the lesser of (A) the amount of interest which would have been
charged if the Maximum Rate had, at all times, been in effect and (B) the
amount of interest which would have accrued had the Effective Interest
Rate, at all times, been in effect, and (ii) the amount of interest
actually paid or accrued under this Agreement. In the event the Lenders
receive, collect or apply as interest any sum in excess of the Maximum
Rate, such excess amount shall be applied to the reduction of the principal
balance of the Secured Obligations, and if no such principal is then
outstanding, such excess or part thereof remaining, shall be paid to
Borrowers.
Section 4.3 Interest Rate Option. Subject to the provisions hereof,
Borrowers shall have the option to have designated portions of the Loans bear
interest at an Applicable Rate determined according to the Base Rate or the
Adjusted Eurodollar Rate; provided, however, that any portion of the Loans
designated to bear interest at an Applicable Rate determined according to the
Adjusted Eurodollar Rate for any particular Interest Period shall not be for
less than $5,000,000 of unpaid principal or an integral multiple $1,000,000 in
excess thereof, and no more than ten (10) Interest Periods shall be allowed to
exist at any one time. Any such option shall be exercised in the manner
provided below:
(a) At Time of Borrowing. Contemporaneously with each request for a
Loan, Borrowers shall give Agent a Notice of Borrowing indicating the
interest rate option selected with respect to the principal balance of such
Loan. If the required Notice of Borrowing shall not have been timely
received by Agent, Borrowers shall be deemed to have designated the Base
Rate and to have given Agent notice of such designation. Notwithstanding
the foregoing, any request for a Revolving Credit Loan made pursuant to
clauses (ii), (iii), (iv) or (v) of Section 2.2(a) shall be deemed to be a
request for a Base Rate Loan.
(b) At Expiration of Interest Periods. Not less than two (2)
Eurodollar Business Days prior to the termination of any Interest Period
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for any Eurodollar Loan, Borrowers shall give Agent a Notice of Borrowing
indicating the interest rate option to be applicable to such Eurodollar
Loan upon the expiration of such Interest Period if Borrowers elect to have
such Loan Continued as a Eurodollar Loan. If the required Notice of
Borrowing shall not have been timely received by Agent prior to the
expiration of such Interest Period, Borrowers shall be deemed to have
selected a rate based upon the Base Rate to be applicable to such
Eurodollar Loan upon the expiration of such Interest Period and to have
given Agent notice of such selection.
(c) Conversion From Base Rate. Subject to the other provisions of
this Agreement, during any period in which any Base Rate Loan is in
existence, Borrowers shall have the right, on any Eurodollar Business Day,
to Convert all or a portion thereof to a Eurodollar Loan by giving Agent a
Notice of Borrowing of such Conversion not less than two (2) Eurodollar
Business Days prior to the date of such Conversion.
Agent, at its option, may accept telephonic instructions from any Borrower
as a Notice of Borrowing (provided, that without limiting the validity of any
such notice by telephonic instruction, Borrowers agree that any such
telephonic request shall promptly be confirmed to Agent by Borrowers
delivering a written Notice of Borrowing to Agent) and Agent hereby is
authorized and directed, at Agent's option, to honor all such telephonic or
other oral notices from any Person whom Agent believes to be an authorized
officer of any Borrower and, for these purposes, any such officer shall be
deemed to be authorized to make any such notice on behalf of all Borrowers.
Borrowers agree to indemnify and hold Agent and the Lenders harmless from any
loss or liability incurred by any of them in connection with honoring any
telephonic or other oral notices. All written Notices of Borrowing are
effective only upon receipt by Agent. Each Notice of Borrowing, whether
written or oral, shall be irrevocable and binding upon Borrowers.
Section 4.4 Certain Fees.
(a) Commitment Fee. Subject to the provisions of Section 16.22, in
connection with and as consideration for the holding available for the use
of Borrowers hereunder the full amount of the Revolving Credit Facility,
Borrowers will pay a fee to Agent, for the ratable benefit of the Lenders
as follows: (i) for each day from the Agreement Date through the end of
the fiscal quarter of OMC in which Agent receives OMC's financial
statements dated September 30, 1998, pursuant to Section 11.1(a), an amount
equal to the product of (A) 0.375%, multiplied by (B) the unused portion of
the Revolving Credit Facility for such day, and (ii) thereafter through,
but not including, the Termination Date, an amount equal to the product of
(A) the per annum percentage set forth in the table below corresponding to
the applicable Leverage Ratio (as determined by reference to the most
recent financial statements of OMC delivered by the Loan Parties pursuant
to Section 11.1 of this Agreement), multiplied by (B) the unused portion of
the Revolving Credit Facility for such day.
--------------------------------------
| Leverage Ratio | Fee |
|-------------------------|----------|
| | |
| Greater than or equal | |
| to 4.0 to 1.0 | 0.375% |
| | |
|-------------------------|----------|
| | |
| Less than 4.0 to 1.0 | 0.25% |
| | |
--------------------------------------
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Such fee shall be payable monthly in arrears on each Interest Payment
Date and on the date of any permanent reduction in the Revolving Credit
Facility and shall be fully earned when due and payable and shall not be
subject to refund or rebate. Such fee is not, and shall not be deemed to
be, interest or a charge for the use of money.
(b) Letter of Credit Fees.
(i) Borrowers agree to pay to Agent for the ratable benefit of
the Lenders Letter of Credit fees equal to the Applicable
Margin with respect to Eurodollar Loans in effect at the
time of issuance, renewal or extension of any Letter of
Credit based on the average daily aggregate Letter of Credit
Amount of all Letters of Credit from time to time
outstanding during the term of this Agreement. Such fees
shall be payable to Agent, for the ratable benefit of the
Lenders in accordance with their respective Commitment
Percentages, quarterly in arrears on the first Business Day
of each January, April, July and October, as applicable,
and shall be calculated according to the average daily
Letter of Credit Amount outstanding based on a year of 360
days and for the actual number of days elapsed.
(ii) Borrowers agree to pay to Agent, for the account of L/C
Issuer, the standard fees and charges of L/C Issuer for
issuing, administering, amending, renewing, paying and
canceling Letters of Credit, as and when assessed.
(c) Other Fees. Subject to the provisions of Section 16.22, Borrowers
agree to pay all other fees and expenses set forth in the certain letter
agreement, dated as of the Agreement Date among Agent and the Loan Parties.
Section 4.5 Manner of Payment.
(a) Except as otherwise expressly provided in Section 9.1(b), each
payment (including prepayments) by Borrowers on account of the principal of
or interest on the Loans or of any other amounts payable under this
Agreement, any Note or any other Loan Document shall be made not later than
12:00 noon (Dallas, Texas time) on the date specified for payment under
this Agreement to Agent, for the account of the Lenders, at Agent's
Principal Office, in Dollars, in immediately available funds and shall be
made without any set-off, counterclaim or deduction whatsoever. Any
payment received after such time but before 1:00 p.m. (Dallas, Texas time)
on such day shall be deemed a payment on such date for the purposes of
Section 13.1, but for all other purposes shall be deemed to have been made
on the next succeeding Business Day. All checks delivered to Agent in
payment of the Secured Obligations shall be subject to Agent's right to
assess interest for a deemed clearance period on the amount thereof for one
(1) Business Day after Agent's receipt thereof, which shall accrue and be
payable on each monthly Interest Payment Date.
(b) The Loan Parties hereby irrevocably authorize each Lender and each
Affiliate or Subsidiary of such Lender and each participant herein to
charge any account of any Loan Party maintained with such Lender or such
Affiliate, Subsidiary or participant with such amounts as may be necessary
from time to time to pay any Secured Obligations (whether or not owed to
such Lender, Affiliate, Subsidiary or participant) which are not paid when
due.
Section 4.6 Payments On Business Days. If any payment under this Agreement
or any Note shall be specified to be made upon a day which is not a Business
Day, it shall be made on the next succeeding day which is a Business Day and
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such extension of time shall in such case be included in computing interest
and fees, as applicable, if any, in accordance with such payment.
Section 4.7 Loan Accounts; Statements of Account.
(a) Each Lender shall open and maintain on its books a loan account in
Borrowers' name (each, a "Loan Account" and collectively, the "Loan
Accounts"). Each such Loan Account shall show as debits thereto each Loan
made under this Agreement by such Lender to Borrowers and as credits
thereto all payments received by such Lender and applied to principal of
such Loan, so that the balance of the Loan Account at all times reflects
the principal amount due such Lender from Borrowers.
(b) Agent shall maintain on its books a control account for Borrowers
in which shall be recorded (i) the amount of each disbursement made
hereunder, (ii) the amount of any principal or interest due or to become
due from Borrowers hereunder, and (iii) the amount of any sum received by
Agent hereunder from Borrowers and each Lender's ratable share therein.
(c) The entries made in the accounts pursuant to subsections (a) and
(b) shall be prima facie evidence, in the absence of manifest error, of the
existence and amounts of the obligations of Borrowers therein recorded and
in case of discrepancy between such accounts, in the absence of manifest
error, the accounts maintained pursuant to subsection (b) shall be
controlling.
(d) Agent will account to Borrowers monthly with a statement of Loans,
charges and payments made to and by Borrowers pursuant to this Agreement,
and such accounts rendered by Agent shall be deemed final, binding and
conclusive, save for manifest error, unless Agent is notified by Borrowers
in writing to the contrary within thirty (30) days of the date the account
to Borrowers was so rendered. Such notice by Borrowers shall be deemed an
objection to only those items specifically objected to therein. Failure of
Agent to render such account shall in no way affect the rights of Agent or
of the Lenders hereunder, nor impair Borrower's right to object as provided
herein.
Section 4.8 Termination of Agreement. Borrowers shall have the right, at
any time, to terminate this Agreement upon not less than thirty (30) Business
Days' prior written notice of their intention to terminate this Agreement,
which notice shall specify the effective date of such termination. Upon
receipt of such notice, Agent shall promptly notify each of the other Credit
Parties thereof. On the date specified in such notice, such termination shall
be effected, provided, that Borrowers shall, on or prior to such date, pay to
Agent, for the account of the Lenders, in same day funds, an amount equal to
all Secured Obligations then outstanding, including, without limitation, all
(i) accrued interest thereon, (ii) all accrued fees provided for hereunder,
and (iii) any amounts payable to the Lenders pursuant to Sections 4.12, 16.2,
16.3 and 16.12, and, in addition thereto, shall deliver to Agent, in respect
of each outstanding Letter of Credit, either the Supporting Letter of Credit
or the Cash Collateral as provided in Section 3.9. Following the date
specified in a notice of termination as provided for in this Section and upon
payment in full of the amounts specified in this Section, this Agreement shall
be terminated and the Credit Parties and Borrowers shall have no further
obligations to any other party hereto except for the obligations to Agent and
the Lenders pursuant to Section 16.12 hereof.
Section 4.9 Making of Loans.
(a) Nature of Obligations of Lenders to Make Loans. The obligations
of the Lenders under this Agreement to make the Loans are several and are
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not joint or joint and several.
(b) Assumption by Agent. Subject to the provisions of Section 4.10
and notwithstanding the occurrence or continuance of a Default or Event of
Default or other failure of any condition to the making of Revolving Credit
Loans hereunder subsequent to the Revolving Credit Loans to be made on the
Effective Date, unless Agent shall have received notice from a Lender in
accordance with the provisions of Section 4.9(c) prior to a proposed
borrowing date that such Lender will not make available to Agent such
Lender's ratable portion of the amount to be borrowed on such date, Agent
may assume that such Lender will make such portion available to Agent in
accordance with Section 2.2(a), and Agent may, in reliance upon such
assumption, make available to Borrowers on such date a corresponding
amount. If and to the extent such Lender shall not make such ratable
portion available to Agent, such Lender and Borrowers severally agree to
repay to Agent forthwith on demand such corresponding amount (the
"Make-Whole Amount"), together with interest thereon for each day from the
date such amount is made available to Borrowers until the date such amount
is repaid to Agent at the Effective Interest Rate or, if lower, subject to
Section 4.2(e), the Maximum Rate; provided, however, if on the Interest
Payment Date next following the date on which any Lender pays interest to
Agent at the Effective Rate or the Maximum Rate on a Make-Whole Amount as
aforesaid, Borrowers default in making the interest payment due on such
Interest Payment Date, then Agent shall reimburse such Lender for the
excess, if any, of the amount of interest so paid by such Lender on the
Make-Whole Amount and the amount of interest that such Lender would have
paid had the Lender been required to pay interest on the Make-Whole Amount
at the Federal Funds Rate. If such Lender shall repay to Agent such
corresponding amount, the amount so repaid shall constitute such Lender's
Commitment Percentage of the Loan made on such borrowing date for purposes
of this Agreement. The failure of any Lender to make its Commitment
Percentage of any Loan available shall not (without regard to whether
Borrowers shall have returned the amount thereof to Agent in accordance
with this Section 4.9) relieve it or any other Lender of its obligation, if
any, hereunder to make its Commitment Percentage of such Loan available on
such borrowing date, but no Lender shall be responsible for the failure of
any other Lender to make its Commitment Percentage of such Loan available
on the borrowing date.
(c) Delegation of Authority to Agent. Without limiting the generality
of Section 15.1, each Lender expressly authorizes Agent to determine on
behalf of such Lender (i) any reduction or increase of advance rates
applicable to the Borrowing Base, so long as such advance rates do not at
any time exceed the rates set forth in the Borrowing Base definition, (ii)
the creation or elimination of any Reserve (other than the Letter of Credit
Reserve) against the Revolving Credit Facility and the Borrowing Base,
(iii) whether or not Inventory or Receivables shall be deemed to constitute
Eligible Inventory, Eligible Domestic Receivables or Eligible Foreign
Receivables, and (iv) whether to make any Overadvance pursuant to Section
2.6 (but subject to the right of the Required Lenders to revoke such
authority by written notice to Agent as provided by Section 2.6). Unless
and until Agent shall have received written notice from the Required
Lenders as to the existence of a Default, an Event of Default or some other
circumstance which would relieve the Lenders of their respective
obligations to make Loans hereunder, which notice shall be in writing and
shall be signed by the Required Lenders and shall expressly state that the
Required Lenders do not intend to make available to Agent such Lenders'
ratable share of Loans made after the effective date of such notice, Agent
shall be entitled to continue to make the assumptions described in Section
4.9(b). After receipt of the notice described in the preceding sentence,
which shall become effective on the third (3rd) Business Day after receipt
of such notice by Agent unless otherwise agreed by Agent, Agent shall be
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entitled to make the assumptions described in Section 4.9(b) as to any
Loans as to which it has not received a written notice to the contrary
prior to 11:00 a.m. (Dallas, Texas time) on the Business Day next
preceding the day on which the Loan is to be made. Agent shall not be
required to make any Loan as to which it shall have received notice by a
Lender of such Lender's intention not to make its ratable portion of such
Loan available to Agent. Any withdrawal of authorization under this
Section 4.9(c) shall not affect the validity of any Loans made prior to the
effectiveness thereof.
Section 4.10 Settlement Among Lenders.
(a) Revolving Credit Loans. It is agreed that each Lender's Net
Outstandings are intended by the Lenders to be equal at all times to such
Lender's Commitment Percentage of the aggregate principal amount of all
Revolving Credit Loans outstanding. Notwithstanding such agreement, the
several and not joint obligation of each Lender to fund Revolving Credit
Loans made in accordance with the terms of this Agreement ratably in
accordance with such Lender's Commitment Percentage and each Lender's right
to receive its ratable share of principal payments on Revolving Credit
Loans in accordance with its Commitment Percentage, the Lenders agree that
in order to facilitate the administration of this Agreement and the Loan
Documents that settlement among them may take place on a periodic basis in
accordance with the provisions of this Section 4.10.
(b) Settlement Procedures as to Revolving Credit Loans. To the extent
and in the manner hereinafter provided in this Section 4.10, settlement
among the Lenders as to Revolving Credit Loans may occur periodically on
Settlement Dates determined from time to time by Agent, which may occur
before or after the occurrence or during the continuance of a Default or
Event of Default and whether or not all of the conditions set forth in
Section 6.2 have been met. On each Settlement Date payments shall be made
by or to the Lenders in the manner provided in this Section 4.10 in
accordance with the Settlement Report delivered by Agent pursuant to the
provisions of this Section 4.10 in respect of such Settlement Date so that
as of each Settlement Date, and after giving effect to the transactions to
take place on such Settlement Date, each Lender's Net Outstandings shall
equal such Lender's Commitment Percentage of the Revolving Credit Loans
outstanding.
(i) Selection of Settlement Dates. If Agent elects, in its
discretion, but subject to the consent of NationsBank, to
settle accounts among the Lenders with respect to principal
amounts of Revolving Credit Loans less frequently than each
Business Day, then Agent shall designate periodic Settlement
Dates which may occur on any Business Day after the
Effective Date; provided, however, that Agent shall
designate as a Settlement Date any Business Day which is an
Interest Payment Date; and provided further, that a
Settlement Date shall occur at least once during each seven
day period. Agent shall designate a Settlement Date by
delivering to each Lender a Settlement Report not later than
12:00 noon (Dallas, Texas time) on the proposed Settlement
Date, which Settlement Report will be substantially in the
form of Exhibit "D" hereto and shall be with respect to the
period beginning on the next preceding Settlement Date and
ending on such designated Settlement Date.
(ii) Non-Ratable Loans and Payments. Between Settlement Dates,
Agent shall request and NationsBank may (but shall not be
obligated to) advance to Borrowers out of NationsBank's own
funds, the entire principal amount of any Revolving Credit
Loan requested or deemed requested pursuant to Section
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2.2(a) (any such Revolving Credit Loan being referred to as
a "Non-Ratable Loan"). The making of each Non-Ratable Loan
by NationsBank shall be deemed to be a purchase by
NationsBank of a 100% participation in each other Lender's
Commitment Percentage of the amount of such Non-Ratable
Loan. All payments of principal, interest and any other
amount with respect to such Non-Ratable Loan shall be
payable to and received by Agent for the account of
NationsBank. Upon demand by NationsBank, with notice
thereof to Agent, each other Lender shall pay to
NationsBank, as the repurchase of such participation, an
amount equal to one hundred percent (100%) of such Lender's
Commitment Percentage of the principal amount of such
Non-Ratable Loan. Any payments received by Agent between
Settlement Dates which in accordance with the terms of this
Agreement are to be applied to the reduction of the
outstanding principal balance of Revolving Credit Loans,
shall be paid over to and retained by NationsBank for such
application, and such payment to and retention by
NationsBank shall be deemed, to the extent of each other
Lender's Commitment Percentage of such payment, to be a
purchase by each such other Lender of a participation in the
Revolving Credit Loans (including the repurchase of
participations in Non-Ratable Loans) held by NationsBank.
Upon demand by another Lender, with notice thereof to Agent,
NationsBank shall pay to Agent, for the account of such
other Lender, as a repurchase of such participation, an
amount equal to such other Lender's Commitment Percentage of
any such amounts (after application thereof to the
repurchase of any participations of NationsBank in such
other Lender's Commitment Percentage of any Non-Ratable
Loans) paid only to NationsBank by Agent.
(iii) Net Decrease in Outstandings. If on any Settlement Date the
increase, if any, in the amount of any Lender's Net
Outstandings which is required to comply with the first
sentence of Section 4.10(b) is less than such Lender's
Commitment Percentage of amounts received by Agent but paid
only to NationsBank since the next preceding Settlement
Date, such Lender and Agent, in their respective records,
shall apply such Lender's Commitment Percentage of such
amounts to the increase in such Lender's Net Outstandings,
and NationsBank shall pay to Agent, for the account of such
Lender, the excess allocable to such Lender.
(iv) Net Increase in Outstandings. If on any Settlement Date the
increase, if any, in the amount of any Lender's Net
Outstandings which is required to comply with the first
sentence of Section 4.10(b) exceeds such Lender's Commitment
Percentage of amounts received by Agent but paid only to
NationsBank since the next preceding Settlement Date, such
Lender and Agent, in their respective records, shall apply
such Lender's Commitment Percentage of such amounts to the
increase in such Lender's Net Outstandings, and such Lender
shall pay to Agent, for the account of NationsBank, any
excess.
(v) No Change in Outstandings. If a Settlement Report indicates
that no Revolving Credit Loans have been made during the
period since the next preceding Settlement Date, then such
Lender's Commitment Percentage of any amounts received by
Agent but paid only to NationsBank shall be paid by
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NationsBank to Agent, for the account of such Lender. If a
Settlement Report indicates that the increase in the amount
of a Lender's Net Outstandings which is required to comply
with the first sentence of Section 4.10(b) is exactly equal
to such Lender's Commitment Percentage of amounts received
by Agent but paid only to NationsBank since the next
preceding Settlement Date, such Lender and Agent, in their
respective records, shall apply such Lender's Commitment
Percentage of such amounts to the increase in such Lender's
Net Outstandings.
(vi) Return of Payments. If any amounts received by NationsBank
in respect of the Secured Obligations are later required to
be returned or repaid by NationsBank to Borrower or any
other obligor or their respective representatives or
successors in interest, whether by court order, settlement
or otherwise, in excess of NationsBank's Commitment
Percentage of all such amounts required to be returned by
all Lenders, each other Lender shall, upon demand by
NationsBank with notice to Agent, pay to Agent for the
account of NationsBank, an amount equal to the excess of
such Lender's Commitment Percentage of all such amounts
required to be returned by all Lenders over the amount, if
any, returned directly by such Lender.
(vii) Payments to Agent, Lenders.
(A) Payment by any Lender to Agent shall be made not later
than 1:00 p.m. (Dallas, Texas time) on the Business Day
such payment is due, provided that if such payment is
due on demand by another Lender, such demand is made on
the paying Lender not later than 10:00 a.m. (Dallas,
Texas time) on such Business Day. Payment by Agent to
any Lender shall be made by wire transfer, promptly
following Agent's receipt of funds for the account of
such Lender and in the type of funds received by Agent,
provided that if Agent receives such funds at or prior
to 1:00 p.m. (Dallas, Texas time), Agent shall pay such
funds to such Lender by 2:00 p.m. (Dallas, Texas time)
on such Business Day. If a demand for payment is made
after the applicable time set forth above, the payment
due shall be made by 2:00 p.m. (Dallas, Texas time) on
the first Business Day following the date of such
demand.
(B) If a Lender shall, at any time, fail to make any payment
to Agent required hereunder, Agent may, but shall not be
required to, retain payments that would otherwise be
made to such Lender hereunder and apply such payments to
such Lender's defaulted obligations hereunder, at such
time, and in such order, as Agent may elect in its sole
discretion.
(C) With respect to the payment of any funds under this
Section 4.10(b), whether from Agent to a Lender or from
a Lender to Agent, the party failing to make full
payment when due pursuant to the terms hereof shall,
upon demand by the other party, pay such amount together
with interest on such amount at the Federal Funds Rate.
(c) Settlement of Other Secured Obligations. All other amounts
received by Agent on account of, or applied by Agent to the payment of, any
Secured Obligation owed to the Lenders (including, without limitation, fees
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payable to the Lenders pursuant to Sections 4.4(a) and (b) and proceeds
from the sale of, or other realization upon, all or any part of the
Collateral following an Event of Default) that are received by Agent on or
prior to 1:00 p.m. (Dallas, Texas time) on a Business Day will be paid by
Agent to each Lender on the same Business Day, and any such amounts that
are received by Agent after 1:00 p.m. (Dallas, Texas time) will be paid by
Agent to each Lender on the following Business Day. Unless otherwise
stated herein, Agent shall distribute fees payable to the Lenders pursuant
to Sections 4.4(a) and (b) ratably to the Lenders based on each Lender's
Commitment Percentage and shall distribute proceeds from the sale of, or
other realization upon, all or any part of the Collateral following an
Event of Default ratably to the Lenders based on the amount of the Secured
Obligations then owing to each Lender.
ARTICLE 5
Change of Circumstances
-----------------------
Section 5.1 Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any Applicable Law or
any change in any Applicable Law or any change in the interpretation or
administration thereof by any Governmental Authority (including, without
limitation, any central bank or comparable agency) charged with the
interpretation or administration thereof, or compliance by any Lender (or
its Applicable Lending Office) with any request or directive (whether or
not having the force of law) of any such Governmental Authority:
(i) shall subject such Lender (or its Applicable Lending Office)
to any tax, duty or other charge with respect to any
Eurodollar Loans, its Notes, or its obligation to make
Eurodollar Loans, or change the basis of taxation of any
amounts payable to such Lender (or its Applicable Lending
Office) under this Agreement or its Note in respect of any
Eurodollar Loans (other than taxes imposed on the overall
net income of such Lender by the jurisdiction in which such
Lender has its principal office or such Applicable Lending
Office);
(ii) shall impose, modify or deem applicable any reserve, special
deposit, assessment, compulsory loan or similar requirement
(other than the Reserve Requirement utilized in the
determination of the Adjusted Eurodollar Rate) relating to
any extensions of credit or other assets of, or any deposits
with or other liabilities or commitments of, such Lender (or
its Applicable Lending Office), including the Commitment of
such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending
Office) or on the London interbank market any other
condition affecting this Agreement or its Notes or any of
such extensions of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to
such Lender (or its Applicable Lending Office) of making, Converting
into, Continuing or maintaining any Eurodollar Loans or to reduce
any sum received or receivable by such Lender (or its Applicable
Lending Office) under this Agreement or its Notes with respect to
any Eurodollar Loans, then Borrowers shall pay to such Lender on
demand such amount or amounts as will compensate such Lender for
such increased cost or reduction. If any Lender requests
compensation by Borrowers under this Section 5.1(a), Borrowers may,
by notice to such Lender (with a copy to Agent), suspend the
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obligation of such Lender to make or Continue Loans of the Type with
respect to which such compensation is requested, or to Convert Loans
of any other Type into Loans of such Type, until the event or
condition giving rise to such request ceases to be in effect (in
which case the provisions of Section 5.4 shall be applicable);
provided that such suspension shall not affect the right of such
Lender to receive the compensation so requested.
(b) If, after the date hereof, any Lender shall have determined that
the adoption of any Applicable Law, rule or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any Governmental Authority (including, without limitation, any
central bank or comparable agency) charged with the interpretation or
administration thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any such Governmental
Authority has or would have the effect of reducing the rate of return on
the capital of such Lender or any corporation controlling such Lender as a
consequence of such Lender's obligations hereunder to a level below that
which such Lender or such corporation could have achieved but for such
adoption, change, request or directive (taking into consideration its
policies with respect to capital adequacy), then, from time to time upon
demand, Borrowers shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
(c) Each Lender shall promptly notify Borrowers and Agent of any event
of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will
avoid the need for, or reduce the amount of, such compensation and will
not, in the judgment of such Lender, be otherwise disadvantageous to it.
Any Lender claiming compensation under this Section shall furnish to
Borrowers and Agent a statement, signed by an authorized officer of such
Lender, setting forth the additional amount or amounts to be paid to it
hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
Section 5.2 Limitation on Types of Loans. If on or prior to the first day
of any Interest Period for any Eurodollar Loan:
(a) Agent determines (which determination shall be conclusive) that by
reason of circumstances affecting the London interbank Eurodollar market,
adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate for such Interest Period; or
(b) the Required Lenders determine (which determination shall be
conclusive) and notify Agent that the Adjusted Eurodollar Rate will not
adequately and fairly reflect the cost to the Lenders of funding Eurodollar
Loans for such Interest Period;
then Agent shall give Borrowers prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make additional Loans of such Type, Continue Loans of such Type, or to Convert
Loans of any other Type into Loans of such Type and Borrowers shall, on the
last day(s) of the then current Interest Period(s) for the outstanding Loans
of the affected Type, either prepay such Loans or Convert such Loans into
another Type of Loan in accordance with the terms of this Agreement.
Section 5.3 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
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Applicable Lending Office to make, maintain or fund Eurodollar Loans
hereunder, then such Lender shall promptly notify Borrowers thereof and such
Lender's obligation to make or Continue Eurodollar Loans, and to Convert other
Types of Loans into Eurodollar Loans, shall be suspended until such time as
such Lender may again make, maintain and fund Eurodollar Loans (in which case
the provisions of Section 5.4 shall be applicable).
Section 5.4 Treatment of Affected Loans. If the obligation of any Lender
to make Loans of a particular Type, or to Continue or Convert Loans of any
other Type into Loans of a particular Type, shall be suspended pursuant to
Section 5.1 or 5.3 hereof (Loans of such Type being herein called "Affected
Loans" and such Type being herein called the "Affected Type"), such Lender's
Affected Loans shall be automatically Converted into Base Rate Loans on the
last day(s) of the then current Interest Period(s) for the Affected Loans (or,
in the case of a Conversion required by Section 5.3 hereof, on such earlier
date as such Lender may specify to Borrowers with a copy to Agent) and, unless
and until such Lender gives notice as provided below that the circumstances
specified in Section 5.1 or Section 5.3 hereof that gave rise to such
Conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Affected Loans shall be applied instead to its
Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such Lender
as Loans of the Affected Type shall be made or Continued instead as Base
Rate Loans, and all Loans of such Lender that would otherwise be Converted
into Loans of the Affected Type shall be Converted instead into (or shall
remain as) Base Rate Loans.
If such Lender gives notice to Borrowers (with a copy to Agent) that the
circumstances specified in Section 5.1 or Section 5.3 hereof that gave rise to
the Conversion of such Lender's Affected Loans pursuant to this Section 5.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of
the Affected Type and by such Lender are held pro rata (as to principal
amounts, Types and Interest Periods) in accordance with their respective
Commitments.
Section 5.5 Compensation. Upon the written request, signed by an
authorized officer of, any Lender (with a copy to Agent), Borrowers shall pay
to such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost or
expense (including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment or Conversion of a Eurodollar Loan for any
reason (including, without limitation, the acceleration of the Loans
pursuant to Section 13.2) on a date other than the last day of the Interest
Period for such Loan; or
(b) any failure by Borrowers for any reason (including, without
limitation, the failure of any condition precedent specified in Article 6
to be satisfied) to borrow, Convert, Continue or prepay a Eurodollar Loan
on the date for such borrowing, Conversion, Continuation or prepayment
specified in the relevant Notice of Borrowing under this Agreement.
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Section 5.6 Taxes.
(a) Any and all payments by any Borrower to or for the account of any
Credit Party hereunder or under any other Loan Document shall be made free
and clear of, and without deduction for, any and all present or future
taxes, duties, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, excluding, in the case of each Credit
Party, taxes imposed on its income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which any such Lender (or its Applicable
Lending Office), L/C Issuer or Agent (as the case may be) is organized or
any political subdivision thereof (all such non-excluded taxes, duties,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If any Borrower shall be required by
law to deduct any Taxes from or in respect of any sum payable under this
Agreement or any other Loan Document to any Credit Party, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable
under this Section 5.6) such Credit Party receives an amount equal to the
sum it would have received had no such deductions been made, (ii) such
Borrower shall make such deductions, (iii) such Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with Applicable Law, and (iv) such Borrower shall furnish to
Agent, at its address referred to in Section 16.1, the original or a
certified copy of a receipt evidencing payment thereof.
(b) In addition, each Borrower agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under this
Agreement or any other Loan Document or from the execution or delivery of,
or otherwise with respect to, this Agreement or any other Loan Document
(hereinafter referred to as "Other Taxes").
(c) EACH BORROWER AGREES TO INDEMNIFY EACH CREDIT PARTY FOR THE FULL
AMOUNT OF TAXES AND OTHER TAXES (INCLUDING, WITHOUT LIMITATION, ANY TAXES
OR OTHER TAXES IMPOSED OR ASSERTED BY ANY JURISDICTION ON AMOUNTS PAYABLE
UNDER THIS SECTION 5.6) PAID BY SUCH CREDIT PARTY (AS THE CASE MAY BE) AND
ANY LIABILITY (INCLUDING PENALTIES, INTEREST AND EXPENSES OTHER THAN THOSE
RESULTING FROM SUCH CREDIT PARTY'S GROSS NEGLIGENCE) ARISING THEREFROM OR
WITH RESPECT THERETO.
(d) Each Lender organized under the laws of a jurisdiction outside the
U.S., on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof
and on or prior to the date on which it becomes a Lender in the case of
each other Lender, and from time to time thereafter if requested in writing
by Borrowers or Agent (but only so long as such Lender remains lawfully
able to do so), shall provide Borrowers and Agent with (i) IRS Form 1001 or
4224, as appropriate, or any successor form prescribed by the IRS,
certifying that such Lender is entitled to benefits under an income tax
treaty to which the U.S. is a party which reduces the rate of withholding
tax on payments of interest or certifying that the income receivable
pursuant to this Agreement is effectively connected with the conduct of a
trade or business in the U.S., (ii) IRS Form W-8 or W-9, as appropriate, or
any successor form prescribed by the IRS, and (iii) any other form or
certificate required by any taxing authority (including any certificate
required by Sections 871(h) and 881(c) of the Internal Revenue Code),
certifying that such Lender is entitled to an exemption from or a reduced
rate of tax on payments pursuant to this Agreement or any of the other Loan
Documents.
(e) For any period with respect to which a Lender has failed to
provide Borrowers and Agent with the appropriate form pursuant to Section
5.6(d) (unless such failure is due to a change in treaty, law or regulation
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occurring subsequent to the date on which a form originally was required to
be provided), such Lender shall not be entitled to indemnification under
Section 5.6(a) or 5.6(b) with respect to Taxes or Other Taxes imposed by
the U.S.; provided, however, that should a Lender, which is otherwise
exempt from or subject to a reduced rate of withholding tax, become subject
to Taxes or Other Taxes because of its failure to deliver a form required
hereunder, Borrowers shall take such steps as such Lender shall reasonably
request to assist such Lender to recover such Taxes or Other Taxes.
(f) If any Borrower is required to pay additional amounts to or for
the account of any Lender pursuant to this Section 5.6, then such Lender
will agree to use reasonable efforts to change the jurisdiction of its
Applicable Lending Office or takes such other reasonable steps, if
available, so as to eliminate or reduce any such additional payment which
may thereafter accrue if such change, in the judgment of such Lender, is
not otherwise disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of Taxes or
Other Taxes, Borrowers shall furnish to Agent the original or a certified
copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of
Borrowers hereunder, the agreements and obligations of Borrowers contained
in this Section 5.6 shall survive the termination of the Commitments and
the payment in full of the Notes.
Section 5.7 Replacement Lender. If Borrowers become obligated to any
Lender pursuant to the provisions of Section 5.1 or Section 5.5, or if the
provisions of Section 5.3 become applicable with respect to any Lender,
Borrowers may, upon reasonable prior written notice to Agent and such Lender,
require such Lender to assign its Commitment and Loans to an Eligible
Assignee, as designated by Borrowers and reasonably acceptable to Agent, which
shall replace such Lender pursuant to the terms of Section 16.10. Borrowers,
such assigning Lender and the Eligible Assignee shall execute and deliver an
Assignment and Acceptance to Agent for Agent's acceptance pursuant to the
terms of this Agreement. Upon Agent's acceptance of such Assignment and
Acceptance, such Eligible Assignee shall be a Lender for all purposes of this
Agreement as set forth in Section 16.10 hereof.
ARTICLE 6
Conditions Precedent
--------------------
Section 6.1 Conditions Precedent to Revolving Credit Loans and Letters of
Credit. Notwithstanding any other provision of this Agreement, no Loan will
be made, and no Letter of Credit shall be issued, until the fulfillment of
each of the following conditions, and with respect to any reports, appraisals,
reviews or other similar items, Agent's and each Lender's satisfaction with
the contents thereof, prior to or contemporaneously with the making of the
first to be made of such Loans or issuance of such Letter of Credit:
(a) Fees. Borrowers shall have paid all of the fees and expenses
payable on the Agreement Date.
(b) Security Interests. Agent shall have received satisfactory
evidence that Agent (for the benefit of the Credit Parties) has a valid,
exclusive and perfected first priority security interest, lien, collateral
assignment and pledge as of such date in all of the Collateral (provided,
that notwithstanding the foregoing and without limitation of the
requirements of the definition of "Eligible Inventory", "Eligible
Work-In-Process" and "Eligible Receivables," Agent in its sole discretion
may defer or waive requirement for execution and delivery of any Foreign
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Security Documents or any Notice and Acknowledgment).
(c) Closing Documents. Agent shall have received each of the
following documents, all of which shall be satisfactory in form and
substance to Agent and to the Lenders:
(i) certified copies of the certificate of incorporation and
bylaws of each Loan Party (or with respect to RBG its
certificate of limited partnership and partnership
agreement as in effect on the Effective Date);
(ii) certified copies of all action taken by each Loan Party (or
with respect to RBG by GP) to authorize the execution,
delivery and performance of this Agreement, the other Loan
Documents and the borrowings under this Agreement;
(iii) certificates of incumbency and specimen signatures with
respect to each of the officers of each Loan Party
authorized to execute and deliver this Agreement and the
other Loan Documents on behalf of such Loan Party and each
other Person executing any document, certificate or
instrument to be delivered in connection with this
Agreement and the other Loan Documents and, in the case of
each Borrower, to request borrowings under this Agreement;
(iv) a certificate evidencing the good standing of each Loan
Party in the jurisdiction of its incorporation (or with
respect to RGB its organization) and in each other
jurisdiction in which it is required to be qualified as a
foreign business entity to transact its business as
presently conducted;
(v) copies of all financial statements referred to in Section
7.1(n) and meeting the requirements thereof;
(vi) signed opinions of counsel for the Loan Parties, opining as
to such matters in connection with the transactions
contemplated by this Agreement as Agent or its special
counsel may reasonably request, in each case in form and
substance satisfactory to Agent;
(vii) certificates or binders of insurance relating to each of
the policies of insurance covering any of the Collateral
together with loss payable clauses which comply with the
terms of Section 9.8;
(viii) a certificate of the president or a Financial Officer of
each of the Loan Parties stating that, to the best of
his/her knowledge and based on an examination sufficient to
enable him/her to make an informed statement,
(A) all of the representations and warranties made or
deemed to be made under this Agreement are true and
correct as of the Effective Date, after giving effect
to the Revolving Credit Loans to be made at such time
and the application of the proceeds thereof,
(B) no Default or Event of Default exists, and
(C) as to such other factual matters as may be reasonably
requested by Agent;
(ix) a Borrowing Base Certificate, a Schedule of Inventory and a
Schedule of Receivables, prepared as of November 30, 1997.
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(x) landlord's or mortgagee's waiver and consent agreements
duly executed on behalf of each landlord or mortgagee, as
the case may be, of Real Estate and any other real property
on which any Collateral is located (it is agreed that
Agent, in its sole discretion, may defer or waive
requirement for any such waiver or consent and establish a
Reserve with respect to all Collateral at any time located
at any such location);
(xi) each Agency Account Agreement duly executed by the Loan
Party and the Clearing Bank party thereto;
(xii) a certificate from Borrowers to Agent requesting the
initial Revolving Credit Loans and specifying the method of
disbursement pursuant to Section 10.8;
(xiii) a Revolving Credit Note payable to the order of each
Lender, duly executed and delivered by all Borrowers,
complying with the requirements of Section 2.4;
(xiv) each of the Security Documents to be executed by any of the
Loan Parties, as follows:
(A) the Financing Statements, duly executed by each Person
a party thereto as required by this Agreement and the
Security Documents, and acknowledgment copies
evidencing the filing of such Financing Statements in
each jurisdiction where such filing may be necessary or
appropriate to perfect the Security Interest;
(B) the Collateral Assignment of Receivables L/Cs, the
Collateral Assignment of Receivables Guaranties, the
Patent Security Agreements, the Trademark Security
Agreements and the Copyright Security Agreements, each
duly executed by all Borrowers;
(C) the Foreign Security Documents, duly executed by each
Loan Party as Agent may require (provided, that
notwithstanding the foregoing and without limitation of
the requirements of the definition of "Eligible
Inventory", "Eligible Receivables" and "Eligible
Work-In-Process Inventory," Agent in its discretion may
defer or waive requirement for execution and delivery
of any Foreign Security Documents in form and substance
satisfactory to Agent in its discretion); and
(D) a Guaranty Agreement, duly executed and delivered by
each Guarantor;
(xv) counterparts of each of the other Loan Documents duly
executed by the parties thereto, together with evidence
satisfactory to Agent of the due authorization and binding
effect of each such Loan Document on such party; and
(xvi) such other documents and instruments as Agent or any
Lender may reasonably request.
(d) Other Security Documents. Agent shall have received each other
Security Document, duly executed and delivered by the Person party thereto.
(e) No Injunctions, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or
proposed by or before any Governmental Authority to enjoin, restrain or
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prohibit, or to obtain damages in respect of, or which is related to or
arises out of this Agreement or the consummation of the transactions
contemplated by this Agreement or which, in Agent's or the Lenders'
reasonable discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement.
(f) Material Adverse Change. Except as disclosed in writing to Agent
and the Lenders on or before the Agreement Date, as of the Effective Date,
there shall not have occurred any change which is materially adverse, in
the Lenders' discretion, to the assets, liabilities, businesses,
operations, condition (financial or otherwise) or prospects of Borrowers in
comparison to such conditions as presented by the financial statements of
Borrowers dated September 30, 1997, previously delivered to Agent and the
Lenders, and no Materially Adverse Effect with respect to the Loan Parties
shall have occurred.
(g) Release of Security Interests. Agent shall have received evidence
satisfactory to it of the release and termination of all Liens other than
Permitted Liens.
Section 6.2 All Loans; Letters of Credit. At the time of making of each
Loan, including the initial Revolving Credit Loan and all subsequent Loans,
and the issuance of each Letter of Credit:
(a) all of the representations and warranties made or deemed to be
made under this Agreement shall be true and correct at such time both with
and without giving effect to the Loan to be made at such time and the
application of the proceeds thereof;
(b) the corporate actions of Borrowers referred to in Section
6.1(c)(ii) shall remain in full force and effect and the incumbency of
officers shall be as stated in the certificates of incumbency delivered
pursuant to Section 6.1(c)(iii) or as subsequently modified and reflected
in a certificate of incumbency delivered to Agent; and
(c) each request or deemed request for any borrowing or the issuance
of any Letter of Credit hereunder shall be deemed to be a certification by
Borrowers to the Credit Parties as to the matters set forth in Section
6.2(a) and (b) and Agent may, without waiving either condition, consider
the conditions specified in Sections 6.2(a) and (b) fulfilled and a
representation by Borrowers to such effect made, if no written notice to
the contrary is received by Agent prior to the making of the Loan, or the
issuance of the Letter of Credit then requested.
ARTICLE 7
Representations and Warranties
------------------------------
Section 7.1 Representations and Warranties. Each of the Loan Parties, as
applicable, hereby represents and warrants to each of the Credit Parties as
follows:
(a) Organization; Power; Qualification. Each of the Loan Parties is a
corporation, (or, in the case of RBG, a limited partnership) duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, having the power and authority to own its
properties and to carry on its business as now being and hereafter proposed
to be conducted and is duly qualified and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization. The jurisdictions
in which each of the Loan Parties is qualified to do business as a foreign
business enterprise are listed on Schedule 7.1(a).
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(b) Capitalization. The outstanding Capital Stock of OMC has been
duly and validly issued and is fully paid and nonassessable, and the number
and owners of such shares of Capital Stock of OMC are set forth on Schedule
7.1(b). The issuance and sale of OMC's Capital Stock have been registered
or qualified under applicable federal and state securities laws or are
exempt therefrom.
(c) Subsidiaries. Schedule 7.1(c) correctly sets forth the name of
each Loan Party (other than OMC), its jurisdiction of organization, the
name of its immediate parent or parents, and the percentage of its issued
and outstanding Capital Stock owned by any Loan Party and indicating
whether such Person is a Consolidated Subsidiary of OMC. Except as set
forth on Schedule 7.1(c),
(i) no Subsidiary of such Person has issued any securities
convertible into shares or other evidence of ownership of
such Person's Capital Stock or any options, warrants or
other rights to acquire any shares or other evidence of
ownership or securities convertible into such Capital Stock,
(ii) the outstanding Capital Stock and other securities of each
Subsidiary of any Loan Party are owned by such Loan Party or
a Wholly-Owned Subsidiary of such Loan Party, or by such
Loan Party and one or more of its Wholly-Owned Subsidiaries,
free and clear of all Liens, warrants, options and rights of
others of any kind whatsoever, and
(iii) No Loan Party has any other Subsidiaries.
The outstanding Capital Stock of each Loan Party (excluding OMC) has been
duly and validly issued and is fully paid and nonassessable by the issuer, and
the number and owners of the shares or other evidence of ownership of such
Capital Stock are set forth on Schedule 7.1(c).
(d) Authorization of Agreement, Notes, Loan Documents and Borrowing.
Each Loan Party has the right and power, and has taken all necessary action
to authorize it, to execute, deliver and perform this Agreement and each of
the other Loan Documents to which such Person is a party in accordance with
their respective terms. This Agreement and each of the other Loan
Documents have been duly executed and delivered by the duly authorized
officers of each Loan Party and each is, or each when executed and
delivered in accordance with this Agreement will be, a legal, valid and
binding obligation of such Loan Party, enforceable in accordance with its
terms.
(e) Compliance of Agreement, Notes, Loan Documents and Borrowing with
Laws, Etc. Except as set forth on Schedule 7.1(e), the execution, delivery
and performance of this Agreement and each of the other Loan Documents in
accordance with their respective terms and the borrowings hereunder do not
and will not, by the passage of time, the giving of notice or otherwise,
(i) require any Governmental Approval or violate any Applicable
Law relating to any Loan Party,
(ii) conflict with, result in a breach of or constitute a default
under the articles or certificate of incorporation or
bylaws, or other constituent documents, of any Loan Party,
(iii) conflict with, result in a breach of or constitute a default
under any material provisions of any indenture, agreement or
other instrument to which any Loan Party is a party or by
which any Loan Party or any of any Loan Party's property may
be bound or any Governmental Approval relating to any Loan
Party, or
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(iv) result in or require the creation or imposition of any Lien
upon or with respect to any property now owned or hereafter
acquired by any Loan Party other than the Security Interest.
(f) Business. The Loan Parties are engaged principally in the
business of manufacturing and marketing of marine engines, boats and
accessories.
(g) Compliance with Law; Governmental Approvals.
(i) Except as set forth in Schedule 7.1(g), each Loan Party:
(A) has all Governmental Approvals, including permits
relating to federal, state and local Environmental Laws,
ordinances and regulations, required by any Applicable
Law for it to conduct its business, each of which is in
full force and effect, is final and not subject to
review on appeal and is not the subject of any pending
or, to the knowledge of any Loan Party, threatened
attack by direct or collateral proceeding, and
(B) is in all material respects in compliance with each
Governmental Approval applicable to it and in compliance
with all other Applicable Laws relating to it,
including, without being limited to, all Environmental
Laws and all occupational health and safety laws
applicable to any Loan Party or its respective
properties,
except for instances of noncompliance which would not, singly or in
the aggregate, cause a Default or Event of Default or have a
Materially Adverse Effect on the Loan Parties and in respect of
which reserves in respect of any Loan Party's reasonably anticipated
liability therefor, if any, have been established on the books of
such Loan Party.
(ii) Without limiting the generality of the above, except with
respect to matters which could not reasonably be expected to
have, singly or in the aggregate, a Materially Adverse
Effect on the Loan Parties:
(A) the operations of each Loan Party comply in all
material respects with all applicable environmental,
health and safety requirements of Applicable Law;
(B) each Loan Party has obtained all environmental, health
and safety permits necessary for its operation, and all
such permits are in good standing and each Loan Party
is in compliance in all material respects with all
terms and conditions of such permits;
(C) neither any Loan Party nor any of any Loan Party's
present or past property or operations is subject to
any order from or agreement with any public authority
or private party respecting (1) any environmental,
health or safety requirements of Applicable Law, (2)
any Remedial Action, or (3) any liabilities and costs
arising from the Release or threatened Release of a
Contaminant into the environment;
(D) none of the operations of any Loan Party is subject to
any judicial or administrative proceeding or
investigation alleging a violation of any
environmental, health or safety requirement of
Applicable Law;
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(E) none of the present or past operations of any Loan
Party is the subject of any investigation by any
Governmental Authority evaluating whether any Remedial
Action is needed to respond to a Release or threatened
Release of a Contaminant into the environment;
(F) no Loan Party has filed any notice under any
requirement of Environmental Law indicating past or
present treatment, storage or disposal of a hazardous
waste, as that term is defined under 40 CFR Part 261 or
any state equivalent;
(G) no Loan Party has filed any notice under any
requirement of Applicable Law reporting a Release of a
Contaminant into the environment;
(H) except in compliance in all material respects with
applicable Environmental Laws, during the course of any
Loan Party's ownership of or operations on its Real
Estate, there has been no generation, treatment,
recycling, storage or disposal of hazardous waste, as
that term is defined under 40 CFR Part 261 or any state
equivalent, use of underground storage tanks or surface
impoundments, use of asbestos containing materials, or
use of polychlorinated biphenyls (PCB) used in
hydraulic oils, electrical transformers or other
equipment;
(I) no Loan Party has entered into any negotiations or
agreements with any Person (including, without
limitation, any prior owner of any of the Real Estate
or other property of any Loan Party) relating to any
Remedial Action or environmental related claim;
(J) no Loan Party has received any notice or claim to the
effect that it is or may be liable to any Person as a
result of the Release or threatened Release of a
Contaminant into the environment;
(K) no Loan Party has any material contingent liability in
connection with any Release or threatened Release of
any Contaminant into the environment;
(L) no Environmental Lien has attached to any of the Real
Estate or other property of any Loan Party;
(M) the presence and condition of all asbestos-containing
material which is on or part of the Real Estate
(excluding any raw materials used in the manufacture of
products or products themselves) do not violate in any
material respect any currently applicable requirement
of Applicable Law; and
(N) no Loan Party manufactures, distributes or sells, and
has never manufactured, distributed or sold, products
which contain asbestos-containing material.
(iii) Each Loan Party has notified Agent of the receipt by it of
any notice of a material violation of any Environmental Law
and occupational health and safety laws applicable to such
Loan Party or any of its properties.
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(h) Title to Properties. Except as set forth in Schedule 7.1(h), each
Loan Party has valid and legal title to or leasehold interest in all
personal property, Real Estate and other assets used in its business.
(i) Liens. Except as set forth in Schedule 7.1(i), none of the
properties and assets of any Loan Party is subject to any Lien, except
Permitted Liens. Other than the Financing Statements, no financing
statement under the UCC of any state or other instrument evidencing a Lien
which names any Loan Party, as debtor has been filed (and has not been
terminated) in any state or other jurisdiction, and no Loan Party has
signed any such financing statement or other instrument or any security
agreement authorizing any secured party thereunder to file any such
financing statement or instrument, except to perfect those Liens listed on
Schedule 7.1(i).
(j) Indebtedness and Guaranties. Schedule 7.1(j) is a complete and
correct listing of all (i) Indebtedness for Money Borrowed, and (ii)
Guaranties of each Loan Party. Each Loan Party has performed and is in
compliance with all of the terms of such Indebtedness and Guaranties and
all instruments and agreements relating thereto, and no default or event of
default, or event or condition which with notice or lapse of time or both
would constitute such a default or event of default, exists with respect to
any such Indebtedness or Guaranty.
(k) Litigation. Except as set forth on Schedule 7.1(k), there are no
actions, suits or proceedings pending (nor, to the knowledge of any Loan
Party, are there any actions, suits or proceedings threatened, or any
reasonable basis therefor) against or in any other way relating to or
affecting any Loan Party or any of any Loan Party's other properties in any
court or before any arbitrator of any kind or before or by any Governmental
Authority, except actions, suits or proceedings of the character normally
incident to the kind of business conducted by the Loan Parties which, if
adversely determined, would not singly or in the aggregate have a
Materially Adverse Effect on the Loan Parties, and there are no strikes or
walkouts in progress, pending or contemplated relating to any labor
contracts to which any Loan Party is a party, relating to any labor
contracts being negotiated, or otherwise.
(l) Tax Returns and Payments. Except as set forth on Schedule 7.1(l),
all U.S. federal, state and local as well as foreign national, provincial
and local and other tax returns of each Loan Party required by Applicable
Law to be filed have been duly filed, and all U.S. federal, state and
local and foreign national, provincial and local and other taxes,
assessments and other governmental charges or levies upon any Loan Party or
any of any Loan Party's property, income, profits and assets which are due
and payable have been paid, except any such nonpayment which is at the time
permitted under Section 10.6. The charges, accruals and reserves on the
books of each Loan Party in respect of U.S. federal, state and local and
foreign national, provincial and local taxes for all fiscal years and
portions thereof since the organization of each such Loan Party are in the
judgment of the Loan Parties adequate, and no Loan Party knows of any
reason to anticipate any additional assessments for any of such years
which, singly or in the aggregate, might have a Materially Adverse Effect
on the Loan Parties.
(m) Burdensome Provisions. No Loan Party is a party to any indenture,
agreement, lease or other instrument, or subject to any charter or
corporate restriction, Governmental Approval or Applicable Law, compliance
with the terms of which might have a Materially Adverse Effect on the Loan
Parties.
(n) Financial Statements.
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(i) The Loan Parties have furnished to Agent and the Lenders
copies of the unaudited balance sheet as at OMC's fiscal
year ended September 30, 1997, and the related statements of
income and cash flow for the twelve (12) month period then
ended, which financial statements are complete and correct
and present fairly and in all material respects in
accordance with GAAP the financial position of OMC and its
Consolidated Subsidiaries as of such date and for the period
then ended and copies of OMC's and its Consolidated
Subsidiaries balance sheet as at November 30, 1997, and the
related statements of income and cash flow for the two (2)
month period then ended, which financial statements are
complete and correct and present fairly and in all material
respects the financial position of OMC and its Consolidated
Subsidiaries as at such period end and the results of
operations of OMC and its Consolidated Subsidiaries for the
two (2) month period then ended.
(ii) The Loan Parties have furnished to NationsBank as Agent and
the sole Lender as of the Agreement Date copies of the
Projections. The Projections have been be prepared by the
Loan Parties in light of the past operations of the
businesses of the Loan Parties and represent as of the
respective dates thereof the good faith opinion of the Loan
Parties and their senior management concerning the most
probable course of business of the Loan Parties.
(iii) Except as disclosed or reflected in the financial statements
described in clause (i) above, the Loan Parties do not have
any material liabilities, contingent or otherwise, and there
were no material unrealized or anticipated losses of any
Loan Party.
(o) Adverse Change. Since the date of the last financial statements
of OMC and its Consolidated Subsidiaries delivered to Agent and the Lenders
pursuant to Section 7.1(n)(i):
(i) no material adverse change has occurred in the business,
assets, liabilities, financial condition, results of
operations or business prospects of any Loan Party; and
(ii) no event has occurred or failed to occur which has had, or
may have, singly or in the aggregate, a Materially Adverse
Effect.
(p) ERISA; Foreign Employee Benefit Matters. Except as set forth in
Schedule 7.1(p):
(i) Neither any Loan Party nor any Related Company maintains or
contributes to any Benefit Plan other than those listed on
Schedule 7.1(p).
(ii) Except in compliance with Applicable Law, no Benefit Plan
of any Loan Party has been terminated or partially
terminated, and no Multiemployer Plan of any Loan Party is
insolvent or in reorganization, nor have any proceedings
been instituted to terminate any such Benefit Plan or to
reorganize any such Multiemployer Plan.
(iii) Neither any Loan Party nor any Related Company has
withdrawn from any Benefit Plan or Multiemployer Plan, nor
has a condition occurred which if continued would result
in a withdrawal.
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(iv) Neither any Loan Party nor any Related Company has incurred
any withdrawal liability under any section of Title IV of
ERISA, including, without limitation, any contingent
withdrawal liability, to any Multiemployer Plan pursuant to
Title IV of ERISA.
(v) Neither any Loan Party nor any Related Company has incurred
any liability to the PBGC other than for required insurance
premiums which have been paid when due.
(vi) No Reportable Event has occurred with respect to a Plan
maintained by any Loan Party.
(vii) No Benefit Plan maintained by any Loan Party has an
"accumulated funding deficiency" (whether or not waived) as
defined in Section 302 of ERISA or in Section 412 of the
Internal Revenue Code.
(viii) Each Plan maintained by any Loan Party is in substantial
compliance with ERISA, and neither any Loan Party nor any
Related Company has received any communication from a
Governmental Authority asserting that a Plan is not in
compliance with ERISA.
(ix) Each Plan maintained by any Loan Party which is intended to
be a qualified Plan has been determined by the IRS to be
qualified under Section 401(a) of the Internal Revenue Code
as currently in effect or will be submitted to the IRS for
such determination prior to the end of the remedial
amendment period under Section 401(b) of the Internal
Revenue Code and the regulations promulgated thereunder and
neither any Loan Party nor any Related Company knows or has
reason to know why each such Plan should not continue to be
so qualified, and each trust related to such Plan that has
been submitted to the IRS for determination of exempt
status has been determined to be exempt from federal
income tax under Section 501(a) of the Internal Revenue
Code or will be submitted to the IRS for a determination
of exempt status.
(x) Except as provided on Schedule 7.1(p), neither any Loan
Party nor any Related Company maintains or contributes to
any employee welfare benefit plan within the meaning of
Section 3(l) of ERISA which provides benefits to employees
after termination of employment other than as required by
Section 601 of ERISA.
(xi) With respect to the Benefit Plan (or Benefit Plans, as
applicable) of each Loan Party, Schedule B to the most
recent annual report filed with the IRS and furnished to
Agent and the Lenders is complete and accurate. Since the
date of each such Schedule B, there has been no adverse
change in funding status or financial condition of such
Benefit Plan (or Benefit Plans, as applicable) relating to
such Schedule B.
(xii) Neither any Loan Party nor any Related Company has failed
to make a required installment under Subsection (m) of
Section 412 of the Internal Revenue Code or any other
payment required under Section 412 of the Internal Revenue
Code on or before the due date for such installment or
other payment.
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(xiii) Neither any Loan Party nor any Related Company is required
to provide security to a Benefit Plan under Section
401(a)(29) of the Internal Revenue Code due to a Benefit
Plan amendment that results in an increase in current
liability for the plan year.
(xiv) Neither any Loan Party, nor any Related Company, nor any
other "party-in-interest" or "disqualified person" has
engaged in a nonexempt "prohibited transaction," as such
terms are defined in Section 4975 of the Internal Revenue
Code and Section 406 of ERISA, in connection with any Plan
or has taken or failed to take any action which would
constitute or result in a Termination Event.
(xv) Neither any Loan Party nor any Related Company has failed
to comply with the health care continuation coverage
requirements of Section 4980B of the Internal Revenue Code
in respect of employees and former employees of any such
Loan Party or such Related Company and their dependents and
beneficiaries which alone or in the aggregate would subject
any such Loan Party or such Related Company to any material
liability.
(xvi) Neither any Loan Party nor any Related Company has (i)
failed to make a required contribution or payment to a
Multiemployer Plan or (ii) made a complete or partial
withdrawal under Sections 4203 or 4205 of ERISA from a
Multiemployer Plan. Except as provided on Schedule 7.1(p),
to the best knowledge of each Loan Party after due inquiry,
neither any Loan Party nor any Related Company shall have
any obligation to (A) make contributions to any
Multiemployer Plan on or after the Effective Date, or (B)
pay withdrawal liability to any Multiemployer Plan in an
amount in excess of a "de minimis amount" as such term is
defined in Section 4209 of ERISA.
(xvii) Each Foreign Employee Benefit Plan is in compliance in all
material respects with Applicable Law and the respective
requirements of the governing documents for such Foreign
Employee Benefit Plan. The aggregate of the liabilities to
provide all of the accrued benefits under any Foreign
Employee Plan does not exceed the current fair market value
of the assets held in the trust or other funding vehicle
for such Foreign Employee Benefit Plan. With respect to
any Foreign Employee Benefit Plan maintained by any Loan
Party or any ERISA Affiliate, reasonable reserves have been
established in accordance with prudent business practice or
where required by ordinary accounting practices in the
jurisdiction in which such Foreign Employee Benefit Plan is
maintained. The aggregate unfunded liabilities, after
giving effect to any reserves for such liabilities, with
respect to such Foreign Employee Benefit Plans are not
material. There are not actions, suits or claims (other
than routine claims for benefits) pending or threatened
against any Loan Party, or any ERISA Affiliate of any Loan
Party with respect to any Foreign Employee Benefit Plan.
(q) Absence of Defaults. No Loan Party is in default under its
articles or certificate of incorporation or bylaws (or other applicable
constituent documents) and no event has occurred, which has not been
remedied, cured or waived,
(i) which constitutes a Default or an Event of Default, or
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(ii) which constitutes, or which with the passage of time or
giving of notice or both would constitute, a default or
event of default by any Loan Party under any material
agreement (other than this Agreement) or judgment, decree or
order to which any Loan Party is a party or by which any
Loan Party or any of any Loan Party's properties may be
bound or which would require any Loan Party to make any
payment under any such agreement prior to the scheduled
maturity date therefor, except, in the case only of any such
agreement, for alleged defaults which are being contested in
good faith by appropriate proceedings and with respect to
which reserves in respect of any such Loan Party's
reasonably anticipated liability have been established on
the books of such Loan Party.
(r) Accuracy and Completeness of Information.
(i) All written information, reports and other papers and data
produced by or on behalf of the Loan Parties and furnished
to any Credit Party were, at the time the same were so
furnished, complete and correct in all material respects, to
the extent necessary to give the recipient a true and
accurate knowledge of the subject matter. No fact is known
to any Loan Party which has had, or may in the future have
(so far as any Loan Party can reasonably foresee), a
Materially Adverse Effect upon the Loan Parties which has
not been set forth in the financial statements or disclosure
delivered prior to the Effective Date, in each case referred
to in Section 7.1(n), or in such written information,
reports or other papers or data or otherwise disclosed in
writing to the Credit Parties prior to the Agreement Date.
No document furnished or written statement made to any
Credit Party by any Loan Party in connection with the
negotiation, preparation or execution of this Agreement or
any of the other Loan Documents contains or will contain any
untrue statement of a fact material to the creditworthiness
of any Borrower or omits or will omit to state a material
fact necessary in order to make the statements contained
therein not misleading.
(ii) No Loan Party has any reason to believe that any document
furnished or written statement made to any Credit Party by
any Person other than such Loan Party in connection with the
negotiation, preparation or execution of this Agreement or
any of the other Loan Documents contained any incorrect
statement of a material fact or omitted to state a material
fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not
misleading.
(s) Solvency. In each case after giving effect to the Indebtedness
represented by the Loans outstanding and to be incurred and the
transactions contemplated by this Agreement, each Borrower and each of the
other Loan Parties is Solvent.
(t) Receivables.
(i) Status.
(A) Each Receivable reflected in the computations included
in any Borrowing Base Certificate meets the criteria
enumerated in clauses (a) through (t) of the definition
of Eligible Receivables, except as disclosed in such
Borrowing Base Certificate or as disclosed in a timely
manner in a subsequent Borrowing Base Certificate or
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otherwise in writing to Agent.
(B) Borrower has no knowledge of any fact or circumstance
not disclosed to Agent in a Borrowing Base Certificate
or otherwise in writing which would impair the validity
or collectibility of any Receivable of $100,000 or more
or of Receivables which (regardless of the individual
amount thereof) aggregate $2,000,000 or more.
(ii) Chief Executive Office; Tax Identification Number. The
federal tax identification number of each Loan Party is as
specified for such Loan Party in Article 1. The chief
executive office of each Loan Party and the books and
records relating to its Receivables are located at the
address or addresses set forth on Schedule 7.1(t). No Loan
Party has maintained its chief executive office or books and
records relating to any of its Receivables at any other
address at any time during the five (5) years immediately
preceding the Agreement Date except as disclosed on Schedule
7.1(t).
(u) Inventory.
(i) Schedule of Inventory. All Inventory included in any
Schedule of Inventory or Borrowing Base Certificate
delivered to Agent pursuant to Section 9.12 meets the
criteria enumerated in clauses (a) through (h) of the
definition of Eligible Inventory, except as disclosed in
such Schedule of Inventory or Borrowing Base Certificate or
in a subsequent Schedule of Inventory or Borrowing Base
Certificate, or as otherwise specifically disclosed in
writing to Agent.
(ii) Condition. All Inventory owned by any Loan Party is in good
condition, meets all standards imposed by any Governmental
Authority having regulatory authority over such goods, their
use or sale, and is currently either usable or salable in
the normal course of such Loan Party's business, except to
the extent reserved against in the financial statements
referred to in Section 7.1(n) or delivered pursuant to
Article 11 or as disclosed on a Schedule of Inventory
delivered to Agent pursuant to Section 9.12(c).
(iii) Location. All Inventory owned by any Loan Party is located
on the premises set forth on Schedule 7.1(u) or is Inventory
in transit to one of such locations, except as otherwise
disclosed in writing to Agent. No Loan Party has, in the
previous twelve (12) months, located such Inventory at
premises other than those set forth on Schedule 7.1(u).
(v) Corporate and Fictitious Names. Except as otherwise disclosed on
Schedule 7.1(v), during the five (5) year period preceding the Agreement
Date, no Loan Party nor any predecessor thereof has been known as or used
any corporate or fictitious name other than the corporate name of such Loan
Party on the Effective Date.
(w) Federal Reserve Regulations. No Loan Party is engaged and none
will engage, principally or as one of its important activities, in the
business of extending credit for the purpose of "purchasing" or "carrying"
any "margin stock" (as each of the quoted terms is defined or used in
Regulations G and U of the Board of Governors of the Federal Reserve
System). No part of the proceeds of any of the Loans will be used for so
purchasing or carrying margin stock or, in any event, for any purpose which
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violates, or which would be inconsistent with, the provisions of Regulation
G, T, U or X of such Board of Governors. If requested by Agent or any
Lender, each Borrower will furnish to Agent and the Lenders a statement or
statements in conformity with the requirements of said Regulation G, T, U
or X to the foregoing effect.
(x) Investment Company Act. No Loan Party is an "investment company"
or a company "controlled" by an "investment company" (as each of the quoted
terms is defined or used in the Investment Company Act of 1940, as
amended).
(y) Employee Relations. Each Loan Party has a stable work force in
place as reasonably required for the operation of its business and is not,
except as set forth on Schedule 7.1(y), party to any collective bargaining
agreement nor has any labor union been recognized as the representative of
any Loan Party's employees, and no Loan Party knows of any pending,
threatened or contemplated strikes, work stoppage or other labor disputes
involving any Loan Party's employees.
(z) Proprietary Rights. Schedule 7.1(z) sets forth a correct and
complete list of all of the Loan Parties' respective Proprietary Rights.
None of such Proprietary Rights is subject to any licensing agreement or
similar arrangement except as set forth on Schedule 7.1(z) or as entered
into in the sale or distribution of the Loan Parties' Inventory in the
ordinary course of business. To the best of each Loan Party's knowledge,
none of such Proprietary Rights infringe on or conflict with any other
Person's property, and no other Person's property infringes on or conflicts
with any such Proprietary Rights. The Proprietary Rights described on
Schedule 7.1(z) constitute all of the property of such type necessary to
the current and anticipated future conduct of the Loan Parties' business.
(aa) Trade Names. All trade names or styles under which any Loan
Party sells Inventory or Equipment or creates Receivables, or
to which instruments in payment of Receivables are made
payable, are listed on Schedule 7.1(aa).
(bb) Investment Property. All of each Loan Party's Investment
Property is set forth on Schedule 7.1(bb). Each Loan Party,
as applicable, is the legal and beneficial owner of all such
Investment Property, free and clear of any Lien (other than
the security interest created by this Agreement), and such
Loan Party has not sold, granted any option with respect to,
assigned transferred or otherwise disposed of any of its
rights or interest therein.
Section 7.2 Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article 7 and all statements
contained in any certificate, financial statement or other instrument,
delivered by or on behalf of any Loan Party pursuant to or in connection with
this Agreement or any of the other Loan Documents (including, but not limited
to, any such representation, warranty or statement made in or in connection
with any amendment thereto) shall constitute representations and warranties
made under this Agreement. All representations and warranties made under this
Agreement shall be made or deemed to be made at and as of the Agreement Date,
at and as of the Effective Date and at and as of the date of each Loan, except
that representations and warranties which, by their terms are applicable only
to one such date shall be deemed to be made only at and as of such date. All
representations and warranties made or deemed to be made under this Agreement
shall survive and not be waived by the execution and delivery of this
Agreement, any investigation made by or on behalf of the Credit Parties or any
borrowing hereunder.
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ARTICLE 8
Security Interest
-----------------
Section 8.1 Security Interest.
(a) To secure the payment, observance and performance of the Secured
Obligations, each Loan Party hereby mortgages, pledges and assigns all of
its right, title and interest in the Collateral to Agent, for the benefit
of itself as Agent and the other Credit Parties, and grants to Agent, for
the benefit of itself as Agent and the other Credit Parties, a continuing
security interest and collateral assignment in, and a continuing Lien upon,
all of the Collateral owned by such Loan Party.
(b) As additional security for all of the Secured Obligations, each
Loan Party grants to Agent, for the benefit of itself as Agent and the
other Credit Parties, a security interest and collateral assignment in, and
assigns to Agent, for the benefit of itself as Agent and the other Credit
Parties, all of such Loan Party's right, title and interest in and to, any
deposits or other sums at any time credited by or due from each Credit
Party and each Affiliate or Subsidiary of any Credit Party to such Loan
Party, or credited by or due from any participant of any Credit Party to
such Loan Party, with the same rights therein as if the deposits or other
sums were credited by or due from such Credit Party. Each Loan Party
hereby authorizes each Credit Party and each Affiliate or Subsidiary of
such Credit Party and each participant to pay or deliver to Agent, for the
account of the Credit Parties, without any necessity on any Credit Party's
part to resort to other security or sources of reimbursement for the
Secured Obligations, at any time during the continuation of any Event of
Default or in the event that Agent, on behalf of the Credit Parties, should
make demand for payment hereunder and without further notice to any Loan
Party (such notice being expressly waived), any of the aforesaid deposits
(general or special, time or demand, provisional or final) or other sums
for application to any Secured Obligation, irrespective of whether any
demand has been made or whether such Secured Obligation is mature, and the
rights given the Credit Parties, their Affiliates, Subsidiaries and
participants hereunder are cumulative with such Person's other rights and
remedies, including, without limitation, other rights of set-off. Agent
will promptly notify each Borrower of its receipt of any such funds for
application to the Secured Obligations, but failure to do so will not
affect the validity or enforceability thereof. Agent may give notice of
the above grant of a security interest in and assignment of the aforesaid
deposits and other sums, and authorization, to, and make any suitable
arrangements with, any Credit Party, any such Affiliate or Subsidiary of
any Credit Party or participant for effectuation thereof, and each Loan
Party hereby irrevocably appoints Agent as its attorney to collect any and
all such deposits or other sums to the extent any such payment is not made
to Agent or any Credit Party by such Credit Party, Affiliate, Subsidiary or
participant.
Section 8.2 Continued Priority of Security Interest.
(a) The Security Interest granted by each Loan Party shall at all
times be valid, perfected and enforceable against such Loan Party and all
third parties in accordance with the terms of this Agreement, as security
for the Secured Obligations, and the Collateral shall not at any time be
subject to any Liens that are prior to, on a parity with or junior to the
Security Interest, other than Permitted Liens.
(b) Each Loan Party shall, at its sole cost and expense, take all
action that may be necessary or desirable, or that Agent may reasonably
request, so as at all times to maintain the validity, perfection,
enforceability and rank of the Security Interest in the Collateral in
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conformity with the requirements of Section 8.2(a), or to enable Agent and
the other Credit Parties to exercise or enforce their rights hereunder,
including, but not limited to:
(i) paying all taxes, assessments and other claims lawfully
levied or assessed on any of the Collateral, except to the
extent that such taxes, assessments and other claims
constitute Permitted Liens;
(ii) using its best efforts to obtain, after the Agreement Date,
landlords', bailees' and mortgagees' releases,
subordinations or waivers, mechanics' releases,
subordinations or waivers;
(iii) delivering to Agent, for the benefit of the Credit Parties,
endorsed or accompanied by such instruments of assignment as
Agent may specify, and stamping or marking, in such manner
as Agent may specify, any and all Investment Property,
chattel paper, instruments, letters and advices of guaranty
and documents evidencing or forming a part of the
Collateral;
(iv) executing and delivering such Patent Security Agreements,
Trademark Security Agreements and Copyright Security
Agreements (if any) as Agent may require in order to
effectuate perfection and filing of the Security Interest
against any of each Loan Party's present or future
Proprietary Rights, as applicable; and
(v) executing and delivering financing statements, pledges,
designations, hypothecations, notices and assignments in
each case in form and substance satisfactory to Agent
relating to the creation, validity, perfection, maintenance
or continuation of the Security Interest under the UCC or
other Applicable Law.
(c) Agent is hereby irrevocably authorized to file one or more
financing or continuation statements or amendments thereto without the
signature of or in the name of any Loan Party for any purpose described in
Section 8.2(b). A carbon, photographic, xerographic or other reproduction
of this Agreement or of any of the Security Documents or of any financing
statement filed in connection with this Agreement is sufficient as a
financing statement. Prior to the occurrence of an Event of Default, Agent
shall, in the ordinary course of Agent's business, provide a copy of any
such financing or continuation statement or amendment to Borrowers;
provided that any delay or failure to provide such copy shall not result in
any liability of Agent or affect the validity of such financing or
continuation statement or amendment.
(d) Each Loan Party shall mark its books and records as directed by
Agent and as may be necessary or appropriate to evidence, protect and
perfect the Security Interest and shall cause its financial statements to
reflect the Security Interest.
(e) On or after the Termination Date and upon the full and final,
indefeasible payment of the Secured Obligations and termination of all of
the obligations of Agent, L/C Issuer or any Lender under this Agreement or
any other Loan Document, Agent shall, upon the request of and at the sole
expense of Borrowers, execute such releases and terminations of any
evidence of the Security Interest, as Borrowers may reasonably request.
ARTICLE 9
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Collateral Covenants
--------------------
Until the Revolving Credit Facility has been terminated and all the Secured
Obligations have been paid in full, unless the Required Lenders shall
otherwise consent in the manner provided in Section 16.9:
Section 9.1 Collection of Receivables.
(a) At the request of Agent, each Loan Party will cause all monies,
checks, notes, drafts and other payments relating to or constituting
proceeds of trade accounts receivable to be forwarded to a Lockbox for
deposit in an Agency Account in accordance with the procedures set out in
the corresponding Agency Account Agreement. Each Loan Party will promptly
cause all monies, checks, notes, drafts and other payments relating to or
constituting proceeds of other Receivables, of any other Collateral and of
any trade accounts receivable that are not forwarded to a Lockbox, to be
transferred to or deposited in an Agency Account. In particular, each Loan
Party will:
(i) advise each Account Debtor on trade accounts receivable to
address all remittances with respect to amounts payable on
account thereof to a specified Lockbox;
(ii) advise each other Account Debtor that makes payment to such
Loan Party by wire transfer, automated clearinghouse
transfer or similar means to make payment directly to an
Agency Account; and
(iii) stamp or otherwise mark all invoices relating to trade
accounts receivable with a legend satisfactory to Agent
indicating that payment is to be made to such Loan Party via
a specified Lockbox.
(b) For so long as no Event of Default shall have occurred and remain
in existence, all balances in each Agency Account may be transmitted daily
by wire transfer, depository transfer check or other means in accordance
with the procedures set forth in the corresponding Agency Account
Agreement, directly to Borrowers for Borrowers' use in the ordinary course
of business, subject to the terms of this Agreement.
(c) At any time when any Event of Default is in existence, Agent in
its discretion may notify Borrowers and each Clearing Bank and instruct
each such Clearing Bank, effective upon receipt of such notice, to cause
all balances in each Agency Account to be transmitted daily to Agent by
wire transfer, depository transfer check or other means in accordance with
the procedures set forth in the corresponding Agency Account Agreement, to
Agent at its Principal Office:
(i) for application, on account of the Secured Obligations, as
provided in Sections 2.3(c), 13.2, and 13.3, such credits to
be entered as of the Business Day they are received if they
are received prior to 1:30 p.m. (Dallas, Texas time) and to
be conditioned upon final payment in cash or solvent credits
of the items giving rise to them; and
(ii) with respect to the balance, so long as no Default or Event
of Default has occurred and is continuing, for transfer by
wire transfer or depository transfer check to a Disbursement
Account.
(d) Any monies, checks, notes, drafts or other payments referred to in
subsection (c) of this Section 9.1 which, notwithstanding the terms of
such subsection, are received by or on behalf of any Loan Party will be
held in trust for Agent and will be delivered to Agent or a Clearing Bank,
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as promptly as possible, in the exact form received, together with any
necessary endorsements for application by Agent directly to the Secured
Obligations or, if applicable, for deposit in the Agency Account maintained
with a Clearing Bank and processing in accordance with the terms of the
corresponding Agency Account Agreement.
Section 9.2 Verification and Notification. Agent shall have the right at
any time and from time to time,
(a) in the name of Agent, the Lenders or any Loan Party, to verify the
validity, amount or any other matter relating to any Loan Party's
Receivables by mail, telephone, telegraph or otherwise,
(b) to review, audit and make extracts from all records and files
related to any Loan Party's Receivables, and
(c) to notify the Account Debtors or obligors under any Loan Party's
Receivables of the assignment of such Receivables to Agent, for the benefit
of the Credit Parties.
Section 9.3 Disputes, Returns and Adjustments.
(a) In the event any amounts due and owing under any Receivable for an
amount in excess of $100,000 are in dispute between the Account Debtor and
any Loan Party, such Loan Party shall provide Agent with prompt written
notice thereof.
(b) Each Loan Party shall notify Agent promptly of all returns and
credits in excess of $250,000 in respect of any Receivable, which notice
shall specify the Receivable affected.
(c) Each Loan Party may, in the ordinary course of business and
consistent with past practice unless a Default or an Event of Default has
occurred and is continuing, grant any extension of time for payment of any
Receivable owing to such Loan Party or compromise, compound or settle the
same for less than the full amount thereof, or release wholly or partly any
Person liable for the payment thereof, or allow any credit or discount
whatsoever therein; provided that (i) no such action results in the
reduction of more than $25,000 in the amount payable with respect to any
Receivable or of more than $500,000 with respect to all Receivables of the
Loan Parties in the aggregate in any fiscal year of OMC (in each case,
excluding the allowance of credits or discounts generally available to
Account Debtors in the ordinary course of such Loan Party's business and
appropriate adjustments to the accounts of Account Debtors in the ordinary
course of business), and (ii) Agent is promptly notified of the amount of
such adjustments and the Receivable(s) affected thereby.
Section 9.4 Invoices.
(a) No Loan Party will use any invoices other than invoices in the
form delivered to Agent prior to the Agreement Date without giving Agent
thirty (30) days' prior written notice of the intended use of a different
form of invoice together with a copy of such different form.
(b) Upon the request of Agent and as reasonably necessary for
protection or enforcement of Agent's rights hereunder, each Loan Party
shall deliver to Agent, at such Loan Party's expense, copies of customers'
invoices or the equivalent, original shipping and delivery receipts or
other proof of delivery, customers' statements, customer address lists, the
original copy of all documents, including, without limitation, repayment
histories and present status reports, relating to Receivables and such
other documents and information relating to such Loan Party's Receivables
as Agent shall specify.
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Section 9.5 Delivery of Instruments. In the event any Receivable of any
Loan Party in excess of $100,000 is at any time evidenced by a promissory
note, trade acceptance or any other instrument for the payment of money,
excluding Receivables Guaranties and Receivables L/Cs which are expressly
subject to the provisions of Section 9.12(b), such Loan Party will immediately
thereafter deliver such instrument to Agent, appropriately endorsed to Agent,
for the benefit of the Credit Parties; provided that, at any time that the
aggregate of all such Receivables of the Loan Parties exceeds $1,000,000, the
Loan Parties shall deliver all such instruments to Agent, appropriately
endorsed to Agent, for the benefit of the Credit Parties.
Section 9.6 Sales of Inventory. All sales of Inventory will be made in
compliance with all requirements of Applicable Law.
Section 9.7 Ownership and Defense of Title.
(a) Except for Permitted Liens, each Loan Party shall at all times be
the sole owner of each and every item of its property which is included in
the Collateral and shall not create any Lien on, or sell, lease, exchange,
assign, transfer, pledge, hypothecate, grant a security interest or
security title in, grant a license in or otherwise dispose of, any of the
Collateral or any interest therein, except for sales of Inventory in the
ordinary course of business, for cash or on open account or on terms of
payment ordinarily extended to its customers, and except for dispositions
that are otherwise expressly permitted under this Agreement. The inclusion
of "proceeds" of the Collateral under the Security Interest shall not be
deemed a consent by Agent or the Lenders to any other sale or other
disposition of any part or all of the Collateral.
(b) Each Loan Party shall defend its title in and to, and the Security
Interest in, the Collateral against the claims and demands of all Persons
(excluding the Credit Parties).
Section 9.8 Insurance.
(a) The Loan Parties shall at all times maintain insurance on all
Inventory and Equipment of all Loan Parties against loss or damage by fire,
theft, burglary, pilferage, loss in transit and such other hazards as Agent
shall reasonably specify, in amounts not to exceed those obtainable at
commercially reasonable rates and under policies issued by insurers
acceptable to Agent in the exercise of its reasonable judgment. All
premiums on such insurance shall be paid by the Loan Parties and copies of
the policies delivered to Agent. No Loan Party will use or permit its
Inventory or Equipment to be used in violation of Applicable Law or in any
manner which might render inapplicable any insurance coverage.
(b) All insurance policies required under Section 9.8(a) covering any
Collateral shall name Agent, for the benefit of the Credit Parties, as an
additional insured and shall contain loss payable clauses in the form
submitted to the Loan Parties by Agent, or otherwise in form and substance
satisfactory to Agent, naming Agent, for the benefit of the Credit Parties,
as loss payee, as its interests may appear, and providing that:
(i) all proceeds thereunder shall be payable to Agent, for the
ratable benefit of the Credit Parties;
(ii) no such insurance shall be affected by any act or neglect of
the insured or owner of the property described in such
policy; and
(iii) such policy and loss payable clauses may be canceled,
amended or terminated only upon at least ten (10) days'
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prior written notice given to Agent.
(c) Any proceeds of insurance referred to in this Section 9.8 which
are paid to Agent, for the benefit of the Credit Parties, shall be
distributed as follows:
(i) in the event the claim giving rise to such proceeds does not
exceed $500,000, and the applicable Loan Party intends to
replace the damaged property from which such proceeds arose,
such proceeds shall, upon such Loan Party's written request
to Agent, provided that no Default or Event of Default shall
have occurred and be continuing, be disbursed by Agent to
such Loan Party pursuant to such procedures as Agent shall
reasonably establish;
(ii) in the event the claim giving rise to such proceeds exceeds
$500,000, and the applicable Loan Party intends to replace
the damaged property from which such proceeds arose within
six (6) months after the date of receipt of such proceeds,
upon such Loan Party's written request to Agent, therein
stating such intention, (provided that no Default or Event
of Default shall have occurred and be continuing) (A) to the
extent such proceeds do not exceed the unpaid balance of the
Revolving Credit Loans, such proceeds shall be applied to
the repayment of the outstanding balance of the Revolving
Credit Loans and Agent shall, until such time as such
repairs or replacement have been completed, establish a
Reserve against the Borrowing Base in the amount of the
proceeds so applied and (B) to the extent such proceeds
exceed the balance of the Revolving Credit Loans, such Loan
Party shall deposit such proceeds with Agent to be held as
Cash Collateral in which Agent, for the ratable benefit of
the Credit Parties, shall have a first priority security
interest. Upon such Loan Party's completion of such
replacement as described above, Agent shall release its
security interest in such Cash Collateral in respect of such
proceeds and shall eliminate the Reserve against the
Borrowing Base; provided that upon such Loan Party's written
request to Agent, such request to include such information
as Agent may require, Agent may, at any time (and from time
to time) during the completion of such replacement,
partially release its security interest in such Cash
Collateral in respect of such proceeds and eliminate the
Reserve against the Borrowing Base by a corresponding
amount. To the extent that such Loan Party fails to
complete such replacement within six (6) months as provided
above, such Loan Party authorizes and directs Agent to
eliminate such Reserve and to apply the amount of the Cash
Collateral in respect of such proceeds to the prepayment of
the Loans as provided in Section 2.3; and
(iii) in the event the applicable Loan Party does not provide
Agent with a notice of its intent to replace the damaged
property as required by either clause (i) or clause (ii)
above, such proceeds shall be applied by Agent in repayment
of the Secured Obligations in the manner provided in Section
2.3.
Section 9.9 Location of Offices and Collateral.
(a) No Loan Party will change the location of its chief executive
office or the place where it keeps its books and records relating to the
Collateral or change its name, its identity or corporate structure without
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giving Agent sixty (60) days' prior written notice thereof.
(b) All of each Loan Party's Inventory, other than Inventory in
transit, will at all times be kept by each Loan Party at the locations set
forth in Schedule 7.1(u), and shall not, without the prior written consent
of Agent, be removed therefrom except pursuant to sales of Inventory
permitted under Section 9.7.
(c) If any of any Loan Party's Inventory is in the possession or
control of any agent or processor, such Loan Party shall notify each such
agent or processor of the Security Interest (and shall promptly provide
copies of any such notice to Agent and the Lenders) and, upon the
occurrence of an Event of Default, shall instruct them (and cause them to
acknowledge such instruction) to hold all such Inventory for the account of
the Credit Parties, subject to the instructions of Agent.
Section 9.10 Records Relating to Collateral.
(a) Each Loan Party will at all times:
(i) keep complete and accurate records of its Inventory on a
basis consistent with past practices of such Loan Party so
as to permit comparison of Inventory records relating to
different time periods, itemizing and describing the kind,
type and quantity of Inventory and such Loan Party's cost
therefor and a current price list for such Inventory; and
(ii) keep complete and accurate records of all other Collateral.
(b) Each Loan Party will prepare a physical listing of all of its
Inventory, wherever located, at least annually.
Section 9.11 Inspection. Agent and, with the consent of and accompanied by
Agent, each Lender (by any of their officers, employees or agents) shall have
the right, to the extent that the exercise of such right shall be within the
control of any Loan Party, during normal business hours to:
(a) visit the properties of each Loan Party, inspect the Collateral
and the other assets of each Loan Party and inspect and make extracts from
the books and records of each Loan Party, including, but not limited to,
management letters prepared by independent accountants, all during
customary business hours at such premises;
(b) discuss each Loan Party's business, assets, liabilities, financial
condition, results of operations and business prospects, insofar as the
same are reasonably related to the rights of any of the Credit Parties
hereunder or under any of the other Loan Documents, with each Loan Party's
principal officers, independent accountants and any other Person (except
that any such discussion with any third parties shall be conducted only in
accordance such Credit Parties' standard operating procedures relating to
the maintenance of the confidentiality of confidential information of
borrowers);
(c) verify the amount, quantity, value and condition of, or any other
matter relating to, any of the Collateral (other than Receivables) except
to the extent permitted under Section 9.2(a) and in this connection to
review, audit and make extracts from all records and files related to any
of the Collateral.
Each Loan Party will deliver to Agent, for the benefit of the Credit
Parties, any instrument necessary for it to obtain records from any service
bureau maintaining records on behalf of such Loan Party.
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Section 9.12 Information and Reports.
(a) Schedule of Receivables. The Loan Parties shall deliver to Agent,
(i) during the period from the Agreement Date through and including
December 31, 1998, not later than the twenty-fifth (25th) day of each
calendar month, and (ii) during the period from January 1, 1999 through the
Termination Date, not later than the fifteenth (15th) day of each calendar
month, a Schedule of Receivables which
(i) shall be as of the last Business Day of the immediately
preceding month,
(ii) shall be reconciled to the Borrowing Base Certificate as of
such last Business Day,
(iii) shall set forth a detailed aged trial balance of all of the
Loan Parties' then existing Receivables, specifying the
names, addresses and balance due for each Account Debtor
obligated on a Receivable so listed;
(iv) shall separately list and identify all of the Loan Parties'
existing Receivables which are supported by a Receivables
L/C and which the Loan Parties desire to be evaluated by
Agent for being treated as a Qualified L/C Supported
Receivable; and
(v) shall separately list and identify all of the Loan Parties'
existing Receivables which are supported by a Receivables
Guaranty and which the Loan Parties desire to be evaluated
by Agent for being treated as a Qualified Guaranteed
Receivable.
(b) Qualified L/C Supported Receivables and Qualified Guaranteed
Receivables. Unless otherwise agreed by Agent, at least five (5) Business
Days (or such longer time as Agent may determine as being reasonably
necessary) prior to proposing any Receivable for designation in any
Borrowing Base Report or Schedule of Receivables as a Qualified L/C
Supported Receivable or a Qualified Guaranteed Receivable, as the case may
be, Borrowers shall deliver the following to Agent, as applicable:
(i) with respect to any Receivable proposed for designation as a
Qualified L/C Supported Receivable, (i) a complete copy of
the related Receivables L/C, (ii) such information regarding
the Person who is the issuer thereof as Agent may request,
(iii) evidence or other confirmation, satisfactory to Agent,
that such Receivables L/C was duly authorized, executed and
delivered by such Person and is the valid and enforceable
obligation of such Person, (iv) such other information
regarding such Receivables L/C as Agent may request; (v) for
each Receivables L/C in excess of $100,000, or which with
all Receivables L/Cs issued for the account of any Account
Debtor to the Loan Parties exceed $100,000 in the aggregate,
each such Receivables L/C, and (vi) at any time after the
occurrence, and during the continuation, of any Default or
Event of Default all Receivables L/Cs of any Loan Party; and
(ii) with respect to any Receivable proposed for designation as a
Qualified Guaranteed Receivable, (i) a complete copy of the
related Receivables Guaranty and all material documentation
related thereto, (ii) such information regarding the Person
who is the obligor thereon as Agent may request, (iii)
evidence or other confirmation, satisfactory to Agent, that
such Receivables Guaranty was duly authorized, executed and
delivered by such Person and is the valid and enforceable
obligation of such Person, (iv) if the Person obligated on
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such related Receivables Guaranty is a Governmental
Authority, designation of the enabling or authorizing
Applicable Law pursuant to which such Receivables Guaranty
was executed and delivered by such Person, (v) with respect
to any Receivables Guaranty for the account of an Account
Debtor for which $100,000 or more of Receivables Guaranties
have been issued, written notice of the Security Interest in
such Receivables Guaranty in favor of Agent, duly executed
by the applicable Loan Party(ies) and providing for
execution by Agent, to be given to and acknowledged in
writing by the Person obligated on such Receivables
Guaranty, in form and substance satisfactory to Agent, and
(vi) at any time after the occurrence, and during the
continuation of, any Default or Event of Default, upon
Agent's request, the notice required under clause (v)
preceding with respect to all Receivables Guaranties.
(c) Schedule of Inventory. The Loan Parties shall deliver to Agent,
(i) during the period from the Agreement Date through and including
December 31, 1998, not later than the twenty-fifth (25th) day of each
calendar month, and (ii) during the period from January 1, 1999 through the
Termination Date, not later than the fifteenth (15th) day of each calendar
month, a Schedule of Inventory as of the last Business Day of the
immediately preceding month, itemizing and describing the kind, type and
quantity of all Inventory of all Loan Parties, the Loan Parties' cost
thereof and the location thereof.
(d) Borrowing Base Certificate. After the Effective Date, the Loan
Parties shall deliver to Agent, (i) during the period from the Agreement
Date through and including December 31, 1998, not later than the
twenty-fifth (25th) day of each calendar month, and (ii) during the period
from January 1, 1999 through the Termination Date, not later than the
fifteenth (15th) day of each calendar month, a Borrowing Base Certificate
prepared as of the close of business on the last day of the previous month.
(e) Notice of Diminution of Value. The Loan Parties shall give prompt
notice to Agent of any matter or event which may be reasonably expected to
result in or has resulted in the diminution in excess of $500,000 in the
value of any of the Collateral, except for any such diminution in the value
of any Collateral in the ordinary course of business which has been
appropriately reserved against, as reflected in financial statements
previously delivered to Agent and the Lenders pursuant to Article 11.
(f) Additional Information. Agent may in its discretion from time to
time request that the Loan Parties deliver the schedules and certificates
described in Sections 9.12(a), (b) and (c) more or less often and on
different schedules than specified in such Sections and the Loan Parties
will comply with such requests. The Loan Parties will also furnish to
Agent such other information with respect to the Collateral as Agent may
from time to time reasonably request.
Section 9.13 Power of Attorney. Each Loan Party hereby appoints Agent as
its attorney, with power to
(a) endorse the name of such Loan Party on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security
that may come into Agent's or any other Credit Party's possession, and
(b) sign the name of such Loan Party on any invoice or bill of lading
relating to any Receivable, Inventory or other Collateral, on any drafts
against customers related to letters of credit, on schedules and
assignments of Receivables furnished to Agent or any Lender by such Loan
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Party, on notices of assignment, financing statements and other public
records relating to the perfection or priority of the Security Interest,
verifications of account and notices to or from customers.
Section 9.14 Additional Real Estate and Leases. Promptly upon any Loan
Party's acquisition of any interest (including a leasehold interest) in any
Real Estate, such Loan Party shall deliver to Agent, for the benefit of the
Credit Parties, each of the items set forth in Section 6.1(c)(x) with respect
to such Real Estate, all in form and substance satisfactory to Agent.
Section 9.15 Assignment of Claims Act. Upon the request of Agent, each
Loan Party shall execute any documents or instruments and shall take such
steps or actions reasonably required by Agent so that all monies due or to
become due under any contract with the U.S., the District of Columbia or any
state, county, municipality or other domestic or foreign Governmental
Authority, will be assigned to Agent, for the benefit of the Credit Parties,
and notice given thereof in accordance with the requirements of the Assignment
of Claims Act of 1940, as amended, or any other laws, rules or regulations
relating to the assignment of any such contract and monies due to or to become
due.
Section 9.16 Voting Rights, Distributions, etc., in respect of Investment
Property.
(a) So long as no Event of Default shall have occurred and be
continuing (i) each Loan Party shall be entitled to exercise any and all
voting and other consensual rights (including, without limitation, the
right to give consents, waivers and notifications in respect of any
Security) pertaining to its Investment Property or any part thereof;
provided, however, that without the prior written consent of Agent and
Required Lenders, no vote shall be cast or consent, waiver or ratification
given or action taken which would (A) be inconsistent with or violate any
provision of this Agreement or any other Loan Document or (B) amend, modify
or waive any material term, provision or condition of the certificate of
incorporation, bylaws, certificate of formation or other charter document
or other agreement relating to, evidencing, providing for the issuance of
or securing any such Investment Property, and (ii) each Loan Party shall be
entitled to receive and retain any and all dividends and interest paid in
respect of any of such Investment Property (unless otherwise required by
this Agreement).
(b) Upon the occurrence and during the continuance of a Default or an
Event of Default, (i) Agent may, without notice to any Loan Party, transfer
or register in the name of Agent or any of its nominees, for the ratable
benefit of the Credit Parties, any or all of the Collateral consisting of
Investment Property, the proceeds thereof (in cash or otherwise) and all
liens, security, rights, remedies and claims of any Loan Party with respect
thereto (as used in this Section collectively, the "Pledged Collateral")
held by Agent hereunder, and Agent or its nominee may thereafter, after
delivery of notice to the applicable Loan Party, exercise all voting and
corporate rights at any meeting of any corporation, partnership or other
business entity issuing any of the Pledged Collateral and any and all
rights of conversion, exchange, subscription or any other rights,
privileges or options pertaining to any of the Pledged Collateral as if it
were the absolute owner thereof, including, without limitation, the right
to exchange at its discretion any and all of the Pledged Collateral upon
the merger, consolidation, reorganization, recapitalization or other
readjustment of any corporation, partnership or other business entity
issuing any of such Pledged Collateral or upon the exercise by any such
issuer or Agent of any right, privilege or option pertaining to any of the
Pledged Collateral, and in connection therewith, to deposit and deliver any
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and all of the Pledged Collateral with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions
as it may determine, all without liability except to account for property
actually received by it, but Agent shall have no duty to exercise any of
the aforesaid rights, privileges or options, and Agent shall not be
responsible for any failure to do so or delay in so doing, (ii) after
Agent's giving of the notice specified in Section 9.16(b)(i), all rights of
any Loan Party to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant to Section 9.16(a)(i) and
to receive the dividends, interest and other distributions which it would
otherwise be authorized to receive and retain pursuant to Section
9.16(a)(ii) shall be suspended until such Event of Default shall no longer
exist, and all such rights shall, until such Event of Default shall no
longer exist, thereupon become vested in Agent which shall thereupon have
the sole right to exercise such voting and other consensual rights and to
receive and hold as Pledged Collateral such dividends, interest and other
distributions, (iii) all dividends, interest and other distributions which
are received by any Loan Party contrary to the provisions of this Section
9.16(b) shall be received in trust for the benefit of Agent, shall be
segregated from other funds of such Loan Party and shall be forthwith paid
over to Agent as Collateral in the same form as so received (with any
necessary endorsement), and (iv) each Loan Party shall execute and deliver
(or cause to be executed and delivered) to Agent all such proxies and other
instruments as Agent may reasonably request for the purpose of enabling
Agent to exercise the voting and other rights which it is entitled to
exercise pursuant to this Section 9.16(b) and to receive the dividends,
interest and other distributions which it is entitled to receive and retain
pursuant to this Section 9.16(b). The foregoing shall not in any way limit
Agent's power and authority granted pursuant to Section 9.13.
ARTICLE 10
Affirmative Covenants
---------------------
Until the Revolving Credit Facility has been terminated and all the Secured
Obligations have been paid in full, unless the Required Lenders shall
otherwise consent in the manner provided for in Section 16.9, each Loan Party
will keep the following covenants.
Section 10.1 Preservation of Existence and Similar Matters. Each Loan
Party will, and will cause each other Loan Party to, preserve and maintain its
existence, rights, franchises, licenses and privileges in the jurisdiction of
its incorporation, organization or formation (as applicable) and qualify and
remain qualified as a foreign business enterprise and authorized to do
business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification or authorization.
Section 10.2 Compliance with Applicable Law. Each Loan Party will, and
will cause each other Loan Party to, comply with all Applicable Laws relating
to each such Loan Party except to the extent being contested in good faith by
appropriate proceedings and for which reserves in respect of each such Loan
Party's reasonably anticipated liability therefor has been appropriately
established.
Section 10.3 Maintenance of Property. In addition to, and not in
derogation of, the requirements of Section 9.7 and of the Security Documents,
each Loan Party will, and will cause each other Loan Party to:
(a) protect and preserve all properties material to its business,
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including, without limitation, Copyrights, Patents, trade names and
Trademarks, and maintain in good repair, working order and condition in all
material respects, with reasonable allowance for wear and tear, all
tangible properties material to its business, and
(b) from time to time make or cause to be made all needed and
appropriate repairs, renewals, replacements and additions to such
properties necessary for the conduct of its business, so that the business
carried on in connection therewith may be properly and advantageously
conducted at all times.
Section 10.4 Conduct of Business. Each Loan Party will, and will cause
each other Loan Party to, at all times carry on only the business described
in Section 7.1(f).
Section 10.5 Insurance. Each Loan Party will, and will cause each other
Loan Party to, maintain, in addition to the coverage required by Section 9.8
and the Security Documents, insurance with responsible insurance companies
against such risks and in such amounts as is customarily maintained by similar
businesses or as may be required by Applicable Law, and from time to time
deliver to Agent upon its request a detailed list of the insurance then in
effect, stating the names of the insurance companies, the amounts and rates of
the insurance, the dates of the expiration thereof and the properties and
risks covered thereby.
Section 10.6 Payment of Taxes and Claims. Each Loan Party will, and will
cause each other Loan Party to, pay or discharge when due
(a) all taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits or upon any properties belonging to
it, except that real property ad valorem taxes shall be deemed to have been
so paid or discharged if the same are paid before they become delinquent,
and
(b) all lawful claims of materialmen, mechanics, carriers,
warehousemen and landlords for labor, materials, supplies and rentals
which, if unpaid, might become a Lien on any properties of any Loan Party;
except that this Section 10.6 shall not require the payment or discharge of
any such tax, assessment, charge, levy or claim which is being contested in
good faith by appropriate proceedings and for which reserves in respect of the
reasonably anticipated liability therefor have been appropriately established.
Section 10.7 Accounting Methods and Financial Records. Each Loan Party
will, and will cause each other Loan Party to, maintain a system of
accounting, and keep such books, records and accounts (which shall be true and
complete), as may be required or as may be necessary to permit the preparation
of financial statements in accordance with GAAP.
Section 10.8 Use of Proceeds.
(a) Borrowers will use the proceeds of all Revolving Credit Loans only
for working capital and general business purposes (such general business
purposes shall specifically exclude (i) repurchase by OMC of any of its
Capital Stock, (ii) use of any proceeds to make any payments with respect
to, and which exceed in the aggregate, $1,000,000, any of the Indebtedness
for Money Borrowed listed as items I(h), I(i), and I(j) on Schedule 7.1(j),
(iii) use of any proceeds to make any payments with respect to the
Indebtedness for Money Borrowed listed as item I(k) on Schedule 7.1(j), and
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(iv) to finance any Acquisition or otherwise make any Investment as
provided in Section 12.4), and
(b) No Borrower will use any part of such proceeds to purchase or, to
carry or reduce or retire or refinance any credit incurred to purchase or
carry, any "margin stock" (within the meaning of Regulation G or U of the
Board of Governors of the Federal Reserve System) or, in any event, for any
purpose which in either case would involve a violation of such Regulation G
or U or of Regulation T or X of such Board of Governors, or for any purpose
prohibited by law or by the terms and conditions of this Agreement.
Section 10.9 Hazardous Waste and Substances; Environmental Requirements.
(a) In addition to, and not in derogation of, the requirements of
Section 10.2 and of the Security Documents, each Loan Party will, and will
cause each other Loan Party to, (i) comply with all Environmental Laws and
all Applicable Laws relating to occupational health and safety (except for
instances of noncompliance that are being contested in good faith by
appropriate proceedings if reserves in respect of any such Loan Party's
reasonably anticipated liability therefor have been appropriately
established), (ii) promptly notify Agent of its receipt of any notice of a
violation of any such Environmental Laws or such other Applicable Laws, and
(iii) indemnify and hold each Credit Party harmless from all loss, cost,
damage, liability, claim and expense incurred by or imposed upon any Credit
Party on account of any Loan Party's failure to perform its obligations
under this Section 10.9.
(b) Whenever any Loan Party gives notice to Agent pursuant to Section
10.9(a)(ii) with respect to any matter that reasonably could be expected to
result in liability to any Loan Party in excess of $1,000,000 in the
aggregate, the Loan Parties shall, at Agent's request and the Loan Parties'
expense (i) provide Agent with the results of any assessment performed by
Borrowers' environmental engineering staff, (ii) after Agent's review of
any information delivered pursuant to clause (i) preceding, upon Agent's
request, cause an independent credentialed environmental engineer
acceptable to Agent to conduct an assessment meeting all requirements of
Agent and Applicable Law, including tests where necessary, feasible and
appropriate of the site where the noncompliance or alleged noncompliance
with Environmental Law has occurred and prepare and deliver to Agent a
report setting forth the results of such assessment, a proposed plan to
bring such Loan Party into compliance with such Environmental Law (if such
assessment indicates noncompliance) and an estimate of the costs thereof,
and (iii) provide to Agent a supplemental report of such engineer whenever
the scope of the noncompliance, or the response thereto or the estimated
costs thereof, shall materially adversely change.
Section 10.10 Foreign Employee Benefit Plan Compliance. Each Loan Party
will, and will cause each of its ERISA Affiliates (as applicable) to,
establish, maintain and operate all Foreign Employee Benefit Plans to comply
in all material respects with all Applicable Laws and the respective
requirements of the governing documents for such Foreign Employee Benefit
Plans.
ARTICLE 11
Information
-----------
Until the Revolving Credit Facility has been terminated and all the Secured
Obligations have been paid in full, unless the Required Lenders shall
otherwise consent in the manner set forth in Section 16.9, the Loan Parties
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will provide the following information to Agent and to each Lender at the
offices then designated for such notices pursuant to Section 16.1 and keep the
other covenants contained in this Article 11.
Section 11.1 Financial Statements.
(a) Audited Year-End Statements. As soon as available, but in any
event within one hundred twenty (120) days after the end of each of its
fiscal years OMC and each other Loan Party (to the extent its financial
statements are not reported on a consolidated basis with OMC) will provide
Agent with copies of the consolidating and consolidated balance sheets of
such Person and its Consolidated Subsidiaries as at the end of such fiscal
year and the related statements of earnings, shareholders' equity and
statement of cash flows for such fiscal year, in each case setting forth in
comparative form the figures for the previous fiscal year of such Person,
reported on, as to such consolidated statements, without qualification
(provided that OMC's financial statements for the fiscal year ended
September 30, 1997, may be qualified solely as to the future maturity of
its $150,000,000 loan facility provided pursuant to that certain Credit
Agreement, dated August 13, 1997, as amended, by and among Greenmarine
Acquisition Corp., as borrower, and American Annuity Group, Inc. and Great
American Insurance Company, as lenders, which matures in June 1998) as to
the scope of the audit or the status of such Person as a "going concern",
by independent certified public accountants of nationally recognized
standing.
(b) Monthly Financial Statements. As soon as available after the end
of each month, but in any event within thirty (30) days after the end of
each month, each Loan Party will provide Agent with copies of the unaudited
consolidated and consolidating balance sheet of such Loan Party and its
Consolidated Subsidiaries as at the end of such month and the related
unaudited consolidated and consolidating statements of earnings and cash
flows for such Loan Party and its Consolidated Subsidiaries for such month
and for the portion of the fiscal year of such Loan Party and its
Consolidated Subsidiaries through such month, certified by a Financial
Officer as presenting fairly the financial condition and results of
operations of such Loan Party (subject to normal year-end audit
adjustments).
All of the financial statements referenced in this Section 11.1 are to be
complete and correct in all material respects and prepared in accordance with
GAAP (except, with respect to the monthly financial statements referred to in
clause (b), for the omission of footnotes and for the effect of normal
year-end audit adjustments) applied consistently throughout the periods
reflected therein.
Section 11.2 Accountants' Certificate. Together with the financial
statements referred to in Section 11.1(a), each such Loan Party shall deliver
a certificate of such accountants addressed to Agent
(a) stating that in making the examination necessary for the
certification of such financial statements, nothing has come to their
attention to lead them to believe that any Default or Event of Default
exists and, in particular, they have no knowledge of any Default or Event
of Default or, if such is not the case, specifying such Default or Event of
Default and its nature, and
(b) having attached the calculations, prepared by the Loan Parties and
reviewed by such accountants, required to establish whether or not the Loan
Parties are in compliance with the covenants contained in Sections 12.1,
12.2, 12.5 and 12.9, as at the date of such financial statements.
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Section 11.3 Officer's Certificate. At the time that OMC provides its
financial statements pursuant to Section 11.1(b) for any month that is the
last month of a fiscal quarter of OMC, the Loan Parties shall also provide a
Compliance Certificate which:
(a) sets forth as at the end of such fiscal quarter or fiscal year, as
the case may be, the calculations required to establish whether or not the
Loan Parties are in compliance with the requirements of Sections 12.1,
12.2, 12.5 and 12.9, as at the end of such period;
(b) states that the information on the Schedules to this Agreement is
complete and accurate as of the date of such certificate or, if such is not
the case, attaches to such certificate proposed updated Schedules, and
(c) states that, based on a reasonably diligent examination, no
Default or Event of Default has occurred or exists, or, if such is not the
case, specifies such Default or Event of Default and its nature, when it
occurred, whether it is continuing and the steps taken or being taken by
the Loan Parties with respect to such Default or Event of Default.
Section 11.4 Copies of Other Reports. The Loan Parties will provide Agent
and the Lenders the following:
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to any Loan Party or its Board of Directors by its independent
public accountants, including, without limitation, any management report;
(b) As soon as practicable, copies of all financial statements and
reports that any Loan Party sends to the holders of any Security issued by
any Loan Party which is subject to reporting pursuant to the Securities Act
and of all registration statements and all regular or periodic reports, if
any, which any Loan Party files with the Securities and Exchange Commission
or any successor commission;
(c) From time to time and as soon as reasonably practicable following
each request, such forecasts, data, certificates, reports, statements,
opinions of counsel, documents or further information regarding the
business, assets, liabilities, financial condition, results of operations
or business prospects of any Loan Party as Agent may reasonably request and
that any such Loan Party has or (except in the case of legal opinions
relating to the perfection or priority of the Security Interest) without
unreasonable expense can obtain; provided, however, that Agent and the
Lenders shall, to the extent reasonably practicable, coordinate
examinations of the Loan Parties' records by their respective internal
auditors;
(d) If requested by Agent or any Lender, each Borrower will provide to
Agent and the Lenders statements in conformity with the requirements of
Federal Reserve Form G-3 or U-1 referred to in Regulation G and U,
respectively, of the Board of Governors of the Federal Reserve System.
The rights of Agent and the Lenders under this Section 11.4 are in addition
to and not in derogation of their rights under any other provision of this
Agreement or of any other Loan Document.
Section 11.5 Notice of Litigation and Other Matters. Each Loan Party will,
and will cause each other Loan Party to, provide Agent and the Lenders prompt
notice of:
(a) the commencement, to the extent such Loan Party is aware of the
same, of all proceedings and investigations by or before any Governmental
Authority or nongovernmental body and all actions and proceedings in any
court or before any arbitrator against or in any other way relating to or
affecting any Loan Party or any of such Loan Party's properties, assets or
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businesses which would be treated as a contingent liability under GAAP and
is an amount in excess of $1,000,000, or might, singly or in the aggregate,
result in the occurrence of a Default or an Event of Default, or have a
Materially Adverse Effect on the Loan Parties;
(b) any amendment of the articles of incorporation or bylaws or other
applicable constituent documents of any Loan Party;
(c) any change in the business, assets, liabilities, financial
condition, results of operations or business prospects of any Loan Party
which has had or may have, singly or in the aggregate, a Materially Adverse
Effect on the Loan Parties and any change in the executive officers of any
Loan Party; and
(d) any Default or Event of Default, or any event which constitutes or
which with the passage of time or giving of notice or both would constitute
a default or event of default by any Loan Party under any material
agreement (other than this Agreement) to which any Loan Party is a party or
by which any Loan Party or any of any Loan Party's properties may be bound.
Section 11.6 ERISA. As soon as possible and in any event within thirty
(30) days after any Loan Party knows, or has reason to know, that
(a) any Termination Event with respect to a Plan has occurred or will
occur, or
(b) the aggregate present value of the Unfunded Vested Accrued
Benefits under all Plans is equal to an amount in excess of $250,000 or if
any event has occurred which could result in any Lien under the Internal
Revenue Code or ERISA or could be a Reportable Event,
(c) any Loan Party is in "default" (as defined in Section 4219(c)(5)
of ERISA) with respect to payments to a Multiemployer Plan required by
reason of any Loan Party's complete or partial withdrawal (as described in
Section 4203 or 4205 of ERISA) from such Multiemployer Plan, or
(d) the occurrence of, or notice of any event, which, with respect to
any Foreign Employee Benefit Plan, could reasonably result in a Materially
Adverse Effect,
the Loan Parties will provide Agent and the Lenders a certificate of the
president or a Financial Officer of each Loan Party setting forth the details
of such event and the action which is proposed to be taken with respect
thereto, together with any notice or filing which may be required by the PBGC
or other Governmental Authority with respect to such event.
Section 11.7 Accuracy of Information. All written information, reports,
statements and other papers and data provided to the Credit Parties, whether
pursuant to this Article 11 or any other provision of this Agreement or of any
other Loan Document, shall be, at the time the same is so provided, complete
and correct in all material respects to the extent necessary to give the
recipient thereof true and accurate knowledge of the subject matter.
Section 11.8 Revisions or Updates to Schedules. Should any of the
information or disclosures provided on any of the Schedules originally
attached hereto become outdated or incorrect in any material respect, the Loan
Parties shall deliver to the Credit Parties as part of the officer's
certificate required pursuant to Section 11.3 such revisions or updates to
such Schedule(s) as may be necessary or appropriate to update or correct such
Schedule(s), provided that no such revisions or updates to any Schedule(s)
shall be deemed to have amended, modified or superseded such Schedule(s) as
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originally attached hereto, or to have cured any breach of warranty or
representation resulting from the inaccuracy or incompleteness of any such
Schedule(s), unless and until the Required Lenders in their sole and absolute
discretion, shall have accepted in writing such revisions or updates to such
Schedule(s).
Section 11.9 Annual Projections. Not sooner than ninety (90) days prior to
the beginning of each of OMC's fiscal years, but not less than thirty (30)
days prior to the beginning of each such fiscal year, the Loan Parties will
deliver to the Credit Parties a budget and projection forecast of OMC's and
its Consolidated Subsidiaries' anticipated operations and financial
performance for such fiscal year, in form reasonably satisfactory to Agent and
containing such information as Agent may reasonably request.
ARTICLE 12
Negative Covenants
------------------
Until the Revolving Credit Facility has been terminated and all the Secured
Obligations have been paid in full, unless the Required Lenders shall
otherwise consent in the manner set forth in Section 16.9:
Section 12.1 Financial Ratios.
(a) Tangible Net Worth. The Loan Parties will not directly or
indirectly permit OMC's Consolidated Tangible Net Worth at any time to be
less than: (i) for each of the periods ended June 30, 1998 and September
30, 1998, the greater of a deficit $51,700,000 (<$51,700,000>) or OMC's
actual Tangible Net Worth as of September 30, 1997 (as determined from
OMC's audited financial statements dated such date); (ii) for the period
ended June 30, 1999, the amount of Tangible Net Worth as of September 30,
1998; (iii) for the period ended September 30, 1999, the amount of Tangible
Net Worth as of September 30, 1998, plus $5,000,000; (iv) for the period
ended June 30, 2000, the amount of Tangible Net Worth as of September 30,
1999; and (v) for the periods ended September 30, 2000 and thereafter, the
amount of Tangible Net Worth as of September 30, 1999, plus $18,000,000.
(b) Minimum Interest Coverage. The Loan Parties will not permit OMC's
Consolidated Interest Coverage Ratio calculated as of the end of each of
OMC's fiscal quarters, determined in accordance with GAAP and based on the
financial statements delivered pursuant to Section 11.1, as applicable,
measured (i) as of March 31, 1998 and June 30, 1998, in each case for the
calendar year to date period, and (ii) thereafter as of each fiscal
quarter, in each case for the preceding twelve (12) calendar months then
ending, to be less than the following specified amounts, as applicable:
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------------------------------------------------
| Period End | Requirement |
|-------------------------|--------------------|
| March 31, 1998 | 0.8 to 1.0 |
|-------------------------|--------------------|
| June 30, 1998 | 1.2 to 1.0 |
|-------------------------|--------------------|
| September 30, 1998 | 0.9 to 1.0 |
------------------------------------------------
| December 31, 1998 | |
| through and including | |
| September 30, 1999 | 1.0 to 1.00 |
------------------------------------------------
| December 31, 1999 | |
| through and including | |
| September 30, 2000 | 1.3 to 1.00 |
------------------------------------------------
| December 31, 2000 and | |
| thereafter | 1.5 to 1.0 |
------------------------------------------------
(c) Leverage Ratio. The Loan Parties will not permit OMC's
Consolidated Leverage Ratio calculated as of the end of each of OMC's
fiscal quarters, determined in accordance with GAAP and based on the
financial statements delivered pursuant to Section 11.1, as applicable,
measured as of the end of each fiscal quarter, in each case for the
preceding twelve (12) calendar months then ending, to be greater than the
following specified amounts, as applicable:
------------------------------------------------
| Period End | Requirement |
|-------------------------|--------------------|
| June 30, 1998 | 20.0 to 1.0 |
|-------------------------|--------------------|
| September 30, 1998 | |
| through and including | |
| June 30, 1999 | 4.5 to 1.0 |
------------------------------------------------
| September 30, 1999 | |
| through and including | |
| June 30, 2000 | 4.0 to 1.0 |
------------------------------------------------
| September 30, 2000 | |
| and thereafter | 3.5 to 1.0 |
------------------------------------------------
(d) Minimum EBITDA. The Loan Parties will not permit OMC's
Consolidated EBITDA calculated for the twelve (12) month period ended as of
March 31, 1998, to be less than or equal to zero Dollars ($0.00).
Section 12.2 Indebtedness for Money Borrowed. No Loan Party will, nor will
it permit any other Loan Party to, directly or indirectly, create, assume or
otherwise become or remain obligated in respect of, or permit or suffer to
exist or to be created, assumed or incurred or to be outstanding any
Indebtedness for Money Borrowed, except that this Section 12.2 shall not apply
to:
(a) Indebtedness of any Loan Party for Money Borrowed represented by
the Loans and the Notes;
(b) Indebtedness for Money Borrowed reflected on Schedule 7.1(j),
including any renewal or refinancing of such Indebtedness, but excluding
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any such Indebtedness that is to be paid in full on the Effective Date;
(c) Permitted Purchase Money Indebtedness;
(d) Subordinated Indebtedness; and
(e) Obligations under any Interest Rate Protection Agreement on any
Indebtedness otherwise permitted pursuant to this Section.
Section 12.3 Guaranties. No Loan Party will, nor will it permit any other
Loan Party to, directly or indirectly, become or remain liable with respect to
any Guaranty of any obligation of any other Person other than pursuant to the
Guaranty Agreement to be executed by such Loan Party pursuant to the terms of
this Agreement, Indebtedness permitted pursuant to Section 12.2(a), Section
12.2(b) or Section 12.2(c), or other Indebtedness in an aggregate amount not
at any time exceeding $10,000,000.
Section 12.4 Investments. No Loan Party will, nor will it permit any other
Loan Party to, directly or indirectly, acquire, after the Agreement Date, any
Business Unit or Investment (including, without limitation, loans, advances
and other Investments in any Affiliate) other than existing Investments in
Subsidiaries, acquisitions of Business Units or additional Subsidiaries for
which the aggregate consideration paid in cash, Capital Stock or other
property does not exceed $50,000,000 for all such acquisitions and Permitted
Investments or, after such date, maintain any Investment other than Permitted
Investments. In addition to, and not in derogation of, the foregoing, if at
any time any Loan Party obtains any interest in any Subsidiary, other than
such Investments existing on the Agreement Date, the Loan Parties and such new
Subsidiary shall execute and deliver such amendments to this Agreement and any
other Loan Document, and execute such other Loan Documents, as Agent requires
in its discretion in order to cause such Subsidiary to (i) become a party to
this Agreement as a Loan Party, (ii) cause all property of such Subsidiary
which is of a type included in the Collateral to be covered by the Security
Interest, and (iii) Guarantee the prompt payment and performance of the
Secured Obligations pursuant to a Guaranty Agreement.
Section 12.5 Capital and Tooling Expenditures. No Loan Party will, nor
will it permit any other Loan Party to, directly or indirectly, make or incur
any Capital and Tooling Expenditures in the aggregate for all Loan Parties in
excess of the amount set forth below for the fiscal year of OMC set forth
opposite such amount:
--------------------------------------------
| Fiscal Year Ended | Amount |
|------------------------|-----------------|
| September 30, 1998 | $80,000,000 |
|------------------------|-----------------|
| September 30, 1999 | $90,000,000 |
--------------------------------------------
Section 12.6 Merger, Consolidation and Sale of Assets. No Loan Party will,
nor will it permit any other Loan Party to, merge or consolidate with any
other Person or sell, lease or transfer or otherwise dispose of all or a
substantial portion of its assets to any Person other than sales of Inventory
in the ordinary course of business; provided that any such merger,
consolidation or other transaction with another Loan Party shall be permitted
if each such Loan Party delivers to Agent prior written notice thereof, and
executes and delivers to Agent evidence of such merger, consolidation or other
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transaction not less than ten (10) days after the occurrence thereof and such
other documents, agreements and certificates as Agent shall deem reasonably
necessary to protect the Security Interest and the Credit Parties' other
interests and rights under this Agreement and the other Loan Documents.
Section 12.7 Transactions with Affiliates. No Loan Party will, nor will it
permit any other Loan Party to, effect any transaction with any Affiliate on a
basis less favorable to such Loan Party than would be the case if such
transaction had been effected with a Person not an Affiliate.
Section 12.8 Liens. No Loan Party will, nor will it permit any other Loan
Party or any Subsidiary of any Loan Party to, create, assume or permit or
suffer to exist or to be created or assumed any Lien on any of the Collateral,
any Capital Stock of any Subsidiary of any Loan Party owned by a Loan Party or
a Subsidiary of a Loan Party or its other assets, other than Permitted Liens.
Section 12.9 Capitalized Lease Obligations and Permitted Purchase Money
Indebtedness. No Loan Party will, nor will it permit any other Loan Party to,
incur or permit to exist any Capitalized Lease Obligation if such Capitalized
Lease Obligation when added to existing Capitalized Lease Obligations and
Permitted Purchase Money Indebtedness of the Loan Parties in the aggregate
would exceed $10,000,000.
Section 12.10 Plans. No Loan Party will, nor will it permit any other Loan
Party to, permit any condition to exist in connection with any Plan which
might constitute grounds for the PBGC to institute proceedings to have such
Plan terminated or a trustee appointed to administer such Plan, and any other
condition, event or transaction with respect to any Plan which could result in
the incurrence by any Loan Party of any material liability, fine or penalty.
Section 12.11 Subordinated Indebtedness. No Loan Party will, nor will it
permit any other Loan Party to, make any payment of principal or interest in
respect of any Subordinated Indebtedness if any such payment is prohibited by
the terms thereof or by any subordination agreement applicable thereto.
Section 12.12 Business Activities of GP. GP will not engage in any
business, activity or other operations other than owning and holding the
Capital Stock of RBG and acting as General Partner of RBG and a Loan Party and
Guarantor hereunder. GP will not merge with or into any other Person except
as permitted pursuant to Section 12.6 of this Agreement.
ARTICLE 13
Default
-------
Section 13.1 Events of Default. Each of the following shall constitute an
Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
Governmental Authority or nongovernmental body:
(a) Default in Payment. Any Loan Party shall default in any payment
of principal of or interest on any Loan or any Note when and as due
(whether at maturity, by reason of acceleration or otherwise);
(b) Other Payment Default. Borrowers shall default in the payment, as
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and when due, of principal of or interest on, any other Secured Obligation,
and such default shall continue for a period of ten (10) days after written
notice thereof has been given to Borrowers by Agent;
(c) Misrepresentation. Any representation or warranty made or deemed
to be made by any Loan Party under this Agreement or any other Loan
Document, or any amendment hereto or thereto, shall at any time prove to
have been incorrect or misleading in any material respect when made;
(d) Default in Performance. Any Loan Party shall default in the
performance or observance of any term, covenant, condition or agreement to
be performed by it, contained in:
(i) Articles 8, 9, 11 or 12, or Sections 10.1 (insofar as it
requires the preservation of the existence of the Loan
Parties), or 10.8, and Agent shall have delivered to
Borrowers written notice of such default, or
(ii) this Agreement (other than as specifically provided for
otherwise in this Section 13.1) and such default shall
continue for a period of thirty (30) days after written
notice thereof has been given to Borrowers by Agent;
(e) Indebtedness Cross-Default.
(i) any Loan Party shall fail to pay when due and payable the
principal of or interest on any Indebtedness for Money
Borrowed (other than the Loans) in an amount in excess of
$500,000, or
(ii) the maturity of any such Indebtedness in excess of $500,000
shall have (A) been accelerated in accordance with the
provisions of any indenture, contract or instrument
providing for the creation of or concerning such
Indebtedness, or (B) been required to be prepaid prior to
the stated maturity thereof, or
(iii) any event shall have occurred and be continuing which would
permit any holder or holders of such Indebtedness in excess
of $500,000, any trustee or agent acting on behalf of such
holder or holders or any other Person so to accelerate such
maturity, and the Loan Parties shall have failed to cure
such default prior to the expiration of any applicable cure
or grace period;.
(f) Other Cross-Defaults.
(i) any event of default or breach shall occur under any of the
Security Documents (as defined or provided thereunder), or
(ii) any Loan Party shall default in the payment when due, or in
the performance or observance, of any obligation or
condition of any agreement, contract or lease (other than
this Agreement, the Security Documents or any such
agreement, contract or lease relating to Indebtedness for
Money Borrowed) if the existence of any such defaults,
singly or in the aggregate, could in the reasonable judgment
of Agent have a Materially Adverse Effect on the Loan
Parties; provided, however, that for the purposes of this
provision where such a default could result only in a
monetary loss, a Materially Adverse Effect shall not be
deemed to have occurred unless the aggregate of such losses
would exceed $5,000,000.
(g) Voluntary Bankruptcy Proceeding. Any Loan Party shall
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(i) commence a voluntary case under the federal bankruptcy laws
(as now or hereafter in effect),
(ii) file a petition seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of
debts,
(iii) consent to or fail to contest in a timely and appropriate
manner any petition filed against it in an involuntary
case under such bankruptcy laws or other laws,
(iv) apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator
of itself or of a substantial part of its property, domestic
or foreign,
(v) admit in writing its inability to pay its debts as they
become due,
(vi) make a general assignment for the benefit of creditors, or
(vii) take any corporate action for the purpose of authorizing any
of the foregoing;
(h) Involuntary Bankruptcy Proceeding. A case or other proceeding
shall be commenced against any Loan Party in any court of competent
jurisdiction seeking
(i) relief under the federal bankruptcy laws (as now or
hereafter in effect) or under any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization,
winding up or adjustment of debts;
(ii) the appointment of a trustee, receiver, custodian,
liquidator or the like of any Loan Party or of all or any
substantial part of the assets, domestic or foreign, of any
Loan Party;
and such case or proceeding shall continue undismissed or unstayed
for a period of sixty (60) consecutive calendar days, or an order
granting the relief requested in such case or proceeding against any
Loan Party (including, but not limited to, an order for relief under
such federal bankruptcy laws) shall be entered;
(i) Failure of Agreements. Any Loan Party shall challenge the
validity and binding effect of any provision of any Loan Document after
delivery thereof hereunder or shall state in writing its intention to make
such a challenge, or any Loan Document, after delivery thereof hereunder,
shall for any reason (except to the extent permitted by the terms thereof)
cease to create a valid and perfected first priority Lien (except for
Permitted Liens) on, or security interest in, any of the Collateral
purported to be covered thereby;
(j) Judgment. A final, unappealable judgment or order for the payment
of money in an amount that exceeds the uncontested insurance available
therefor by $5,000,000 or more shall be entered against any Loan Party by
any court or other Governmental Authority and such judgment or order shall
continue undischarged or unstayed for ten (10) days;
(k) Attachment. A warrant or writ of attachment or execution or
similar process which exceeds $5,000,000 in value shall be issued against
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any property of any Loan Party and such warrant or process shall continue
undischarged or unstayed for ten (10) days;
(l) Loan Documents. Any event of default under any other Loan
Document shall occur or any Loan Party shall default in the performance or
observance of any term, covenant, condition or agreement contained in, or
the payment of any other sum covenanted to be paid by any Loan Party under,
any such Loan Document; provided, however that no event of default under
any such Loan Document shall be deemed to have occurred until any notice
required under such Loan Document has been given and any grace period
granted under such Loan Document has expired;
(m) ERISA.
(i) Any Termination Event with respect to a Plan shall occur
that, after taking into account the excess, if any, of (A)
the fair market value of the assets of any other Plan with
respect to which a Termination Event occurs on the same day
(but only to the extent that such excess is the property of
any Loan Party) over (B) the present value on such day of
all vested nonforfeitable benefits under such other Plan,
results in an Unfunded Vested Accrued Benefit in excess of
$0, or
(ii) any Plan shall incur an "accumulated funding deficiency" (as
defined in Section 412 of the Internal Revenue Code or
Section 302 of ERISA) for which a waiver has not been
obtained in accordance with the applicable provisions of the
Internal Revenue Code and ERISA, or
(iii) any Loan Party is in "default" (as defined in Section
4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from such Loan Party's complete
or partial withdrawal (as described in Section 4203 or 4205
of ERISA) from such Multiemployer Plan;
(n) Change in Control. OMC shall cease to own, whether directly or
through any Wholly-Owned Subsidiary, beneficially and of record, one
hundred percent (100%) of the outstanding Capital Stock of each other Loan
Party, or Greenmarine Holdings LLC together with any Person who is an
officer, director or employee of Greenmarine Holdings LLC or OMC, shall
cease to own, beneficially and of record, at least eighty-five percent
(85%) of the outstanding Voting Stock of OMC; and
(o) Material Adverse Effect. The occurrence of any event or condition
which constitutes a Materially Adverse Effect.
Section 13.2 Remedies.
(a) Automatic Acceleration and Termination of Facilities. Upon the
occurrence of an Event of Default specified in Section 13.1(g) or (h), (i)
the principal of and the interest on the Loans and any Note at the time
outstanding, and all other amounts owed to any Credit Party under this
Agreement or any of the other Loan Documents and all other Secured
Obligations, shall thereupon become due and payable without presentment,
demand, protest or other notice of any kind, all of which are expressly
waived, anything in this Agreement or any of the other Loan Documents to
the contrary notwithstanding, and (ii) the Revolving Credit Facility and
the right of Borrowers to request borrowings and the issuance of Letters of
Credit under this Agreement shall immediately terminate.
(b) Other Remedies. If any Event of Default shall have occurred, and
during the continuance of any such Event of Default, Agent may, and at the
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direction of the Required Lenders in their sole and absolute discretion
shall, do any of the following:
(i) declare the principal of and interest on the Loans and any
Note at the time outstanding, and all other amounts owed to
any Credit Party under this Agreement or any of the other
Loan Documents and all other Secured Obligations, to be
forthwith due and payable, whereupon the same shall immedi-
ately become due and payable without presentment, demand,
protest or other notice of any kind, all of which are ex-
pressly waived, anything in this Agreement or the other
Loan Documents to the contrary notwithstanding;
(ii) terminate the Revolving Credit Facility and any right of
any Borrower to request borrowings or the issuance of
Letters of Credit under this Agreement;
(iii) notify, or request each Loan Party to notify, in writing or
otherwise, any Account Debtor or obligor with respect to
any one or more of the Receivables to make payment to
Agent, for the benefit of the Credit Parties, or any agent
or designee of Agent, at such address as may be specified
by Agent and if, notwithstanding the giving of any notice,
any Account Debtor or other such obligor shall make
payments to any Loan Party, such Loan Party shall hold all
such payments it receives in trust for Agent, for the
account of the Credit Parties, without commingling the same
with other funds or property of, or held by, such Loan
Party, and shall deliver the same to Agent or any such
agent or designee of Agent immediately upon receipt by such
Loan Party in the identical form received, together with
any necessary endorsements;
(iv) notify, or direct each Loan Party to notify, and instruct,
in writing or otherwise, any Clearing Bank to transmit the
balances in each Agency Account to Agent in accordance with
the terms of this Agreement and any Agency Account
Agreement;
(v) at the Loan Parties' expense, enforce collection of any
Receivables, settle or compromise the amount or payment
thereof or settle or adjust disputes and claims directly
with Account Debtors and other obligors on Receivables for
amounts and on terms which Agent considers advisable and in
all such cases only the net amounts received by Agent, for
the account of the Credit Parties, in payment of such
amounts, after deductions of costs and attorneys' fees,
shall constitute Collateral and the Loan Parties shall have
no further right to make any such settlements or
adjustments or to accept any returns of merchandise;
(vi) enter upon any premises in which any Collateral may be
located and, without resistance or interference by any Loan
Party, take physical possession of any or all thereof and
maintain such possession on such premises or move the same
or any part thereof to such other place or places as Agent
shall choose, without being liable to any Loan Party on
account of any loss, damage or depreciation that may occur
as a result thereof, so long as Agent shall act reasonably
and in good faith;
(vii) require the Loan Parties to and the Loan Parties shall,
without charge to any Credit Party, assemble the tangible
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Collateral and maintain or deliver it into the possession
of Agent or any agent or representative of Agent at such
place or places as Agent may designate and as are
reasonably convenient to both Agent and the Loan Parties;
(viii) at the expense of the Loan Parties, cause any of the
tangible Collateral to be placed in a public or field
warehouse, and Agent shall not be liable to any Loan Party
on account of any loss, damage or depreciation that may
occur as a result thereof, so long as Agent shall act
reasonably and in good faith;
(ix) without notice, demand or other process, and without payment
of any rent or any other charge, enter any of Loan Party's
premises and, without breach of the peace, until Agent, on
behalf of the Credit Parties, completes the enforcement of
its rights in the Collateral, take possession of such
premises or place custodians in exclusive control thereof,
remain on such premises and use the same and any Loan
Party's Equipment, for the purpose of (A) completing any
work in process, preparing any Inventory for disposition
and disposing thereof, and (B) collecting any Receivable,
and Agent, for the benefit of the Credit Parties, is hereby
granted a license or sublicense and all other rights as may
be necessary, appropriate or desirable to use the Loan
Parties' Proprietary Rights in connection with the
foregoing, and the rights of any Loan Party under all
licenses, sublicenses and franchise agreements shall inure
to Agent, for the benefit of the Credit Parties (provided,
however, that any use of any federally registered
Trademarks as to any goods shall be subject to the control
as to the quality of such goods of the owner of such
Trademarks and the goodwill of the business symbolized
thereby);
(x) exercise any and all of its rights under any and all of the
Security Documents;
(xi) apply any Collateral consisting of cash to the payment of
the Secured Obligations in any order in which Agent, on
behalf of the Credit Parties, may elect or use such cash in
connection with the exercise of any of its other rights
hereunder or under any of the Security Documents;
(xii) establish or cause to be established one or more Lockboxes
or other arrangement for the deposit of proceeds of the
Loan Parties' Receivables, and, in such case, each Loan
Party shall cause to be forwarded to Agent at its Principal
Office, on a daily basis, copies of all checks and other
items of payment and deposit slips related thereto
deposited in such Lockboxes, together with collection
reports in form and substance satisfactory to Agent; and
(xiii) exercise all of the rights and remedies of a secured party
under the UCC and under any other Applicable Law,
including, without limitation, the right, without notice
except as specified below and with or without taking the
possession thereof, to sell the Collateral or any part
thereof in one or more parcels at public or private sale,
at any location chosen by Agent, for cash, on credit or for
future delivery, and at such price or prices and upon such
other terms as Agent may deem commercially reasonable.
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Each Loan Party agrees that, to the extent notice of sale
shall be required by law, at least ten (10) days' notice to
such Loan Party of the time and place of any public sale or
the time after which any private sale is to be made shall
constitute reasonable notification, but notice given in any
other reasonable manner or at any other reasonable time
shall constitute reasonable notification. Agent shall not
be obligated to make any sale of Collateral regardless of
notice of sale having been given. Agent may adjourn any
public or private sale from time to time by announcement at
the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to
which it was so adjourned.
(c) Cash Collateral; Injunctive Relief. All cash proceeds of
Collateral from time to time existing, including, without limitation,
collections and payments of the Loan Parties' Receivables and cash
receipts, if any, for other Collateral, whether consisting of cash, checks
or other similar items, at all times shall be subject to an express trust
for the benefit of Agent, for the benefit of the Credit Parties. All such
proceeds shall be subject to Agent's continuing security interests under
this Agreement. The Loan Parties are expressly prohibited from using,
spending, retaining or otherwise exercising any dominion over such proceeds
in any manner in contravention of the requirements of this Agreement. Each
Loan Party recognizes, acknowledges and agrees that, in the event any Loan
Party fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any action for damages or other remedy at
law may prove to be inadequate relief to Agent and the other Credit
Parties; therefore, each Loan Party agrees to the fullest extent allowed by
law that if any Event of Default shall have occurred and be continuing,
Agent and the other Credit Parties, if Agent or any other Credit Party so
requests, shall be entitled to temporary injunctive relief without the
necessity of proving actual damages to restrain the breach giving rise to
such Default and require compliance with the requirements of this
Agreement.
Section 13.3 Application of Proceeds. All proceeds from each sale of, or
other realization upon, all or any part of the Collateral following an Event
of Default shall be applied or paid over as follows:
(a) First: to the payment of all costs and expenses incurred in
connection with such sale or other realization, including reasonable
attorneys' fees;
(b) Second: to the payment of the Secured Obligations (with Borrowers
remaining liable for any deficiency) as Agent may elect; and
(c) Third: the balance (if any) of such proceeds shall be paid to
Borrowers, subject to any duty imposed by law, or otherwise to whomsoever
shall be entitled thereto.
BORROWERS SHALL REMAIN LIABLE AND WILL PAY, ON DEMAND, ANY DEFICIENCY
REMAINING IN RESPECT OF THE SECURED OBLIGATIONS, TOGETHER WITH INTEREST
THEREON AT A RATE PER ANNUM EQUAL TO THE HIGHEST RATE THEN PAYABLE HEREUNDER
ON SUCH SECURED OBLIGATIONS, WHICH INTEREST SHALL CONSTITUTE PART OF THE
SECURED OBLIGATIONS.
Section 13.4 Power of Attorney. In addition to the authorizations granted
to Agent under Section 9.13, Section 9.16 or under any other provision of this
Agreement or of any other Loan Document, during the continuance of an Event of
Default, each Loan Party hereby irrevocably designates, makes, constitutes and
appoints Agent (and all Persons designated by Agent from time to time) as such
Loan Party's true and lawful attorney, and agent in fact, and Agent, or any
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such Person, may, without notice to any Loan Party, and at such time or times
as Agent, or any such Person in its sole discretion may determine, in the name
of such Loan Party, Agent or the Lenders,
(i) demand payment of the Loan Parties' Receivables,
(ii) enforce payment of the Loan Parties' Receivables by legal
proceedings or otherwise,
(iii) exercise all of the Loan Parties' rights and remedies with
respect to the collection of Receivables,
(iv) settle, adjust, compromise, extend or renew any or all of
the Loan Parties' Receivables,
(v) settle adjust or compromise any legal proceedings brought
to collect the Loan Parties' Receivables,
(vi) discharge and release the Loan Parties' Receivables or any
of them,
(vii) prepare, file and sign the name of any Loan Party on any
proof of claim in bankruptcy or any similar document
against any Account Debtor,
(viii) prepare, file and sign the name of any Loan Party on any
notice of Lien, assignment or satisfaction of Lien, or
similar document in connection with any of the Collateral,
(ix) endorse the name of any Loan Party upon any chattel paper,
document, instrument, notice, freight bill, bill of lading
or similar document or agreement relating such Loan
Parties' Receivables, Inventory or any other Collateral,
(x) use the stationery of any Loan Party and sign the name of
such Loan Party to verifications of such Loan Party's
Receivables and on any notice to the Account Debtors,
(xi) open any Loan Party's mail,
(xii) notify the post office authorities to change the address
for delivery of any Loan Party's mail to an address
designated by Agent, and
(xiii) use the information recorded on or contained in any data
processing equipment and computer hardware and software
relating to any Loan Party's Receivables, Inventory or
other Collateral to which such Loan Party has access.
Section 13.5 Miscellaneous Provisions Concerning Remedies.
(a) Rights Cumulative. The rights and remedies of the Credit Parties
under this Agreement, the Notes and each of the other Loan Documents shall
be cumulative and not exclusive of any rights or remedies which it or they
would otherwise have. In exercising such rights and remedies the Credit
Parties may be selective and no failure or delay by the Credit Parties in
exercising any right shall operate as a waiver of it, nor shall any single
or partial exercise of any power or right preclude its other or further
exercise or the exercise of any other power or right.
(b) Waiver of Marshaling. Each Loan Party hereby waives any right to
require any marshaling of assets and any similar right.
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(c) Limitation of Liability. Nothing contained in this Article or
elsewhere in this Agreement or in any of the other Loan Documents shall be
construed as requiring or obligating any Credit Party or any agent or
designee of any Credit Party to make any demand or to make any inquiry as
to the nature or sufficiency of any payment received by it, or to present
or file any claim or notice or take any action, with respect to any
Receivable or any other Collateral or the monies due or to become due
thereunder or in connection therewith, or to take any steps necessary to
preserve any rights against prior parties, and the Credit Parties and their
agents or designees shall have no liability to any Loan Party for actions
taken pursuant to this Article, any other provision of this Agreement or
any of the other Loan Documents so long as such Credit Party shall act
reasonably and in good faith.
(d) Appointment of Receiver. In any action under this Article, Agent
shall be entitled during the continuance of an Event of Default to the
appointment of a receiver, without notice of any kind whatsoever, to take
possession of all or any portion of the Collateral and to exercise such
power as the court shall confer upon such receiver in accordance with
Applicable Law.
Section 13.6 Registration Rights; Private Sales; Etc.
(a) If Agent shall determine to exercise its right to sell or
otherwise dispose of all or any Investment Property owned by any Loan
Party, pursuant to Section 13.2 or any other Loan Document, such Loan Party
agrees that, upon the reasonable request of Agent (which request may be
made by Agent in its sole discretion), such Loan Party will, at its own
expense use its best efforts to: (i) execute and deliver, and cause each
Issuer of any Collateral or other property contemplated to be sold and the
directors and officers thereof to execute and deliver, all such agreements,
documents and instruments, and do or cause to be done all such other acts
and things, as may be necessary or, in the opinion of Agent, advisable to
register such Collateral or other property to be sold under the provisions
of the Securities Act, and to cause the registration statement relating
thereto to become effective and to remain effective for such period as
prospectuses are required by law to be furnished and to make all amendments
and supplements thereto and to the related prospectus which, in the opinion
of Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto; (ii) to qualify such
Collateral or other property to be sold under all applicable state
securities or "Blue Sky" laws and to obtain all necessary Governmental
Approvals for the sale of such Collateral or other property, as requested
by Agent; (iii) cause each such Issuer to make available to its security
holders, as soon as practicable, an earnings statement which will satisfy
the provisions of Section 11(a) of the Securities Act; and (iv) do or cause
to be done all such other acts and things as may be reasonably necessary to
make the sale of such Collateral or other property or any part thereof
valid and binding and in compliance with applicable law. The Loan Parties
will bear all reasonable costs and expenses, including reasonable
attorneys' fees, of carrying out its obligations under this Section 13.6.
(b) Each Loan Party recognizes that Agent may be unable to effect a
public sale of any or all of the Collateral or other property to be sold by
reason of certain prohibitions contained in the laws of any jurisdiction
outside the U.S. or in the Securities Act and applicable state securities
laws but may be compelled to resort to one or more private sales thereof to
a restricted group of purchasers who will be obliged to agree, among other
things, to acquire such Collateral or other property to be sold for their
own account for investment and not with a view to the distribution or
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resale thereof. Each Loan Party acknowledges and agrees that any such
private sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall, to the extent
permitted by law, be deemed to have been made in a commercially reasonable
manner. Unless required by Applicable Law, Agent shall not be under any
obligation to delay a sale of any of the Collateral or other property to be
sold for the period of time necessary to permit the Issuer of such
securities to register such securities under the laws of any jurisdiction
outside the U.S., under the Securities Act or under any applicable state
securities laws, even if such Issuer would agree to do so.
(c) Each Loan Party further agrees to do or cause to be done, to the
extent that such Loan Party may do so under Applicable Law, all such other
acts and things as may be necessary to make such sales or resales of any
portion or all of the Collateral or other property to be sold valid and
binding and in compliance with any and all Applicable Laws of any and all
Governmental Authorities having jurisdiction over any such sale or sales,
all at the Loan Parties' expense. Each Loan Party further agrees that a
breach of any of the covenants contained in this Section 13.6 will cause
irreparable injury to the Credit Parties and that the Credit Parties have
no adequate remedy at law in respect of such breach and, as a consequence,
agrees that each and every covenant contained in this Section 13.6 shall be
specifically enforceable against such Loan Party and such Loan Party hereby
waives and agrees, to the fullest extent permitted by law, not to assert as
a defense against an action for specific performance of such covenants that
(i) such Loan Party's failure to perform such covenants will not cause
irreparable injury to the Credit Parties or (ii) the Credit Parties have an
adequate remedy at law in respect of such breach. Each Loan Party further
acknowledges the impossibility of ascertaining the amount of damages which
would be suffered by the Credit Parties by reason of a breach of any of the
covenants contained in this Section 13.6 and, consequently, agrees that, if
such Loan Party shall breach any of such covenants and the Credit Parties
shall sue for damages for such breach, such Loan Party shall pay to the
Credit Parties, as liquidated damages and not as a penalty, an aggregate
amount equal to the value of the Collateral or other property to be sold on
the date Agent shall demand compliance with this Section 13.6.
(d) EACH LOAN PARTY HEREBY AGREES TO INDEMNIFY, PROTECT AND SAVE
HARMLESS THE CREDIT PARTIES AND ANY CONTROLLING PERSONS THEREOF WITHIN THE
MEANING OF THE SECURITIES ACT FROM AND AGAINST ANY AND ALL LIABILITIES,
SUITS, CLAIMS, COSTS AND EXPENSES (INCLUDING COUNSEL FEES AND
DISBURSEMENTS) ARISING UNDER THE SECURITIES ACT, THE SECURITIES AND
EXCHANGE ACT OF 1934, AS AMENDED, ANY APPLICABLE STATE SECURITIES STATUTE,
OR AT COMMON LAW, OR PURSUANT TO ANY OTHER APPLICABLE LAW IN CONNECTION
WITH THE ABOVE REFERENCED REGISTRATION, INSOFAR AS SUCH LIABILITIES, SUITS,
CLAIMS, COSTS AND EXPENSES ARISE OUT OF, OR ARE BASED UPON, ANY UNTRUE
STATEMENT OR ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT CONTAINED IN ANY
REGISTRATION STATEMENT RELATING TO ANY PART OF THE COLLATERAL OR OTHER
PROPERTY TO BE SOLD, OR SUCH REGISTRATION STATEMENT AS AMENDED OR
SUPPLEMENTED, OR ARISES OUT OF, OR IS BASED UPON, THE OMISSION OR ALLEGED
OMISSION TO STATE THEREIN A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR
NECESSARY TO MAKE THE STATEMENTS THEREIN NOT MISLEADING; PROVIDED, THAT
SUCH LOAN PARTY SHALL NOT BE LIABLE IN ANY SUCH CASE TO THE EXTENT THAT ANY
SUCH LIABILITIES, SUITS, CLAIMS, COSTS AND EXPENSES ARISE OUT OF, OR ARE
BASED UPON, ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OR OMISSION OR
ALLEGED OMISSION MADE IN SUCH REGISTRATION STATEMENT OR SUCH REGISTRATION
STATEMENT AS AMENDED OR SUPPLEMENTED, IN RELIANCE UPON AND IN CONFORMITY
WITH WRITTEN INFORMATION FURNISHED TO SUCH LOAN PARTY BY ANY CREDIT PARTY
SPECIFICALLY FOR INCLUSION THEREIN. THE FOREGOING INDEMNITY AGREEMENT IS
IN ADDITION TO ANY INDEBTEDNESS, LIABILITY OR OBLIGATION THAT SUCH LOAN
PARTY MAY OTHERWISE HAVE TO ANY CREDIT PARTY OR ANY SUCH CONTROLLING
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PERSON.
ARTICLE 14
Assignments
-----------
Section 14.1 Assignments and Participations.
(a) Each Lender may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Loans, its Notes and its
Commitment); provided, however, that:
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender or an
assignment of all of a Lender's rights and obligations under
this Agreement, any such partial assignment shall be in an
amount at least equal to $10,000,000 or an integral multiple
of $5,000,000 in excess thereof; provided that no such
assignment may result in a reduction of such Lender's
Commitment to less than $10,000,000;
(iii) each such assignment by a Lender shall be of a constant, and
not varying, percentage of all of its rights and obligations
under this Agreement and the Notes;
(iv) the parties to such assignment shall execute and deliver to
Agent for its acceptance an Assignment and Acceptance in the
form of Exhibit "C" hereto, together with any Notes subject
to such assignment and a processing fee of $3,500; provided
that no such fee shall be payable by NationsBank upon the
assignment of any portion of its Commitment at any time
prior to July 1, 1998; and
(v) the prior written consent of Agent (such consent to not be
unreasonably withheld) shall be required.
Upon execution, delivery and acceptance of an Assignment and
Acceptance, the assignee thereunder shall be a party hereto and, to the
extent of such assignment, have the obligations, rights and benefits of a
Lender hereunder and the assigning Lender shall, to the extent of such
assignment, relinquish its rights and be released from its obligations
under this Agreement. Upon the consummation of any assignment pursuant to
this Section, the assignor, Agent and Borrowers shall make appropriate
arrangements so that, if required, new Notes are issued to the assignor and
the assignee. If the assignee is not incorporated under the laws of the
U.S., or a state thereof, it shall deliver to Borrowers and Agent
certification as to exemption from deduction or withholding of Taxes in
accordance with Section 5.6.
(b) Agent shall maintain at its address referred to in Section 16.1 a
copy of each Assignment and Acceptance delivered to and accepted by it and
a register for the recordation of the names and addresses of the Lenders
and the Commitment of, and principal amount of the Loans owing to, each
Lender from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error,
and Borrowers, Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by Borrowers or
any Lender at any reasonable time and from time to time upon reasonable
prior notice.
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(c) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such Assignment and
Acceptance and payment of the processing fee, Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the
form of Exhibit "C" hereto, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give
prompt notice thereof to the parties thereto.
(d) Each Lender may sell participations to one or more Persons in all
or a portion of its rights, obligations or rights and obligations under
this Agreement (including all or a portion of its Commitment or its Loans);
provided, however, that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations, (iii) the
participant shall be entitled to the benefit of the yield protection
provisions contained in Article 5 and the right of set-off contained in
Section 16.4, and (iv) the Loan Parties shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole
right to enforce the obligations of Borrowers relating to its Loans and its
Notes and to approve any amendment, modification or waiver of any provision
of this Agreement (other than amendments, modifications or waivers
decreasing the amount of principal of or the rate at which interest is
payable on such Loans or Notes, extending any scheduled principal payment
date or date fixed for the payment of interest on such Loans or Notes, or
extending its Commitment).
(e) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time assign and pledge all or any portion of its
Loans and its Notes to any Federal Reserve Bank as collateral security
pursuant to Regulation A and any Operating Circular issued by such Federal
Reserve Bank. No such assignment shall release the assigning Lender from
its obligations hereunder.
(f) Any Lender may furnish any information concerning any Loan Party
in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants).
Section 14.2 Representation of Lenders. Each Lender hereby represents that
it will make each Loan hereunder as a commercial loan for its own account in
the ordinary course of its business; provided, however, that subject to
Section 14.1 hereof, the disposition of the Notes or other evidence of the
Secured Obligations held by any Lender shall at all times be within its
exclusive control.
ARTICLE 15
Agent
-----
Section 15.1 Appointment, Powers, and Immunities. Each Lender and L/C
Issuer hereby irrevocably appoints and authorizes Agent to act as its agent
under this Agreement and the other Loan Documents with such powers and
discretion as are specifically delegated to Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Agent (which term as used in this sentence and
in Section 15.5 and the first sentence of Section 15.6 hereof shall include
its Affiliates and Subsidiaries, and its own and its Affiliates' and
Subsidiaries', officers, directors, employees and agents):
(a) shall not have any duties or responsibilities except those
expressly set forth in this Agreement and shall not be a trustee or
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fiduciary for any Lender or L/C Issuer;
(b) shall not be responsible to the Lenders or L/C Issuer for any
recital, statement, representation or warranty (whether written or oral)
made in or in connection with any Loan Document or any certificate or other
document referred to or provided for in, or received by any of them under,
any Loan Document, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of any Loan Document, or any other document
referred to or provided for therein or for any failure by any Loan Party or
any other Person to perform any of its obligations thereunder;
(c) shall not be responsible for or have any duty to ascertain,
inquire into or verify the performance or observance of any covenants or
agreements by any Loan Party or the satisfaction of any condition or to
inspect the property (including the books and records) of any Loan Party or
any of its Subsidiaries or Affiliates;
(d) shall not be required to initiate or conduct any litigation or
collection proceedings under any Loan Document; and
(e) shall not be responsible for any action taken or omitted to be
taken by it under or in connection with any Loan Document, except for its
own gross negligence or willful misconduct.
Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
Section 15.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice, instrument, writing or other communication (including,
without limitation, any communication by telephone or telecopy) believed by it
to be genuine and correct and to have been signed, sent or made by or on
behalf of the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel for any Loan Party), independent accountants
and other experts selected by Agent. Agent may deem and treat the payee of
any Note as the holder thereof for all purposes hereof unless and until Agent
receives and accepts an Assignment and Acceptance executed in accordance with
Section 14.1 hereof. As to any matters not expressly provided for by this
Agreement, Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions
of the Required Lenders, and such instructions shall be binding on all of the
Lenders; provided, however, that Agent shall not be required to take any
action that exposes Agent to personal liability or that is contrary to any
Loan Document or Applicable Law or unless it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking any such action.
Section 15.3 Defaults. Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless Agent has
received written notice from a Lender or a Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default." In
the event that Agent receives such a notice of the occurrence of a Default or
Event of Default, Agent shall give prompt notice thereof to the Lenders.
Agent shall (subject to Section 15.2 hereof) take such action with respect to
such Default or Event of Default as shall reasonably be directed by the
Required Lenders, provided that, unless and until Agent shall have received
such directions, Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Credit Parties.
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Section 15.4 Rights as Lender. With respect to its Commitment and the
Loans made by it, NationsBank (and any successor acting as Agent) in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not acting as
Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include Agent in its individual capacity. NationsBank (and any
successor acting as Agent) and its Affiliates or Subsidiaries may (without
having to account therefor to any Lender) accept deposits from, lend money to,
make investments in, provide services to and generally engage in any kind of
lending, trust or other business with any Loan Party or any of its Affiliates
or Subsidiaries as if it were not acting as Agent, and NationsBank (and any
successor acting as Agent) and its Affiliates or Subsidiaries may accept fees
and other consideration from any Loan Party or any of its Affiliates or
Subsidiaries for services in connection with this Agreement or otherwise
without having to account for the same to the other Lenders.
Section 15.5 Indemnification. THE LENDERS AGREE TO INDEMNIFY AGENT (TO THE
EXTENT NOT REIMBURSED UNDER SECTION 16.2 HEREOF, BUT WITHOUT LIMITING THE
OBLIGATIONS OF BORROWERS UNDER SUCH SECTION) RATABLY IN ACCORDANCE WITH THEIR
RESPECTIVE COMMITMENTS, FOR ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES (INCLUDING,
WITHOUT LIMITATION, ATTORNEYS' FEES) OR DISBURSEMENTS OF ANY KIND AND NATURE
WHATSOEVER THAT MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST AGENT
(INCLUDING BY ANY LENDER) IN ANY WAY RELATING TO OR ARISING OUT OF ANY LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY OR ANY ACTION TAKEN OR
OMITTED BY AGENT UNDER ANY LOAN DOCUMENT (INCLUDING ANY OF THE FOREGOING
ARISING FROM THE NEGLIGENCE OF AGENT); PROVIDED THAT NO LENDER SHALL BE LIABLE
FOR ANY OF THE FOREGOING TO THE EXTENT THEY ARISE FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED. WITHOUT LIMITATION OF THE
FOREGOING, EACH LENDER AGREES TO REIMBURSE AGENT PROMPTLY UPON DEMAND FOR ITS
RATABLE SHARE OF ANY COSTS OR EXPENSES PAYABLE BY BORROWERS UNDER SECTION
16.2, TO THE EXTENT THAT AGENT IS NOT PROMPTLY REIMBURSED FOR SUCH COSTS AND
EXPENSES BY BORROWERS. THE AGREEMENTS CONTAINED IN THIS SECTION SHALL SURVIVE
PAYMENT IN FULL OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE UNDER THIS
AGREEMENT.
Section 15.6 Non-Reliance on Agent and Other Lenders. Each Credit Party
agrees that it has, independently and without reliance on any other Credit
Party, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Loan Parties and decision to
enter into this Agreement and that it will, independently and without reliance
upon any other Credit Party, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under the Loan Documents. Except for
notices, reports and other documents and information expressly required to be
furnished to the Credit Parties by Agent hereunder, Agent shall not have any
duty or responsibility to provide any Credit Party with any credit or other
information concerning the affairs, financial condition or business of any
Loan Party or any of its Affiliates or Subsidiaries that may come into the
possession of Agent or any of its Affiliates or Subsidiaries.
Section 15.7 Resignation of Agent. Agent may resign at any time by giving
notice thereof to the Lenders and Borrowers. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on
behalf of the other Credit Parties, appoint a successor Agent which shall be a
commercial bank organized under the laws of the U.S. having combined capital
and surplus of at least $100,000,000. Upon the acceptance of any appointment
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as Agent hereunder by a successor, such successor shall thereupon succeed to
and become vested with all the rights, powers, discretion, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations hereunder. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Agent.
Section 15.8 Enforcement. Each of the Lenders and L/C Issuer agrees that
it shall not take any legal action, nor institute any actions or proceedings,
against or with respect to any Collateral without the prior written consent of
Agent. Without limiting the generality of the foregoing, no Lender may
accelerate or otherwise enforce its portion of the Secured Obligations, or
terminate its Commitment except in accordance with Section 13.2(b) or a
set-off permitted under Section 16.4.
ARTICLE 16
Miscellaneous
-------------
Section 16.1 Notices.
(a) Method of Communication. Except as specifically provided in this
Agreement or in any of the other Loan Documents, all notices and the
communications hereunder and thereunder shall be in writing or by
telephone, subsequently confirmed in writing. Notices in writing shall be
delivered personally or sent by certified or registered mail, postage
prepaid, or by overnight courier, telex or facsimile transmission and shall
be deemed received in the case of personal delivery, when delivered, in the
case of mailing, when receipted for, in the case of overnight delivery, on
the next Business Day after delivery to the courier, and in the case of
telex and facsimile transmission, upon transmittal, provided that in the
case of notices to Agent, notice shall be deemed to have been given only
when such notice is actually received by Agent. A telephonic notice to
Agent, as understood by Agent, will be deemed to be the controlling and
proper notice in the event of a discrepancy with or failure to receive a
confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent to it
at the address of such party set forth on the signature pages hereof, in
any Assignment and Acceptance or any other address of which all the other
parties are notified in writing.
(c) Principal Office. Agent hereby designates its office located at
901 Main Street, Dallas, Dallas County, Texas 75202, or any subsequent
office which shall have been specified for such purpose by written notice
to Borrowers, as the office to which payments due are to be made and at
which Loans will be disbursed.
Section 16.2 Expenses. Borrowers agree to pay or reimburse on demand all
costs and expenses incurred by any Credit Party, including, without
limitation, the reasonable fees and disbursements of counsel, in connection
with the following:
(a) the negotiation, preparation, execution, delivery, administration,
enforcement and termination of this Agreement and each of the other Loan
Documents, whenever the same shall be executed and delivered, including,
without limitation, the following:
(i) the out-of-pocket costs and expenses incurred in connection
with the administration and interpretation of this Agreement
and the other Loan Documents;
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(ii) the costs and expenses of appraisals of the Collateral;
(iii) the costs and expenses of lien and title searches; and
(iv) taxes, fees and other charges for filing the Financing
Statements and continuations and the costs and expenses of
taking other actions to perfect, protect and continue the
Security Interests;
provided, however, that in connection with any Person becoming a
Lender hereunder, Borrower shall not be required to pay (i) the
expenses incurred in excess of $5,000 of any such Person which
becomes a Lender within ninety (90) days of the Agreement Date, and
(ii) the expenses incurred of any such Person which becomes a Lender
more than ninety (90) days after the Effective Date;
(b) the preparation, execution and delivery of any waiver, amendment,
supplement or consent by Agent and the Lenders relating to this Agreement
or any of the other Loan Documents;
(c) sums paid or incurred to pay any amount or take any action
required of the Loan Parties under the Loan Documents that the Loan Parties
fail to pay or take;
(d) costs of inspections and verifications of the Collateral,
including, without limitation, standard per diem fees charged by Agent,
travel, lodging and meals (all of such travel, lodging and meals to be
charged in conformity with NationsBank's internal policies and procedures)
for inspections of the Collateral and the Loan Parties' operations and
books and records by Agent's agents up to four (4) times per year and
whenever an Event of Default exists;
(e) costs and expenses of forwarding loan proceeds, collecting checks
and other items of payment, and establishing and maintaining each
Disbursement Account, Agency Account and Lockbox;
(f) costs and expenses of preserving and protecting the Collateral;
(g) consulting, after the occurrence of a Default, with one or more
Persons, including appraisers, accountants and lawyers, concerning the
value of any Collateral for the Secured Obligations or related to the
nature, scope or value of any right or remedy of Agent or any Lender
hereunder or under any of the Loan Documents, including any review of
factual matters in connection therewith, which expenses shall include the
fees and disbursements of such Persons;
(h) reasonable costs and expenses paid or incurred to obtain payment
of the Secured Obligations, enforce the Security Interests, sell or
otherwise realize upon the Collateral, and otherwise enforce the provisions
of the Loan Documents, or to prosecute or defend any claim in any way
arising out of, related to or connected with this Agreement or any of the
other Loan Documents, which expenses shall include the reasonable fees and
disbursements of counsel and of experts and other consultants retained by
Agent or any Lender; and
(i) all reasonable attorney's fees and expenses (including, without
limitation, the cost of internal counsel) incurred in connection with any
of the foregoing other than attorneys' fees and expenses incurred by a
Person in becoming a Lender hereunder not covered pursuant to Section
16.2(a).
The foregoing shall not be construed to limit any other provisions of the
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Loan Documents regarding costs and expenses to be paid by Borrowers.
Borrowers hereby authorize Agent to debit Borrowers' Loan Accounts (by
increasing the principal amount of the Revolving Credit Loan) in the amount of
any such costs and expenses owed by Borrowers when due. Without prejudice to
the survival of any other agreement of Borrowers hereunder, the agreements and
obligations of Borrowers contained in this Section 16.2 shall survive the
payment in full of the Loans and all other amounts payable under this
Agreement.
Section 16.3 Stamp and Other Taxes. Borrowers will pay any and all stamp,
registration, recordation and similar taxes, fees or charges and shall
indemnify the Credit Parties against any and all liabilities with respect to
or resulting from any delay in the payment or omission to pay any such taxes,
fees or charges, which may be payable or determined to be payable in
connection with the execution, delivery, performance or enforcement of this
Agreement and any of the other Loan Documents or the perfection of any rights
or security interest thereunder, including, without limitation, the Security
Interest.
Section 16.4 Right of Set-Off; Adjustments.
(a) Upon the occurrence and during the continuance of any Event of
Default, each Lender (and each of its Affiliates and Subsidiaries) is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set-off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
Indebtedness at any time owing by such Lender (or any of its Affiliates or
Subsidiaries) to or for the credit or the account of Borrowers against any
and all of the obligations of Borrowers now or hereafter existing under
this Agreement and the Notes held by such Lender, irrespective of whether
Agent or such Lender shall have made any demand under this Agreement or
such Notes and although such obligations may be unmatured. Each Lender
agrees promptly to notify Borrowers after any such set-off and application
made by such Lender; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application. The
rights of each Lender under this Section 16.4 are in addition to other
rights and remedies (including, without limitation, other rights of
set-off) that such Lender may have.
(b) If any Lender (a "Benefitted Lender") shall at any time receive
any payment of all or part of the Loans owing to it, or interest thereon,
or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in
respect of such other Lender's Loans owing to it, or interest thereon, such
Benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Loans
owing to it, or shall provide such other Lenders with the benefits of any
such collateral, or the proceeds thereof, as shall be necessary to cause
such Benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided, however,
that if all or any portion of such excess payment or benefit is thereafter
recovered from such Benefitted Lender, such purchase shall be rescinded,
and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Borrowers agree that any Lender so
purchasing a participation from a Lender pursuant to this Section 16.4 may,
to the fullest extent permitted by law, exercise all of its rights of
payment (including the right of set-off) with respect to such participation
as fully as if such Person were the direct creditor of Borrowers in the
amount of such participation.
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Section 16.5 Litigation; Waiver of Trial by Jury. EACH LOAN PARTY AND
CREDIT PARTY HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH
AN ACTION MAY BE COMMENCED BY OR AGAINST ANY LOAN PARTY OR CREDIT PARTY
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, THE
COLLATERAL OR ANY ASSIGNMENT THEREOF OR BY REASON OF ANY OTHER CAUSE OR
DISPUTE WHATSOEVER BETWEEN OR AMONG ANY LOAN PARTY OR CREDIT PARTY OF ANY KIND
OR NATURE. EACH SUCH PARTY ACKNOWLEDGES THAT SUCH WAIVER IS MADE WITH FULL
KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS WAIVED
HEREBY AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING. EACH LOAN
PARTY AND CREDIT PARTY HEREBY AGREES THAT THE FEDERAL COURT OF THE NORTHERN
DISTRICT OF TEXAS AND THE FEDERAL COURTS IN ANY OTHER JURISDICTION WHERE A
MATERIAL AMOUNT OF THE COLLATERAL IS LOCATED SHALL HAVE NONEXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG ANY
OF THE LOAN PARTIES AND THE CREDIT PARTIES, PERTAINING DIRECTLY OR INDIRECTLY
TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING
THEREFROM. EACH OF THE LOAN PARTIES EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE
TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS.
WITHOUT LIMITING THE APPLICABILITY OF ANY LAW PROVIDING FOR SERVICE OF PROCESS
UPON A STATUTORY AGENT AND NOTIFICATION THEREOF BY MAIL, EACH LOAN PARTY
HEREBY WAIVES (TO THE FULLEST EXTENT ALLOWED BY LAW) PERSONAL SERVICE OF THE
SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS ISSUED THEREIN AND AGREES (TO
THE FULLEST EXTENT ALLOWED BY LAW) THAT SERVICE OF SUCH SUMMONS AND COMPLAINT
OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH LOAN PARTY AT THE ADDRESS OF SUCH LOAN PARTY SET FORTH ON
THE SIGNATURE PAGES HEREOF. THE NONEXCLUSIVE CHOICE OF FORUM SET FORTH IN
THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE THE SAME IN ANY APPROPRIATE JURISDICTION.
Section 16.6 Consent to Advertising and Publicity. With the prior written
consent of OMC, which consent shall not be unreasonably withheld, Agent, on
behalf of the Credit Parties, may issue and disseminate to the public
information describing the credit accommodation entered into pursuant to this
Agreement, including the name and address of the Loan Parties, the amount,
interest rate, maturity, collateral and a general description of Loan Parties'
business.
Section 16.7 Reversal of Payments. Agent and each Lender shall have the
continuing and exclusive right to apply, reverse and re-apply any and all
payments to any portion of the Secured Obligations in a manner consistent with
the terms of this Agreement. To the extent any Borrower makes a payment or
payments to Agent, for the account of the Credit Parties, or any Credit Party
receives any payment or proceeds of the Collateral for Borrowers' benefit,
which payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of
such payment or proceeds received, the Secured Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and
effect, as if such payment or proceeds had not been received by Agent or such
other Credit Party.
Section 16.8 Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by
Borrowers to determine whether they are in compliance with any covenant
contained herein, shall, unless this Agreement otherwise provides or unless
Required Lenders shall otherwise consent in writing, be performed in
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accordance with GAAP.
Section 16.9 Amendments.
(a) Except as set forth in subsection (b) below, any term, covenant,
agreement or condition of this Agreement or any of the other Loan Documents
may be amended or waived, and any departure therefrom may be consented to
by the Required Lenders, if, but only if, such amendment, waiver or consent
is in writing signed by the Required Lenders and, in the case of an
amendment (other than an amendment described in Section 16.9(d)), by each
of the Loan Parties, and in any such event, the failure to observe, perform
or discharge any such term, covenant, agreement or condition (whether such
amendment is executed or such waiver or consent is given before or after
such failure) shall not be construed as a breach of such term, covenant,
agreement or condition or as a Default or an Event of Default. Unless
otherwise specified in such waiver or consent, a waiver or consent given
hereunder shall be effective only in the specific instance and for the
specific purpose for which given. In the event that any such waiver or
amendment is requested by Borrowers, Agent and the Lenders may require and
charge a fee in connection therewith and consideration thereof in such
amount as shall be determined by Agent and the Required Lenders in their
discretion.
(b) Except as otherwise set forth in this Agreement, without the prior
unanimous written consent of the Lenders,
(i) no amendment, consent or waiver shall affect the amount or
extend the time of the obligation of the Lenders to make
Loans or extend the originally scheduled time or times of
payment of the principal of any Loan or alter the time or
times of payment of interest on any Loan or the amount of the
principal thereof or the rate of interest thereon or the
amount of any commitment fee payable hereunder, or other fees
payable ratably to the Lenders hereunder, or permit any
subordination of the principal or interest on such Loan,
permit the subordination of the Security Interests in any
material Collateral or amend the provisions of Article 13 or
of this Section 16.9(b),
(ii) no material Collateral shall be released by Agent other than
as specifically permitted in this Agreement,
(iii) except to the extent expressly provided herein, the
definition of "Borrowing Base" shall not be amended,
(iv) no Loan Party shall be released of its obligations under
this Agreement or any other Loan Document;
(v) the definition of "Required Lenders" shall not be amended;
and
(vi) the Termination Date with respect to the Revolving Credit
Facility may not be amended;
provided, however, that anything herein to the contrary
notwithstanding, Required Lenders shall have the right to waive any Default
or Event of Default and the consequences hereunder of such Default or Event
of Default and shall have the right to enter into an agreement with any
Loan Party providing for the forbearance from the exercise of any remedies
provided hereunder or under the other Loan Documents without waiving any
Default or Event of Default.
(c) The making of Loans hereunder by the Lenders, or the issuance of
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any Letter of Credit by L/C Issuer, during the existence of a Default or
Event of Default shall not be deemed to constitute a waiver of such Default
or Event of Default.
(d) a. Notwithstanding any provision of this Agreement or the other
Loan Documents to the contrary, no consent, written or otherwise, of any
Loan Party shall be necessary or required in connection with any amendment
to Article 15 or Section 4.10, and any amendment to such provisions shall
be effected solely by and among Agent and the Lenders, provided that no
such amendment shall impose any obligation on Borrowers.
Section 16.10 Assignment. All the provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Loan Parties may not assign
or transfer any of their rights under this Agreement.
Section 16.11 Performance of Duties.
(a) The Loan Parties obligations under this Agreement and each of the
Loan Documents shall be performed by the Loan Parties at their sole cost
and expense.
(b) If any Loan Party shall fail to do any act or thing which it has
covenanted to do under this Agreement or any of the other Loan Documents,
Agent, on behalf of the Credit Parties, may (but shall not be obligated to)
do the same or cause it to be done either in the name of Agent or the other
Credit Parties or in the name and on behalf of any Loan Party, and each
Loan Party hereby irrevocably authorizes Agent so to act.
Section 16.12 Indemnification.
(a) EACH LOAN PARTY AGREES TO INDEMNIFY AND HOLD HARMLESS AGENT AND
EACH OTHER CREDIT PARTY AND EACH OF THEIR AFFILIATES AND SUBSIDIARIES AND
THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND ADVISORS (EACH,
AN "INDEMNIFIED PARTY") FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES,
LOSSES, LIABILITIES, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION,
REASONABLE ATTORNEYS' FEES AND EXPENSES) THAT MAY BE INCURRED BY OR
ASSERTED OR AWARDED AGAINST ANY INDEMNIFIED PARTY, IN EACH CASE ARISING OUT
OF OR IN CONNECTION WITH OR BY REASON OF (INCLUDING, WITHOUT LIMITATION, IN
CONNECTION WITH ANY INVESTIGATION, LITIGATION OR PROCEEDING OR PREPARATION
OF DEFENSE IN CONNECTION THEREWITH) THE LOAN DOCUMENTS, ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE
PROCEEDS OF THE LOANS (INCLUDING ANY OF THE FOREGOING ARISING FROM THE
NEGLIGENCE OF THE INDEMNIFIED PARTY), EXCEPT TO THE EXTENT SUCH CLAIM,
DAMAGE, LOSS, LIABILITY, COST OR EXPENSE IS FOUND IN A FINAL,
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE
RESULTED FROM SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. IN THE CASE OF AN INVESTIGATION, LITIGATION OR OTHER
PROCEEDING TO WHICH THE INDEMNITY IN THIS SECTION 16.12 APPLIES, SUCH
INDEMNITY SHALL BE EFFECTIVE WHETHER OR NOT SUCH INVESTIGATION, LITIGATION
OR PROCEEDING IS BROUGHT BY ANY LOAN PARTY, ITS DIRECTORS, SHAREHOLDERS OR
CREDITORS OR AN INDEMNIFIED PARTY OR ANY OTHER PERSON OR ANY INDEMNIFIED
PARTY IS OTHERWISE A PARTY THERETO AND WHETHER OR NOT THE TRANSACTIONS
CONTEMPLATED HEREBY ARE CONSUMMATED. EACH LOAN PARTY AGREES NOT TO ASSERT
ANY CLAIM AGAINST AGENT, ANY OTHER CREDIT PARTY, ANY OF THEIR AFFILIATES OR
SUBSIDIARIES OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES,
ATTORNEYS, AGENTS AND ADVISERS, ON ANY THEORY OF LIABILITY, FOR SPECIAL,
INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE
RELATING TO THE LOAN DOCUMENTS, ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN
OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE LOANS.
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(b) WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER AGREEMENT OF THE
LOAN PARTIES HEREUNDER, THE AGREEMENTS AND OBLIGATIONS OF THE LOAN PARTIES
CONTAINED IN THIS SECTION 16.12 SHALL SURVIVE THE PAYMENT IN FULL OF THE
LOANS AND ALL OTHER AMOUNTS PAYABLE UNDER THIS AGREEMENT.
Section 16.13 All Powers Coupled with Interest. All powers of attorney and
other authorizations granted to Agent and the other Credit Parties and any
Persons designated by Agent or the other Credit Parties pursuant to any
provisions of this Agreement or any of the other Loan Documents shall be
deemed coupled with an interest and shall be irrevocable so long as any of the
Secured Obligations remain unpaid or unsatisfied.
Section 16.14 Survival. Notwithstanding any termination of this Agreement,
(a) until all Secured Obligations have been irrevocably paid in full
or otherwise satisfied, Agent, for the benefit of the Credit Parties, shall
retain its Security Interest and shall retain all rights under this
Agreement and each of the Security Documents with respect to such
Collateral as fully as though this Agreement had not been terminated,
(b) the indemnities to which Agent and the other Credit Parties are
entitled under the provisions of this Article 16 and any other provision of
this Agreement and the other Loan Documents shall continue in full force
and effect and shall protect Agent and the other Credit Parties against
events arising after such termination as well as before, and
(c) in connection with the termination of this Agreement and the
release and termination of the Security Interests, Agent, on behalf of
itself as agent and the other Credit Parties, may require such assurances
and indemnities as it shall reasonably deem necessary or appropriate to
protect Agent and the other Credit Parties against loss on account of such
release and termination, including, without limitation, with respect to
credits previously applied to the Secured Obligations that may subsequently
be reversed or revoked.
Section 16.15 Titles and Captions. Titles and captions of Articles,
Sections and subsections in this Agreement are for convenience only, and
neither limit nor amplify the provisions of this Agreement.
Section 16.16 Severability of Provisions. Any provision of this Agreement
or any Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating the remainder of such
provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 16.17 Governing Law. THIS AGREEMENT AND ALL OTHER LOAN DOCUMENTS
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS, PROVIDED THAT TO THE EXTENT FEDERAL LAW WOULD ALLOW A HIGHER RATE OF
INTEREST THAN WOULD BE ALLOWED BY THE LAWS OF THE STATE OF TEXAS, THEN WITH
RESPECT TO THE PROVISIONS OF ANY LAWS WHICH PURPORT TO LIMIT THE AMOUNT OF
INTEREST THAT MAY BE CONTRACTED FOR, CHARGED OR RECEIVED IN CONNECTION WITH
ANY OF THE SECURED OBLIGATIONS, SUCH FEDERAL LAW SHALL APPLY.
Section 16.18 Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and shall be
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binding upon all parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.
Section 16.19 Reproduction of Documents. This Agreement, each of the other
Loan Documents and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by Agent or any other Credit Party, and (c)
financial statements, certificates and other information previously or
hereafter furnished to Agent or any other Credit Party, may be reproduced by
Agent or such other Credit Party by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and such Person may
destroy any original document so produced. Each party hereto stipulates that,
to the extent permitted by Applicable Law, any such reproduction shall be as
admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original shall be in existence
and whether or not such reproduction was made by Agent or such other Credit
Party in the regular course of business), and any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
Section 16.20 Term of Agreement. This Agreement shall remain in effect
from the Agreement Date through the Termination Date and thereafter until all
Secured Obligations shall have been irrevocably paid and satisfied in full.
No termination of this Agreement shall affect the rights and obligations of
the parties hereto arising prior to such termination.
Section 16.21 Pro-Rata Participation.
(a) Each Lender agrees that
(i) if it or any of its Affiliates or Subsidiaries shall exercise
any right of counterclaim, set-off, banker's lien or similar
right, or if under any applicable bankruptcy, insolvency or
other similar law it receives a secured claim the security
for which is a debt owed by it to any Loan Party, it shall
apportion the amount thereof, on a pro rata basis, between
(A) amounts at the time owed to it by Borrowers under this
Agreement, and (B) amounts otherwise owed to it by any Loan
Party, and
(ii) if, as a result of the exercise of a right or the receipt of
a secured claim and the apportionment thereof described in
clause (i) of this Section 16.21(a) or otherwise, it shall
receive payment of a proportion of the aggregate amount of
principal and interest due with respect to the Secured
Obligations owed to it under this Agreement greater than the
proportion of such amounts then received by any other Lender,
such Lender shall purchase a participation (which it shall be
deemed to have purchased simultaneously upon the receipt of
such payment) in the Secured Obligations then held by the
other Lenders so that all such recoveries of principal and
interest with respect to all Secured Obligations owed to each
Lender shall be pro rata on the basis of its respective
amount of the Secured Obligations owed to all Lenders,
provided that if all or part of such proportionately greater
payment received by such purchasing Lender is thereafter
recovered by or on behalf of any Borrower from such Lender,
such purchase shall be rescinded and the purchase price paid
for such participation shall be returned to such Lender to
the extent of such recovery, but without interest.
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(b) Each Lender which receives such a secured claim shall exercise its
rights in respect of such secured claim in a manner consistent with the
rights of the Lenders entitled under this Section 16.21 to share in the
benefits of any recovery on such secured claim.
(c) Each Loan Party expressly consents to the foregoing arrangements
and agrees that any holder of a participation in any Secured Obligation so
purchased or otherwise acquired may exercise any and all rights of banker's
lien, set-off or counterclaim with respect to any and all monies owing by
any Loan Party to such holder as fully as if such holder were a holder of
such Secured Obligation in the amount of the participation held by such
holder.
Section 16.22 Interest Limitation. In no contingency or event whatsoever
shall the amount of interest under the Loan Documents paid by Borrowers,
received by the Lenders, agreed to be paid by Borrowers, or requested or
demanded to be paid by the Lenders, exceed the Maximum Rate. In the event any
such sums paid to the Lenders by Borrowers would exceed the Maximum Rate, the
Lenders shall automatically apply such excess to any unpaid amount of the
Secured Obligations or, if the amount of such excess exceeds said unpaid
amount, such excess shall be paid to Borrowers, as applicable. All sums paid,
or agreed to be paid, by Borrowers which are or hereafter may be construed to
be compensation for the use, forbearance or detention of money shall be
amortized, prorated, spread and allocated in respect of the Secured
Obligations throughout the full term of this Agreement until the Secured
Obligations are paid in full. Notwithstanding any provisions contained in the
Loan Documents, or in any Notes or other related documents executed pursuant
hereto, the Lenders shall never be entitled to receive, collect or apply as
interest any amount in excess of the Maximum Rate and, in the event any Lender
ever receives, collects or applies any amount in respect of Borrowers that
otherwise would be in excess of the Maximum Rate, such amount shall
automatically be deemed to be applied in reduction of the unpaid principal
balance of the Secured Obligations and, if such principal balance is paid in
full, any remaining excess shall forthwith be paid to Borrowers, as
applicable. In determining whether or not the interest paid or payable under
any specific contingency exceeds the Maximum Rate, Borrowers and the Lenders
shall, to the maximum extent permitted under Applicable Law, (i) characterize
any non-principal payment as a standby fee, commitment fee, prepayment charge,
delinquency charge or reimbursement for a third-party expense rather than as
interest, (ii) exclude voluntary prepayments and the effect thereof, and (iii)
amortize, prorate, allocate and spread in equal parts throughout the entire
period during which the Secured Obligations were outstanding the total amount
of interest at any time contracted for, charged or received. Nothing herein
contained shall be construed or so operate as to require Borrowers to pay any
interest, fees, costs or charges greater than is permitted by Applicable Law.
Subject to the foregoing, each Borrower hereby agrees that the actual
effective rate of interest from time to time existing with respect to Loans
made by the Lenders to Borrowers, including all amounts agreed to by Borrowers
or charged or received by the Lenders, which may be deemed to be interest
under Applicable Law, shall be deemed to be a rate which is agreed to and
stipulated by Borrowers and the Lenders in accordance with Applicable Law.
Section 16.23 Joint and Several Liability. All obligations of the Loan
Parties under this Agreement are joint and several.
Section 16.24 Mutual Benefit. Each of the Loan Parties is part of a
combined enterprise the success and prosperity of which is dependent, in part,
on the operations of each Loan Party. Each Loan Party has determined that
entering into this Agreement is necessary or convenient to the conduct,
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promotion or attainment of the business of such Loan Party, and that executing
and entering into this Agreement and the other Loan Documents is within its
corporate purpose, will be of direct and indirect benefit to, will result in a
reasonably equivalent value to, such Loan Party and is in its best interest.
Section 16.25 Express Waivers By Loan Parties In Respect of Cross
Guaranties and Cross Collateralization. Each Loan Party agrees as follows:
(a) Each Loan Party hereby waives: (1) notice of acceptance of this
Agreement; (2) notice of the making of any Loans, the issuance of any
Letter of Credit or any other financial accommodations made or extended
under the Loan Documents or the creation or existence of any Secured
Obligations; (3) notice of the amount of the Secured Obligations, subject,
however, to such Loan Party's right to make inquiry of Agent to ascertain
the amount of the Secured Obligations at any reasonable time; (4) notice of
any adverse change in the financial condition of any other Loan Party or of
any other fact that might increase such Loan Party's risk with respect to
such other Loan Party under this Agreement; (5) notice of presentment for
payment, demand, protest and notice thereof as to any promissory notes or
other instruments among the Loan Documents; and (7) all other notices
(except if such notice is specifically required to be given to such Loan
Party hereunder or under any of the other Loan Documents to which such Loan
Party is a party) and demands to which such Loan Party might otherwise be
entitled.
(b) Each Loan Party hereby waives the right by statute or
otherwise to require any Credit Party to institute suit against any
other Loan Party or to exhaust any rights and remedies which such
Credit Party has or may have against any other Loan Party. Each
Loan Party further waives any defense arising by reason of any
disability or other defense of any other Loan Party (other than the
defense that the Secured Obligations shall have been fully and
finally performed and indefeasibly paid) or by reason of the
cessation from any cause whatsoever of the liability of any such
Loan Party in respect thereof.
(c) Each Loan Party hereby waives and agrees not to assert against any
Credit Party: (i) any defense (legal or equitable), set-off, counterclaim
or claim which such Loan Party may now or at any time hereafter have
against any other Loan Party or any other party liable to the Credit
Parties; (ii) any defense, set-off, counterclaim or claim of any kind or
nature available to any other Loan Party against any Credit Party, arising
directly or indirectly from the present or future lack of perfection,
sufficiency, validity or enforceability of the Secured Obligations or any
security therefor; (iii) any right or defense arising by reason of any
claim or defense based upon an election of remedies by any Credit Party
under any applicable law; (iv) the benefit of any statute of limitations
affecting any other Loan Party's liability hereunder.
(d) In addition to the foregoing waivers, each Loan Party hereby
waives outright and absolutely, any right of subrogation such Loan Party
has or may have against any other Loan Party with respect to the Secured
Obligations. In addition, each Loan Party hereby waives any right to
proceed against any other Loan Party, now or hereafter, for contribution,
indemnity, reimbursement and any other suretyship rights and claims,
whether direct or indirect, liquidated or contingent, whether arising under
express or implied contract or by operation of law, which such Loan Party
may now have or hereafter have as against any such other Loan Party with
respect to the Secured Obligations. Each Loan Party also hereby waives any
rights of recourse to or with respect to any asset of any other Loan Party.
Each Loan Party agrees that in light of the immediately foregoing waivers,
the execution of this Agreement shall not be deemed to make such Loan Party
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a "creditor" of any other Borrower, and that for purposes of Sections 547
and 550 of the Bankruptcy Code such Loan Party shall not be deemed a
"creditor" of any other Loan Party.
(e) Each Loan Party consents and agrees that, without notice to or by
such Loan Party and without affecting or impairing the obligations of such
Loan Party hereunder, the Credit Parties may, by action or inaction: (a)
compromise, settle, extend the duration or the time for the payment of, or
discharge the performance of, or may refuse to or otherwise not enforce the
Loan Documents; (b) release all or any one or more parties to any one or
more of the Loan Documents or grant other indulgences to any other Loan
Party in respect thereof; (c) amend or modify in any manner and at any time
(or from time to time) any of the Loan Documents; or (d) release or
substitute any Guarantor or other Person liable for payment of the Secured
Obligations, if any, or enforce, exchange, release or waive any security
for the Secured Obligations or any Guaranty of the Secured Obligations.
(f) The Credit Parties shall have the right to seek recourse against
any Loan Party to the fullest extent provided for herein, and no election
by any Credit Party to proceed in one form of action or proceeding, or
against any party, or on any obligation, shall constitute a waiver of such
Credit Party's right to proceed in any other form of action or proceeding
or against other parties unless such Credit Party has expressly waived such
right in writing. Specifically, but without limiting the generality of the
foregoing, no action or proceeding by any Credit Party under any document
or instrument evidencing the Secured Obligations shall serve to diminish
the liability of any Loan Party under this Agreement or any other Loan
Document except to the extent that the Credit Parties finally and
unconditionally shall have realized indefeasible payment by such action or
proceeding.
(g) Each Loan Party represents and warrants to the Credit Parties that
such Loan Party is currently informed of the financial condition of all
other Loan Parties (including, without limitation, all other Guarantors) of
all other circumstances which a diligent inquiry would reveal and which
bear upon the risk of nonpayment of the Secured Obligations. Each Loan
Party further represents and warrants to the Credit Parties that such Loan
Party has read and understands the terms and conditions of the Loan
Documents. Each Loan Party hereby covenants that such Loan Party will
continue to keep informed of the financial condition of all other Loan
Parties, and of all other circumstances which bear upon the risk of
nonpayment or nonperformance of the Secured Obligations.
Section 16.26 Judgment Currency. The payment obligations of any Loan Party
under this Agreement or any of the other Loan Documents shall not be
discharged by an amount paid in any currency other than Dollars, or in any
other place than required by this Agreement or any such Loan Documents, to the
extent that the amount so paid on conversion to Dollars and transferred to
Agent in Dallas, Dallas County, Texas, U.S., under normal banking procedures
does not yield the amount of Dollars due under this Agreement or any such
other Loan Document. If for the purpose of obtaining judgment in any court it
is necessary to convert a sum due under this Agreement or any of the other
Loan Documents in any currency to another currency (the "Other Currency"),
then the rate of exchange which shall be applied shall be the Spot Rate,
determined as of the Business Day preceding the date on which such judgment is
signed by the judge or other Person acting on behalf of such court. The
payment obligations of any Loan Party in respect of any such amount due by it
to any Credit Party pursuant to such judgment, notwithstanding the rate of
exchange actually applied in rendering such judgment, shall be discharged only
to the extent that on the Business Day following receipt by such Credit Party
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of any such sum in the Other Currency pursuant to such judgment, such Credit
Party in accordance with normal banking procedures may purchase and transfer
to Dallas, Dallas County, U.S., Dollars with the amount of the Other Currency
so received.
Section 16.27 Assignment to Agent; Renewal and Continuation; Non-Assumption
By New Loan Parties; Deemed Allocation of Payments and Proceeds.
(a) On the Agreement Date, and in connection with this Agreement,
NationsBank has transferred and assigned, absolutely, to Agent, for the
ratable benefit of the Credit Parties, the Original Agreement, the Existing
Revolving Note, the Existing Obligations and the Existing Lien and Agent
has assigned to each Lender a portion of the Existing Obligations
corresponding to its Commitment Percentage. As of the Agreement Date, (i)
the Original Agreement hereby is renewed, extended, amended, increased and
restated by this Agreement, (ii) all of the Existing Obligations are hereby
renewed, extended, increased and continued, and shall hereafter be deemed
outstanding under and governed by, this Agreement and evidenced by the
Revolving Credit Notes, (ii) the Existing Revolving Note hereby is renewed,
extended, increased, amended and restated by the Revolving Credit Notes,
and (iii) the Existing Lien hereby is renewed and continued and shall
remain in full force and effect as security for the Secured Obligations,
and for all purposes shall be deemed to be continued and included as a part
of the Security Interest. Each of OMC and the other Loan Parties hereby
consents to the acquisition by Agent, for the benefit of the Credit
Parties, of the rights and interests described above and expressly agrees
to the renewal, extension, increase, amendment, restatement and
continuation of such rights and interests as described herein.
(b) Notwithstanding Section 16.27(a) above or any other provisions of
this Agreement or any other Loan Document, it is expressly agreed that no
Person, if any, who hereafter becomes party to this Agreement as a Borrower
(the "New Loan Parties") shall have any obligation or liability for, and
the Security Interest granted by such Loan Parties shall not secure, any of
the Existing Obligations. For these purposes, it is agreed that until
receipt by Agent, for the benefit of the Credit Parties, of payments and
proceeds of Collateral from any and all of the Loan Parties other than the
New Loan Parties in an amount equal to the amount of the Existing
Obligations existing on the Agreement Date, (i) all such payments and
proceeds shall be deemed applied in reduction of that portion of the
Obligations as is comprised by the Existing Obligations, and (ii) all
payments and proceeds received by Agent from the New Loan Parties
(including, without limitation, proceeds of Receivables of the New Loan
Parties delivered to and applied by Agent pursuant to Section 9.1) shall be
deemed applied in reduction of that portion of the Secured Obligations
other than such portion as is comprised by the Existing Obligations or, if
no such Secured Obligations exist as of any such receipt, held as Cash
Collateral for any such Secured Obligations subsequently arising under this
Agreement or the Loan Documents.
Section 16.28 Confidentiality. Each Credit Party agrees to keep
confidential any information furnished or made available to it by the Loan
Parties pursuant to this Agreement that is marked confidential; provided that
nothing herein shall prevent any Credit Party from disclosing such information
(a) to any other Credit Party or any Affiliate of any Credit Party, or any
officer, director, employee, agent or advisor of any Credit Party or Affiliate
of any Credit Party, (b) to any other Person if reasonably incidental to the
administration of the credit facility provided herein, (c) as required by any
Applicable Law, (d) upon the order, request or demand of any Governmental
Authority, (e) that is or becomes available to the public or that is or
becomes available to any Credit Party other than as a result of a disclosure
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by any Credit Party prohibited by this Agreement, (f) in connection with any
litigation to which such Credit Party or any of its Affiliates may be a party,
(g) to the extent necessary in connection with the exercise of any remedy
under this Agreement or any other Loan Document, and (h) subject to provisions
substantially similar to those contained in this Section, to any actual or
proposed participant or assignee.
Section 16.29 Additional Borrower(s), Guarantor(s). The Loan Parties
contemplate that, from time to time, they may propose one or more Subsidiaries
of OMC to become party to this Agreement as a Borrower and/or a Guarantor.
Addition of any such Person as a party to this Agreement is subject to
approval of Agent and the Lenders, and may be conditioned upon such
requirements as they may determine in their discretion, including, without
limitation, (i) the furnishing of such financial and other information as
Agent or any such Lender may request, (ii) approval by all appropriate
approval authorities of Agent and each such Lender, (iii) execution and
delivery by the Loan Parties, such Person, Agent and the Lenders of such
agreements and other documentation (including, without limitation, an
amendment to this Agreement or any other Loan Document), and the furnishing by
such Person or any of the Loan Parties of such certificates, opinions and
other documentation, as Agent and any such Lender may request.
Notwithstanding the foregoing, neither Agent nor any Lender shall have any
obligation to approve any such Person for addition as a party to this
Agreement.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers in several counterparts all as of
the day and year first written above.
BORROWERS:
OUTBOARD MARINE CORPORATION
By: ROBERT S. ROMANO
----------------
Name: Robert S. Romano
Title: Vice President, General
Counsel and Secretary
By: ANDREW P. HINES
---------------
Name: Andrew P. Hines
Title: Executive Vice President
and Chief Financial
Officers
Address for Notices: 100 Sea-Horse Drive
Waukegan, Illinois 60085
Attention: Treasurer
Telecopy: (847) 689-5661
with a copy to: 100 Sea-Horse Drive
Waukegan, Illinois 60085
Attention: General Counsel
Telecopy: (847) 689-6246
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<PAGE> 132
OMC ALUMINUM BOAT GROUP, INC.
By: ROBERT S. ROMANO
----------------
Name: Robert S. Romano
Title: President and Secretary
By: GORDON G. REPP
--------------
Name: Gordon G. Repp
Title: Assistant Secretary
and Treasurer
Address for Notices: 100 Sea-Horse Drive
Waukegan, Illinois 60085
Attention: Treasurer
Telecopy: (847) 689-5661
with a copy to: 100 Sea-Horse Drive
Waukegan, Illinois 60085
Attention: General Counsel
Telecopy: (847) 689-6246
OMC FISHING BOAT GROUP, INC.
By: ROBERT S. ROMANO
----------------
Name: Robert S. Romano
Title: President and Secretary
By: GORDON G. REPP
--------------
Name: Gordon G. Repp
Title: Assistant Secretary
and Treasurer
Address for Notices: 100 Sea-Horse Drive
Waukegan, Illinois 60085
Attention: Treasurer
Telecopy: (847) 689-5661
with a copy to: 100 Sea-Horse Drive
Waukegan, Illinois 60085
Attention: General Counsel
Telecopy: (847) 689-6246
OMC LATIN AMERICA/CARIBBEAN, INC.
By: ROBERT S. ROMANO
----------------
Name: Robert S. Romano
Title: Vice President and Secretary
By: GORDON G. REPP
--------------
Name: Gordon G. Repp
Title: Assistant Secretary
and Treasurer
Address for Notices: 100 Sea-Horse Drive
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<PAGE> 133
Waukegan, Illinois 60085
Attention: Treasurer
Telecopy: (847) 689-5661
with a copy to: 100 Sea-Horse Drive
Waukegan, Illinois 60085
Attention: General Counsel
Telecopy: (847) 689-6246
RECREATIONAL BOAT GROUP
LIMITED PARTNERSHIP
By: OMC Recreational BoatGroup, Inc.,
General Partner
By: ROBERT S. ROMANO
----------------
Name: Robert S. Romano
Title: Vice President and Secretary
By: GORDON G. REPP
--------------
Name: Gordon G. Repp
Title: Assistant Secretary
and Treasurer
Address for Notices: 100 Sea-Horse Drive
Waukegan, Illinois 60085
Attention: Treasurer
Telecopy: (847) 689-5661
with a copy to: 100 Sea-Horse Drive
Waukegan, Illinois 60085
Attention: General Counsel
Telecopy: (847) 689-6246
GUARANTOR:
OMC RECREATIONAL BOAT GROUP, INC.
By: ROBERT S. ROMANO
----------------
Name: Robert S. Romano
Title: Vice President and Secretary
By: GORDON G. REPP
--------------
Name: Gordon G. Repp
Title: Assistant Secretary
and Treasurer
Address for Notices: 100 Sea-Horse Drive
Waukegan, Illinois 60085
Attention: Treasurer
Telecopy: (847) 689-5661
with a copy to: 100 Sea-Horse Drive
Waukegan, Illinois 60085
Attention: General Counsel
Telecopy: (847) 689-6246
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<PAGE> 134
AGENT:
NATIONSBANK OF TEXAS, N.A.
By: JOSEPH LEHRER
-------------
Name: Joseph Lehrer
Title: Vice President
Address for Notices: 901 Main Street, 6th Floor
Dallas, Texas 75202
Attn: Business Credit Regional
Manager: URGENT
Facsimile No.: (214) 508-0480
LENDERS:
Commitment NATIONSBANK OF TEXAS, N.A.
Amount: $150,000,000
By: JOSEPH LEHRER
-------------
Name: Joseph Lehrer
Title: Vice President
Address for Notices: 901 Main Street, 6th Floor
Dallas, Texas 75202
Attn: Business Credit Regional
Manager: URGENT
Facsimile No.: (214) 508-0480
Applicable Lending Office for Base
Rate Loans:
NationsBank of Texas, N.A.
901 Main Street, 6th Floor
Dallas, Texas 75202
Applicable Lending Office for
Eurodollar Loans:
NationsBank of Texas, N.A.
901 Main Street, 6th Floor
Dallas, Texas 75202
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<PAGE> 135
EXHIBIT 11
OUTBOARD MARINE CORPORATION AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(UNAUDITED)
Post-Merger Pre-Merger
Company Company
----------- ----------
Three Months Ended
December 31
(In millions except amounts per share) 1997 1996
------ ------
Basic Earnings Per Share:
Net Earnings (Loss) $ (12.9) $ (14.3)
====== ======
Weighted Average Number of Shares 20.4 20.2
====== ======
Basic Earnings (Loss) Per Share $ (0.63) $ (0.71)
====== ======
Diluted Earnings Per Share:
Net Earnings (Loss) $ (12.9) $ (14.3)
Add: After-Tax Interest and
Related Expense Amortization
on 7% Convertible
Subordinated Debentures -- 0.9
------ ------
Net Earnings (Loss) Adjusted $ (12.9) $ (13.4)
====== ======
Weighted Average Number of Shares 20.4 20.2
Weighted Average Common Shares
Assuming Conversion of 7%
Convertible Subordinated
Debentures -- 3.4
------ ------
Average Shares Outstanding 20.4 23.6
====== ======
Diluted Earnings (Loss) Per Share $ (0.63) $ *
====== ======
* The computation of diluted earnings per share of common stock is
antidilutive; therefore, the amount reported for basic and diluted
earnings per share is the same.
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