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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
from to
--------------------- --------------------
For the quarterly period ended JUNE 30, 1999
Commission file number 001-14989
WESCO INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 25-1723345
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
COMMERCE COURT
FOUR STATION SQUARE, SUITE 700
PITTSBURGH, PENNSYLVANIA 15219 (412) 454-2200
(Address of principal executive offices) (Registrant's telephone number,
including area code)
N/A
(Former name or former address, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for at least the past 90 days. Yes X No .
--- ---
As of August 5, 1999, WESCO International, Inc. had 43,076,172 shares and
4,653,131 shares of common stock and Class B common stock outstanding,
respectively.
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WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets as of December 31, 1998 and
June 30, 1999 (unaudited) 2
Condensed Consolidated Statements of Operations for the three months
and six months ended June 30, 1998 and 1999 (unaudited) 3
Condensed Consolidated Statements of Cash Flows for the six months
ended June 30, 1998 and 1999 (unaudited) 4
Notes to Condensed Consolidated Financial Statements (unaudited) 5
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 12
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 19
PART II - OTHER INFORMATION
ITEM 2. Changes in Securities and Use of Proceeds 19
ITEM 6. Exhibits and Reports on Form 8-K 19
Signatures 20
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE> 3
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
Dollars in thousands, except par values 1998 1999
- -----------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,093 $ 41,331
Trade accounts receivable, net of allowance for doubtful accounts of
$8,082 and $6,817 in 1998 and 1999, respectively 181,511 231,514
Other accounts receivable 22,265 20,674
Inventories 343,764 385,296
Income taxes receivable 7,329 9,248
Prepaid expenses and other current assets 2,892 5,503
Deferred income taxes 16,217 14,064
----------- -----------
Total current assets 582,071 707,630
Property, buildings and equipment, net 107,596 109,066
Goodwill and other intangibles, net of accumulated amortization
of $10,163 and $14,655 in 1998 and 1999, respectively 234,049 252,339
Other assets 26,806 20,789
----------- -----------
Total assets $ 950,522 $ 1,089,824
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 378,590 $ 441,498
Accrued payroll and benefit costs 19,614 15,605
Current portion of long-term debt 16,592 2,391
Other current liabilities 51,671 26,514
----------- -----------
Total current liabilities 466,467 486,008
Long-term debt 579,238 476,526
Other noncurrent liabilities 7,040 7,604
Deferred income taxes 18,832 19,632
----------- -----------
Total liabilities 1,071,577 989,770
Commitments and contingencies
Redeemable Class A common stock, $.01 par value; 4,901,902 issued and
outstanding in 1998 (redemption value of redeemable common stock and
vested options of $130,267 in 1998) 21,506 --
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 20,000,000 shares authorized, no shares issued -- --
Common stock, $.01 par value; 210,000,000 shares authorized, 25,209,817 and
43,052,350 shares issued and outstanding in 1998 and 1999, respectively 252 431
Class B nonvoting convertible common stock, $.01 par value; 20,000,000 shares
authorized, 4,653,131 issued and outstanding in 1998 and 1999 46 46
Additional capital 326,783 564,745
Retained earnings (deficit) (468,220) (464,263)
Accumulated other comprehensive income (loss) (1,422) (905)
----------- -----------
Total stockholders' equity (142,561) 100,054
----------- -----------
Total liabilities and stockholders' equity $ 950,522 $ 1,089,824
=========== ===========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
2
<PAGE> 4
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
In thousands, except share data 1998 1999 1998 1999
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales, net $ 748,307 $ 864,151 $ 1,441,755 $ 1,641,566
Cost of goods sold 615,015 707,150 1,181,769 1,345,772
----------- ----------- ----------- -----------
Gross profit 133,292 157,001 259,986 295,794
Selling, general and administrative expenses 101,543 115,245 205,107 225,625
Depreciation and amortization 3,372 5,229 6,328 9,728
Recapitalization costs 51,800 -- 51,800 --
----------- ----------- ----------- -----------
Income (loss) from operations (23,423) 36,527 (3,249) 60,441
Interest expense, net 10,278 12,332 16,480 26,791
Other expenses 2,570 4,933 2,570 9,547
----------- ----------- ----------- -----------
Income (loss) before income taxes and extraordinary item (36,271) 19,262 (22,299) 24,103
Provision for income taxes (18,142) 7,714 (12,693) 9,638
----------- ----------- ----------- -----------
Income (loss) before extraordinary item (18,129) 11,548 (9,606) 14,465
Extraordinary item, net of tax benefits of $6,711 (Note 4) -- 10,507 -- 10,507
----------- ----------- ----------- -----------
Net income (loss) $ (18,129) $ 1,041 $ (9,606) $ 3,958
=========== =========== =========== ===========
Basic earnings (loss) per share:
Income (loss) before extraordinary item $ (0.35) $ 0.28 $ (0.17) $ 0.38
Extraordinary item -- (0.25) -- (0.27)
----------- ----------- ----------- -----------
Net income (loss) $ (0.35) $ 0.03 $ (0.17) $ 0.11
=========== =========== =========== ===========
Diluted earnings (loss) per share:
Income (loss) before extraordinary item $ (0.35) $ 0.25 $ (0.17) $ 0.34
Extraordinary item -- (0.22) -- (0.24)
----------- ----------- ----------- -----------
Net income (loss) $ (0.35) $ 0.03 $ (0.17) $ 0.10
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
3
<PAGE> 5
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
In thousands 1998 1999
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (9,606) $ 3,958
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Extraordinary item, net of tax benefit -- 10,507
Recapitalization costs 40,500 --
Depreciation and amortization 6,328 9,728
Accretion of original issue and amortization of purchase discounts 2,761 3,867
Amortization of debt issuance costs and interest rate caps 331 706
Gain on sale of property, buildings and equipment (443) (240)
Deferred income taxes (226) 2,953
Changes in assets and liabilities, excluding the effects of acquisitions:
Sale of trade accounts receivable 249,802 25,000
Trade and other receivables (12,602) (62,086)
Inventories 1,115 (32,568)
Other current and noncurrent assets (20,875) 2,702
Accounts payable 41,005 64,834
Accrued payroll and benefit costs (14,184) (4,009)
Other current and noncurrent liabilities (2,357) 1,928
--------- ---------
Net cash provided by operating activities 281,549 27,280
INVESTING ACTIVITIES:
Capital expenditures (6,149) (9,641)
Proceeds from the sale of property, buildings and equipment 1,139 320
Advances to affiliates -- (1,196)
Acquisitions, net of cash acquired (90,641) (58,489)
--------- ---------
Net cash used by investing activities (95,651) (69,006)
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 850,228 453,966
Repayments of long-term debt (628,350) (564,512)
Debt issuance costs (10,570) (2,103)
Recapitalization costs (18,174) --
Repurchase of common stock and options (653,528) --
Proceeds from issuance of common stock 319,999 187,613
Proceeds from contributed capital 5,806 --
--------- ---------
Net cash provided (used) by financing activities (134,589) 74,964
--------- ---------
Net change in cash and cash equivalents 51,309 33,238
Cash and cash equivalents at the beginning of period 7,620 8,093
--------- ---------
Cash and cash equivalents at the end of period $ 58,929 $ 41,331
========= =========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
4
<PAGE> 6
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. ORGANIZATION
WESCO International, Inc. and its subsidiaries (collectively, "WESCO"),
headquartered in Pittsburgh, Pennsylvania, is a full-line distributor of
electrical supplies and equipment and is a provider of integrated supply
procurement services. WESCO is engaged principally in one line of business-the
sale of electrical products and maintenance, repair and operating supplies.
WESCO currently operates branch locations in the United States, Canada, Mexico,
Puerto Rico, Guam, Singapore and the United Kingdom.
Subsequent to the completion in June 1998 of a leveraged recapitalization,
WESCO was substantially owned by an investor group led by affiliates of The
Cypress Group L.L.C. ("Cypress") with WESCO's management retaining the remaining
interest.
On May 17, 1999, WESCO completed an initial public offering of 11,183,750
shares of common stock at $18.00 per share (see Note 3).
2. ACCOUNTING POLICIES
Basis of Presentation
The unaudited condensed consolidated financial statements include the
accounts of WESCO and all of its subsidiaries and have been prepared in
accordance with Rule 10-01 of the Securities and Exchange Commission. The
unaudited condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in WESCO's 1998 Annual Report on Form 10-K filed with the Securities
and Exchange Commission.
The unaudited condensed consolidated balance sheet as of June 30, 1999, the
unaudited condensed consolidated statements of operations for the three months
and six months ended June 30, 1998 and 1999, and the unaudited condensed
consolidated statements of cash flows for the six months ended June 30, 1998 and
1999, in the opinion of management, have been prepared on the same basis as the
audited consolidated financial statements and include all adjustments necessary
for the fair presentation of the results of the interim periods. All adjustments
reflected in the condensed consolidated financial statements are of a normal
recurring nature. Results for the interim periods presented are not necessarily
indicative of the results to be expected for the full year. Certain prior period
amounts have been reclassified in order to conform to the current period
presentation.
Recent Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement,
as amended, is required to be adopted by WESCO as of January 1, 2001, although
early adoption is permitted. This statement requires the recognition of the fair
value of any derivative financial instrument on the balance sheet. Changes in
fair value of the derivative and, in certain instances, changes in the fair
value of an underlying hedged asset or liability, are recognized through either
income or as a component of other comprehensive income. Management does not
expect this statement will have a material impact on the results of operations
or financial position of WESCO.
3. INITIAL PUBLIC OFFERING
On May 17, 1999, WESCO completed its initial public offering of 11,183,750
shares of common stock ("Offering") at $18.00 per share. In connection with the
Offering, certain employee rights to require WESCO to repurchase outstanding
redeemable common stock were terminated and approximately $31.5 million of
convertible notes were converted into common stock. Proceeds from the Offering
(after deducting Offering costs) totaling $187.6 million and borrowings of
approximately $65 million were used to redeem all of the senior discount notes
($62.8 million) and to repay the revolving credit and term loan facilities
($188.8 million).
5
<PAGE> 7
In connection with the Offering, on April 11, 1999, the Board of Directors
approved a 57.8 to one stock split effected in the form of a stock dividend of
WESCO's common stock. The Board of Directors also reclassified the Class A
common stock into common stock, increased the authorized common stock to
210,000,000 shares and the authorized Class B common stock to 20,000,000 shares
and authorized 20,000,000 shares of $.01 par preferred stock, all effective May
11, 1999. In this report, all share and per share data have been restated to
reflect the stock split.
4. EXTRAORDINARY ITEM
In the second quarter of 1999, WESCO: (i) entered into a new $400 million
revolving credit facility and retired its existing term loans and revolving
facility; (ii) terminated its existing accounts receivable securitization
program and entered into a new accounts receivable securitization program; and
(iii) retired all of its outstanding 11.125% senior discount notes. In
conjunction with these transactions, approximately $8.9 million of deferred
financing charges were written off and redemption costs of $8.3 million were
incurred to redeem the 11.125% senior discount notes. These transactions
resulted in an extraordinary loss of $10.5 million, net of income tax benefits
of $6.7 million.
5. RECAPITALIZATION
On June 5, 1998, WESCO repurchased and retired 61,862,068 shares of common
stock held by certain shareholders for net consideration of approximately $653.5
million ("Equity Consideration"). In addition, WESCO repaid approximately $379.1
million of then outstanding indebtedness, and sold 29,604,351 shares of common
stock to an investor group led by affiliates of Cypress representing
approximately 88.7% of WESCO for an aggregate cash consideration of $318.1
million ("Cash Equity Contribution") (collectively, "Recapitalization").
Existing management retained approximately 11.3% interest in WESCO after the
Recapitalization. WESCO funded the Equity Consideration and the repayment of
indebtedness from proceeds of the Cash Equity Contribution, issuance of
approximately $351 million of senior subordinated and senior discount notes, a
$170 million credit facility and the sale of approximately $250 million of
accounts receivable. Given the 11.3% retained ownership, the transaction was
treated as a recapitalization for financial reporting purposes and, accordingly,
the historical bases of WESCO's assets and liabilities were not affected.
In connection with the Recapitalization, WESCO recorded a one-time charge of
$51.8 million related to investment banking fees of $13.8 million, compensation
charges of $11.3 million associated with one-time bonuses paid to certain
members of management, transaction fees of $9.5 million paid to Cypress,
compensation charges of $6.2 million associated with the cash settlement of
certain stock options, compensation charges of $4.1 million associated with the
acceleration of vesting of one former executive's stock options issued at a
discount and other non-capitalized transaction fees and expenses amounting to
$6.9 million.
6. ACCOUNTS RECEIVABLE SECURITIZATION
On June 30, 1999, WESCO and certain of its subsidiaries terminated its
previous accounts receivable securitization program and entered into a new $350
million accounts receivable securitization program ("Receivables Facility") with
another financial institution. Under the Receivables Facility WESCO sells, on a
continuous basis, to WESCO Receivables Corporation, a wholly-owned, special
purpose subsidiary ("SPC"), an undivided interest in all eligible accounts
receivable. The SPC sells to a third party conduit all the receivables while
maintaining a subordinated interest, in the form of overcollateralization, in a
portion of the receivables. WESCO has agreed to continue servicing the sold
receivables for the financial institution at market rates; accordingly, no
servicing asset or liability has been recorded.
6
<PAGE> 8
As of December 31, 1998 and June 30, 1999, securitized accounts receivable
totaled $360.1 million and $414.8 million, respectively, of which the
subordinated retained interest was $84.1 million and $112.8 million,
respectively. Accordingly, $276.0 million and $302.0 million of accounts
receivable balances were removed from the consolidated balance sheet at December
31, 1998 and June 30, 1999. Net proceeds from the transactions totaled $274.2
million in 1998 and $25.0 million in the first six months of 1999. Costs
associated with the Receivables Facility totaled $2.6 million in the first six
months of 1998, and $9.5 million in the first six months of 1999. These amounts
are recorded as other expenses in the condensed consolidated statement of
operations and are primarily related to the discount and loss on the sale of
accounts receivables, partially offset by related servicing revenue.
7. LONG-TERM DEBT
The following table sets forth WESCO's outstanding indebtedness.
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
In thousands 1998 1999
----------------------------------------------------------------------------------
<S> <C> <C>
Revolving credit facility $ -- $183,850
Senior subordinated notes (1) 289,194 289,746
Term loans 169,500 --
Prior revolving facility 42,450 --
Senior discount notes (2) 52,071 --
Other 42,615 5,321
------------- -------------
595,830 478,917
Less current portion (16,592) (2,391)
------------- -------------
Total $579,238 $476,526
----------------------------------------------------------------------------------
</TABLE>
(1) Net of original issue discount and purchase discount of $918 and $9,888
respectively, at December 31, 1998 and $891 and $9,363 respectively, at
June 30, 1999.
(2) Net of original issue discount and purchase discount of $33,266 and
$1,664, respectively.
During the second quarter of 1999, WESCO completed the Offering and, as
discussed below, refinanced the majority of its long-term debt facilities. As a
result of these transactions, the term loans and the senior discount notes were
repaid, the prior revolving facility was refinanced and certain convertible
notes were converted into WESCO common stock.
The term loans and prior revolving facility borrowings were made pursuant to
a credit agreement entered into by and between WESCO and certain financial
institutions. This credit agreement provided for term loan facilities in an
aggregate principal amount of $270 million and a $100 million revolving credit
facility. This facility provided variable-rate borrowings tied to market
indices plus applicable borrowing margins.
The senior discount notes with an aggregate principal amount of $87 million and
a stated rate of 11.125% were issued with an original issue discount ("OID") of
$36.5 million that was being accreted over the period ending June 1, 2003.
Revolving Credit Facility
On June 29, 1999, WESCO Distribution, Inc. entered into a new $400 million
revolving credit facility with a consortium of financial institutions. The
revolving credit facility, which matures in June 2004, consists of up to $365
million of revolving loans denominated in US dollars and a Canadian sublimit
totaling $35 million. Borrowings under the revolving credit facility are
collateralized by substantially all the assets, excluding real property, of
WESCO Distribution, Inc. and are guaranteed by WESCO International, Inc. and
certain subsidiaries.
7
<PAGE> 9
Borrowings bear rates of interest equal to various indices, at WESCO's
option, plus a borrowing margin. At June 30, 1999, the interest rate on
revolving credit facility borrowings was 6.86%. A commitment fee of 30 to 50
basis points per annum is due on unused portions of the revolving credit
facility.
Capitalized debt issuance costs related to the new revolving credit facility
were approximately $1.8 million and are being amortized to interest expense on a
straight-line basis, which does not differ materially from the
effective-interest method, over the life of the credit agreement.
The revolving credit facility contains various restrictive covenants that,
among other things, include limitations on (i) dividend payments or certain
other restricted payments or investments; (ii) the incurrence of additional
indebtedness and guarantees or issuance of additional stock; (iii) creation of
liens; (iv) mergers, consolidation or sales of substantially all of WESCO's
assets; (v) certain transactions among affiliates; (vi) payments by certain
subsidiaries to WESCO; and (vii) capital expenditures. In addition, the
agreements require WESCO to meet certain leverage, working capital and interest
coverage ratios.
8. LONG-TERM INCENTIVE PLAN
On April 26, 1999, the Board of Directors approved the Long-Term Incentive
Plan ("LTIP"). The LTIP provides for stock participation in the form of options,
restricted stock awards and performance awards by certain key employees of
WESCO. The LTIP covers a maximum of 6,936,000 shares of WESCO's common stock.
The exercise price is determined by the Compensation Committee of the Board of
Directors.
9. ACQUISITIONS
On September 11, 1998, WESCO acquired substantially all the assets and
assumed substantially all liabilities and obligations relating to the operations
of Bruckner Supply Company, Inc. ("Bruckner"), a privately owned company
headquartered in Port Washington, New York. Bruckner is a provider of integrated
supply procurement and outsourcing activities for large industrial companies.
Net sales totaled approximately $222 million in 1997.
The following unaudited pro forma information assumes that the Bruckner
acquisition had occurred as of January 1, 1998. Adjustments to arrive at the pro
forma information include, among others, those related to acquisition financing,
amortization of goodwill and the related tax effects of such adjustments at an
assumed rate of 39%.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
In thousands, except per share amounts JUNE 30, 1998 JUNE 30, 1998
----------------------------------------------------------------------------------
<S> <C> <C>
Sales, net $814,030 $1,573,770
Net loss (16,000) (6,648)
Basic earnings per share (0.31) (0.12)
Diluted earnings per share (0.31) (0.12)
----------------------------------------------------------------------------------
</TABLE>
The pro forma financial information does not purport to present what WESCO's
results of operations would have been if the Bruckner acquisition had actually
occurred as of January 1, 1998, or to project WESCO's results of operations for
any future period.
During 1999, WESCO purchased four electrical supply distributors with annual
sales of approximately $70 million for an aggregate consideration of $24.4
million, resulting in goodwill of $9.5 million.
8
<PAGE> 10
10. EARNINGS PER SHARE
The following tables set forth the details of basic and diluted earnings per
share before extraordinary item:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30
Dollars in thousands, except per share amounts 1998 1999
----------------------------------------------------------------------------------
<S> <C> <C>
Income (loss) before extraordinary item $(18,129) $11,548
Interest on convertible debt -- 189
---------- ----------
Earnings (loss) used in diluted earnings
(loss) per share before extraordinary item $(18,129) $11,737
========== ==========
Weighted average common shares outstanding used in
computing basic earnings (loss) per share
52,184,367 41,737,337
Common shares issuable upon exercise of
dilutive stock options -- 4,072,623
Assumed conversion of convertible debt -- 928,205
---------- ----------
Weighted average common shares outstanding and
common share equivalents used in computing
diluted earnings (loss) per share 52,184,367 46,738,165
========== ==========
Earnings (loss) per share before extraordinary item
Basic $(0.35) $0.28
Diluted $(0.35) $0.25
----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
Dollars in thousands, except per share amounts 1998 1999
----------------------------------------------------------------------------------
<S> <C> <C>
Income (loss) before extraordinary item $(9,606) $14,465
Interest on convertible debt -- 595
---------- ----------
Earnings (loss) used in diluted earnings
(loss) per share before extraordinary item $(9,606) $15,060
========== ==========
Weighted average common shares outstanding
used in computing basic earnings (loss)
per share 55,686,399 38,271,955
Common shares issuable upon exercise of
dilutive stock options -- 3,948,807
Assumed conversion of convertible debt -- 1,754,090
---------- ----------
Weighted average common shares outstanding and
common share equivalents used in computing
diluted earnings (loss) per share 55,686,399 43,974,852
========== ==========
Earnings (loss) per share before extraordinary item
Basic $(0.17) $0.38
Diluted $(0.17) $0.34
----------------------------------------------------------------------------------
</TABLE>
In the three months and six months ended June 30, 1998, interest on
convertible debt of $85 and $168, respectively, and common share equivalents
outstanding of 4,235,761 and 4,324,910, respectively, were anti-dilutive and,
accordingly, were not considered in the computation of diluted loss per share.
9
<PAGE> 11
11. COMPREHENSIVE INCOME
The following tables set forth comprehensive income and its components:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30
In thousands 1998 1999
----------------------------------------------------------------------------------
<S> <C> <C>
Net income (loss) $(18,129) $1,041
Foreign currency translation adjustment (344) 258
-------- ------
Comprehensive income (loss) $(18,473) $1,299
----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
In thousands 1998 1999
----------------------------------------------------------------------------------
<S> <C> <C>
Net income (loss) $(9,606) $3,958
Foreign currency translation adjustment (277) 517
------- ------
Comprehensive income (loss) $(9,883) $4,475
----------------------------------------------------------------------------------
</TABLE>
12. CASH FLOW STATEMENT
Supplemental cash flow information with respect to acquisitions was as
follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
In thousands 1998 1999
----------------------------------------------------------------------------------
<S> <C> <C>
Details of acquisitions
Fair value of assets acquired $142,664 $30,974
Deferred acquisition payment -- 36,415
Fair value of liabilities assumed (32,403) (6,600)
Notes issued to seller (19,620) (2,300)
-------- -------
Cash paid for acquisitions $ 90,641 $58,489
----------------------------------------------------------------------------------
</TABLE>
Noncash investing and financing activities not reflected in the consolidated
statement of cash flows for the six months ended June 30, 1999, consisted of
$21.5 million of conversion redeemable Class A common stock and the conversion
of $31.5 million of convertible notes into WESCO common stock.
13. OTHER FINANCIAL INFORMATION
In June 1998, WESCO Distribution, Inc. issued $300 million of 9 1/8% senior
subordinated notes. The senior subordinated notes are fully and unconditionally
guaranteed by WESCO International, Inc. on a subordinated basis to all existing
and future senior indebtedness of WESCO International, Inc. Summarized financial
information for WESCO Distribution, Inc. is as follows:
<TABLE>
<CAPTION>
BALANCE SHEET DATA
DECEMBER 31 JUNE 30
In thousands 1998 1999
----------------------------------------------------------------------------------
<S> <C> <C>
Current assets $582,071 $707,630
Noncurrent assets 368,451 382,194
Current liabilities 466,467 486,008
Long-term debt 527,167 476,526
Other noncurrent liabilities 25,872 27,236
Total liabilities and stockholder's equity 950,522 1,089,824
----------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 12
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS DATA
THREE MONTHS ENDED
JUNE 30
In thousands 1998 1999
----------------------------------------------------------------------------------
<S> <C> <C>
Sales, net $748,307 $864,151
Gross profit 133,292 157,001
Income (loss) from operations (23,423) 36,527
Net income (loss) (17,646) 1,856
----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
In thousands 1998 1999
----------------------------------------------------------------------------------
<S> <C> <C>
Sales, net $1,441,755 $1,641,566
Gross profit 259,986 295,794
Income (loss) from operations (3,249) 60,441
Net income (loss) (9,123) 6,360
----------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the information
in the unaudited condensed consolidated financial statements and notes thereto
included herein and WESCO International Inc.'s Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in its 1998 Annual Report on Form 10-K.
GENERAL
WESCO is a leading distributor of electrical products and other industrial
MRO supplies and related services in North America. WESCO has over 330 branches
and five distribution centers strategically located in 48 states, nine Canadian
provinces, Puerto Rico, Guam, Mexico, the United Kingdom and Singapore. WESCO
serves over 130,000 customers worldwide, offering over 1,000,000 products from
over 23,000 suppliers. WESCO's diverse customer base includes a wide variety of
industrial companies; contractors for industrial, commercial and residential
projects; utility companies, and commercial, institutional and governmental
customers. Approximately 90% of WESCO's net sales are generated from operations
in the U.S., 9% from Canada and the remainder from other countries.
RECENT DEVELOPMENTS
Recent developments affecting the results of operations and financial
position of WESCO include the following:
Initial Public Offering. On May 17, 1999, WESCO completed its initial public
offering of 11,183,750 shares of common stock ("Offering") at $18.00 per share.
In connection with the Offering, certain employee rights to require WESCO to
repurchase outstanding redeemable common stock were terminated and approximately
$31.5 million of convertible notes were converted into common stock. Proceeds
from the Offering (after deducting Offering costs) totaling $187.6 million and
borrowings of approximately $65 million were used to redeem all of the senior
discount notes ($62.8 million) and to repay the revolving credit and term loan
facilities ($188.8 million).
Credit Refinancing. On June 29, 1999, WESCO Distribution, Inc. entered into
a new $400 million revolving credit facility with a consortium of financial
institutions. The new credit agreement provides greater financial flexibility
and lower annual costs of financing than the previous credit agreement. In
addition, WESCO entered into a new $350 million accounts receivable
securitization program that provides for a larger amount of eligible accounts
receivable and lower costs than the previous securitization program.
In conjunction with these transactions, approximately $8.9 million of
deferred financing charges were written off and redemption costs of $8.3 million
were incurred to redeem the 11.125% senior discount notes. These transactions
resulted in an extraordinary loss of $10.5 million, net of income tax benefits
of $6.7 million.
Acquisitions. During the first six months of 1999, WESCO purchased four
electrical supply distributors with annual sales of approximately $70 million
for an aggregate consideration of $24.4 million, resulting in goodwill of $9.5
million.
12
<PAGE> 14
RESULTS OF OPERATIONS
Second Quarter of 1999 versus Second Quarter of 1998
The following table sets forth the percentage relationship to net sales of
certain items in WESCO's condensed consolidated statements of operations for the
periods presented:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30
1998 1999
----------------------------------------------------------------------------------
<S> <C> <C>
Sales, net 100.0% 100.0%
Gross profit 17.8 18.2
Selling, general and administrative expenses 13.6 13.3
Depreciation and amortization 0.5 0.6
Recapitalization costs 6.9 --
----- -----
Income (loss) from operations (3.1) 4.2
Interest expense 1.4 1.4
Other expense 0.3 0.6
----- -----
Income (loss) before income taxes and
extraordinary item (4.8) 2.2
Income taxes (benefits) (2.4) 0.9
----- -----
Income (loss) before extraordinary item (2.4) 1.3
Extraordinary item -- (1.2)
----- -----
Net income (loss) (2.4)% 0.1%
----------------------------------------------------------------------------------
</TABLE>
Net Sales. Sales in the second quarter of 1999 increased $115.9 million, or
15.5%, to $864.2 million compared with $748.3 million in the prior-year quarter,
primarily due to sales attributable to acquired companies. The mix of direct
shipment sales increased to approximately 47% in the second quarter of 1999 from
41% in the second quarter of 1998 as a result of the Bruckner acquisition
completed in September 1998. Substantially all of Bruckner's sales are direct
shipment.
Gross Profit. Gross profit for the second quarter of 1999 increased $23.7
million to $157.0 million from $133.3 million for the second quarter of 1998.
Gross profit margin increased to 18.2% in the current-year quarter from 17.8% in
the second quarter of 1998. The increase was primarily due to lower costs of
sales partially offset by the effects of the Bruckner acquisition. Gross profit
margin in 1999 includes the effect of an increase in direct shipment sales
associated with the Bruckner acquisition. Direct ship gross margins are lower
than those of other sales; however, operating profit margins are often higher,
since the product handling and fulfillment costs associated with direct
shipments are much lower. Excluding the effects of the Bruckner acquisition,
gross profit margin increased to 18.8% due to gross margin improvement
initiatives.
Selling, General and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses increased $13.7 million, or 13.5%, to $115.2
million. Approximately $11.5 million of this increase was associated with
companies acquired during 1998 and the first half of 1999; the remainder was
associated with certain expenses that are variable in nature and increase when
sales increase. As a percent of sales, SG&A expenses declined to 13.3% compared
with 13.6% in the year-earlier quarter reflecting a lower relative cost
structure associated with the Bruckner acquisition.
In connection with the recapitalization completed in June 1998, WESCO
recorded a one-time charge of $51.8 million primarily related to various
financing expenses, professional and legal fees and management compensation
costs.
Depreciation and Amortization. Depreciation and amortization increased $1.9
million to $5.2 million reflecting higher amortization of goodwill from
acquisitions and increases in property, buildings and equipment over the prior
year.
13
<PAGE> 15
Interest and Other Expense. Interest expense totaled $12.3 million for the
second quarter of 1999, an increase of $2.1 million over the same period in
1998. The increase was primarily due to the higher levels of borrowings
associated with the June 1998 recapitalization and acquisitions.
Other expense totaled $4.9 million and $2.6 million in the second quarter of
1999 and 1998, respectively, reflecting costs associated with the accounts
receivable securitization.
Income Taxes. Income tax expense totaled $7.7 million in the second quarter
of 1999 and the effective tax rate was 40.0%. In the second quarter of 1998,
income tax benefits totaled $18.1 million and were primarily due to the one-time
$51.8 million recapitalization costs recorded in the second quarter of 1998. The
effective tax rate in the second quarter of 1998 was 50.0% primarily reflecting
certain nondeductible recapitalization costs. Excluding the recapitalization
costs, the effective tax rate was 39.0% for second quarter of 1998. The
effective tax rates differ from the federal statutory rate primarily due to
state income taxes and nondeductible expenses.
Income Before Extraordinary Item and Net Income. For the second quarter of
1999, income before extraordinary item totaled $11.5 million, or $0.25 per
diluted share, compared with a loss and loss per diluted share of $18.1 million
and $0.35, respectively, in the second quarter of 1998. The increases in the
comparison are primarily due to revenue growth through acquisitions and
nonrecurring recapitalization costs included in the second quarter 1998 results.
Net income and diluted earnings per share totaled $1.0 million and $0.03,
respectively, for the second quarter of 1999, compared with a net loss of $18.1
million, or $0.35 per diluted share, for the second quarter of 1998.
Six Months Ended June 30, 1999 versus Six Months Ended June 30, 1998
The following table sets forth the percentage relationship to net sales of
certain items in WESCO's condensed consolidated statements of operations for the
periods presented:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
1998 1999
----------------------------------------------------------------------------------
<S> <C> <C>
Sales, net 100.0% 100.0%
Gross profit 18.0 18.0
Selling, general and administrative expenses 14.2 13.7
Depreciation and amortization 0.5 0.6
Recapitalization costs 3.6 --
----- -----
Income (loss) from operations (0.3) 3.7
Interest expense 1.1 1.6
Other expense 0.2 0.6
----- -----
Income (loss) before income taxes and
extraordinary item (1.6) 1.5
Income taxes (benefits) (0.9) 0.6
----- -----
Income (loss) before extraordinary item (0.7) 0.9
Extraordinary item -- (0.6)
----- -----
Net income (loss) (0.7)% 0.3%
----------------------------------------------------------------------------------
</TABLE>
Net Sales. Sales in the first six months of 1999 increased $199.8 million,
or 13.9%, to $1.6 billion compared with $1.4 billion in the prior-year period
due to sales attributable to acquired companies. The mix of direct shipment
sales increased to approximately 47% in the first six months of 1999 from 40% in
the first six months of 1998 as a result of the Bruckner acquisition completed
in September 1998. Substantially all of Bruckner's sales are direct shipment.
Gross Profit. Gross profit for the first six months of 1999 increased $35.8
million to $295.8 million from $260.0 million for the first six months of 1998.
Gross profit margin was 18.0% in the first half of 1999 and 1998. Excluding the
effects of the Bruckner acquisition, which has a higher proportion of
lower-margin direct ship sales, gross profit margin increased to 18.7% due to
gross margin improvement initiatives.
14
<PAGE> 16
Selling, General and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses increased $20.5 million, or 10.0%, to $225.6
million. This increase was associated with companies acquired during 1998 and in
the first half of 1999. As a percent of sales, SG&A expenses declined to 13.7%
compared with 14.2% in the year-earlier quarter reflecting a lower relative cost
structure associated with the Bruckner acquisition.
Depreciation and Amortization. Depreciation and amortization increased $3.4
million to $9.7 million reflecting higher amortization of goodwill from
acquisitions and increases in property, buildings and equipment over the prior
year.
Interest and Other Expense. Interest expense totaled $26.8 million for the
first six months of 1999, an increase of $10.3 million over the same period in
1998. The increase was primarily due to the higher levels of borrowings
associated with the recapitalization and acquisitions.
Other expense totaled $9.5 million and $2.6 million in the first six months
of 1999 and 1998, respectively, reflecting costs associated with the accounts
receivable securitization program which commenced in June 1998.
Income Taxes. Income tax expense totaled $9.6 million in the first six
months of 1999 and the effective tax rate was 40.0%. In the second quarter of
1998, income tax benefits totaled $12.7 million and were primarily due to the
one-time $51.8 million recapitalization costs recorded in the second quarter of
1998. The effective tax rate in the first six months of 1998 was 56.9% primarily
reflecting certain nondeductible recapitalization costs. Excluding the
recapitalization costs, the effective tax rate was 39.0% for the first six
months of 1998.
Income Before Extraordinary Item and Net Income. For the first six months of
1999, income before extraordinary item totaled $14.5 million, or $0.34 per
diluted share, compared with a loss of $9.6 million, or $0.17 per diluted share,
in the first six months of 1998. The increases in the comparison are primarily
due to revenue growth and nonrecurring recapitalization costs included in the
1998 results.
Net income and diluted earnings per share totaled $4.0 million and $0.10,
respectively, for the first six months of 1999, compared with a net loss of $9.6
million, or $0.17 per diluted share, for the first six months of 1998.
LIQUIDITY AND CAPITAL RESOURCES
Total assets were $1.1 billion and $950.5 million at June 30, 1999 and
December 31, 1998, respectively. In addition, stockholders' equity totaled
$100.1 million at June 30, 1999, compared with a deficit of $142.6 million at
December 31, 1998. The increase in stockholders' equity was primarily due to the
Offering.
The following table sets forth WESCO's outstanding indebtedness.
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
In millions 1998 1999
----------------------------------------------------------------------------------
<S> <C> <C>
Revolving credit facility $ -- $183.9
Senior subordinated notes (1) 289.2 289.7
Term loans 169.5 --
Prior revolving facility 42.4 --
Senior discount notes (2) 52.1 --
Other 42.6 5.3
------ ------
595.8 478.9
Less current portion (16.6) (2.4)
------ ------
Total $579.2 $476.5
----------------------------------------------------------------------------------
</TABLE>
(1) Net of original issue discount and purchase discount of $0.9 and $9.9,
respectively, at December 31, 1998 and $0.9 and $9.4, respectively, at
June 30, 1999.
(2) Net of original issue discount and purchase discount of $33.2 and $1.7,
respectively.
15
<PAGE> 17
During the second quarter of 1999, WESCO completed the Offering with net
proceeds of $187.6 million, and, as discussed below, refinanced its credit
agreement and accounts receivable securitization program. As a result of these
transactions, the term loans and the senior discount notes were repaid, the
prior revolving facility was refinanced and $31.5 million of convertible notes
were converted into WESCO common stock.
Revolving Credit Facility
On June 29, 1999, WESCO Distribution, Inc. entered into a new $400 million
revolving credit facility with a consortium of financial institutions. The
revolving credit facility, which matures in June 2004, consists of up to $365
million of revolving loans denominated in US dollars and a Canadian sublimit
totaling $35 million. Borrowings under the revolving credit facility are
collateralized by substantially all the assets, excluding real property, of
WESCO Distribution, Inc. and are guaranteed by WESCO International, Inc. and
certain subsidiaries.
Borrowings bear rates of interest equal to various indices, at WESCO's
option, plus a borrowing margin. At June 30, 1999, the interest rate on
revolving credit facility borrowings was 6.86%. A commitment fee of 30 to 50
basis points per annum is due on unused portions of the revolving credit
facility. The new credit agreement is expected to reduce WESCO's borrowing
costs.
The revolving credit facility contains various restrictive covenants that,
among other things, impose limitations on (i) dividend payments or certain other
restricted payments or investments; (ii) the incurrence of additional
indebtedness and guarantees or issuance of additional stock; (iii) creation of
liens; (iv) mergers, consolidation or sales of substantially all of WESCO's
assets (v) certain transactions among affiliates; (vi) payments by certain
subsidiaries to WESCO; and (vii) capital expenditures. In addition, the
agreements require WESCO to meet certain leverage, working capital and interest
coverage ratios.
Accounts Receivable Securitization Program
On June 30, 1999, WESCO and certain of its subsidiaries terminated its
previous accounts receivable securitization program and entered into a new $350
million accounts receivable securitization program ("Receivables Facility") with
another financial institution. Under the Receivables Facility WESCO sells an
undivided interest in all eligible accounts receivable. WESCO has agreed to
continue servicing the sold receivables for the financial institution at market
rates; accordingly, no servicing asset or liability has been recorded.
WESCO's liquidity needs arise from seasonal working capital requirements,
capital expenditures, debt service obligations and acquisitions. An analysis of
cash flows for the first six months of 1999 and 1998 follows:
Operating Activities. Cash provided by operating activities totaled $27.3
million in the first six months of 1999, compared to $281.5 million a year ago.
Cash provided by operations in the first six months of 1999 and 1998 included
proceeds of $25.0 million and $249.8 million, respectively, from the sale of
accounts receivable in connection with the accounts receivable securitization
program. Excluding this transaction, operating activities provided $2.3 million
in 1999 and $31.7 million in 1998. On this basis, the period-to-period decline
in operating cash flow was primarily due to increases in working capital.
Investing Activities. Net cash used in investing activities was $69.0
million in the first six months of 1999, compared to $95.7 million in the same
period of 1998. Cash used for investing activities was higher in 1998 primarily
due to amounts invested in business acquisitions. Capital expenditures for the
first six months of 1999 were $9.6 million compared to $6.1 million for first
six months of 1998 and were for computer equipment and software, branch and
distribution center facility improvements, forklifts and delivery vehicles. The
increase from the prior year was primarily due to the replacement of computer
hardware at the branch locations.
16
<PAGE> 18
Financing Activities. Cash provided by financing activities totaled $75.0
million in the first six months of 1999 primarily reflecting the Offering
offset, in part, by a net reduction in long-term debt. In the first six months
of 1998, cash used by financing activities totaled $134.6 million primarily
reflecting the Recapitalization completed in June 1998.
Management believes that cash generated from operations, together with
amounts available under the credit agreement after the Offering and the
receivables facility, will be sufficient to meet WESCO's working capital,
capital expenditures and other cash requirements for the foreseeable future.
There can be no assurance, however, that this will be the case. Financing of
acquisitions can be funded under the existing credit agreement and may,
depending on the number and size of acquisitions, require the issuance of
additional debt and equity securities.
YEAR 2000 READINESS DISCLOSURE
The Year 2000 issue concerns the ability of automated applications to
process date-dependent processes, calculations and information by properly
interpreting the year. The Year 2000 issue may potentially impact WESCO's
business-critical computerized applications related to, among others, customer
sales, service and invoicing, purchasing, inventory management, payroll,
financing and financial accounting and reporting. In addition, other non
business-critical systems and services may also be affected. WESCO has assembled
an internal project team composed of information systems, operations, finance
and executive personnel to:
o assess the readiness of our systems, vendors and suppliers, third-party
service providers, customers and financial institutions;
o replace or correct through program changes all non-compliant
applications;
o develop remediation action plans for systems that may not be Year 2000
compliant; and
o develop contingency plans in the event systems and services are not
compliant.
The readiness assessment phase of the project is complete and consisted of a
detailed assessment and testing of substantially all internal computer systems,
surveys of significant vendors and suppliers, service providers and customers.
WESCO has received, or is seeking, documentation from many external parties,
including its major suppliers, customers and service providers, indicating their
Year 2000 readiness. Over the past three years, WESCO has invested approximately
$5.5 million in new information systems to support the growth and diversity of
its business. In addition to meeting this objective, Year 2000 compliance was
also achieved in many systems.
As of the date of this report, WESCO's core information technology and
non-information technology systems are Year 2000 compliant. Additional testing
will continue through December 1999. The project team is also developing or
enhancing contingency plans to minimize the potential adverse effect the Year
2000 issue could have on WESCO in the event business-critical systems and
processes of WESCO or its suppliers or customers fail to be compliant. Such
contingent plans include identifying alternative suppliers or service providers.
Costs specifically associated with modifying WESCO's systems for Year 2000
compliance are expensed as incurred. Through June 30, 1999, such costs totaled
approximately $2.4 million. Costs to be incurred in the remainder of 1999 to
address Year 2000 problems are estimated to be $1.0 million. Such costs do not
include normal system upgrades and replacements.
17
<PAGE> 19
Based on current information, WESCO believes that the most likely worst case
scenario to result from a Year 2000 failure by WESCO, its suppliers or customers
would be a temporary limitation in its ability to distribute electrical products
from certain operating locations or provide integrated supply services to its
customers. Based on its own efforts and information received from third parties,
WESCO does not believe that Year 2000 issues are likely to result in significant
operational problems or have a material adverse impact on its consolidated
financial position, operations or cash flow. Nonetheless, failures of suppliers,
third party vendors or customers resulting from Year 2000 issues could result in
a short-term material adverse effect.
INFLATION
The rate of inflation, as measured by changes in the consumer price index,
did not have a material effect on the sales or operating results of WESCO during
the periods presented. However, inflation in the future could affect WESCO's
operating costs. Price changes from suppliers have historically been consistent
with inflation and have not had a material impact on WESCO's results of
operations.
SEASONALITY
WESCO's operating results are affected by certain seasonal factors. Sales
are typically at their lowest during the first quarter due to a reduced level of
activity during the winter months. Sales increase during the warmer months
beginning in March and continuing through November. Sales drop again slightly in
December as the weather cools and also as a result of reduced level of activity
during the holiday season. As a result, WESCO reports sales and earnings in the
first quarter that are generally lower than that of the remaining quarters.
FORWARD-LOOKING STATEMENTS
From time to time in this report and in other written reports and oral
statements, references are made to expectations regarding future performance of
WESCO. When used in this context, the words "anticipates," "plans," "believes,"
"estimates," "intends," "expects," "projects" and similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain such words. Such statements including, but
not limited to, WESCO's statements regarding its business strategy, growth
strategy, productivity and profitability enhancement, new product and service
introductions and liquidity and capital resources are based on management's
beliefs, as well as on assumptions made by, and information currently available
to, management, and involve various risks and uncertainties, certain of which
are beyond WESCO's control. WESCO's actual results could differ materially from
those expressed in any forward-looking statement made by or on behalf of WESCO.
In light of these risks and uncertainties there can be no assurance that the
forward-looking information will in fact prove to be accurate. Factors that
might cause actual results to differ from such forward-looking statements
include, but are not limited to, an increase in competition, the amount of
outstanding indebtedness, the availability of appropriate acquisition
opportunities, availability of key products, functionality of information
systems, Year 2000 readiness, international operating environments and other
risks that are described in WESCO's Annual Report on Form 10-K for the year
ended December 31, 1998 which are incorporated by reference herein. WESCO has
undertaken no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
18
<PAGE> 20
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The information required relative to market risk has not been included, as
it is not material to WESCO.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On May 17, 1999, WESCO completed its initial public offering of 11,183,750
shares of common stock, $.01 par value, ("Offering") at $18.00 per share. In
connection with the Offering, certain employee rights to require WESCO to
repurchase outstanding redeemable common stock were terminated and approximately
$31.5 million of convertible notes were converted into common stock. Proceeds
from the Offering (after deducting Offering costs) totaling $187.6 million and
borrowings of approximately $65 million were used to redeem all of the senior
discount notes ($62.8 million) and to repay the revolving credit and term loan
facilities ($188.8 million). All of the proceeds of the Offering have been
applied and the Offering has terminated.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
The following exhibits are filed herewith.
10.1 Credit Agreement among WESCO Distribution, Inc., WESCO
Distribution-Canada, Inc., WESCO International, Inc. and the
Lenders Identified therein, dated June 29, 1999.
10.2 Receivables Purchase Agreement, dated as of June 30, 1999,
among WESCO Receivables Corp., WESCO Distribution, Inc.,
Market Street Capital Corp. and PNC Bank, National
Association.
27 Financial Data Schedule
Copies of these exhibits may be retrieved electronically at the Securities
and Exchange Commission's home page at www.sec.gov. Exhibits will also be
furnished without charge by writing to Steven A. Burleson, Vice President,
Chief Financial Officer and Treasurer, Commerce Court, Four Station Square,
Suite 700, Pittsburgh, Pennsylvania 15219. Requests may also be directed to
(412) 454-2200.
(B) REPORTS ON FORM 8-K
None
19
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on August 16,
1999 on its behalf by the undersigned thereunto duly authorized.
WESCO International, Inc. and Subsidiaries
By: /s/ Steven A. Burleson
---------------------------------
Steven A. Burleson
Vice President, Chief Financial
Officer and Treasurer
20
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- --------------- --------------------------------------------------------------------------------------------
<S> <C>
10.1 Credit Agreement among WESCO Distribution, Inc., WESCO Distribution-Canada, Inc.,
WESCO International, Inc. and the Lenders identified therein, dated June 29, 1999,
filed herewith. Omitted schedules and exhibits will be provided supplementally to
the Commission upon request.
10.2 Receivables Purchase Agreement, dated as of June 30, 1999, among WESCO Receivables
Corp., WESCO Distribution, Inc., Market Street Capital Corp. and PNC Bank, National
Association, filed herewith. Omitted schedules and exhibits will be provided
supplementally to the Commission upon request.
27 Financial Data Schedule, filed herewith
</TABLE>
21
<PAGE> 1
Exhibit 10.1
[EXECUTION COPY]
CREDIT AGREEMENT
among
WESCO DISTRIBUTION, INC.
as U.S. Borrower
WESCO DISTRIBUTION-CANADA, INC.
as Canadian Borrower
WESCO INTERNATIONAL, INC.
and
CERTAIN AFFILIATES OF THE BORROWERS
as Guarantors
THE LENDERS IDENTIFIED HEREIN
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
as U.S. Administrative Agent
and
BANK OF AMERICA CANADA
as Canadian Administrative Agent
DATED AS OF JUNE 29, 1999
-----------------------------------------------------------------------------
BANC OF AMERICA SECURITIES LLC
as Co-Lead Arranger and Co-Book Manager
CHASE SECURITIES INC.
as Co-Lead Arranger and Co-Book Manager
THE CHASE MANHATTAN BANK
as Syndication Agent
and
ABN AMRO BANK N.V.
as Documentation Agent
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1 DEFINITIONS AND ACCOUNTING TERMS.......................................................................1
1.1 Definitions..........................................................................................1
1.2 Computation of Time Periods and Other Definitional Provisions.......................................32
1.3 Accounting Terms....................................................................................32
1.4 Time................................................................................................33
SECTION 2 U.S. CREDIT FACILITIES................................................................................33
2.1 U.S. Revolving Loans................................................................................33
2.2 U.S. Letter of Credit Subfacility...................................................................36
2.3 U.S. Swingline Loans Subfacility....................................................................41
2.4 Continuations and Conversions.......................................................................43
2.5 Minimum Amounts.....................................................................................43
SECTION 3 CANADIAN CREDIT FACILITIES............................................................................44
3.1 Canadian Revolving Loans............................................................................44
3.2 Canadian Letter of Credit Subfacility...............................................................46
3.3 Canadian Swingline Loans Subfacility................................................................52
3.4 Bankers' Acceptances................................................................................53
3.5 Continuations and Conversions.......................................................................57
3.6 Minimum Amounts.....................................................................................58
SECTION 4 GENERAL PROVISIONS APPLICABLE TO LOANS,...............................................................58
BANKERS' ACCEPTANCES AND LETTERS OF CREDIT.......................................................................58
4.1 Interest............................................................................................58
4.2 Place and Manner of Payments........................................................................59
4.3 Voluntary Prepayments...............................................................................60
4.4 Fees................................................................................................60
4.5 Payment in full at Maturity.........................................................................61
4.6 Computations of Interest and Fees...................................................................61
4.7 Pro Rata Treatment..................................................................................62
4.8 Sharing of Payments.................................................................................64
4.9 Capital Adequacy....................................................................................64
4.10 Inability To Determine Interest Rate or Create Bankers' Acceptances................................65
4.11 Illegality.........................................................................................66
4.12 Requirements of Law................................................................................66
4.13 Taxes..............................................................................................67
4.14 Compensation.......................................................................................69
4.15 Evidence of Debt...................................................................................69
4.16 Substitution of Lender; Relocation.................................................................70
4.17 All Borrowers Treated Equally......................................................................71
SECTION 5 GUARANTY..............................................................................................71
5.1 Guaranty of Payment.................................................................................71
5.2 Obligations Unconditional...........................................................................71
5.3 Modifications.......................................................................................72
5.4 Waiver of Rights....................................................................................72
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
5.5 Reinstatement.......................................................................................73
5.6 Remedies............................................................................................73
5.7 Limitation of Guaranty..............................................................................73
5.8 Rights of Contribution..............................................................................73
SECTION 6 CONDITIONS PRECEDENT..................................................................................74
6.1 Closing Conditions..................................................................................74
6.2 Conditions to All Extensions of Credit..............................................................78
SECTION 7 REPRESENTATIONS AND WARRANTIES........................................................................79
7.1 Financial Condition.................................................................................79
7.2 No Material Change..................................................................................79
7.3 Organization and Good Standing......................................................................79
7.4 Due Authorization...................................................................................80
7.5 No Conflicts........................................................................................80
7.6 Consents............................................................................................80
7.7 Enforceable Obligations.............................................................................80
7.8 No Default..........................................................................................80
7.9 Ownership.......................................................................................... 81
7.10 Indebtedness.......................................................................................81
7.11 Litigation.........................................................................................81
7.12 Taxes..............................................................................................81
7.13 Compliance with Law................................................................................81
7.14 ERISA..............................................................................................81
7.15 Subsidiaries.......................................................................................82
7.16 Use of Proceeds....................................................................................83
7.17 Government Regulation..............................................................................83
7.18 Environmental Matters..............................................................................84
7.19 Intellectual Property..............................................................................85
7.20 Solvency.......................................................................................... 85
7.21 Investments........................................................................................85
7.22 Location of Collateral.............................................................................86
7.23 Disclosure.........................................................................................86
7.24 Licenses, etc......................................................................................86
7.25 Collateral Documents...............................................................................86
7.26 Burdensome Restrictions............................................................................86
7.27 Year 2000 Compliance...............................................................................86
7.28 Labor Contracts and Disputes.......................................................................87
7.29 Broker's Fees......................................................................................87
SECTION 8 AFFIRMATIVE COVENANTS.................................................................................87
8.1 Information Covenants...............................................................................87
8.2 Financial Covenants.................................................................................90
8.3 Preservation of Existence and Franchises............................................................91
8.4 Books and Records...................................................................................91
8.5 Compliance with Law.................................................................................91
8.6 Payment of Taxes and Other Indebtedness.............................................................91
8.7 Insurance...........................................................................................92
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
8.8 Maintenance of Property.............................................................................93
8.9 Performance of Obligations..........................................................................93
8.10 Collateral.........................................................................................93
8.11 Use of Proceeds....................................................................................94
8.12 Audits/Inspections.................................................................................94
8.13 Additional Credit Parties..........................................................................95
SECTION 9 NEGATIVE COVENANTS....................................................................................96
9.1 Indebtedness........................................................................................97
9.2 Liens...............................................................................................99
9.3 Nature of Business..................................................................................99
9.4 Consolidation and Merger............................................................................99
9.5 Sale or Lease of Assets............................................................................100
9.6 Sale Leasebacks....................................................................................100
9.7 Advances, Investments and Loans....................................................................101
9.8 Restricted Payments................................................................................101
9.9 Transactions with Affiliates.......................................................................101
9.10 Fiscal Year; Organizational Documents.............................................................101
9.11 No Limitations....................................................................................101
9.12 No Other Negative Pledges.........................................................................102
9.13 Other Indebtedness................................................................................102
9.14 Limitation on Parent..............................................................................102
9.15 Capital Expenditures..............................................................................103
9.16 Limitation on Ownership of Assets.................................................................103
SECTION 10 EVENTS OF DEFAULT...................................................................................103
10.1 Events of Default.................................................................................103
10.2 Acceleration; Remedies............................................................................106
10.3 Allocation of Payments After Event of Default.....................................................107
10.4 Conversion and Redenomination of Loans; Purchase of Risk Participations...........................108
SECTION 11 AGENCY PROVISIONS...................................................................................109
11.1 Appointment.......................................................................................109
11.2 Delegation of Duties..............................................................................109
11.3 Exculpatory Provisions............................................................................110
11.4 Reliance on Communications........................................................................110
11.5 Notice of Default.................................................................................111
11.6 Non-Reliance on Agents and Other Lenders..........................................................111
11.7 Indemnification...................................................................................111
11.8 Agents in Their Individual Capacity...............................................................112
11.9 Successor Agent...................................................................................112
SECTION 12 MISCELLANEOUS.......................................................................................113
12.1 Notices...........................................................................................113
12.2 Right of Set-Off..................................................................................113
12.3 Benefit of Agreement..............................................................................113
12.4 No Waiver; Remedies Cumulative....................................................................117
12.5 Payment of Expenses; Indemnification..............................................................117
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
<S> <C> <C>
12.6 Amendments, Waivers and Consents..................................................................118
12.7 Counterparts/Telecopy.............................................................................119
12.8 Headings..........................................................................................119
12.9 Defaulting Lender.................................................................................119
12.10 Survival of Indemnification and Representations and Warranties...................................119
12.11 Governing Law; Jurisdiction......................................................................119
12.12 Waiver of Jury Trial; Waiver of Consequential Damages............................................120
12.13 Severability.....................................................................................120
12.14 Further Assurances...............................................................................120
12.15 Confidentiality..................................................................................121
12.16 Judgment Currency................................................................................121
12.17 Entirety.........................................................................................122
12.18 Binding Effect; Continuing Agreement.............................................................122
12.19 Designated Senior Indebtedness...................................................................123
</TABLE>
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<PAGE> 6
SCHEDULES
Schedule 1.1(a) Lenders and Commitment Percentages
Schedule 1.1(b) Existing Letters of Credit
Schedule 1.1(c) Permitted Liens
Schedule 7.10 Indebtedness
Schedule 7.11 Litigation
Schedule 7.15 Subsidiaries
Schedule 7.19 Intellectual Property
Schedule 7.21 Investments
Schedule 7.22(a) Personal Property Locations
Schedule 7.22(b) Chief Executive Offices
Schedule 7.28 Labor Contract and Disputes
Schedule 8.7 Insurance
Schedule 12.1 Notices
EXHIBITS
Exhibit 2.1(b) Form of Notice of Borrowing
Exhibit 2.1(f) Form of U.S. Revolving Note
Exhibit 2.3(b) Form of Swingline Loan Request
Exhibit 2.3(d) Form of U.S. Swingline Note
Exhibit 2.4 Form of Notice of Continuation/Conversion
Exhibit 3.1(e) Form of Canadian Revolving Note
Exhibit 3.3(d) Form of Canadian Swingline Note
Exhibit 3.4(d) Form of Bankers' Acceptance Notice
Exhibit 8.1(c) Form of Officer's Certificate
Exhibit 8.13 Form of Joinder Agreement
Exhibit 12.3(b) Form of Assignment Agreement
- v -
<PAGE> 7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Credit Agreement") is entered into as of
June 29, 1999 among WESCO DISTRIBUTION, INC., a Delaware corporation (the "U.S.
Borrower"), WESCO DISTRIBUTION-CANADA, INC., an Ontario corporation (the
"Canadian Borrower", and together with the U.S. Borrower, the "Borrowers"),
WESCO INTERNATIONAL, INC., a Delaware corporation (the "Parent") and certain
Subsidiaries of the Parent (individually a "Guarantor" and collectively the
"Guarantors"), the Lenders (as defined herein), BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as U.S. Administrative Agent and U.S. Swingline Lender,
BANK OF AMERICA CANADA, as Canadian Administrative Agent and Canadian Swingline
Lender, and the Issuing Lenders (as defined herein).
RECITALS
A. The Borrowers have requested that the Lenders provide a senior
secured credit facility consisting of (i) a $365 million revolving facility to
the U.S. Borrower and (ii) a C$50 million revolving facility to the Canadian
Borrower.
B. The Lenders party hereto have agreed to make the requested senior
secured credit facility available to the Borrowers on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINITIONS.
As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms herein shall
include in the singular number the plural and in the plural the singular:
"Acceptance Fee" means, in respect of a particular Bankers'
Acceptance accepted by a Canadian Lender, an amount equal to the
product of (a) the Applicable Percentage for Eurodollar Loans and
Bankers' Acceptances as at the date of acceptance of such Bankers'
Acceptance; (b) the aggregate Face Amount of such Bankers' Acceptance;
and (c) a fraction (i) the numerator of which is the number of days in
the term of such Bankers' Acceptance, and (ii) the denominator of which
is 365 days.
"Acquisition" means the acquisition by any Person of (a) the
Capital Stock of another Person, (b) all or substantially all of the
assets of another Person or (c) all or substantially all of a line of
business of another Person, in each case whether or not involving a
merger or consolidation with such other Person.
<PAGE> 8
"Additional Credit Party" means each Person that becomes a
Guarantor after the Closing Date, as provided in Section 8.13.
"Adjusted Base Rate" means the Base Rate plus the Applicable
Percentage for Base Rate Loans and Canadian Prime Rate Loans.
"Adjusted Canadian Prime Rate" means the Canadian Prime Rate
plus the Applicable Percentage for Base Rate Loans and Canadian Prime
Rate Loans.
"Adjusted Eurodollar Rate" means the Eurodollar Rate plus the
Applicable Percentage for Eurodollar Loans and Bankers' Acceptances.
"Adjusted Funded Debt" means total Funded Debt (as defined
below) minus the sum of: (a) Indebtedness related to Permitted
Receivables Financing, (b) Indebtedness constituting seller financing
incurred in connection with Permitted Acquisitions not to exceed $30
million, in the aggregate, at any one time outstanding, (c) Support
Obligations relating to loans for a stock purchase program for senior
management of the Credit Parties, not to exceed $9,000,000, in the
aggregate and (d) cash on the consolidated balance sheet of the Credit
Parties and their Subsidiaries in excess of $15,000,000.
For purposes hereof, "Funded Debt" means, without duplication,
the sum of (a) all Indebtedness of the Credit Parties and their
Subsidiaries for borrowed money, (b) all purchase money Indebtedness of
the Credit Parties and their Subsidiaries, (c) the principal portion of
all obligations of the Credit Parties and their Subsidiaries under
Capital Leases, (d) all obligations, contingent or otherwise, relative
to the face amount of all letters of credit (other than trade letters
of credit obtained in the ordinary course of business), whether or not
drawn, and banker's acceptances issued for the account of a Credit
Party or its Subsidiaries (it being understood that, to the extent an
undrawn letter of credit supports another obligation consisting of
Indebtedness, in calculating aggregated Indebtedness only such other
obligation shall be included), (e) all Support Obligations of the
Credit Parties and their Subsidiaries with respect to Funded Debt of
another Person, (f) all Funded Debt of another entity secured by a Lien
on any property of the Credit Parties and their Subsidiaries whether or
not such Funded Debt has been assumed by a Credit Party or any of its
Subsidiaries, (g) all Funded Debt of any partnership or unincorporated
joint venture to the extent a Credit Party or any of its Subsidiaries
is legally obligated or has a reasonable expectation of being liable
with respect thereto, net of any assets of such partnership or joint
venture, provided that such netting does not result in a negative value
for such Funded Debt, (h) the outstanding aggregate amount of
Indebtedness permitted under Section 9.1(p) and Section 9.1(q),
including without limitation as such Indebtedness relates to the sale
leaseback transactions permitted under clauses (ii) and (iii) of
Section 9.6, and (i) the principal balance outstanding under any
synthetic lease, tax retention operating lease, off-balance sheet loan
or similar off-balance sheet financing product where such transaction
is considered borrowed money indebtedness for tax purposes but is
classified as an operating lease in accordance with GAAP (but excluding
operating leases under GAAP entered into in the ordinary course of
business and not as an off-balance sheet financing product); provided,
- 2 -
<PAGE> 9
however, that the outstanding aggregate amount of Indebtedness
permitted under clause (ii) of Section 9.1(c) shall be excluded from
Funded Debt.
"Administrative Agents" means the U.S. Administrative Agent
and the Canadian Administrative Agent.
"Administrative Fees" has the meaning set forth in Section
4.4(d).
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to
all directors and officers (or the equivalent) of such Person),
controlled by or under direct or indirect common control with such
Person (and specifically including any other Person that is an
"associate" of such Person, as the term "associate" is used in the
context of Canadian corporate and securities law). A Person shall be
deemed to control an entity if such Person possesses, directly or
indirectly, the power (a) to vote 10% or more of the ordinary voting
power for the election of directors (or the equivalent) of such entity
or (b) to direct or cause direction of the management and policies of
such entity, whether through the ownership of voting securities, by
contract or otherwise.
"Agents" means, collectively, the Administrative Agents and
the Collateral Agent and any successors and assigns in such capacity.
"Applicable BA Discount Rate" means (a) with respect to any
Canadian Lender named on Schedule I to the Bank Act (Canada), as
applicable to a Bankers' Acceptance being purchased by such Lender on
any day, the respective percentage discount rate per annum for a
Canadian Dollar bankers' acceptance for the term and face amount
comparable to the term and face amount of such Bankers' Acceptance that
appears on the Reuters Screen CDOR Page as of 10:00 a.m. (Toronto,
Ontario time) on the date of determination as reported by the Canadian
Administrative Agent; provided, however, that if on such day no rate
appears on the Reuters Screen CDOR Page as contemplated, the rate for
such day shall be the average (as calculated by the Canadian
Administrative Agent) of the respective percentage discount rates
(expressed to two decimal places and rounded upward, if necessary, to
the nearest 1/100th of 1%) quoted to the Canadian Administrative Agent
by each of the five largest Canadian chartered banks named on Schedule
I to the Bank Act (Canada) (each a "Schedule I Reference Bank") as the
percentage discount rate at which such Schedule I Reference Bank would,
in accordance with its normal practices, at or about 10:00 a.m.
(Toronto, Ontario time) on such day, be prepared to purchase bankers'
acceptances accepted by such Schedule I Reference Bank having a term
and a face amount comparable to the term and face amount of such
Bankers' Acceptance and (b) with respect to any Canadian Lender named
on Schedule II to the Bank Act (Canada), as applicable to a Bankers'
Acceptance being purchased by such Lender on any day, the lesser of (x)
the percentage discount rate at which Bank of America Canada would, in
accordance with its normal practices, at or about 10:00 a.m. (Toronto
time) on such day, be prepared to purchase bankers' acceptances
accepted by it having a term and a face amount comparable to the term
and face amount of such Bankers' Acceptance and (y) the rate that is 7
basis points per annum in excess of the rate determined pursuant to
clause (a) of this definition in connection with the relevant issuance
of Bankers' Acceptances.
- 3 -
<PAGE> 10
"Applicable Percentage" means the appropriate applicable
percentages corresponding to the Leverage Ratio in effect as of the
most recent Calculation Date as shown below:
<TABLE>
<CAPTION>
----------- ---------------- -------------- --------------- -------------- ---------------- ------------------
Applicable
Percentage
Applicable Applicable for U.S.
Percentage Percentage Standby
for for Base Rate Letter of Applicable
Eurodollar Loans and Credit Fees Percentage for
Loans and Canadian and Canadian U.S. Trade Applicable
Pricing Bankers' Prime Rate Letter of Letters of Percentage for
Level Leverage Ratio Acceptances Loans Credit Fees Credit Commitment Fees
----------- ---------------- -------------- --------------- -------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
I <= 2.0 to 1.0 1.00% 0% 1.0% .50% .30%
II <= 2.5 to 1.0 1.25% .25% 1.25% .6125% .35%
but
> 2.0 to 1.0
III <= 3.25 to 1.0 1.50% .50% 1.50% .75% .40%
but
> 2.5 to 1.0
IV <= 4.0 to 1.0 1.75% .75% 1.75% .875% .45%
but
> 3.25 to 1.0
V > 4.0 to 1.0 2.00% 1.00% 2.00% 1.00% .50%
----------- ---------------- -------------- --------------- -------------- ---------------- ------------------
</TABLE>
The Applicable Percentage for Loans, Bankers' Acceptances, the
Letter of Credit Fees and the Commitment Fees shall, in each case, be
determined and adjusted quarterly on the date (each a "Calculation
Date") five Business Days after the date by which the U.S. Borrower is
required to provide the officer's certificate in accordance with the
provisions of Section 8.1(c); provided that the initial Applicable
Percentage for Loans, the Letter of Credit Fees and the Commitment Fees
shall be based on Pricing Level III (as shown above) and, thereafter,
the Pricing Level shall be determined by the Leverage Ratio calculated
as of the most recent Calculation Date (provided that the Applicable
Percentage shall not be less than Pricing Level III until the first
Calculation Date subsequent to September 30, 1999); and provided
further that if the U.S. Borrower fails to provide the officer's
certificate required by Section 8.1(c) on or before the most recent
Calculation Date, the Applicable Percentage for Loans, the Letter of
Credit Fees and the Commitment Fees from such Calculation Date shall be
based on Pricing Level V until such time that an appropriate officer's
certificate is provided whereupon the Pricing Level shall be determined
by the then current Leverage Ratio. Each Applicable Percentage shall be
effective from one Calculation Date until the next Calculation Date.
Any adjustment in the Applicable Percentage shall be applicable to all
existing Loans and Letters of Credit as well as any new Loans made or
Letters of Credit issued.
The U.S. Borrower shall promptly deliver to the U.S.
Administrative Agent, at the address set forth on Schedule 12.1, at the
time the officer's certificate is required to be delivered by Section
8.1(c), information regarding any change in the Leverage Ratio that
would change the existing Pricing Level pursuant to the preceding
paragraph. The U.S. Administrative Agent shall promptly advise the
Canadian Administrative Agent of any such change in the Pricing Level.
- 4 -
<PAGE> 11
"Approved Fund" means, with respect to any Lender that is a
fund or trust that makes, buys or invests in commercial loans, any
other fund or trust that makes, buys or invests in commercial loans and
is managed by the same investment advisor as such Lender or an
Affiliate thereof.
"Asset Disposition" means the disposition of any or all of the
assets (including the Capital Stock) of a Credit Party or any of its
Subsidiaries whether by sale, lease, transfer, condemnation or
otherwise, other than (a) transfers of assets permitted by Section 9.5
and (b) losses of assets or destroyed assets permitted by Section 8.7.
"BA Discount Proceeds" means proceeds in respect of any
Bankers' Acceptance to be purchased on any day under Section 3.4(b), in
an amount (rounded to the nearest whole Canadian cent, and with
one-half of one Canadian cent being rounded up) calculated on such day
by dividing:
(a) the Face Amount of such Bankers' Acceptance; by
(b) the sum of one plus the product of:
(i) the Applicable BA Discount Rate (expressed as a
decimal) applicable to such Bankers' Acceptance; and
(ii) a fraction, the numerator of which is the number
of days in the term of such Bankers' Acceptance and the
denominator of which is the number of days in the then current
calendar year;
with such product being rounded up or down to the fifth
decimal place and .000005 being rounded up.
"BA Documents" means with respect to any Bankers' Acceptance,
such documents and agreements as the Canadian Lenders accepting the
same may require in connection with the creation of such Bankers'
Acceptance.
"BA Obligations" means all obligations of the Canadian
Borrower with respect to Bankers' Acceptances created under the
Canadian Revolving Committed Amount.
"Bank of America" means Bank of America National Trust and
Savings Association, or any successor thereto.
"Bank of America Canada" means Bank of America Canada, or any
successor thereto.
"Bankers' Acceptance" means a depository bill as defined in
the Depository Bills and Notes Act (Canada) in Canadian Dollars that is
in the form of an order signed by the Canadian Borrower and accepted by
a Canadian Lender pursuant to this Credit Agreement or, for Lenders not
participating in clearing services contemplated in that Act, a draft or
bill
- 5 -
<PAGE> 12
of exchange in Canadian Dollars payable in Canada that is drawn in
Canada by the Canadian Borrower and accepted by a Canadian Lender
pursuant to this Credit Agreement. Orders that become depository bills,
drafts and bills of exchange are sometimes collectively referred to in
this Credit Agreement as "orders".
"Bankruptcy Code" means either (a) the Bankruptcy Code in
Title 11 of the United States Code, as amended, modified, succeeded or
replaced from time to time or (b) corresponding Canadian legislation,
as applicable.
"BAS" means Banc of America Securities LLC, in its capacity as
Co-Lead Arranger and Co-Book Manager, and its successors and assigns.
"Base Rate" means, for any day, the rate per annum equal to
the greater of (a) the Federal Funds Rate in effect on such day plus
1/2 of 1% or (b) the U.S. Reference Rate in effect on such day. If for
any reason the U.S. Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is
unable after due inquiry to ascertain the Federal Funds Rate for any
reason, including the inability or failure of the U.S. Administrative
Agent to obtain sufficient quotations in accordance with the terms
hereof, the Base Rate shall be determined without regard to clause (a)
of the first sentence of this definition until the circumstances giving
rise to such inability no longer exist. Any change in the Base Rate due
to a change in the U.S. Reference Rate or the Federal Funds Rate shall
be effective on the effective date of such change in the U.S. Reference
Rate or the Federal Funds Rate, respectively.
"Base Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Base Rate, including, if applicable,
Swingline Loans.
"Borrowers" means, collectively, the U.S. Borrower and the
Canadian Borrower.
"Business Day" means any day other than a Saturday or a
Sunday; provided that, in addition, (a) in the case of U.S. Revolving
Loans, U.S. Swingline Loans and U.S. Letters of Credit, such day is not
a day on which banking institutions are authorized or required by law
or other governmental action to close in San Francisco, California or
New York, New York (provided that in the case of Eurodollar Loans, such
day is also a day on which dealings between banks are carried on in
Dollar deposits in the London interbank market) and (b) in the case of
Canadian Revolving Loans, Canadian Swingline Loans, Canadian Letters of
Credit and Bankers' Acceptances, such day is not a day on which banking
institutions are authorized or required by law or other governmental
action to close in Toronto, Ontario.
"Calculation Date" has the meaning set forth in the definition
of Applicable Percentage.
"Canadian Administrative Agent" means Bank of America Canada
or any successor agent appointed pursuant to Section 11.9.
- 6 -
<PAGE> 13
"Canadian Borrower" means WESCO Distribution-Canada, Inc., an
Ontario corporation, together with any permitted successors and
assigns.
"Canadian Credit Parties" means those Credit Parties domiciled
in Canada.
"Canadian Credit Party Obligations" means, without
duplication, (a) all of the obligations of the Canadian Credit Parties
to the Lenders (including the Canadian Issuing Lender) and the Agents,
whenever arising, under this Credit Agreement, the Notes, the
Collateral Documents or any of the other Credit Documents to which any
such Credit Party is a party and (b) all liabilities and obligations
owing from any such Credit Party to any Lender, or any Affiliate of a
Lender, arising under Hedging Agreements.
"Canadian Dollars" and "C$" mean dollars in lawful currency of
Canada.
"Canadian Facility Guarantors" means each of (a) the U.S.
Borrower, (b) the Subsidiaries of the Canadian Borrower identified as
Canadian Facility Guarantors on the signature pages hereto, if any are
so identified, and (c) each hereafter acquired or organized Subsidiary
of the Canadian Borrower that becomes an Additional Credit Party and
Canadian Facility Guarantor hereunder by execution of a Joinder
Agreement or otherwise, in each case together with their successors and
assigns.
"Canadian Issuing Lender" means Bank of America Canada or,
with the consent of (a) the Borrowers, (b) the Canadian Administrative
Agent and (c) the Required Canadian Lenders, any other Canadian Lender.
"Canadian Lender" means any of the Persons identified as a
"Canadian Lender" on Schedule 1.1(a), and any Eligible Assignee which
may become a Canadian Lender by way of assignment in accordance with
the terms hereof, together with their successors and permitted assigns.
"Canadian Letter of Credit" means a Letter of Credit issued
for the account of the Canadian Borrower by the Canadian Issuing Lender
pursuant to Section 3.2(a), as such Letter of Credit may be amended,
modified, extended, renewed or replaced.
"Canadian Letter of Credit Outstanding Amount" means, for any
period, the quotient resulting from dividing (a) the sum for each day
during such period of the aggregate maximum amount available to be
drawn under all Canadian Letters of Credit by (b) the total number of
days in such period.
"Canadian LOC Commitment" means the commitment of the Canadian
Issuing Lender to issue Letters of Credit for the account of the
Canadian Borrower in an aggregate face amount at any time outstanding
(together with the amounts of any unreimbursed drawings thereon) of up
to the Canadian LOC Committed Amount.
"Canadian LOC Committed Amount" has the meaning assigned to
such term in Section 3.2(a).
- 7 -
<PAGE> 14
"Canadian LOC Obligations" means, at any time, the sum of (a)
the maximum amount which is, or at any time thereafter may become,
available to be drawn under Canadian Letters of Credit then
outstanding, assuming compliance with all requirements for drawings
referred to in such Canadian Letters of Credit plus (b) the aggregate
amount of all drawings under Canadian Letters of Credit honored by the
Canadian Issuing Lender but not theretofore reimbursed.
"Canadian LOC Subfacility" means the Letter of Credit
subfacility established pursuant to Section 3.2.
"Canadian Pledge Agreement" means that certain Pledge
Agreement, dated as of the Closing Date, executed and delivered by the
Canadian Borrower in favor of the Collateral Agent, for the benefit of
the Lenders, to secure its obligations under the Credit Documents, as
amended, modified, extended, renewed or replaced from time to time.
"Canadian Prime Rate" means, for any day, the greater of (a)
the variable rate of interest per annum equal to the rate of interest
determined by the Canadian Administrative Agent from time to time as
its prime rate for Canadian Dollar loans made by the Canadian
Administrative Agent in Canada, being a variable per annum reference
rate of interest adjusted automatically upon change by the Canadian
Administrative Agent, and calculated on the basis of a year of 365 or
366 days, as the case may be, and (b) the sum of (i) the rate per annum
determined by the Canadian Administrative Agent as the applicable rate
for it to accept a Canadian Dollar bankers' acceptance having a term of
30 days as of 10:00 a.m. (Toronto, Ontario time) on the date of
determination plus (ii) 100 basis points.
"Canadian Prime Rate Loan" means any Canadian Revolving Loan
bearing interest at a rate determined by reference to the Canadian
Prime Rate, including, if applicable, Canadian Swingline Loans.
"Canadian Revolving Committed Amount" means FIFTY MILLION
CANADIAN DOLLARS (C$50,000,000), as such amount may be reduced in
accordance with Section 3.1(d).
"Canadian Revolving Loan Commitment" means, with respect to
each Canadian Lender, the commitment of such Canadian Lender to make
its portion of the Canadian Revolving Loans in a principal amount equal
to such Canadian Lender's Canadian Revolving Loan Commitment Percentage
of the Canadian Revolving Committed Amount.
"Canadian Revolving Loan Commitment Percentage" means, for
each Canadian Lender, the percentage identified as its Canadian
Revolving Loan Commitment Percentage on Schedule 1.1(a), as such
percentage may be modified in connection with any assignment made in
accordance with the provisions of Section 12.3.
"Canadian Revolving Loans" means the revolving credit loans
made by the Canadian Lenders to the Canadian Borrower pursuant to
Section 3.1.
- 8 -
<PAGE> 15
"Canadian Revolving Note" or "Canadian Revolving Notes" means
the promissory notes of the Canadian Borrower in favor of each of the
Canadian Lenders evidencing the Canadian Revolving Loans provided
pursuant to Section 3.1, individually or collectively, as appropriate,
as such promissory notes may be amended, modified, supplemented,
extended, renewed or replaced from time to time and as evidenced in the
form of Exhibit 3.1(e).
"Canadian Security Agreement" means that certain Security
Agreement, dated as of the Closing Date, executed and delivered by the
Canadian Borrower in favor of the Collateral Agent, for the benefit of
the Lenders, to secure its obligations under the Credit Documents, as
amended, modified, extended, renewed or replaced from time to time.
"Canadian Swingline Committed Amount" means FIVE MILLION
CANADIAN DOLLARS (C$5,000,000).
"Canadian Swingline Lender" means Bank of America Canada or,
with the consent of (i) the Borrowers, (ii) the Canadian Administrative
Agent and (iii) the Required Canadian Lenders, any other Canadian
Lender.
"Canadian Swingline Loan Commitment" means, with respect to
the Canadian Swingline Lender, the commitment of the Canadian Swingline
Lender to make Canadian Swingline Loans available to the Canadian
Borrower in the principal amount of up to the Canadian Swingline
Committed Amount.
"Canadian Swingline Note" means the promissory note of the
Canadian Borrower in favor of the Canadian Swingline Lender evidencing
the Canadian Swingline Loans provided pursuant to Section 3.3, as such
promissory note may be amended, modified, supplemented, extended,
renewed or replaced from time to time in and as evidenced by the form
of Exhibit 3.3(d).
"Canadian Unused Revolving Commitment" means, for any period,
the amount by which (a) the then applicable Canadian Revolving
Committed Amount exceeds (b) the quotient resulting from dividing (i)
the sum for each day during such period of the outstanding aggregate
principal amount of all Canadian Revolving Loans plus Canadian LOC
Obligations plus the Face Amount of BA Obligations by (ii) the total
number of days in such period.
"Capital Expenditures" means all expenditures of the Credit
Parties and their Subsidiaries which, in accordance with GAAP, would be
classified as capital expenditures, including, without limitation,
Capital Leases; provided, however, that Capital Expenditures shall
exclude (a) amounts constituting the reinvestment of proceeds from an
Asset Disposition in Eligible Assets and (b) any amount representing
capitalized interest on Capital Leases.
"Capital Lease" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a
capital lease on the balance sheet of that Person and the
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<PAGE> 16
amount of such obligation shall be the capitalized amount thereof
determined in accordance with GAAP.
"Capital Stock" means (a) in the case of a corporation, all
classes of capital stock of such corporation, (b) in the case of a
partnership, partnership interests (whether general or limited), (c) in
the case of a limited liability company, membership interests and (d)
any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (a) securities issued directly or
fully guaranteed or insured by the United States of America or Canada
or any agency or instrumentality thereof (provided that the full faith
and credit of the United States of America or Canada is pledged in
support thereof) having maturities of not more than twelve months from
the date of acquisition, (b) U.S. or Canadian dollar denominated time
and demand deposits and certificates of deposit of (i) any Lender, (ii)
any U.S. or Canadian commercial bank having capital and surplus in
excess of $500,000,000 (U.S.) or (iii) any bank whose short-term
commercial paper rating from S&P is at least A-1 or the equivalent
thereof or from Moody's is at least P-1 or the equivalent thereof (any
such bank being an "Approved Bank"), in each case with maturities of
not more than 270 days from the date of acquisition, (c) commercial
paper and variable or fixed rate notes issued by any Approved Bank (or
by the parent company thereof) or any variable rate notes issued by, or
guaranteed by, any domestic corporation rated A-1 (or the equivalent
thereof) or better by S&P or P-1 (or the equivalent thereof) or better
by Moody's and maturing within six months of the date of acquisition,
(d) repurchase agreements with a bank or trust company (including any
of the Lenders) or recognized securities dealer having capital and
surplus in excess of $500,000,000 (U.S.) for direct obligations issued
by or fully guaranteed by the United States of America or Canada in
which a Credit Party shall have a perfected first priority security
interest (subject to no other Liens) and having, on the date of
purchase thereof, a fair market value of at least 100% of the amount of
the repurchase obligations and (e) Investments, classified in
accordance with GAAP as current assets, in money market investment
programs registered under the Investment Company Act of 1940, as
amended, which are administered by reputable financial institutions
having capital of at least $500,000,000 (U.S.) and the portfolios of
which are limited to Investments of the character described in the
foregoing subdivisions (a) through (d).
"CDOR Rate" means the rate per annum for a Canadian Dollar
bankers' acceptance having a term of 30 days that appears on the
Reuters Screen CDOR Page as of 10:00 a.m. (Toronto, Ontario time) on
the date of determination, as reported by the Canadian Administrative
Agent.
"Change of Control" means the occurrence of any of the
following events: (a) the acquisition, directly or indirectly, whether
voluntarily or by operation of law, by any person (as such term in used
in Section 13(d) of the Exchange Act) other than The Cypress Group LLC,
of beneficial ownership of more than 30% of the outstanding shares of
common stock of the Parent; (b) the replacement or resignation (other
than by reason of death, illness or incapacity), within any two-year
period, of a majority of the members of the Board of Directors of the
Parent (the "Board") or a change in the size of the Board, within any
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<PAGE> 17
two-year period, which results in members of the Board who were in
office at the beginning of such two-year period constituting less than
a majority of the members of the Board (unless such replacement,
resignation or change in size of the Board shall have been effected or
initiated by a majority of the members of the Board in office at the
beginning of such two-year period or who became members of the Board
without effectuating a Change in Control) or (c) the failure of the
Parent to own directly or indirectly 100% of the outstanding shares of
common stock of the U.S. Borrower or the Canadian Borrower.
"Chase Securities" means Chase Securities Inc. in its capacity
as Co-Lead Arranger and Co-Book Manager, and its successors and
assigns.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986 and the rules
and regulations promulgated thereunder, as amended, modified, succeeded
or replaced from time to time. References to sections of the Code
should be construed also to refer to any successor sections.
"Collateral" means all assets of the Credit Parties in which,
pursuant to the Collateral Documents, a Lien has been granted in favor
of the Collateral Agent for the benefit of the Lenders.
"Collateral Agent" means Bank of America, or any successor
collateral agent appointed pursuant to Section 11.9.
"Collateral Documents" means the Security Agreements, the
Pledge Agreements, and such other documents executed and delivered in
connection with the attachment and perfection of the Lenders' security
interests in the assets of the Credit Parties, including, without
limitation, UCC financing statements and patent, trademark and
copyright filings.
"Commitment Fees" means the fees payable to the Lenders
pursuant to Section 4.4(a).
"Commitments" means (a) with respect to each U.S. Lender, the
U.S. Revolving Loan Commitment of such Lender, (b) with respect to each
Canadian Lender, the Canadian Revolving Loan Commitment of such Lender,
(c) with respect to the U.S. Swingline Lender, the U.S. Swingline Loan
Commitment (in addition to its other Commitments), (d) with respect to
the Canadian Swingline Lender, the Canadian Swingline Loan Commitment
(in addition to its other Commitments), (e) with respect to the
Canadian Issuing Lender, the Canadian LOC Commitment (in addition to
its other Commitments) and (f) with respect to the U.S. Issuing Lender,
the U.S. LOC Commitment (in addition to its other Commitments).
"Credit Documents" means this Credit Agreement, the Notes, any
Joinder Agreement, the Collateral Documents, the LOC Documents, and all
other related agreements and documents issued or delivered hereunder or
thereunder or pursuant hereto or thereto.
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<PAGE> 18
"Credit Parties" means the Borrowers and the Guarantors and
"Credit Party" means any one of them.
"Credit Party Obligations" means, without duplication, (a) all
of the obligations of the Credit Parties to the Lenders (including the
Issuing Lenders) and the Agents, whenever arising, under this Credit
Agreement, the Notes, the Collateral Documents or any of the other
Credit Documents to which any Credit Party is a party and (b) all
liabilities and obligations owing from any such Credit Party to any
Lender, or any Affiliate of a Lender, arising under Hedging Agreements.
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, (a)
has failed to make a Loan or purchase a Participation Interest required
pursuant to the terms of this Credit Agreement (but only for so long as
such Loan is not made or such Participation Interest is not purchased),
(b) has failed to pay to the Agents or any Lender an amount owed by
such Lender pursuant to the terms of this Credit Agreement (but only
for so long as such amount has not been paid) or (c) has been deemed
insolvent or has become subject to a bankruptcy or insolvency
proceeding or with respect to which (or with respect to any assets of
which) a receiver, trustee or similar official has been appointed.
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"EBITDA" means, subject to Section 1.3(b), for any period with
respect to the Credit Parties and their Subsidiaries on a consolidated
basis, the sum of (a) Net Income for such period (excluding the effect
of any extraordinary or other non-recurring gains (including any gain
from the sale of property) or non-cash losses) plus (b) an amount
which, in the determination of Net Income for such period, has been
deducted for (i) Interest Expense for such period, (ii) total Federal,
state, foreign or other income or franchise taxes for such period and
(iii) all depreciation and amortization for such period, including the
amortization of debt discounts and deferred financing charges, all as
determined in accordance with GAAP.
"Effective Date" means the date on which the conditions set
forth in Section 6.1 shall have been fulfilled (or waived in the sole
discretion of the Lenders).
"Eligible Assets" means any assets or any business (or any
substantial part thereof) used or useful in the same or a similar line
of business as the Credit Parties and their Subsidiaries were engaged
in on the Closing Date.
"Eligible Assignee" means (a) any Lender; (b) an Affiliate of
a Lender or an Approved Fund; and (c) any other Person that (x) is a
financial institution having capital and surplus in excess of
$100,000,000, (y) if such Person is to be a U.S. Lender, is approved by
the U.S. Administrative Agent, the U.S. Issuing Lender, the U.S.
Swingline Lender and the Borrowers and (z) if such Person is to be a
Canadian Lender, is approved by the
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<PAGE> 19
Canadian Administrative Agent, the Canadian Issuing Lender, the
Canadian Swingline Lender and the Borrowers (in each of cases (y) and
(z), such approval not to be unreasonably withheld or delayed; it being
understood that it is reasonable for the Borrowers not to consent to a
new Lender that would impose material additional costs or taxes on the
Borrowers); provided that (i) the Borrowers' consent is not required
during the existence and continuation of an Event of Default; (ii)
approval by the Borrowers shall be deemed given if no objection is
received by the assigning Lender and the U.S. Administrative Agent from
the Borrowers within five Business Days after notice of such proposed
assignment has been received by the Borrowers; and (iii) neither a
Borrower nor an Affiliate of a Borrower shall qualify as an Eligible
Assignee.
"Environmental Claim" means any investigation, written notice,
violation, written demand, written allegation, action, suit,
injunction, judgment, order, consent decree, penalty, fine, lien,
proceeding, or written claim whether administrative, judicial, or
private in nature arising (a) pursuant to, or in connection with, an
actual or alleged violation of, any Environmental Law, (b) in
connection with any Hazardous Material, (c) from any assessment,
abatement, removal, remedial, corrective, or other response action in
connection with an Environmental Law or other order of a Governmental
Authority or (d) from any actual or alleged damage, injury, threat, or
harm to health, safety, natural resources, or the environment.
"Environmental Laws" means any current or future legal
requirement of any Governmental Authority pertaining to (a) the
protection of health, safety, and the indoor or outdoor environment,
(b) the conservation, management, or use of natural resources and
wildlife, (c) the protection or use of surface water and groundwater or
(d) the management, manufacture, possession, presence, use, generation,
transportation, treatment, storage, disposal, release, threatened
release, abatement, removal, remediation or handling of, or exposure
to, any hazardous or toxic substance or material or (e) pollution
(including any release to land, surface water and groundwater) and
includes, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 USC 9601 et seq., Solid
Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984,
42 USC 6901 et seq., Federal Water Pollution Control Act, as amended by
the Clean Water Act of 1977, 33 USC 1251 et seq., Clean Air Act of
1966, as amended, 42 USC 7401 et seq., Toxic Substances Control Act of
1976, 15 USC 2601 et seq., Hazardous Materials Transportation Act, 49
USC App. 1801 et seq., Occupational Safety and Health Act of 1970, as
amended, 29 USC 651 et seq., Oil Pollution Act of 1990, 33 USC 2701 et
seq., Emergency Planning and Community Right-to-Know Act of 1986, 42
USC 11001 et seq., National Environmental Policy Act of 1969, 42 USC
4321 et seq., Safe Drinking Water Act of 1974, as amended, 42 USC
300(f) et seq., any analogous implementing or successor law, and any
amendment, rule, regulation, order, or directive issued thereunder.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by
the rules and regulations thereunder, all as the same may be in effect
from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
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<PAGE> 20
"ERISA Affiliate" means an entity, whether or not
incorporated, which is under common control with any Credit Party or
any of its Subsidiaries within the meaning of Section 4001(a)(14) of
ERISA, or is a member of a group which includes any Credit Party or any
of its Subsidiaries and which is treated as a single employer under
Sections 414(b), (c), (m), or (o) of the Code.
"Eurodollar Loan" means a U.S. Revolving Loan bearing interest
based at a rate determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
determined pursuant to the following formula:
Eurodollar Rate = London Interbank Offered Rate
----------------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that
percentage (expressed as a decimal) which is in effect from time to
time under Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as such regulation may be amended
from time to time or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable with respect to
Eurocurrency liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by
reference to which the interest rate of Eurodollar Loans is
determined), whether or not a Lender has any Eurocurrency liabilities
subject to such reserve requirement at that time. Eurodollar Loans
shall be deemed to constitute Eurocurrency liabilities and as such
shall be deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be available from
time to time to a Lender. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Event of Default" means any of the events or circumstances
specified in Section 10.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as
amended, modified, succeeded or replaced from time to time.
"Existing Credit Agreement" has the meaning set forth in
Section 6.1(n).
"Existing Letters of Credit" means the Letters of Credit
described by date, issuance, letter of credit number, undrawn amount,
name of beneficiary and the date of expiry set forth on Schedule
1.1(b), as such Letters of Credit may be amended, modified, extended,
renewed or replaced.
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<PAGE> 21
"Existing U.S. Letters of Credit" means those Existing Letters
of Credit identified as U.S. Letters of Credit on Schedule 1.1(b).
"Extension of Credit" means, as to any Lender, the making of a
Loan by such Lender (or a participation therein by a Lender), the
issuance of, or participation in, a Letter of Credit by such Lender or
the creation of a Bankers' Acceptance by such Lender.
"Face Amount" means, in respect of a Bankers' Acceptance, the
amount payable to the holder thereof at maturity.
"Federal Funds Rate" means for any day the rate of interest
per annum 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 and (b) if no such rate is so
published on such next preceding Business Day, the Federal Funds Rate
for such day shall be the average rate quoted to the U.S.
Administrative Agent on such day on such transactions as determined by
the U.S.
Administrative Agent.
"Fee Letter" means that certain letter agreement between the
U.S. Borrower, BAS and Bank of America dated as of May 26, 1999.
"Fife" means Fife Electric Company, LLC, a Michigan limited
liability company.
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to Section
1.3(a).
"Governmental Authority" means any Federal, state, local,
provincial or foreign court or governmental agency, authority,
instrumentality or regulatory body.
"Guarantors" means, collectively, the Total Facility
Guarantors and the Canadian Facility Guarantors.
"Guaranteed Obligations" means, without duplication, (a) in
the case of the Total Facility Guarantors, all Credit Party
Obligations, and (b) in the case of the Canadian Facility Guarantors,
all Canadian Credit Party Obligations.
"Hazardous Materials" means any substance, material or waste
defined in or regulated under any Environmental Laws.
"Hedging Agreements" means any interest rate protection
agreements, foreign currency exchange agreements, commodity futures
agreements or other interest or exchange rate hedging agreements.
"Indebtedness" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money, (b) all obligations
of such Person evidenced by bonds,
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<PAGE> 22
debentures, notes or similar instruments, or upon which interest
payments are customarily made (c) all obligations of such Person under
conditional sale or other title retention agreements relating to
property purchased by such Person to the extent of the value of such
property (other than customary reservations or retentions of title
under agreements with suppliers entered into in the ordinary course of
business), (d) all obligations, other than intercompany items, of such
Person issued or assumed as the deferred purchase price of property or
services purchased by such Person which would appear as liabilities on
a balance sheet of such Person, (e) all Indebtedness of others secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or payable out
of the proceeds of production from, property owned or acquired by such
Person, whether or not the obligations secured thereby have been
assumed, (f) all Support Obligations of such Person, (g) the principal
portion of all obligations of such Person under (i) Capital Leases and
(ii) any synthetic lease, tax retention operating lease, off-balance
sheet loan or similar off-balance sheet financing product of such
Person where such transaction is considered borrowed money indebtedness
for tax purposes but is classified as an operating lease in accordance
with GAAP, (h) all net obligations of such Person in respect of Hedging
Agreements, (i) the maximum amount of all performance and standby
letters of credit issued or bankers' acceptances facilities created for
the account of such Person and, without duplication, all drafts drawn
thereunder (to the extent unreimbursed), (j) all preferred stock issued
by such Person and required by the terms thereof to be redeemed, or for
which mandatory sinking fund payments are due by a fixed date, (k) the
aggregate amount of uncollected accounts receivable of such Person
subject at such time to a sale of receivables (or similar transaction)
regardless of whether such transaction is effected without recourse to
such Person or in a manner that would not be reflected on the balance
sheet of such Person in accordance with GAAP, and (l) all obligations
of such Person to repurchase any securities which repurchase obligation
is related to the issuance thereof, including, without limitation,
obligations commonly known as residual equity appreciation potential
shares. The Indebtedness of any Person shall include the Indebtedness
of any partnership or unincorporated joint venture in which such Person
is legally obligated.
"Interest Coverage Ratio" means the ratio of (a) EBITDA to (b)
Interest Expense.
"Interest Expense" means, subject to Section 1.3(b), for any
period with respect to the Credit Parties and their Subsidiaries on a
consolidated basis, all cash interest expense (paid or accrued to be
paid), including (a) the interest component under Capital Leases (but
excluding the amortization of debt discounts, deferred financing
charges and other non-cash interest expenses), as determined in
accordance with GAAP and (b) the interest-equivalent costs associated
with any Permitted Receivables Financing as included in the "other
expense" line item in the consolidated income statements of the Credit
Parties and their Subsidiaries, whether accounted for as interest
expense or loss on the sale of Receivables, net of any cash interest
income reported during such period (including any interest-equivalent
income associated with any Permitted Receivables Financing).
"Interest Payment Date" means (a) as to Base Rate Loans, the
last day of each calendar quarter of the Credit Parties and the
Maturity Date, and (b) as to Eurodollar Loans, the last day of each
applicable Interest Period, the Maturity Date and each date on which
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<PAGE> 23
any principal of such Loans is repaid and, in addition, where the
applicable Interest Period for a Eurodollar Loan is greater than three
months, then also the date three months from the beginning of the
Interest Period and each three months thereafter.
"Interest Period" means, as to Eurodollar Loans, a period of
one week or one, two, three, six or (subject to availability from all
Lenders) nine or twelve months' duration, as the U.S. Borrower may
elect, commencing, in each case, on the date of the borrowing
(including continuations and conversions thereof); provided, however,
(a) if any Interest Period would end on a day which is not a Business
Day, such Interest Period shall be extended to the next succeeding
Business Day (except that where the next succeeding Business Day falls
in the next succeeding calendar month, then on the next preceding
Business Day), (b) no Interest Period shall extend beyond the Maturity
Date, and (c) where an Interest Period begins on a day for which there
is no numerically corresponding day in the calendar month in which the
Interest Period is to end, such Interest Period shall end on the last
Business Day of such calendar month.
"Investment" in any Person means (a) the acquisition (whether
for cash, property, services, assumption of Indebtedness, securities or
otherwise) of assets, shares of Capital Stock, bonds, notes,
debentures, joint ventures or other ownership interests or other
securities of such other Person or (b) any deposit with, or advance,
loan or other extension of credit to, such Person (other than deposits
made in connection with the purchase of equipment or other assets in
the ordinary course of business) or (c) any other capital contribution
to or investment in such Person, including, without limitation, any
Support Obligation (including any support for a Letter of Credit issued
on behalf of such Person) incurred for the benefit of such Person.
"Issuing Lender Fees" has the meaning set forth in
Section 4.4(c).
"Issuing Lenders" means, collectively, the U.S. Issuing Lender
and the Canadian Issuing Lender and "Issuing Lender" means any one of
them.
"Joinder Agreement" means a joinder agreement substantially in
the form of Exhibit 8.13.
"Lenders" means, collectively, the U.S. Lenders and the
Canadian Lenders and "Lender" means any one of them.
"Letter of Credit" means (a) Letters of Credit issued for the
account of the U.S. Borrower or one of its Subsidiaries by the U.S.
Issuing Lender pursuant to Section 2.2, as such Letters of Credit may
be amended, modified, extended, renewed or replaced, (b) Letters of
Credit issued for the account of the Canadian Borrower or one of its
Subsidiaries by the Canadian Issuing Lender pursuant to Section 3.2, as
such Letters of Credit may be amended, modified, extended, renewed or
replaced, and (c) the Existing Letters of Credit.
"Letter of Credit Fee" has the meaning set forth in
Section 4.4(b).
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<PAGE> 24
"Leverage Ratio" means, as of the last day of each fiscal
quarter, the ratio of (a) total Adjusted Funded Debt on such date and
(b) EBITDA for the twelve month period ending on such date.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind, including,
without limitation, any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, and any lease in
the nature thereof.
"Loan" or "Loans" means the Revolving Loans and the Swingline
Loans (or a portion of any Revolving Loan or Swingline Loan),
individually or collectively, as appropriate.
"LOC Commitment" means, collectively, the Canadian LOC
Commitment and the U.S. LOC Commitment.
"LOC Obligations" means, collectively, the Canadian LOC
Obligations and the U.S. LOC Obligations.
"LOC Documents" means, with respect to any Letter of Credit,
such Letter of Credit, any amendments thereto, any documents delivered
in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (a) the rights and obligations of the parties concerned
or at risk or (b) any collateral security for such obligations.
"London Interbank Offered Rate" means, with respect to any
Eurodollar Loan for the Interest Period applicable thereto, the rate
per annum equal to the rate determined by the U.S. Administrative Agent
to be the offered rate which appears on the page of the Telerate Screen
which displays an average British Bankers Association Interest
Settlement Rate (such page currently being page number 3740 or 3750)
for deposits (for delivery on the first day of such period) with a term
equivalent to such period in Dollars, determined as of approximately
11:00 a.m. (London, England time) two Business Days prior to the first
day of such Interest Period, or (ii) in the event the rate referenced
in the preceding clause (i) does not appear on such page or service or
if such page or service shall cease to be available, the rate per annum
equal to the rate determined by the U.S. Administrative Agent to be the
offered rate on such other page or other service which displays an
average British Bankers Association Interest Settlement Rate for
deposits (for delivery on the first day of such period) with a term
equivalent to such period in Dollars, determined as of approximately
11:00 a.m. (London, England time) two Business Days prior to the first
day of such Interest Period, or (iii) in the event the rates referenced
in the preceding clauses (i) and (ii) are not available, the rate per
annum equal to the offered quotation rate to first class banks in the
London interbank market by the U.S. Administrative Agent for deposits
(for delivery on the first day of the relevant period) in Dollars of
amounts in immediately available funds comparable to the principal
amount of the Eurodollar Loan for which the London Interbank Offered
Rate is then being
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<PAGE> 25
determined with maturities comparable to such period as of
approximately 11:00 a.m. (London, England time) two Business Days prior
to the first day of such Interest Period.
"Mandatory Canadian Borrowing" has the meaning set forth in
Section 3.2(e).
"Mandatory U.S. Borrowing" has the meaning set forth in
Section 2.2(e).
"Material Adverse Effect" means a material adverse effect on
(a) the business, assets, liabilities (actual or contingent),
operations, condition (financial or otherwise) or prospects of the
Credit Parties taken as a whole, (b) the ability of a Credit Party to
perform its obligations under this Credit Agreement or any of the other
Credit Documents, or (c) the validity or enforceability of this Credit
Agreement, any of the other Credit Documents, or the rights and
remedies of the Lenders hereunder or thereunder taken as a whole.
"Material Foreign Subsidiary" means, as of any date of
determination, any Subsidiary of the Parent that (a) is organized or
formed outside of the United States and Canada and (b) owns assets
greater than or equal to $7,000,000.
"Maturity Date" means June 29, 2004.
"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such company in the business
of rating securities.
"Multiemployer Plan" means a Plan covered by Title IV of ERISA
which is a multiemployer plan as defined in Section 3(37) or 4001(a)(3)
of ERISA.
"Multiple Employer Plan" means a Plan covered by Title IV of
ERISA, other than a Multiemployer Plan, which any Credit Party or any
of its Subsidiaries or any ERISA Affiliate and at least one employer
other than a Credit Party or any of its Subsidiaries or any ERISA
Affiliate are contributing sponsors.
"Net Income" means, for any period, the net income after taxes
for such period of the Credit Parties and their Subsidiaries on a
consolidated basis, as determined in accordance with GAAP.
"Non-Excluded Taxes" has the meaning set forth in
Section 4.13.
"Note" or "Notes" means the Revolving Notes and the Swingline
Notes, individually or collectively, as appropriate.
"Notice of Borrowing" means a request by a Borrower for a
Revolving Loan, in the form of Exhibit 2.1(b).
"Notice of Continuation/Conversion" means a request by (a) the
U.S. Borrower to continue an existing Eurodollar Loan to a new Interest
Period or to convert a Eurodollar Loan to a Base Rate Loan (other than
a U.S. Swingline Loan) or a Base Rate Loan (other than a U.S. Swingline
Loan) to a Eurodollar Loan or (b) the Canadian Borrower to continue
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<PAGE> 26
an existing Bankers' Acceptance to a new maturity date or to convert a
Bankers' Acceptance to a Canadian Revolving Loan (other than a Canadian
Swingline Loan) or a Canadian Revolving Loan (other than a Canadian
Swingline Loan) to a Bankers' Acceptance, in either case in the form of
Exhibit 2.4.
"Parent" means WESCO International, Inc., a Delaware
corporation, and any permitted successors and assigns.
"Participation Interest" means the Extension of Credit by a
Lender by way of a purchase of a participation in Loans, Letters of
Credit, LOC Obligations and/or BA Obligations as provided in any of
Section 2.2, 2.3, 3.2, 3.3, 4.8 or 10.4(b).
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereto.
"Permitted Acquisition" means an Acquisition by a Credit Party
or any Subsidiary of a Credit Party for consideration no greater than
the fair market value of the Capital Stock or property acquired;
provided that (a) the property acquired (or the property of the Person
acquired) in such Acquisition constitutes Eligible Assets (or goodwill
associated therewith), (b) the U.S. Administrative Agent shall have
received all items in respect of the Capital Stock or property acquired
in such Acquisition (and/or the seller thereof) required to be
delivered by the terms of Section 8.10 and/or Section 8.13, (c) in the
case of an Acquisition of the Capital Stock of another Person, the
board of directors (or other comparable governing body) of such other
Person shall have duly approved such Acquisition, (d) the U.S. Borrower
shall have delivered to the U.S. Administrative Agent, prior to the
closing of such Acquisition, a Pro Forma Compliance Certificate
demonstrating that, upon giving effect to such Acquisition, the Credit
Parties are in compliance with all of the covenants set forth in
Section 8.2, and (e) the representations and warranties made by the
Credit Parties in any Credit Document shall be true and correct in all
material respects at and as if made as of the date of such Acquisition
(after giving effect thereto) except to the extent such representations
and warranties expressly relate to an earlier date.
"Permitted Investments" means Investments which are (a) cash
or Cash Equivalents, (b) accounts receivable created, acquired or made
in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms, (c) inventory, raw materials and
general intangibles acquired in the ordinary course of business, (d)
Investments by a Borrower in any Credit Party that guarantees such
Borrower's obligations under the Credit Documents, (e) guaranties not
to exceed, in the aggregate, $10,000,000 at any one time outstanding of
loans from PNC Bank National Association or one of its Affiliates to
senior managers of a Borrower, which loans finance such senior
managers' participation in the Borrowers' stock purchase programs, (f)
Investments by the U.S. Borrower or its Subsidiaries in the Canadian
Borrower in an amount not to exceed, in the aggregate, $50,000,000 at
any one time, (g) loans to directors, officers or employees in the
ordinary course of business for reasonable business expenses, not to
exceed, in the aggregate, $2,500,000 at any one time, (h) Investments
in Capital Expenditures, (i) Permitted Acquisitions, (j) Investments in
non-cash proceeds received as consideration for
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<PAGE> 27
the sale of Fife and (k) other Investments (in addition to those set
forth above) not to exceed, in the aggregate, $20,000,000 at any one
time.
"Permitted Liens" means (a) Liens securing Credit Party
Obligations, (b) Liens for taxes not yet due or Liens for taxes being
contested in good faith by appropriate proceedings for which adequate
reserves determined in accordance with GAAP have been established (and
as to which the property subject to any such Lien is not yet subject to
foreclosure, sale, collection, levy or loss on account thereof), (c)
Liens in respect of property imposed by law arising in the ordinary
course of business such as materialmen's, mechanics', warehousemen's,
carrier's, landlords' and other nonconsensual statutory Liens which are
not yet due and payable or which are being contested in good faith by
appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which the
property subject to any such Lien is not yet subject to foreclosure,
sale or loss on account thereof), (d) pledges or deposits made in the
ordinary course of business to secure payment of worker's compensation
insurance, unemployment insurance, pensions or social security
programs, (e) Liens arising from good faith deposits in connection with
or to secure performance of tenders, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations incurred in the ordinary course of business (other than
obligations in respect of the payment of borrowed money), (f) Liens
arising from good faith deposits in connection with or to secure
performance of statutory obligations and surety and appeal bonds, (g)
easements, rights-of-way, restrictions (including zoning restrictions),
matters of plat, minor defects or irregularities in title and other
similar charges or encumbrances not, in any material respect, impairing
the use of the encumbered property for its intended purposes, (h)
judgment Liens that would not constitute an Event of Default, (i) Liens
in connection with Indebtedness permitted by Section 9.1(b) (to the
extent the assets covered by such Liens are subject to Liens on the
Closing Date as indicated on Schedule 1.1(c)), Section 9.1(f), Section
9.1(m), Section 9.1(o) or Section 9.1(p), (j) Liens arising by virtue
of any statutory or common law provision relating to banker's liens,
rights of setoff or similar rights as to deposit accounts or other
funds maintained with a creditor depository institution and (k) Liens
existing on the date hereof and identified on Schedule 1.1(c); provided
that (i) no such Lien shall extend to any property other than the
property subject thereto on the Closing Date and (ii) the principal
amount of the Indebtedness secured by such Liens shall not be extended,
renewed, refunded or refinanced.
"Permitted Receivables Financing" means any transaction
entered into pursuant to and in accordance with the Receivables Sale
Agreements, the Receivables Pooling Agreement and the Receivables
Supplemental Pooling Agreement or any other financing by the Credit
Parties of Receivables in any transaction or series of transactions
that may be entered into by the Credit Parties pursuant to which (a)
one or more Credit Parties sells, conveys or otherwise transfers to a
Receivables Subsidiary and (b) such Receivables Subsidiary sells,
conveys or otherwise transfers to any other Person or grants a security
interest to any Person in, any Receivables (whether now existing or
hereafter acquired) of a Credit Party, and any assets related thereto
including all collateral securing such Receivables, all contracts and
all Support Obligations or other obligations in respect of such
Receivables, proceeds of such Receivables and other assets that are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset
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<PAGE> 28
securitization transactions involving Receivables, provided that (i)
the Board of Directors of the U.S. Borrower shall have determined in
good faith that such Permitted Receivables Financing is economically
fair and reasonable to the Credit Parties and the applicable
Receivables Subsidiary and (ii) all sales of Receivables and Related
Property to such Receivables Subsidiary are made at fair market value
(as determined in good faith by the U.S. Borrower).
"Permitted Subordinated Refinancing Debt" means Indebtedness
of the U.S. Borrower that (a) is issued in exchange for all of, or the
net proceeds of which are used to refinance, replace, defease or refund
in whole and not in part, the Subordinated Debt; provided that (i) the
principal amount of such Permitted Subordinated Refinancing Debt does
not exceed the principal amount (or accreted value, if applicable) of
the Subordinated Debt, so refinanced, replaced, defeased or refunded,
plus the amount of premiums, prepayment penalties and other amounts
required to be paid in connection therewith and the reasonable and
customary fees and expenses incurred in connection therewith, (ii) no
material terms applicable to such Permitted Subordinated Refinancing
Debt (including the subordination provisions thereof) are materially
less favorable to the U.S. Borrower or the Lenders than the terms that
are applicable under the Subordinate Debt Indenture, prior to such
refinancing, (iii) the timing and amounts of principal repayments
(including any sinking fund therefor) on such Permitted Subordinated
Refinancing Debt are no sooner and no greater, respectively, than the
timing and amounts of principal repayments under the Subordinated Debt
being refinanced, (iv) such Permitted Subordinated Refinancing Debt is
unsecured and (v) such Permitted Subordinated Refinancing Debt accrues
interest at a rate determined in good faith by the Board of Directors
of the U.S. Borrower to be a market rate of interest for such Permitted
Subordinated Refinancing Debt at the time of issuance thereof.
"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated), or any Governmental
Authority.
"Plan" means any employee benefit plan (as defined in Section
3(3) of ERISA) which is covered by ERISA and with respect to which any
Credit Party or any of its Subsidiaries or any ERISA Affiliate is (or,
if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" within the meaning of Section 3(5)
of ERISA.
"Pledge Agreements" means the U.S. Pledge Agreement, the
Canadian Pledge Agreement and any other pledge agreement executed and
delivered by one or more of the Credit Parties in favor of the
Collateral Agent, for the benefit of the Lenders, to secure its (or
their) respective obligations under the Credit Documents, as amended,
modified, extended, renewed or replaced from time to time.
"Pro Forma Basis" means, for purposes of calculating
(utilizing the principles set forth in Section 1.3(b)) compliance with
each of the financial covenants set forth in Section 8.2 in respect of
a proposed Acquisition as referred to in clause (d) of the definition
of "Permitted Acquisition" set forth in this Section 1.1, that such
Acquisition
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<PAGE> 29
shall be deemed to have occurred as of the first day of the four
fiscal-quarter period ending as of the most recent fiscal quarter end
preceding the date of such Acquisition with respect to which the U.S.
Administrative Agent has received the financial statements and
officer's certificate required to be delivered pursuant to Section
8.1(a) or (b), as applicable, and Section 8.1(c). In connection with
any calculation of the financial covenants set forth in Section 8.2 and
upon giving effect on a Pro Forma Basis to any Acquisition, (a) any
Indebtedness incurred by any Credit Party in connection with such
Acquisition (i) shall be deemed to have been incurred as of the first
day of the applicable period and (ii) if such Indebtedness has a
floating or formula rate, such Indebtedness shall have an implied rate
of interest for the applicable period for purposes of this definition
determined by utilizing the rate which is or would be in effect with
respect to such Indebtedness as at the relevant date of determination,
(b) income statement items (whether positive or negative) attributable
to the Capital Stock or property acquired in such Acquisition shall be
included to the extent relating to the relevant period and to the
extent, and in the same manner, as such items are included for the
Credit Parties and (c) Net Income after giving effect to such
Acquisition shall be adjusted to add back identifiable and quantifiable
expenses that would not have been incurred if such Acquisition was
completed as of the first day of the relevant period.
"Pro Forma Compliance Certificate" means a certificate of the
chief financial officer (or other officer acceptable to the U.S.
Administrative Agent) of the U.S. Borrower delivered to the U.S.
Administrative Agent in connection with any Acquisition as referred to
in clause (d) of the definition of "Permitted Acquisition" set forth in
this Section 1.1 and containing reasonably detailed calculations, upon
giving effect to such Acquisition on a Pro Forma Basis, of each of the
financial covenants set forth in Section 8.2 as of the most recent
fiscal quarter end preceding the date of such Acquisition with respect
to which the U.S. Administrative Agent shall have received the
financial statements and officer's certificate required to be delivered
pursuant to Section 8.1(a) or (b), as applicable, and Section 8.1(c);
provided, however, that the calculations of such financial covenants in
such certificate shall either (a) exclude positive income statement
items and all adjustments that would otherwise be used in such
calculations pursuant to clauses (b) and (c) of the definition of "Pro
Forma Basis" or (b) shall include such positive income statement items
and adjustments, but such adjustments shall be included only to the
extent the U.S. Borrower has provided supporting detail acceptable to
the U.S. Administrative Agent for any adjustments to Net Income that
will be made in accordance with clause (c) of the definition of "Pro
Forma Basis".
"Receivable" means the indebtedness and payment obligations of
any Person to any Credit Party or acquired by any Credit Party
(including obligations constituting an account or general intangible or
evidenced by a note, instrument, contract, security agreement, chattel
paper or other evidence of indebtedness or security) arising from a
sale of merchandise or the provision of services in the ordinary course
of business by such Credit Party or the Person from which such
indebtedness and payment obligation were acquired by any Credit Party,
including (a) any right to payment for goods sold or for services
rendered and (b) the right to payment of any interest, sales taxes,
finance charges, returned check or late charges and other obligations
of such Person with respect thereto.
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<PAGE> 30
"Receivables Pooling Agreement" means the Pooling Agreement
dated as of June 5, 1998 among WESCO Receivables Corp., the U.S.
Borrower, as servicer, and The Chase Manhattan Bank, as Funding Agent
and as trustee, as the same may be amended, modified or supplemented
from time to time in accordance with the terms hereof and thereof and
any other supplement to the Receivables Pooling Agreement entered into
in connection with a Permitted Receivables Financing.
"Receivables Sale Agreements" means, collectively, (a) the
U.S. Receivables Sale Agreement dated as of June 5, 1998 among the U.S.
Borrower and WESCO Equity Corporation, as Sellers, WESCO Receivables
Corp. and the U.S. Borrower, in its capacity as servicer, and (b) the
Canadian Receivables Sale Agreement dated as of June 5, 1998 among the
Canadian Borrower, as Seller, WESCO Receivables Corp. and the U.S.
Borrower, in its capacity as servicer.
"Receivables Subsidiary" means WESCO Receivables Corp., a
Delaware corporation that is a wholly owned, bankruptcy-remote, special
purpose subsidiary of the U.S. Borrower or any other wholly owned
Subsidiary of the U.S. Borrower or the Canadian Borrower (a) that
engages in no activities other than in connection with the financing of
Receivables, all proceeds thereof and all rights (contractual or
other), collateral and other assets relating thereto, and any business
or activities incidental or related to such business, (b) that is
designated by the Board of Directors of the U.S. Borrower or the
Canadian Borrower (as provided below) as a Receivables Subsidiary and
(c) of which no portion of its Indebtedness or any other obligations
(contingent or otherwise) (i) is guaranteed by the Credit Parties or
any of their Subsidiaries (excluding guarantees of obligations (other
than the principal of, and interest on, Indebtedness) pursuant to
Standard Securitization Undertakings), (ii) is recourse to or obligates
the Credit Parties or any of their Subsidiaries in any way other than
pursuant to Standard Securitization Undertakings or (iii) subjects any
property or asset of directly or indirectly, contingently or otherwise,
to the satisfaction thereof, other than pursuant to Standard
Securitization Undertakings. Upon any such designation, a financial
officer of the U.S. Borrower or the Canadian Borrower, as applicable,
shall deliver a certificate to the U.S. Administrative Agent certifying
(a) the resolution of the Board of Directors of the U.S. Borrower or
the Canadian Borrower, as applicable, giving effect to such
designation, (b) that such designation complied with the foregoing
conditions, (c) that after giving effect to such designation (including
any Indebtedness permitted to exist in connection with such
designation), the Credit Parties shall be in compliance, on a pro forma
basis, with the covenants set forth in Section 8.2 and (d) immediately
after giving effect to such designation no Default or Event of Default
shall have occurred and be continuing.
"Receivables Supplemental Pooling Agreement" means the Series
1998-1 Supplement, dated as of June 5, 1998, to the Receivables Pooling
Agreement, among WESCO Receivables Corp., the U.S. Borrower, as
servicer, Park Avenue Receivables Corporation, certain banks or
financial institutions party thereto, and The Chase Manhattan Bank, as
Funding Agent and as trustee, as the same may be amended, modified or
supplemented from time to time in accordance with the terms hereof and
thereof, and any other supplement to the Receivables Pooling Agreement
entered into in connection with a Permitted Receivable Financing.
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<PAGE> 31
"Regulation D, O, T, U, or X" means Regulation D, O, T, U or
X, respectively, of the Board of Governors of the Federal Reserve
System as from time to time in effect and any successor to all or a
portion thereof.
"Related Property" means, with respect to each Receivable:
(a) all of the interest of the applicable Credit
Party or its Subsidiary in the goods, if any, sold and
delivered to an obligor relating to the sale which gave rise
to such Receivable,
(b) all other security interest or Liens, and the
interest of the applicable Credit Party or its Subsidiary in
the property subject thereto, from time to time purporting to
secure payment of such Receivable, together with all financing
statements signed by an obligor describing any collateral
securing such Receivable and
(c) all guarantees, insurance, letters of credit and
other agreements or arrangements of whatever character from
time to time supporting or securing payment of such
Receivable,
in the case of clauses (b) and (c), whether pursuant to the contract
related to such Receivable or otherwise or pursuant to any obligations
evidenced by a note, instrument, contract, security agreement, chattel
paper or other evidence of indebtedness or security and the proceeds
thereof.
"Reportable Event" means a "reportable event" as defined in
Section 4043 of ERISA with respect to which the notice requirements to
the PBGC have not been waived.
"Required Canadian Lenders" means Canadian Lenders whose
aggregate Canadian Facility Credit Exposure (as hereinafter defined)
constitutes more than 50% of the Canadian Facility Credit Exposure of
all Canadian Lenders at such time; provided, however, that if any
Canadian Lender shall be a Defaulting Lender at such time then there
shall be excluded from the determination of Required Canadian Lenders
the aggregate principal amount of Canadian Facility Credit Exposure of
such Lender at such time. For purposes of the preceding sentence, the
term "Canadian Facility Credit Exposure" as applied to each Canadian
Lender shall mean (a) at any time prior to the termination of the
Commitments, the Canadian Revolving Loan Commitment Percentage of such
Lender multiplied by the Canadian Revolving Committed Amount and (b) at
any time after the termination of the Commitments, the sum of (i) the
principal balance of the outstanding Canadian Revolving Loans of such
Lender plus (ii) the Face Amount of all Bankers' Acceptances created by
such Lender plus (iii) such Lender's Participation Interests in the
face amount of the outstanding Canadian Letters of Credit and Canadian
Swingline Loans.
"Required Lenders" means Lenders whose aggregate Credit
Exposure (as hereinafter defined) constitutes more than 50% of the
Credit Exposure of all Lenders at such time; provided, however, that if
any Lender shall be a Defaulting Lender at such time then
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<PAGE> 32
there shall be excluded from the determination of Required Lenders the
aggregate principal amount of Credit Exposure of such Lender at such
time. For purposes of the preceding sentence, the term "Credit
Exposure" as applied to each Lender shall mean (a) at any time prior to
the termination of the Commitments, the sum of (i) the U.S. Revolving
Loan Commitment Percentage of such Lender multiplied by the U.S.
Revolving Committed Amount plus (ii) the Canadian Revolving Loan
Commitment Percentage of such Lender multiplied by the Canadian
Revolving Committed Amount and (b) at any time after the termination of
the Commitments, the sum of (i) the principal balance of the
outstanding Loans of such Lender plus (ii) the Face Amount of all
Bankers' Acceptances created by such Lender plus (iii) such Lender's
Participation Interests in the face amount of the outstanding Letters
of Credit and Swingline Loans. In determining each Lender's Credit
Exposure as set forth above, amounts denominated in Canadian Dollars
shall be converted into U.S. Dollars based on an exchange rate
determined by the U.S. Administrative Agent in accordance with its
normal practices.
"Required U.S. Lenders" means U.S. Lenders whose aggregate
U.S. Facility Credit Exposure (as hereinafter defined) constitutes more
than 50% of the U.S. Facility Credit Exposure of all U.S. Lenders at
such time; provided, however, that if any U.S. Lender shall be a
Defaulting Lender at such time then there shall be excluded from the
determination of Required U.S. Lenders the aggregate principal amount
of U.S. Facility Credit Exposure of such Lender at such time. For
purposes of the preceding sentence, the term "U.S. Facility Credit
Exposure" as applied to each U.S. Lender shall mean (a) at any time
prior to the termination of the Commitments, the U.S. Revolving Loan
Commitment Percentage of such Lender multiplied by the U.S. Revolving
Committed Amount and (b) at any time after the termination of the
Commitments, the sum of (i) the principal balance of the outstanding
U.S. Revolving Loans of such Lender plus (ii) such Lender's
Participation Interests in the face amount of the outstanding U.S.
Letters of Credit and U.S. Swingline Loans.
"Requirement of Law" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation or final, non-appealable determination of an arbitrator or a
court or other Governmental Authority, in each case applicable to or
binding upon such Person or to which any of its material property is
subject.
"Revolving Loans" means, collectively, the U.S. Revolving
Loans and the Canadian Revolving Loans.
"Revolving Note" or "Revolving Notes" means, collectively, the
Canadian Revolving Notes and the U.S. Revolving Notes.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc. or any successor or assignee of the business of such
division in the business of rating securities.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
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<PAGE> 33
"Security Agreements" means the U.S. Security Agreement, the
Canadian Security Agreement and any other security agreement executed
and delivered by one or more of the Credit Parties in favor of the
Collateral Agent for the benefit of the Lenders to secure its (or
their) respective obligations under the Credit Documents, as amended,
modified, extended, renewed, restated or replaced from time to time.
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Solvent" means, with respect to any Person as of a particular
date, that on such date (a) such Person is able to pay its debts and
other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (b) such Person does not
intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and
liabilities mature in their ordinary course, (c) such Person is not
engaged in a business or a transaction, and is not about to engage in a
business or a transaction, for which such Person's assets would
constitute unreasonably small capital after giving due consideration to
the prevailing practice in the industry in which such Person is engaged
or is to engage, (d) the fair value of the assets of such Person is
greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person and (e) the present
fair saleable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured. In computing
the amount of contingent liabilities at any time, it is intended that
such liabilities will be computed at the amount which, in light of all
the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by a Credit Party
that the U.S. Borrower has determined in good faith to be customary in
receivables financing transactions similar to the Permitted Receivables
Financings, including those representations, warranties, covenants and
indemnities relating to the servicing of assets of a Receivables
Subsidiary.
"Subordinated Debt" means the Indebtedness evidenced by the 9
1/8% Senior Subordinated Notes of the U.S. Borrower due 2008 issued on
June 5, 1998.
"Subordinated Debt Indenture" means the indenture entered into
by the U.S. Borrower in connection with the issuance of the
Subordinated Debt, together with all instruments and other agreements
entered into by the U.S. Borrower, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
Section 9.13.
"Subsidiary" means, as to any Person, (a) any corporation more
than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time, any class
or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by
such Person directly or indirectly through Subsidiaries, and (b) any
partnership, association, joint venture, limited liability
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<PAGE> 34
company or other entity in which such person directly or indirectly
through Subsidiaries has more than a 50% equity interest at any time.
"Support Obligations" means, with respect to any Person,
without duplication, any obligations (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing any Indebtedness of any other Person in any
manner, whether direct or indirect, and including without limitation
any obligation, whether or not contingent, (a) to purchase any such
Indebtedness or other obligation or any property constituting security
therefor, (b) to advance or provide funds or other support for the
payment or purchase of such Indebtedness or obligation or to maintain
working capital, solvency or other balance sheet condition of such
other Person (including, without limitation, maintenance agreements,
comfort letters, take or pay arrangements, put agreements or similar
agreements or arrangements) for the benefit of the holder of
Indebtedness of such other Person, (c) to lease or purchase property,
securities or services primarily for the purpose of assuring the owner
of such Indebtedness or (d) to otherwise assure or hold harmless the
owner of such Indebtedness or obligation against loss in respect
thereof. The amount of any Support Obligation hereunder shall (subject
to any limitations set forth therein) be deemed to be an amount equal
to the outstanding principal amount (or maximum principal amount, if
larger) of the Indebtedness in respect of which such Support Obligation
is made.
"Swingline Loan Request" means a request by a Borrower for a
Swingline Loan in substantially the form of Exhibit 2.3(b).
"Swingline Loans" means, collectively, the U.S. Swingline
Loans and the Canadian Swingline Loans.
"Termination Event" means (a) with respect to any Plan, the
occurrence of a Reportable Event or the substantial cessation of
operations (within the meaning of Section 4062(e) of ERISA); (b) the
withdrawal of any Credit Party or any of its Subsidiaries or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it
was a substantial employer (as such term is defined in Section
4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan;
(c) the distribution of a notice of intent to terminate or the actual
termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA;
(d) the institution of proceedings to terminate or the actual
termination of a Plan by the PBGC under Section 4042 of ERISA; (e) any
event or condition which might reasonably constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan; (f) the complete or partial withdrawal
of any Credit Party or any of its Subsidiaries or any ERISA Affiliate
from a Multiemployer Plan; or (g) the adoption of an amendment to any
Plan requiring the provision of security to such Plan pursuant to
Section 307 of ERISA.
"Total Facility Commitment Percentage" means, for each Lender,
the percentage identified as its Total Facility Commitment Percentage
on Schedule 1.1(a), as such percentage may be modified in connection
with any assignment made in accordance with the provisions of Section
12.3.
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"Total Facility Guarantors" means each of (a) the Parent, (b)
the Subsidiaries of the Parent identified as Total Facility Guarantors
on the signature pages hereto and (c) each hereafter acquired or
organized Subsidiary of the Parent that becomes an Additional Credit
Party and Total Facility Guarantor hereunder by execution of a Joinder
Agreement or otherwise, in each case together with their successors and
assigns.
"Total Senior Debt" means all Indebtedness of the Credit
Parties and their Subsidiaries other than the Subordinated Debt.
"U.S. Administrative Agent" means Bank of America or any
successor agent appointed pursuant to Section 11.9.
"U.S. Borrower" means WESCO Distribution, Inc., a Delaware
Corporation, and any permitted successors and assigns.
"U.S. Credit Parties" means those Credit Parties domiciled in
the United States.
"U.S. Issuing Lender" means (a) Bank of America or, with the
consent of (i) the Borrowers, (ii) the U.S. Administrative Agent and
(iii) the Required U.S. Lenders, any other U.S. Lender or (b) with
respect to any Existing U.S. Letter of Credit, The Chase Manhattan
Bank.
"U.S. Lender" means any of the Persons identified as a "U.S.
Lender" on Schedule 1.1(a), and any Eligible Assignee which may become
a U.S. Lender by way of assignment in accordance with the terms hereof,
together with their successors and permitted assigns.
"U.S. Letter of Credit" means a Letter of Credit issued for
the account of the U.S. Borrower by the U.S. Issuing Lender pursuant to
Section 2.2(a) or any Existing U.S. Letter of Credit, as such Letter of
Credit may be amended, modified, extended, renewed or replaced.
"U.S. LOC Commitment" means the commitment of the U.S. Issuing
Lender to issue U.S. Letters of Credit for the account of the U.S.
Borrower in an aggregate face amount at any time outstanding (together
with the amounts of any unreimbursed drawings thereon) of up to the
U.S. LOC Committed Amount.
"U.S. LOC Committed Amount" has the meaning assigned to such
term in Section 2.2(a).
"U.S. LOC Obligations" means, at any time, the sum of (a) the
maximum amount which is, or at any time thereafter may become,
available to be drawn under U.S. Letters of Credit (including the
Existing U.S. Letters of Credit) then outstanding, assuming compliance
with all requirements for drawings referred to in such U.S. Letters of
Credit plus (b) the aggregate amount of all drawings under U.S. Letters
of Credit honored by the U.S. Issuing Lender but not theretofore
reimbursed.
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"U.S. LOC Subfacility" means the Letter of Credit subfacility
established pursuant to Section 2.2.
"U.S. Pledge Agreement" means that certain Pledge Agreement,
dated as of the Closing Date, executed and delivered by the U.S. Credit
Parties in favor of the Collateral Agent, for the benefit of the
Lenders, to secure their respective obligations under the Credit
Documents, as amended, modified, extended, renewed or replaced from
time to time.
"U.S. Reference Rate" means the per annum rate of interest
established from time to time by the U.S. Administrative Agent as its
reference rate in effect at its principal office in San Francisco,
California or Charlotte, North Carolina, as applicable (or such other
principal office of the U.S. Administrative Agent as communicated in
writing to the U.S. Borrower and the U.S. Lenders). Any change in the
interest rate resulting from a change in the U.S. Reference Rate shall
become effective as of 12:01 a.m. of the Business Day on which each
change in the U.S. Reference Rate is announced by the U.S.
Administrative Agent. The U.S. Reference Rate is a reference rate used
by the U.S. Administrative Agent in determining interest rates on
certain loans and is not intended to be the lowest rate of interest
charged on any extension of credit to any debtor.
"U.S. Revolving Committed Amount" means THREE HUNDRED
SIXTY-FIVE MILLION DOLLARS ($365,000,000) or such lesser amount as the
U.S. Revolving Committed Amount may be reduced pursuant to Section
2.1(d) or increased in accordance with Section 2.1(e).
"U.S. Revolving Loan Commitment" means, with respect to each
U.S. Lender, the commitment of such U.S. Lender to make its portion of
the U.S. Revolving Loans in a principal amount equal to such U.S.
Lender's U.S. Revolving Loan Commitment Percentage of the U.S.
Revolving Committed Amount.
"U.S. Revolving Loan Commitment Percentage" means, for each
U.S. Lender, the percentage identified as its U.S. Revolving Loan
Commitment Percentage on Schedule 1.1(a), as such percentage may be
modified in connection with any assignment made in accordance with the
provisions of Section 12.3.
"U.S. Revolving Loans" means the revolving loans made by the
U.S. Lenders to the U.S. Borrower pursuant to Section 2.1.
"U.S. Revolving Note" or "U.S. Revolving Notes" means the
promissory notes of the U.S. Borrower in favor of each of the U.S.
Lenders evidencing the U.S. Revolving Loans provided pursuant to
Section 2.1, individually or collectively, as appropriate, as such
promissory notes may be amended, modified, supplemented, extended,
renewed or replaced from time to time and as evidenced in the form of
Exhibit 2.1(f).
"U.S. Security Agreement" means that certain Security
Agreement, dated as of the Closing Date, executed and delivered by the
U.S. Credit Parties in favor of the Collateral Agent, for the benefit
of the Lenders, to secure their respective obligations under the Credit
Documents, as amended, modified, extended, renewed or replaced from
time to time.
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"U.S. Standby Letters of Credit" has the meaning set forth in
Section 2.2(a).
"U.S. Standby Letter of Credit Outstanding Amount" means, for
any period, the quotient resulting from dividing (a) the sum for each
day during such period of the aggregate maximum amount available to be
drawn under all U.S. Standby Letters of Credit by (b) the total number
of days in such period.
"U.S. Swingline Committed Amount" means TWENTY MILLION DOLLARS
($20,000,000).
"U.S. Swingline Lender" means Bank of America or, with the
consent of (i) the Borrowers, (ii) the U.S. Administrative Agent and
(iii) the Required U.S. Lenders, any other U.S. Lender.
"U.S. Swingline Loan Commitment" means, with respect to the
U.S. Swingline Lender, the commitment of the U.S. Swingline Lender to
make U.S. Swingline Loans available to the U.S. Borrower in the
principal amount of up to the U.S. Swingline Committed Amount.
"U.S. Swingline Loans" means to loans made by the U.S.
Swingline Lender pursuant to Section 2.3.
"U.S. Swingline Note" means the promissory note of the U.S.
Borrower in favor of the U.S. Swingline Lender evidencing the U.S.
Swingline Loans provided pursuant to Section 2.3, as such promissory
note may be amended, modified, supplemented, extended, renewed or
replaced from time to time in and as evidenced by the form of Exhibit
2.3(d).
"U.S. Trade Letter of Credit" has the meaning set forth in
Section 2.2(a).
"U.S. Trade Letter of Credit Outstanding Amount" means, for
any period, the quotient resulting from dividing (a) the sum for each
day during such period of the aggregate maximum amount available to be
drawn under all U.S. Trade Letters of Credit by (b) the total number of
days in such period.
"U.S. Unused Revolving Commitment" means, for any period, the
amount by which (a) the then applicable U.S. Revolving Committed Amount
exceeds (b) the quotient resulting from dividing (i) the sum for each
day during such period of the outstanding aggregate principal amount of
all U.S. Revolving Loans plus U.S. LOC Obligations by (ii) the total
number of days in such period.
"Voting Stock" of a corporation means all classes of the
Capital Stock of such corporation then outstanding and normally
entitled to vote in the election of directors.
"Working Capital" means, at any time, with respect to the
Credit Parties and their Subsidiaries on a consolidated basis, the sum
of (a) inventory plus (b) Receivables, in each case as determined in
accordance with GAAP.
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"Year 2000 Problem" means any risk (a) that any computer
hardware, software or other equipment used by a Credit Party or any of
its Subsidiaries (or by any suppliers, vendors or customers that is
material to the business of such Credit Party or Subsidiary) will not
function as effectively and reliably on and after January 1, 2000 as it
does prior to January 1, 2000 or (b) that any computer applications
used by a Credit Party or any of its Subsidiaries may not be able to
recognize and properly perform date-sensitive functions after December
31, 1999, to the extent any such risk specified in items (a) or (b)
above could cause or could be reasonably expected to cause a Material
Adverse Effect.
1.2 COMPUTATION OF TIME PERIODS AND OTHER DEFINITIONAL PROVISIONS.
For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding." References in this Agreement to "Articles", "Sections",
"Schedules" or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits
of or to this Agreement unless otherwise specifically provided.
1.3 ACCOUNTING TERMS.
(a) Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 8.1 (or,
prior to the delivery of the first financial statements pursuant to Section 8.1,
consistent with the financial statements described in Section 6.1(d)); provided,
however, if (i) the U.S. Borrower shall object to determining such compliance on
such basis at the time of delivery of such financial statements due to any
change in GAAP or the rules promulgated with respect thereto or (ii) the U.S.
Administrative Agent or the Required Lenders shall so object in writing within
30 days after delivery of such financial statements, then such calculations
shall be made on a basis consistent with GAAP as in effect as of the date of the
most recent financial statements delivered by the U.S. Borrower to the Lenders
to which no such objection shall have been made.
(b) Notwithstanding the above, the parties hereto acknowledge and agree
that, for purposes of (i) all calculations made under the financial covenants
set forth in Section 8.2 (including the definitions used therein), (ii)
calculating the Leverage Ratio in connection with the definition of "Applicable
Percentage" set forth in Section 1.1 and (iii) the definition of "Pro Forma
Basis" set forth in Section 1.1, income statement items (whether positive or
negative) attributable to any Person or property acquired in any Acquisition
contemplated by the definition of "Permitted Acquisition" set forth in Section
1.1 shall, to the extent not otherwise included in such income statement items
for the Credit Parties in accordance with GAAP or in accordance with any defined
terms set forth in Section 1.1, be included to the extent relating to any period
applicable in such calculations and to the extent and in the same manner as such
items are included for the Credit Parties.
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1.4 TIME.
All references to time herein shall be references to Eastern Standard
time or Eastern Daylight time, as the case may be, unless specified otherwise.
SECTION 2
U.S. CREDIT FACILITIES
2.1 U.S. REVOLVING LOANS.
(a) U.S. Revolving Loan Commitment. Subject to the terms and
conditions set forth herein, each U.S. Lender severally agrees to make
revolving loans (each a "U.S. Revolving Loan" and collectively the
"U.S. Revolving Loans") to the U.S. Borrower, in Dollars, at any time
and from time to time, during the period from and including the
Effective Date to but not including the Maturity Date (or such earlier
date on which the U.S. Revolving Committed Amount has been terminated
as provided herein); provided, however, that (i) the sum of the
aggregate amount of U.S. Revolving Loans outstanding plus the aggregate
amount of U.S. LOC Obligations outstanding plus the aggregate amount of
U.S. Swingline Loans outstanding shall not exceed the U.S. Revolving
Committed Amount and (ii) with respect to each individual U.S. Lender
(other than the U.S. Swingline Lender in its capacity as such), such
Lender's pro rata share of outstanding U.S. Revolving Loans plus such
Lender's pro rata share of outstanding U.S. LOC Obligations plus such
Lender's pro rata share of outstanding U.S. Swingline Loans shall not
exceed such Lender's U.S. Revolving Loan Commitment. Subject to the
terms of this Credit Agreement (including Section 6.2), the U.S.
Borrower may borrow, repay and reborrow U.S. Revolving Loans.
(b) Method of Borrowing for U.S. Revolving Loans. By no later
than 11:00 a.m. (i) on the date of the requested borrowing of U.S.
Revolving Loans that will be Base Rate Loans or (ii) three Business
Days prior to the date of the requested borrowing of U.S. Revolving
Loans that will be Eurodollar Loans, the U.S. Borrower shall telephone
the U.S. Administrative Agent with the information described below as
well as submit a written Notice of Borrowing in the form of Exhibit
2.1(b) (which may be submitted via telecopy) to the U.S. Administrative
Agent setting forth (A) the amount requested, (B) whether such U.S.
Revolving Loans shall accrue interest at the Adjusted Base Rate or the
Adjusted Eurodollar Rate, (C) with respect to U.S. Revolving Loans that
will be Eurodollar Loans, the Interest Period applicable thereto and
(D) a certification that the U.S. Borrower has complied in all respects
with Section 6.2. All U.S. Revolving Loans made on the Effective Date
shall be Base Rate Loans. Thereafter, all or any portion of such U.S.
Revolving Loans may be converted into Eurodollar Loans in accordance
with the terms of Section 2.4.
(c) Funding of U.S. Revolving Loans. Upon receipt of a Notice
of Borrowing, the U.S. Administrative Agent shall promptly inform the
U.S. Lenders as to the terms thereof. Each U.S. Lender shall make its
U.S. Revolving Loan Commitment Percentage of the requested U.S.
Revolving Loans available to the U.S. Administrative Agent by 1:00
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p.m. on the date specified in the Notice of Borrowing by deposit, in
Dollars, of immediately available funds at the offices of the U.S.
Administrative Agent at its principal office in San Francisco,
California or at such other address as the U.S. Administrative Agent
may designate in writing. The amount of the requested U.S. Revolving
Loans will then be made available to the U.S. Borrower by the U.S.
Administrative Agent by crediting the account of the U.S. Borrower on
the books of such office of the U.S. Administrative Agent, to the
extent the amount of such U.S. Revolving Loans are made available to
the U.S. Administrative Agent.
No U.S. Lender shall be responsible for the failure or delay
by any other U.S. Lender in its obligation to make U.S. Revolving Loans
hereunder; provided, however, that the failure of any U.S. Lender to
fulfill its obligations hereunder shall not relieve any other U.S.
Lender of its obligations hereunder. Unless the U.S. Administrative
Agent shall have been notified by any U.S. Lender prior to the date of
any such U.S. Revolving Loan that such U.S. Lender does not intend to
make available to the U.S. Administrative Agent its portion of the U.S.
Revolving Loans to be made on such date, the U.S. Administrative Agent
may assume that such U.S. Lender has made such amount available to the
U.S. Administrative Agent on the date of such U.S. Revolving Loans, and
the U.S. Administrative Agent in reliance upon such assumption, may (in
its sole discretion but without any obligation to do so) make available
to the U.S. Borrower a corresponding amount. If such corresponding
amount is not in fact made available to the U.S. Administrative Agent,
the U.S. Administrative Agent shall be able to recover such
corresponding amount from such U.S. Lender. If such U.S. Lender does
not pay such corresponding amount forthwith upon the U.S.
Administrative Agent's demand therefor, the U.S. Administrative Agent
will promptly notify the U.S. Borrower, and the U.S. Borrower shall
immediately pay such corresponding amount to the U.S. Administrative
Agent. The U.S. Administrative Agent shall also be entitled to recover
from the U.S. Lender or the U.S. Borrower, as the case may be, interest
on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the U.S. Administrative
Agent to the U.S. Borrower to the date such corresponding amount is
recovered by the U.S. Administrative Agent at a per annum rate equal to
(i) from the U.S. Borrower at the applicable rate for such U.S.
Revolving Loan pursuant to the Notice of Borrowing and (ii) from a U.S.
Lender at the Federal Funds Rate.
(d) Reductions of U.S. Revolving Committed Amount. Upon at
least three Business Days' advance written notice, the U.S. Borrower
shall have the right to permanently reduce, without premium or penalty
(other than as may be required pursuant to Section 4.14), all or part
of the aggregate unused amount of the U.S. Revolving Committed Amount
at any time or from time to time; provided that (i) each partial
reduction shall be in an aggregate amount at least equal to $5,000,000
and in integral multiples of $500,000 above such amount and (ii) no
reduction shall be made which would reduce the U.S. Revolving Committed
Amount to an amount less than the aggregate amount of outstanding U.S.
Revolving Loans plus the aggregate amount of outstanding U.S. LOC
Obligations plus the aggregate amount of U.S. Swingline Loans
outstanding. Subject to Section 2.1(e), any reduction in the U.S.
Revolving Committed Amount shall be permanent and may not be
reinstated. The U.S. Administrative Agent shall immediately notify the
U.S. Lenders of any reduction in the U.S. Revolving Committed Amount.
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(e) Increases of U.S. Revolving Committed Amount. Subject to
the terms and conditions set forth herein, upon 30 days' advance
written notice to the U.S. Administrative Agent, the U.S. Borrower
shall have the right, at any time and from time to time from the
Effective Date until the Maturity Date (but no more than once a year,
with each year for purposes hereof being deemed to begin on the Closing
Date or an anniversary thereof), to increase the then existing U.S.
Revolving Committed Amount by an amount of up to FIFTY MILLION DOLLARS
($50,000,000) in the aggregate for all such increases; provided that
(i) the U.S. Revolving Committed Amount may not exceed FOUR HUNDRED
FIFTEEN MILLION DOLLARS ($415,000,000), (ii) any such increase shall be
in a minimum principal amount of $10,000,000 and an integral multiple
of $5,000,000 in excess thereof, (iii) if any U.S. Revolving Loans are
outstanding at the time of any such increase, the U.S. Borrower shall
make such payments and adjustments on such U.S. Revolving Loans
(including payment of any break-funding amount owing under Section
4.14) as are necessary to give effect to the revised U.S. Revolving
Loan Commitment Percentages and U.S. Revolving Loan Commitments of the
U.S. Lenders and (iv) the conditions to an Extension of Credit in
Sections 6.2 shall be satisfied before and after giving effect to any
such increase. An increase in the U.S. Revolving Committed Amount
hereunder shall be subject to satisfaction of the following: (A) the
amount of such increase shall be offered first to the existing U.S.
Lenders, (B) each existing U.S. Lender shall have the right, but not
the obligation, to commit to all or a portion of the proposed increase
to the U.S. Revolving Committed Amount, (C) in the event the additional
U.S. Revolving Loan Commitments which such existing U.S. Lenders are
willing to take shall exceed the amount requested by the U.S. Borrower,
then additional U.S. Revolving Loan Commitments which in the aggregate
equal such requested increase shall be allocated at the discretion of
the U.S. Administrative Agent in consultation with the U.S. Borrower
and (D) if the amount of the increase in the U.S. Revolving Committed
Amount requested by the U.S. Borrower shall exceed the additional U.S.
Revolving Loan Commitments which the existing U.S. Lenders are willing
to take, then the U.S. Borrower may invite other Eligible Assignees to
join this Credit Agreement as U.S. Lenders hereunder for the portion of
such increase not taken by such existing U.S. Lenders, provided that
(i) the minimum U.S. Revolving Loan Commitment of each such institution
equals or exceeds the smallest U.S. Revolving Loan Commitment of an
existing U.S. Lender prior to the increase to the U.S. Revolving
Committed Amount and (ii) such institutions shall enter into such
joinder agreements to give effect thereto as the U.S. Administrative
Agent and/or the U.S. Borrower may reasonably request, and the U.S.
Borrower shall execute such new Notes as appropriate. In connection
with any increase in, or new, U.S. Revolving Loan Commitments pursuant
to this Section, Schedule 1.1(a) hereto shall be revised to reflect the
modified U.S. Revolving Loan Commitment Percentages and U.S. Revolving
Loan Commitments of the U.S. Lenders.
(f) Repayment; U.S. Revolving Notes. The U.S. Borrower hereby
promises to repay in full the principal amount of all U.S. Revolving
Loans on the Maturity Date. Upon the request of any U.S. Lender made
through the U.S. Administrative Agent, the U.S. Revolving Loans made by
each U.S. Lender shall be evidenced by, in addition to the loan
accounts referenced in Section 4.15, a duly executed promissory note of
the U.S. Borrower
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to such U.S. Lender in an original principal amount equal to such U.S.
Lender's U.S. Revolving Loan Commitment Percentage of the U.S.
Revolving Committed Amount and in substantially the form of Exhibit
2.1(f).
2.2 U.S. LETTER OF CREDIT SUBFACILITY.
(a) Issuance. Subject to the terms and conditions hereof and
of the LOC Documents, if any, and any other terms and conditions which
the U.S. Issuing Lender may reasonably require (so long as such terms
and conditions do not impose any financial obligation on or require any
Lien (not otherwise contemplated by this Credit Agreement) to be given
by any Credit Party or conflict with any obligation of, or detract from
any action which may be taken by, any Credit Party under this Credit
Agreement), the U.S. Issuing Lender shall from time to time upon
request issue (from the Effective Date to the Maturity Date and in a
form reasonably acceptable to the U.S. Issuing Lender), in Dollars, and
the U.S. Lenders shall participate in, letters of credit ("U.S. Letters
of Credit") for the account of the U.S. Borrower or any of its
Subsidiaries; provided, however, that (i) the aggregate amount of U.S.
LOC Obligations shall not at any time exceed FIFTY MILLION DOLLARS
($50,000,000) (the "U.S. LOC Committed Amount"), (ii) the sum of the
aggregate amount of U.S. LOC Obligations outstanding plus U.S.
Revolving Loans outstanding plus U.S. Swingline Loans outstanding shall
not exceed the U.S. Revolving Committed Amount and (iii) with respect
to each individual U.S. Lender (other than the U.S. Swingline Lender in
its capacity as such), such Lender's pro rata share of outstanding U.S.
Revolving Loans plus its pro rata share of outstanding U.S. LOC
Obligations plus its pro rata share of U.S. Swingline Loans outstanding
shall not exceed such Lender's U.S. Revolving Loan Commitment. The U.S.
Issuing Lender may require the issuance and expiry date of each U.S.
Letter of Credit to be a Business Day. Each U.S. Letter of Credit shall
be either (A) a standby letter of credit issued to support the
obligations (including pension or insurance obligations), contingent or
otherwise, of the U.S. Borrower for itself or on behalf of one of its
Subsidiaries (the "U.S. Standby Letters of Credit") or (B) a commercial
letter of credit in respect of the purchase of goods or services by the
U.S. Borrower for itself or on behalf of one of its Subsidiaries in the
ordinary course of business (the "U.S. Trade Letters of Credit").
Except as otherwise expressly agreed upon by all the U.S. Lenders, no
U.S. Letter of Credit shall have an original expiry date more than one
year from the date of issuance, or as extended, shall have an expiry
date extending beyond the Maturity Date. Each U.S. Letter of Credit
shall comply with the related LOC Documents.
(b) Notice and Reports. The request for the issuance of a U.S.
Letter of Credit shall be submitted to the U.S. Issuing Lender at least
three Business Days prior to the requested date of issuance (or such
shorter period as may be reasonably acceptable to the U.S. Issuing
Lender) and shall be accompanied by a certification that the U.S.
Borrower has complied in all respects with Section 6.2. The U.S.
Issuing Lender will provide to the U.S. Administrative Agent prompt
notice of U.S. Letters of Credit which are issued within three (3)
Business Days, and including in such notice, among other things, the
account party, the beneficiary, the face amount, and the expiry date.
The U.S. Issuing Lender will further provide to the U.S. Administrative
Agent, promptly upon request, copies of the U.S. Letters of Credit and
the other LOC Documents.
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(c) Participations.
(i) Each U.S. Lender acknowledges and confirms that
it has a Participation Interest in the liability of the U.S.
Issuing Lender under each Existing U.S. Letter of Credit in an
amount equal to its U.S. Revolving Loan Commitment Percentage
of such Existing U.S. Letter of Credit. The U.S. Borrower's
reimbursement obligations in respect of each Existing U.S.
Letter of Credit, and each U.S. Lender's obligations in
connection therewith, shall be governed by the terms of this
Credit Agreement.
(ii) Each U.S. Lender, upon issuance of a U.S. Letter
of Credit (or upon the Effective Date in the case of an
Existing U.S. Letter of Credit), shall be deemed to have
purchased without recourse a risk participation from the U.S.
Issuing Lender in such Letter of Credit and each LOC Document
related thereto and the rights and obligations arising
thereunder and any collateral relating thereto, in each case
in an amount equal to its U.S. Revolving Loan Commitment
Percentage of the obligations under such Letter of Credit, and
shall absolutely, unconditionally and irrevocably assume, as
primary obligor and not as surety, and be obligated to pay to
the U.S. Issuing Lender therefor and discharge when due, its
U.S. Revolving Loan Commitment Percentage of the obligations
arising under such Letter of Credit. Without limiting the
scope and nature of each U.S. Lender's participation in any
U.S. Letter of Credit, to the extent that the U.S. Issuing
Lender has not been reimbursed as required hereunder or under
any such Letter of Credit, each such U.S. Lender shall pay to
the U.S. Administrative Agent its U.S. Revolving Loan
Commitment Percentage of such unreimbursed drawing in same day
funds on the day of notification by the U.S. Administrative
Agent of an unreimbursed drawing pursuant to the provisions of
subsection (d) or (e) hereof. The obligation of each U.S.
Lender to so reimburse the U.S. Issuing Lender shall be
absolute and unconditional and shall not be affected by the
occurrence of a Default, an Event of Default or any other
occurrence or event. Any such reimbursement shall not relieve
or otherwise impair the obligation of the U.S. Borrower or any
other Credit Party to reimburse the U.S. Issuing Lender under
any U.S. Letter of Credit, together with interest as
hereinafter provided.
(d) Reimbursement. In the event of any drawing under any U.S.
Letter of Credit, the U.S. Issuing Lender will promptly notify the U.S.
Borrower. Unless the U.S. Borrower shall immediately notify the U.S.
Issuing Lender of its intent to otherwise reimburse the U.S. Issuing
Lender, including through a U.S. Swingline Loan to the extent a U.S.
Swingline Loan in such amount is available (including the ability of
the U.S. Borrower to meet the conditions of Section 6.2), then the U.S.
Borrower shall be deemed to have requested a U.S. Revolving Loan at the
Adjusted Base Rate in the amount of the drawing, the proceeds of which
will be used to satisfy the reimbursement obligations. The U.S.
Borrower shall reimburse the U.S. Issuing Lender on the day of drawing
under any U.S. Letter of Credit either with the proceeds of such U.S.
Swingline Loan or U.S. Revolving Loan obtained hereunder or otherwise
in same day funds as provided herein or in the LOC Documents. If the
U.S. Borrower shall fail to reimburse the U.S. Issuing Lender as
provided hereinabove, the unreimbursed amount of such drawing shall
bear interest at a per
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annum rate equal to the Adjusted Base Rate plus 200 basis points. The
U.S. Borrower's reimbursement obligations hereunder shall be absolute
and unconditional under all circumstances irrespective of (but without
waiver of) any rights of set-off, counterclaim or defense to payment
the applicable account party or the U.S. Borrower may claim or have
against the U.S. Issuing Lender, an Agent, the Lenders, the beneficiary
of the Letter of Credit drawn upon or any other Person, including,
without limitation, any defense based on any failure of the applicable
account party, the U.S. Borrower or any other Credit Party to receive
consideration or the legality, validity, regularity or unenforceability
of the Letter of Credit. The U.S. Issuing Lender will promptly notify
the U.S. Administrative Agent who will promptly notify the U.S. Lenders
of the amount of any unreimbursed drawing and each U.S. Lender shall
promptly pay to the U.S. Administrative Agent for further credit to the
U.S. Issuing Lender, in Dollars and in immediately available funds, the
amount of such Lender's U.S. Revolving Loan Commitment Percentage of
such unreimbursed drawing. Such payment shall be made on the day such
notice is received by such Lender from the U.S. Administrative Agent if
such notice is received at or before 12:00 Noon; otherwise, such
payment shall be made at or before 12:00 Noon on the Business Day next
succeeding the day such notice is received. If such Lender does not pay
such amount to the U.S. Administrative Agent for the benefit of the
U.S. Issuing Lender in full upon such request, such Lender shall, on
demand, pay to the U.S. Administrative Agent for the benefit of the
U.S. Issuing Lender interest on the unpaid amount during the period
from the date the Lender received the notice regarding the unreimbursed
drawing until such Lender pays such amount to the U.S. Issuing Lender
in full at a rate per annum equal to, if paid within two Business Days
of the date of drawing, the Federal Funds Rate and thereafter at a rate
equal to the Base Rate. Each U.S. Lender's obligation to make such
payment to the U.S. Administrative Agent for the benefit of the U.S.
Issuing Lender, and the right of the U.S. Issuing Lender to receive the
same, shall be absolute and unconditional, shall not be affected by any
circumstance whatsoever and without regard to the termination of this
Credit Agreement or the Commitments hereunder, the existence of a
Default or Event of Default or the acceleration of the obligations
hereunder and shall be made without any offset, abatement, withholding
or reduction whatsoever. Simultaneously with the making of each such
payment by a U.S. Lender to the U.S. Administrative Agent for the
benefit of the U.S. Issuing Lender, such U.S. Lender shall,
automatically and without any further action on the part of the U.S.
Issuing Lender or such Lender, acquire a participation in an amount
equal to such payment (excluding the portion of such payment
constituting interest owing to the U.S. Issuing Lender) in the related
unreimbursed drawing portion of the LOC Obligation and in the interest
thereon and in the related LOC Documents, and shall have a claim
against the U.S. Borrower and the other Credit Parties with respect
thereto.
(e) Repayment with Revolving Loans. On any day on which the
U.S. Borrower shall have requested, or been deemed to have requested, a
U.S. Revolving Loan borrowing to reimburse a drawing under a U.S.
Letter of Credit (as set forth in clause (d) above), the U.S.
Administrative Agent shall give notice to the U.S. Lenders that a U.S.
Revolving Loan has been requested or deemed requested in connection
with a drawing under a U.S. Letter of Credit, in which case a U.S.
Revolving Loan borrowing comprised solely of Base Rate Loans (each such
borrowing, a "Mandatory U.S. Borrowing") shall be immediately made from
all U.S. Lenders (without giving effect to any termination of the
Commitments pursuant to Section 10.2) pro rata based on each U.S.
Lender's respective U.S. Revolving
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Loan Commitment Percentage and the proceeds thereof shall be paid
directly to the U.S. Issuing Lender for application to the respective
U.S. LOC Obligations. Each U.S. Lender hereby irrevocably agrees to
make such U.S. Revolving Loans immediately upon any such request or
deemed request on account of each such Mandatory U.S. Borrowing in the
amount and in the manner specified in the preceding sentence and on the
same such date notwithstanding (i) the amount of Mandatory U.S.
Borrowing may not comply with the minimum amount for borrowings of U.S.
Revolving Loans otherwise required hereunder, (ii) whether any
conditions specified in Section 6.2 are then satisfied, (iii) whether a
Default or Event of Default then exists, (iv) failure of any such
request or deemed request for U.S. Revolving Loans to be made by the
time otherwise required hereunder, (v) the date of such Mandatory U.S.
Borrowing, or (vi) any reduction in the U.S. Revolving Committed Amount
or any termination of the Commitments. In the event that any Mandatory
U.S. Borrowing cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with respect to
the U.S. Borrower or any other Credit Party), then each U.S. Lender
hereby agrees that it shall forthwith fund (as of the date the
Mandatory U.S. Borrowing would otherwise have occurred, but adjusted
for any payments received from the U.S. Borrower on or after such date
and prior to such purchase) its Participation Interest in the
outstanding U.S. LOC Obligations; provided, further, that in the event
any U.S. Lender shall fail to fund its Participation Interest on the
day the Mandatory U.S. Borrowing would otherwise have occurred, then
the amount of such Lender's unfunded Participation Interest therein
shall bear interest payable to the U.S. Issuing Lender upon demand, at
the rate equal to, if paid within two Business Days of such date, the
Federal Funds Rate, and thereafter at a rate equal to the Base Rate.
(f) Modification and Extension. The issuance of any
supplement, modification, amendment, renewal, or extensions to any U.S.
Letter of Credit shall, for purposes hereof, be treated in all respects
the same as the issuance of a new U.S. Letter of Credit hereunder.
(g) Uniform Customs and Practices. The U.S. Issuing Lender may
have the U.S. Letters of Credit be subject to The Uniform Customs and
Practice for Documentary Credits, as published as of the date of issue
by the International Chamber of Commerce (Publication No. 500 or the
most recent publication, the "UCP"), in which case the UCP may be
incorporated therein and deemed in all respects to be a part thereof.
(h) Responsibility of U.S. Issuing Lender. It is expressly
understood and agreed as between the U.S. Lenders that the obligations
of the U.S. Issuing Lender hereunder to the U.S. Lenders are only those
expressly set forth in this Credit Agreement and that the U.S. Issuing
Lender shall be entitled to assume that the conditions precedent set
forth in Section 6.2 have been satisfied unless it shall have acquired
actual knowledge that any such condition precedent has not been
satisfied; provided, however, that nothing set forth in this Section
2.2 shall be deemed to prejudice the right of any U.S. Lender to
recover from the U.S. Issuing Lender any amounts made available by such
Lender to the U.S. Issuing Lender pursuant to this Section 2.2 in the
event that it is determined by a court of competent jurisdiction that
the payment with respect to a U.S. Letter of Credit constituted gross
negligence or willful misconduct on the part of the U.S. Issuing
Lender.
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(i) Conflict with LOC Documents. In the event of any conflict
between this Credit Agreement and any LOC Document (other than a Letter
of Credit itself to the extent the UCP or the Uniform Commercial Code
requires such Letter of Credit to govern), this Credit Agreement shall
govern.
(j) Indemnification of U.S. Issuing Lender.
(i) In addition to its other obligations under this
Credit Agreement, the U.S. Credit Parties hereby agree to
protect, indemnify, pay and save the U.S. Issuing Lender
harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) that the U.S. Issuing
Lender may incur or be subject to as a consequence, direct or
indirect, of (A) the issuance of any U.S. Letter of Credit or
(B) the failure of the U.S. Issuing Lender to honor a drawing
under a U.S. 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, herein called "Government Acts").
(ii) As between the U.S. Credit Parties and the U.S.
Issuing Lender, the U.S. Credit Parties shall assume all risks
of the acts, omissions or misuse of any U.S. Letter of Credit
by the beneficiary thereof. The U.S. Issuing Lender shall not
be responsible for (except in the case of (A), (B) and (C)
below if the U.S. Issuing Lender has actual knowledge to the
contrary): (A) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any
party in connection with the application for and issuance of
or the presentation for payment and honoring of any U.S.
Letter of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent
or forged; (B) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign
any U.S. Letter of Credit or the rights or benefits thereunder
or proceeds thereof, in whole or in part, that may prove to be
invalid or ineffective for any reason; (C) failure of the
beneficiary of a U.S. Letter of Credit to comply fully with
conditions (other than those explicitly set forth in the
applicable Letter of Credit) required in order to draw upon a
U.S. Letter of Credit; (D) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail,
courier, cable, telegraph, telex, telecopy or otherwise,
whether or not they be in cipher; (E) errors in interpretation
of technical terms; (F) any loss or delay in the transmission
or otherwise of any document required in order to make a
drawing under a U.S. Letter of Credit or of the proceeds
thereof; and (G) any consequences arising from causes beyond
the control of the U.S. Issuing Lender, including, without
limitation, any Government Acts. None of the above shall
affect, impair, or prevent the vesting of the U.S. Issuing
Lender's rights or powers hereunder.
(iii) In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth,
any action taken or omitted by the U.S. Issuing Lender, under
or in connection with any U.S. Letter of Credit or the related
certificates, if taken or omitted in good faith, shall not put
the U.S. Issuing Lender under any resulting liability to any
U.S. Credit Party. It is the intention of the
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parties that this Credit Agreement shall be construed and
applied to protect and indemnify the U.S. Issuing Lender
against any and all risks involved in the issuance of the U.S.
Letters of Credit, all of which risks are hereby assumed by
the U.S. Credit Parties, including, without limitation, any
and all risks of the acts or omissions, whether rightful or
wrongful, of any present or future Government Acts. The U.S.
Issuing Lender shall not, in any way, be liable for any
failure by the U.S. Issuing Lender or anyone else to pay any
drawing under any U.S. Letter of Credit as a result of any
Government Acts or any other cause beyond the control of the
U.S. Issuing Lender.
(iv) Nothing in this subsection (j) is intended to
limit the reimbursement obligation of the U.S. Borrower
contained in this Section 2.2. The obligations of the U.S.
Credit Parties under this subsection (j) shall survive the
termination of this Credit Agreement. No act or omission of
any current or prior beneficiary of a U.S. Letter of Credit
shall in any way affect or impair the rights of the U.S.
Issuing Lender to enforce any right, power or benefit under
this Credit Agreement.
(v) Notwithstanding anything to the contrary
contained in this subsection (j), the U.S. Credit Parties
shall have no obligation to indemnify the U.S. Issuing Lender
in respect of any liability incurred by the U.S. Issuing
Lender arising solely out of the gross negligence or willful
misconduct of the U.S. Issuing Lender, as determined by a
court of competent jurisdiction. Nothing in this Credit
Agreement shall relieve the U.S. Issuing Lender of any
liability to the U.S. Credit Parties in respect of any action
taken by the U.S. Issuing Lender which action constitutes
gross negligence or willful misconduct of the U.S. Issuing
Lender or a violation of the UCP or Uniform Commercial Code
(as applicable), as determined by a court of competent
jurisdiction.
(k) Designation of other Credit Parties as Account Parties.
Notwithstanding anything to the contrary set forth in this Credit
Agreement, including without limitation Section 2.2(a) hereof, a U.S.
Letter of Credit issued hereunder may contain a statement to the effect
that such Letter of Credit is issued for the account of a Subsidiary of
the U.S. Borrower; provided that notwithstanding such statement, the
U.S. Borrower shall be the actual account party for all purposes of
this Credit Agreement for such Letter of Credit and such statement
shall not affect the U.S. Borrower's reimbursement obligations
hereunder with respect to such Letter of Credit.
2.3 U.S. SWINGLINE LOANS SUBFACILITY.
(a) U.S. Swingline Loans. The U.S. Swingline Lender hereby
agrees, on the terms and subject to the conditions set forth herein and
in the other Credit Documents, to make loans to the U.S. Borrower, in
Dollars, at any time and from time to time during the period from and
including the Effective Date to but not including the Maturity Date
(each such loan, a "U.S. Swingline Loan" and collectively, the "U.S.
Swingline Loans"); provided that (i) the aggregate principal amount of
the U.S. Swingline Loans outstanding at any one time shall not exceed
the U.S. Swingline Committed Amount and (ii) the aggregate amount of
U.S. Swingline Loans outstanding plus the aggregate amount of U.S.
Revolving Loans
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outstanding plus the aggregate amount of U.S. LOC Obligations
outstanding shall not exceed the U.S. Revolving Committed Amount. Prior
to the Maturity Date, U.S. Swingline Loans may be repaid and reborrowed
by the U.S. Borrower in accordance with the provisions hereof.
(b) Method of Borrowing and Funding U.S. Swingline Loans. By
no later than 1:00 p.m. on the date of the requested borrowing of U.S.
Swingline Loans the U.S. Borrower shall provide telephonic notice to
the U.S. Swingline Lender, followed promptly by a written Swingline
Loan Request in the form of Exhibit 2.3(b) (which may be submitted via
telecopy), each of such telephonic notice and such written Swingline
Loan Request setting forth (i) the amount of the requested U.S.
Swingline Loan, (ii) the date of the requested U.S. Swingline Loan and
(iii) certification that the U.S. Borrower has complied in all respects
with Section 6.2. The U.S. Swingline Lender shall initiate the transfer
of funds representing the U.S. Swingline Loan advance to the U.S.
Borrower by 3:00 p.m. on the Business Day of the requested borrowing.
(c) Repayment and Participations of U.S. Swingline Loans. The
U.S. Borrower agrees to repay all U.S. Swingline Loans within one
Business Day of demand therefor by the U.S. Swingline Lender. Each
repayment of a U.S. Swingline Loan may be accomplished by requesting
U.S. Revolving Loans, which request is not subject to the conditions
set forth in Section 6.2. In the event that the U.S. Borrower shall
fail to timely repay any U.S. Swingline Loan, and in any event upon (i)
a request by the U.S. Swingline Lender made through the U.S.
Administrative Agent, (ii) the occurrence of an Event of Default
described in Section 10.1(f) or (iii) the acceleration of any Loan or
termination of any Commitment pursuant to Section 10.2, each other U.S.
Lender shall irrevocably and unconditionally purchase from the U.S.
Swingline Lender, without recourse or warranty, an undivided interest
and participation in such U.S. Swingline Loan in an amount equal to
such other U.S. Lender's U.S. Revolving Loan Commitment Percentage
thereof, by directly purchasing a participation in such Swingline Loan
in such amount (regardless of whether the conditions precedent thereto
set forth in Section 6.2 hereof are then satisfied, whether or not the
U.S. Borrower has submitted a Notice of Borrowing and whether or not
the Commitments are then in effect, any Event of Default exists or all
the Loans have been accelerated) and paying the proceeds thereof to the
U.S. Administrative Agent on behalf of the U.S. Swingline Lender at the
address provided on Schedule 12.1, or at such other address as the U.S.
Swingline Lender may designate, in Dollars and in immediately available
funds. If such amount is not in fact made available to the U.S.
Swingline Lender by any U.S. Lender, the U.S. Swingline Lender shall be
entitled to recover such amount on demand from such U.S. Lender,
together with accrued interest thereon for each day from the date of
demand thereof, at the Federal Funds Rate. If such U.S. Lender does not
pay such amount forthwith upon the U.S. Swingline Lender's demand
therefor, and until such time as such U.S. Lender makes the required
payment, the U.S. Swingline Lender shall be deemed to continue to have
outstanding U.S. Swingline Loans in the amount of such unpaid
participation obligation for all purposes of the Credit Documents other
than those provisions requiring the other U.S. Lenders to purchase a
participation therein. Further, such U.S. Lender shall be deemed to
have assigned any and all payments made of principal and interest on
its Loans, and any other amounts due to it hereunder to the U.S.
Swingline Lender to fund the U.S. Swingline Loans in the amount
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of the participation in U.S. Swingline Loans that such U.S. Lender
failed to purchase pursuant to this Section 2.3(c) until such amount
has been purchased (as a result of such assignment or otherwise).
(d) U.S. Swingline Note. Upon the request of the U.S.
Swingline Lender, the U.S. Swingline Loans shall be evidenced by, in
addition to the loan accounts referenced in Section 4.15, a duly
executed promissory note of the U.S. Borrower to the U.S. Swingline
Lender in the original principal amount of the U.S. Swingline Committed
Amount and in substantially the form of Exhibit 2.3(d).
2.4 CONTINUATIONS AND CONVERSIONS.
The U.S. Borrower shall have the option, on any Business Day, to
continue existing Eurodollar Loans for a subsequent Interest Period, to convert
Base Rate Loans (other than U.S. Swingline Loans) into Eurodollar Loans or to
convert Eurodollar Loans into Base Rate Loans (other than U.S. Swingline Loans);
provided, however, that (a) each such continuation or conversion must be
requested by the U.S. Borrower pursuant to a written Notice of
Continuation/Conversion, in the form of Exhibit 2.4, in compliance with the
terms set forth below, (b) except as provided in Section 4.11, Eurodollar Loans
may only be continued or converted into Base Rate Loans on the last day of the
Interest Period applicable thereto, (c) Eurodollar Loans may not be continued
nor may Base Rate Loans be converted into Eurodollar Loans during the existence
and continuation of a Default or an Event of Default and (d) any request to
continue a Eurodollar Loan that fails to comply with the terms hereof or any
failure to request a continuation of a Eurodollar Loan at the end of an Interest
Period shall constitute a conversion to a Base Rate Loan on the last day of the
applicable Interest Period. Each continuation or conversion must be requested by
the U.S. Borrower no later than 11:00 a.m. (i) on the date for a requested
conversion of a Eurodollar Loan to a Base Rate Loan or (ii) three Business Days
prior to the date for a requested continuation of a Eurodollar Loan or
conversion of a Base Rate Loan to a Eurodollar Loan, in each case pursuant to a
written Notice of Continuation/Conversion submitted to the U.S. Administrative
Agent which shall set forth (A) whether the U.S. Borrower wishes to continue or
convert such Loans and (B) if the request is to continue a Eurodollar Loan or
convert a Base Rate Loan to a Eurodollar Loan, the Interest Period applicable
thereto.
2.5 MINIMUM AMOUNTS.
Each request for a borrowing, conversion or continuation shall be
subject to the requirements that (a) each Eurodollar Loan shall be in a minimum
amount of $1,000,000 (and in integral multiples of $100,000 in excess thereof),
(b) each Base Rate Loan shall be in a minimum amount of the lesser of $500,000
(and integral multiples of $100,000 in excess thereof) or the remaining amount
available under the U.S. Revolving Committed Amount, (c) each U.S. Swingline
Loan shall be in a minimum amount of $100,000 or the remaining amount of the
U.S. Swingline Committed Amount (provided that this limitation in clause (c)
shall not apply for amounts requested to repay a drawn Letter of Credit pursuant
to Section 2.2(d)), and (d) no more than ten (10) Eurodollar Loans shall be
outstanding hereunder at any one time. For the purposes of this Section,
Eurodollar Loans with different Interest Periods shall be considered as separate
Eurodollar Loans, even if they begin on the same date, although borrowings,
conversions and
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continuations may, in accordance with the provisions hereof, be combined at the
end of existing Interest Periods to constitute a new Eurodollar Loan with a
single Interest Period.
SECTION 3
CANADIAN CREDIT FACILITIES
3.1 CANADIAN REVOLVING LOANS.
(a) Canadian Revolving Loan Commitment. Subject to the terms
and conditions set forth herein, each Canadian Lender severally agrees
to make revolving loans (each a "Canadian Revolving Loan" and
collectively the "Canadian Revolving Loans") to the Canadian Borrower,
in Canadian Dollars, at any time and from time to time, during the
period from and including the Effective Date to but not including the
Maturity Date (or such earlier date on which the Canadian Revolving
Committed Amount has been terminated as provided herein); provided,
however, that (i) the sum of the aggregate amount of Canadian Revolving
Loans outstanding plus the aggregate amount of Canadian LOC Obligations
outstanding plus the aggregate amount of Canadian Swingline Loans
outstanding plus the aggregate Face Amount of Bankers' Acceptances
shall not exceed the Canadian Revolving Committed Amount and (ii) with
respect to each individual Canadian Lender (other than the Canadian
Swingline Lender in its capacity as such), such Lender's pro rata share
of outstanding Canadian Revolving Loans plus such Lender's pro rata
share of outstanding Canadian LOC Obligations plus such Lender's pro
rata share of outstanding Canadian Swingline Loans plus such Lender's
pro rata share of the Face Amount of Bankers' Acceptances shall not
exceed such Lender's Canadian Revolving Loan Commitment Percentage of
the Canadian Revolving Committed Amount. Subject to the terms of this
Credit Agreement (including Section 6.2), the Canadian Borrower may
borrow, repay and reborrow Canadian Revolving Loans.
(b) Method of Borrowing for Canadian Revolving Loans. By no
later than 11:00 a.m. (Toronto, Ontario time) one Business Day prior to
the date of the requested borrowing of Canadian Revolving Loans, the
Canadian Borrower shall telephone the Canadian Administrative Agent
with the information described below as well as submit a written Notice
of Borrowing in the form of Exhibit 2.1(b) (which may be submitted via
telecopy) to the Canadian Administrative Agent setting forth (A) the
amount requested and (B) a certification that the Canadian Borrower has
complied in all respects with Section 6.2. All Canadian Revolving Loans
shall be Canadian Prime Rate Loans. All or any portion of such Canadian
Revolving Loans may be converted into Bankers' Acceptances in
accordance with the terms of Section 3.5.
(c) Funding of Canadian Revolving Loans. Upon receipt of a
Notice of Borrowing, the Canadian Administrative Agent shall promptly
inform the Canadian Lenders as to the terms thereof. Each Canadian
Lender shall make its Canadian Revolving Loan Commitment Percentage of
the requested Canadian Revolving Loans available to the Canadian
Administrative Agent by 1:00 p.m. on the date specified in the Notice
of Borrowing by deposit, in Canadian Dollars, of immediately available
funds at the offices of
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the Canadian Administrative Agent at its principal office in Toronto,
Ontario or at such other address as the Canadian Administrative Agent
may designate in writing. The amount of the requested Canadian
Revolving Loans will then be made available to the Canadian Borrower by
the Canadian Administrative Agent by crediting the account of the
Canadian Borrower on the books of such office of the Canadian
Administrative Agent, to the extent the amount of such Canadian
Revolving Loans are made available to the Canadian Administrative
Agent.
No Canadian Lender shall be responsible for the failure or
delay by any other Canadian Lender in its obligation to make Canadian
Revolving Loans hereunder; provided, however, that the failure of any
Canadian Lender to fulfill its obligations hereunder shall not relieve
any other Canadian Lender of its obligations hereunder. Unless the
Canadian Administrative Agent shall have been notified by any Canadian
Lender prior to the date of any such Canadian Revolving Loan that such
Canadian Lender does not intend to make available to the Canadian
Administrative Agent its portion of any Canadian Revolving Loans to be
made on such date, the Canadian Administrative Agent may assume that
such Canadian Lender has made such amount available to the Canadian
Administrative Agent on the date of such Canadian Revolving Loans, and
the Canadian Administrative Agent in reliance upon such assumption, may
(in its sole discretion but without any obligation to do so) make
available to the Canadian Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Canadian
Administrative Agent, the Canadian Administrative Agent shall be able
to recover such corresponding amount from such Canadian Lender. If such
Canadian Lender does not pay such corresponding amount forthwith upon
the Canadian Administrative Agent's demand therefor, the Canadian
Administrative Agent will promptly notify the Canadian Borrower, and
the Canadian Borrower shall immediately pay such corresponding amount
to the Canadian Administrative Agent. The Canadian Administrative Agent
shall also be entitled to recover from the Canadian Lender or the
Canadian Borrower, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount
was made available by the Canadian Administrative Agent to the Canadian
Borrower to the date such corresponding amount is recovered by the
Canadian Administrative Agent at a per annum rate equal to (i) from the
Canadian Borrower at the applicable rate for such Canadian Revolving
Loan pursuant to the Notice of Borrowing and (ii) from a Canadian
Lender at the CDOR Rate determined as at the date of such Canadian
Revolving Loan.
(d) Reductions of Canadian Revolving Committed Amount. Upon at
least three Business Days' notice, the Canadian Borrower shall have the
right to permanently reduce, without premium or penalty (other than as
may be required pursuant to Section 4.14), all or part of the aggregate
unused amount of the Canadian Revolving Committed Amount at any time or
from time to time; provided that (i) each partial reduction shall be in
an aggregate amount at least equal to C$5,000,000 and in integral
multiples of C$500,000 above such amount and (ii) no reduction shall be
made which would reduce the Canadian Revolving Committed Amount to an
amount less than the aggregate amount of outstanding Canadian Revolving
Loans plus the aggregate amount of outstanding Canadian LOC Obligations
plus the aggregate amount of Canadian Swingline Loans outstanding plus
the aggregate Face Amount of Bankers' Acceptances. Any reduction in (or
termination of) the Canadian Revolving Committed Amount shall be
permanent and may not be reinstated. The
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Canadian Administrative Agent shall immediately notify the Canadian
Lenders of any reduction in the Canadian Revolving Committed Amount.
(e) Repayment; Canadian Revolving Notes. The Canadian Borrower
hereby promises to repay in full the principal amount of all Canadian
Revolving Loans on the Maturity Date. Upon the request of any Canadian
Lender made through the Administrative Agents, the Canadian Revolving
Loans made by each Canadian Lender shall be evidenced by, in addition
to the loan accounts referenced in Section 4.15, a duly executed
promissory note of the Canadian Borrower to such Canadian Lender in an
original principal amount equal to such Canadian Lender's Canadian
Revolving Loan Commitment Percentage of the Canadian Revolving
Committed Amount and in substantially the form of Exhibit 3.1(e).
3.2 CANADIAN LETTER OF CREDIT SUBFACILITY.
(a) Issuance. Subject to the terms and conditions hereof and
of the LOC Documents, if any, and any other terms and conditions which
the Canadian Issuing Lender may reasonably require (so long as such
terms and conditions do not impose any financial obligation on or
require any Lien (not otherwise contemplated by this Credit Agreement)
to be given by any Credit Party or conflict with any obligation of, or
detract from any action which may be taken by, any Credit Party under
this Credit Agreement), the Canadian Issuing Lender shall from time to
time upon request issue (from the Effective Date to the Maturity Date
or such earlier date on which the Canadian LOC Commitment has been
terminated as provided herein and in a form reasonably acceptable to
the Canadian Issuing Lender), in Canadian Dollars, and the Canadian
Lenders shall participate in, letters of credit ("Canadian Letters of
Credit") for the account of the Canadian Borrower or any of its
Subsidiaries; provided, however, that (i) the aggregate amount of
Canadian LOC Obligations shall not at any time exceed THIRTY-FIVE
MILLION CANADIAN DOLLARS (C$35,000,000) (the "Canadian LOC Committed
Amount"), (ii) the sum of the aggregate amount of Canadian LOC
Obligations outstanding plus Canadian Revolving Loans outstanding plus
Canadian Swingline Loans outstanding plus the Face Amount of Bankers'
Acceptances outstanding shall not exceed the Canadian Revolving
Committed Amount and (iii) with respect to each individual Canadian
Lender (other than the Canadian Swingline Lender in its capacity as
such), such Lender's pro rata share of outstanding Canadian Revolving
Loans plus its pro rata share of outstanding Canadian LOC Obligations
plus its pro rata share of Canadian Swingline Loans outstanding plus
its pro rata share of the Face Amount of Bankers' Acceptances
outstanding shall not exceed such Lender's Canadian Revolving Loan
Commitment Percentage of the Canadian Revolving Committed Amount. The
Canadian Issuing Lender may require the issuance and expiry date of
each Canadian Letter of Credit to be a Business Day. Each Canadian
Letter of Credit shall be either (A) a standby letter of credit issued
to support the obligations (including pension or insurance
obligations), contingent or otherwise, of the Canadian Borrower for
itself or on behalf of one of its Subsidiaries or (B) a commercial
letter of credit in respect of the purchase of goods or services by the
Canadian Borrower for itself or on behalf of one of its Subsidiaries in
the ordinary course of business. Except as otherwise expressly agreed
upon by all the Canadian Lenders, no Canadian Letter of Credit shall
have an original expiry date more than one year from the date of
issuance, or as extended, shall have an expiry date extending beyond
the Maturity Date. Each Canadian Letter of Credit shall comply with the
related LOC Documents.
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(b) Notice and Reports. The request for the issuance of a
Canadian Letter of Credit shall be submitted to the Canadian Issuing
Lender at least three Business Days prior to the requested date of
issuance (or such shorter period as may be reasonably acceptable to the
Canadian Issuing Lender) and shall be accompanied by a certification
that the Canadian Borrower has complied in all respects with Section
6.2. The Canadian Issuing Lender will provide to the Canadian
Administrative Agent prompt notice of Canadian Letters of Credit which
are issued within three (3) Business Days, and including in such
notice, among other things, the account party, the beneficiary, the
face amount, and the expiry date. The Canadian Issuing Lender will
further provide to the Canadian Administrative Agent, promptly upon
request, copies of the Canadian Letters of Credit and the other LOC
Documents.
(c) Participations.
(i) [Intentionally omitted.]
(ii) Each Canadian Lender, upon issuance of a
Canadian Letter of Credit, shall be deemed to have purchased
without recourse a risk participation from the Canadian
Issuing Lender in such Letter of Credit and each LOC Document
related thereto and the rights and obligations arising
thereunder and any collateral relating thereto, in each case
in an amount equal to its Canadian Revolving Loan Commitment
Percentage of the obligations under such Letter of Credit, and
shall absolutely, unconditionally and irrevocably assume, as
primary obligor and not as surety, and be obligated to pay to
the Canadian Issuing Lender therefor and discharge when due,
its Canadian Revolving Loan Commitment Percentage of the
obligations arising under such Letter of Credit. Without
limiting the scope and nature of each Canadian Lender's
participation in any Canadian Letter of Credit, to the extent
that the Canadian Issuing Lender has not been reimbursed as
required hereunder or under any such Letter of Credit, each
such Canadian Lender shall pay to the Canadian Issuing Lender
its Canadian Revolving Loan Commitment Percentage of such
unreimbursed drawing in same day funds on the day of
notification by the Canadian Issuing Lender of an unreimbursed
drawing pursuant to the provisions of subsection (d) or (e)
hereof. The obligation of each Canadian Lender to so reimburse
the Canadian Issuing Lender shall be absolute and
unconditional and shall not be affected by the occurrence of a
Default, an Event of Default or any other occurrence or event.
Any such reimbursement shall not relieve or otherwise impair
the obligation of the Canadian Borrower or any other Credit
Party to reimburse the Canadian Issuing Lender under any
Canadian Letter of Credit, together with interest as
hereinafter provided.
(d) Reimbursement. In the event of any drawing under any
Canadian Letter of Credit, the Canadian Issuing Lender will promptly
notify the Canadian Borrower. Unless the Canadian Borrower shall
immediately notify the Canadian Issuing Lender of its intent to
otherwise reimburse the Canadian Issuing Lender, including through a
Canadian Swingline
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Loan to the extent a Canadian Swingline Loan in such amount is
available (including the ability of the Canadian Borrower to meet the
conditions of Section 6.2), then the Canadian Borrower shall be deemed
to have requested a Canadian Revolving Loan bearing interest based upon
the Canadian Prime Rate and in the amount of the drawing, the proceeds
of which will be used to satisfy the reimbursement obligations. The
Canadian Borrower shall reimburse the Canadian Issuing Lender on the
day of drawing under any Canadian Letter of Credit either with the
proceeds of such Canadian Swingline Loan or Canadian Revolving Loan
obtained hereunder or otherwise in same day funds as provided herein or
in the LOC Documents. If the Canadian Borrower shall fail to reimburse
the Canadian Issuing Lender as provided hereinabove, the unreimbursed
amount of such drawing shall bear interest at a per annum rate equal to
the Adjusted Canadian Prime Rate plus 200 basis points. The Canadian
Borrower's reimbursement obligations hereunder shall be absolute and
unconditional under all circumstances irrespective of (but without
waiver of) any rights of set-off, counterclaim or defense to payment
the applicable account party or the Canadian Borrower may claim or have
against the Canadian Issuing Lender, an Agent, the Lenders, the
beneficiary of the Letter of Credit drawn upon or any other Person,
including, without limitation, any defense based on any failure of the
applicable account party, the Canadian Borrower or any other Credit
Party to receive consideration or the legality, validity, regularity or
unenforceability of the Letter of Credit. The Canadian Issuing Lender
will promptly notify the Canadian Administrative Agent who will
promptly notify the Canadian Lenders of the amount of any unreimbursed
drawing and each Canadian Lender shall promptly pay to the Canadian
Administrative Agent for further credit to the Canadian Issuing Lender,
in Canadian Dollars and in immediately available funds, the amount of
such Lender's Canadian Revolving Loan Commitment Percentage of such
unreimbursed drawing. Such payment shall be made on the day such notice
is received by such Lender from the Canadian Administrative Agent if
such notice is received at or before 12:00 noon (Toronto, Ontario
time); otherwise, such payment shall be made at or before 12:00 noon
(Toronto, Ontario time) on the Business Day next succeeding the day
such notice is received. If such Lender does not pay such amount to the
Canadian Administrative Agent for the benefit of the Canadian Issuing
Lender in full upon such request, such Lender shall, on demand, pay to
the Canadian Administrative Agent for the benefit of the Canadian
Issuing Lender interest on the unpaid amount during the period from the
date the Lender received the notice regarding the unreimbursed drawing
until such Lender pays such amount to the Canadian Issuing Lender in
full at a rate per annum equal to, if paid within two Business Days of
the date of drawing, the CDOR Rate determined as at the date of drawing
and thereafter at a rate equal to the Canadian Prime Rate. Each
Canadian Lender's obligation to make such payment to the Canadian
Administrative Agent for the benefit of the Canadian Issuing Lender,
and the right of the Canadian Issuing Lender to receive the same, shall
be absolute and unconditional, shall not be affected by any
circumstance whatsoever and without regard to the termination of this
Credit Agreement or the Commitments hereunder, the existence of a
Default or Event of Default or the acceleration of the obligations
hereunder and shall be made without any offset, abatement, withholding
or reduction whatsoever. Simultaneously with the making of each such
payment by a Canadian Lender to the Canadian Administrative Agent for
the benefit of the Canadian Issuing Lender, such Canadian Lender shall,
automatically and without any further action on the part of the
Canadian Issuing Lender or such Lender, acquire a participation in an
amount equal to such payment (excluding the portion of such payment
constituting interest
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owing to the Canadian Issuing Lender) in the related unreimbursed
drawing portion of the LOC Obligation and in the interest thereon and
in the related LOC Documents, and shall have a claim against the
Canadian Borrower and the other Credit Parties with respect thereto.
(e) Repayment with Revolving Loans. On any day on which the
Canadian Borrower shall have requested, or been deemed to have
requested, a Canadian Revolving Loan borrowing to reimburse a drawing
under a Canadian Letter of Credit (as set forth in clause (d) above),
the Canadian Administrative Agent shall give notice to the Canadian
Lenders that a Canadian Revolving Loan has been requested or deemed
requested in connection with a drawing under a Canadian Letter of
Credit, in which case a Canadian Revolving Loan borrowing comprised
solely of Canadian Prime Rate Loans (each such borrowing, a "Mandatory
Canadian Borrowing") shall be immediately made from all Canadian
Lenders (without giving effect to any termination of the Commitments
pursuant to Section 10.2) pro rata based on each Canadian Lender's
respective Canadian Revolving Loan Commitment Percentage and the
proceeds thereof shall be paid directly to the Canadian Issuing Lender
for application to the respective Canadian LOC Obligations. Each
Canadian Lender hereby irrevocably agrees to make such Canadian
Revolving Loans immediately upon any such request or deemed request on
account of each such Mandatory Canadian Borrowing in the amount and in
the manner specified in the preceding sentence and on the same such
date notwithstanding (i) the amount of Mandatory Canadian Borrowing may
not comply with the minimum amount for borrowings of Canadian Revolving
Loans otherwise required hereunder, (ii) whether any conditions
specified in Section 6.2 are then satisfied, (iii) whether a Default or
Event of Default then exists, (iv) failure of any such request or
deemed request for Canadian Revolving Loans to be made by the time
otherwise required hereunder, (v) the date of such Mandatory Canadian
Borrowing, or (vi) any reduction in the Canadian Revolving Committed
Amount or any termination of the Commitments. In the event that any
Mandatory Canadian Borrowing cannot for any reason be made on the date
otherwise required above (including, without limitation, as a result of
the commencement of a proceeding under the Bankruptcy Code with respect
to the Canadian Borrower or any other Credit Party), then each Canadian
Lender hereby agrees that it shall forthwith fund (as of the date the
Mandatory Canadian Borrowing would otherwise have occurred, but
adjusted for any payments received from the Canadian Borrower on or
after such date and prior to such purchase) its Participation Interest
in the outstanding Canadian LOC Obligations; provided, further, that in
the event any Canadian Lender shall fail to fund its Participation
Interest on the day the Mandatory Canadian Borrowing would otherwise
have occurred, then the amount of such Lender's unfunded Participation
Interest therein shall bear interest payable to the Canadian Issuing
Lender upon demand, at the rate equal to, if paid within two Business
Days of such date, the CDOR Rate determined as at such date, and
thereafter at a rate equal to the Canadian Prime Rate.
(f) Modification and Extension. The issuance of any
supplement, modification, amendment, renewal, or extension to any
Canadian Letter of Credit shall, for purposes hereof, be treated in all
respects the same as the issuance of a new Canadian Letter of Credit
hereunder.
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<PAGE> 56
(g) Uniform Customs and Practices. The Canadian Issuing Lender
may have the Canadian Letters of Credit be subject to The Uniform
Customs and Practice for Documentary Credits, as published as of the
date of issue by the International Chamber of Commerce (Publication No.
500 or the most recent publication, the "UCP"), in which case the UCP
may be incorporated therein and deemed in all respects to be a part
thereof.
(h) Responsibility of Canadian Issuing Lender. It is expressly
understood and agreed as between the Canadian Lenders that the
obligations of the Canadian Issuing Lender hereunder to the Canadian
Lenders are only those expressly set forth in this Credit Agreement and
that the Canadian Issuing Lender shall be entitled to assume that the
conditions precedent set forth in Section 6.2 have been satisfied
unless it shall have acquired actual knowledge that any such condition
precedent has not been satisfied; provided, however, that nothing set
forth in this Section 3.2 shall be deemed to prejudice the right of any
Canadian Lender to recover from the Canadian Issuing Lender any amounts
made available by such Lender to the Canadian Issuing Lender pursuant
to this Section 3.2 in the event that it is determined by a court of
competent jurisdiction that the payment with respect to a Canadian
Letter of Credit constituted gross negligence or willful misconduct on
the part of the Canadian Issuing Lender.
(i) Conflict with LOC Documents. In the event of any conflict
between this Credit Agreement and any LOC Document (other than a Letter
of Credit itself to the extent the UCP or the Uniform Commercial Code
requires such Letter of Credit to govern), this Credit Agreement shall
govern.
(j) Indemnification of Canadian Issuing Lender.
(i) In addition to their other obligations under this
Credit Agreement, the Canadian Credit Parties hereby agree to
protect, indemnify, pay and save the Canadian Issuing Lender
harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) that the Canadian
Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (A) the issuance of any Canadian Letter
of Credit or (B) the failure of the Canadian Issuing Lender to
honor a drawing under a Canadian 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, herein called "Government Acts").
(ii) As between the Canadian Credit Parties and the
Canadian Issuing Lender, the Canadian Credit Parties shall
assume all risks of the acts, omissions or misuse of any
Canadian Letter of Credit by the beneficiary thereof. The
Canadian Issuing Lender shall not be responsible for (except
in the case of (A), (B) and (C) below if the Canadian Issuing
Lender has actual knowledge to the contrary): (A) the form,
validity, sufficiency, accuracy, genuineness or legal effect
of any document submitted by any party in connection with the
application for and issuance of or the presentation for
payment and honoring of any Canadian Letter of Credit, even if
it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the
validity or sufficiency of any instrument
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<PAGE> 57
transferring or assigning or purporting to transfer or assign
any Canadian Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, that may
prove to be invalid or ineffective for any reason; (C) failure
of the beneficiary of a Canadian Letter of Credit to comply
fully with conditions (other than those explicitly set forth
in the applicable Letter of Credit) required in order to draw
upon a Canadian Letter of Credit; (D) errors, omissions,
interruptions or delays in transmission or delivery of any
messages, by mail, courier, cable, telegraph, telex, telecopy
or otherwise, whether or not they be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in
the transmission or otherwise of any document required in
order to make a drawing under a Canadian Letter of Credit or
of the proceeds thereof; and (G) any consequences arising from
causes beyond the control of the Canadian Issuing Lender,
including, without limitation, any Government Acts. None of
the above shall affect, impair, or prevent the vesting of the
Canadian Issuing Lender's rights or powers hereunder.
(iii) In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth,
any action taken or omitted by the Canadian Issuing Lender,
under or in connection with any Canadian Letter of Credit or
the related certificates, if taken or omitted in good faith,
shall not put the Canadian Issuing Lender under any resulting
liability to any Canadian Credit Party. It is the intention of
the parties that this Credit Agreement shall be construed and
applied to protect and indemnify the Canadian Issuing Lender
against any and all risks involved in the issuance of the
Canadian Letters of Credit, all of which risks are hereby
assumed by the Credit Parties, including, without limitation,
any and all risks of any present or future Government Acts.
The Canadian Issuing Lender shall not, in any way, be liable
for any failure by the Canadian Issuing Lender or anyone else
to pay any drawing under any Canadian Letter of Credit as a
result of any Government Acts or any other cause beyond the
control of the Canadian Issuing Lender.
(iv) Nothing in this subsection (j) is intended to
limit the reimbursement obligation of the Canadian Borrower
contained in this Section 3.2. The obligations of the Canadian
Credit Parties under this subsection (j) shall survive the
termination of this Credit Agreement. No act or omission of
any current or prior beneficiary of a Canadian Letter of
Credit shall in any way affect or impair the rights of the
Canadian Issuing Lender to enforce any right, power or benefit
under this Credit Agreement.
(v) Notwithstanding anything to the contrary
contained in this subsection (j), the Canadian Credit Parties
shall have no obligation to indemnify the Canadian Issuing
Lender in respect of any liability incurred by the Canadian
Issuing Lender arising solely out of the gross negligence or
willful misconduct of the Canadian Issuing Lender, as
determined by a court of competent jurisdiction. Nothing in
this Credit Agreement shall relieve the Canadian Issuing
Lender of any liability to the Canadian Credit Parties in
respect of any action taken by the Canadian Issuing Lender
which action constitutes gross negligence or willful
misconduct of the Canadian Issuing Lender or a violation of
the UCP or Uniform
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Commercial Code (as applicable), as determined by a court of
competent jurisdiction.
(k) Designation of other Credit Parties as Account Parties.
Notwithstanding anything to the contrary set forth in this Credit
Agreement, including without limitation Section 3.2(a) hereof, a
Canadian Letter of Credit issued hereunder may contain a statement to
the effect that such Letter of Credit is issued for the account of a
Subsidiary (which is domiciled in Canada) of the Canadian Borrower;
provided that notwithstanding such statement, the Canadian Borrower
shall be the actual account party for all purposes of this Credit
Agreement for such Letter of Credit and such statement shall not affect
the Canadian Borrower's reimbursement obligations hereunder with
respect to such Letter of Credit.
3.3 CANADIAN SWINGLINE LOANS SUBFACILITY.
(a) Canadian Swingline Loans. The Canadian Swingline Lender
hereby agrees, on the terms and subject to the conditions set forth
herein and in the other Credit Documents, to make loans to the Canadian
Borrower, in Canadian Dollars, at any time and from time to time during
the period from and including the Effective Date to but not including
the Maturity Date (each such loan, a "Canadian Swingline Loan" and
collectively, the "Canadian Swingline Loans"); provided that (i) the
aggregate principal amount of the Canadian Swingline Loans outstanding
at any one time shall not exceed the Canadian Swingline Committed
Amount and (ii) the aggregate amount of Canadian Swingline Loans
outstanding plus the aggregate amount of Canadian Revolving Loans
outstanding plus the aggregate amount of Canadian LOC Obligations
outstanding plus the Face Amount of Bankers' Acceptances outstanding
shall not exceed the Canadian Revolving Committed Amount. Prior to the
Maturity Date, Canadian Swingline Loans may be repaid and reborrowed by
the Canadian Borrower in accordance with the provisions hereof.
(b) Method of Borrowing and Funding Canadian Swingline Loans.
By no later than 11:00 a.m. (Toronto, Ontario time) on the date of the
requested borrowing of Canadian Swingline Loans the Canadian Borrower
shall provide telephonic notice to the Canadian Swingline Lender,
followed promptly by a written Swingline Loan Request in the form of
Exhibit 2.3(b) (which may be submitted via telecopy), each of such
telephonic notice and such written Swingline Loan Request setting forth
(i) the amount of the requested Canadian Swingline Loan, (ii) the date
of the requested Canadian Swingline Loan and (iii) certification that
the Canadian Borrower has complied in all respects with Section 6.2.
The Canadian Swingline Lender shall initiate the transfer of funds
representing the Canadian Swingline Loan advance to the Canadian
Borrower by 3:00 p.m. (Toronto, Ontario time) on the Business Day of
the requested borrowing.
(c) Repayment and Participations of Canadian Swingline Loans.
The Canadian Borrower agrees to repay all Canadian Swingline Loans
within one Business Day of demand therefor by the Canadian Swingline
Lender. Each repayment of a Canadian Swingline Loan may be accomplished
by requesting Canadian Revolving Loans, which request is not subject to
the conditions set forth in Section 6.2. In the event that the Canadian
Borrower shall fail to timely repay any Canadian Swingline Loan, and in
any event upon (i) a request by the Canadian Swingline Lender made
through the
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Canadian Administrative Agent, (ii) the occurrence of an Event of
Default described in Section 10.1(f), or (iii) the acceleration of any
Loan or termination of any Commitment pursuant to Section 10.2, each
other Canadian Lender shall irrevocably and unconditionally purchase
from the Canadian Swingline Lender, without recourse or warranty, an
undivided interest and participation in such Canadian Swingline Loan in
an amount equal to such other Canadian Lender's Canadian Revolving Loan
Commitment Percentage thereof, by directly purchasing a participation
in such Swingline Loan in such amount (regardless of whether the
conditions precedent thereto set forth in Section 6.2 hereof are then
satisfied, whether or not the Canadian Borrower has submitted a Notice
of Borrowing and whether or not the Commitments are then in effect, any
Event of Default exists or all the Loans have been accelerated) and
paying the proceeds thereof to the Canadian Administrative Agent on
behalf of the Canadian Swingline Lender at the address provided on
Schedule 12.1, or at such other address as the Canadian Swingline
Lender may designate, in Canadian Dollars and in immediately available
funds. If such amount is not in fact made available to the Canadian
Swingline Lender by any Canadian Lender, the Canadian Swingline Lender
shall be entitled to recover such amount on demand from such Canadian
Lender, together with accrued interest thereon for each day from the
date of demand thereof, at the CDOR Rate determined as at such date. If
such Canadian Lender does not pay such amount forthwith upon the
Canadian Swingline Lender's demand therefor, and until such time as
such Canadian Lender makes the required payment, the Canadian Swingline
Lender shall be deemed to continue to have outstanding Canadian
Swingline Loans in the amount of such unpaid participation obligation
for all purposes of the Credit Documents other than those provisions
requiring the other Canadian Lenders to purchase a participation
therein. Further, such Canadian Lender shall be deemed to have assigned
any and all payments made of principal and interest on its Loans, and
any other amounts due to it hereunder to the Canadian Swingline Lender
to fund Canadian Swingline Loans in the amount of the participation in
Canadian Swingline Loans that such Canadian Lender failed to purchase
pursuant to this Section 3.3(c) until such amount has been purchased
(as a result of such assignment or otherwise).
(d) Canadian Swingline Note. Upon the request of the Canadian
Swingline Lender, the Canadian Swingline Loans shall be evidenced by,
in addition to the loan accounts referenced in Section 4.15, a duly
executed promissory note of the Canadian Borrower to the Canadian
Swingline Lender in the original principal amount of the Canadian
Swingline Committed Amount and in substantially the form of Exhibit
3.3(d).
3.4 BANKERS' ACCEPTANCES.
(a) Form.
(i) To facilitate the acceptance of Bankers'
Acceptances hereunder, the Canadian Borrower hereby appoints
each Canadian Lender as its attorney to sign and endorse on
its behalf, as and when considered necessary by such Canadian
Lender, an appropriate number of orders in the form prescribed
by that Canadian Lender.
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(ii) Each Canadian Lender may, at its option, execute
any order in handwriting or by the facsimile or mechanical
signature of any of its authorized officers, and the Canadian
Lenders are hereby authorized to accept or pay, as the case
may be, any order of the Canadian Borrower which purports to
bear such a signature notwithstanding that any such individual
has ceased to be an authorized officer of such Canadian
Lender. Any such order or Bankers' Acceptance shall be as
valid as if he or she were an authorized officer at the date
of issue of the order or Bankers' Acceptance.
(iii) Any order signed by a Canadian Lender as
attorney for the Canadian Borrower, whether signed in
handwriting or by the facsimile or mechanical signature of an
authorized officer of a Canadian Lender, may be dealt with by
the Canadian Administrative Agent or any Canadian Lender to
all intents and purposes and shall bind the Canadian Borrower
as if duly signed and issued by the Canadian Borrower.
(iv) The receipt by the Canadian Administrative Agent
of a notice under Section 3.4(c) requesting Bankers'
Acceptances shall be each Canadian Lender's sufficient
authority to execute, and each Canadian Lender shall, subject
to the terms and conditions of this Credit Agreement, execute,
orders in accordance with such request, and the orders so
executed shall thereupon be deemed to have been presented for
acceptance.
(b) Issuance. Subject to the terms and conditions hereof and
of the BA Documents executed in connection with the creation of each
Banker's Acceptance and any other terms and conditions which the
Canadian Lenders may reasonably require (so long as such terms and
conditions do not impose any financial obligation on or require any
Lien (not otherwise contemplated by this Credit Agreement) to be given
by the Canadian Borrower or any other Credit Party or conflict with any
obligation of, or detract from any action which may be taken by, any
Credit Party under this Agreement), each Canadian Lender agrees,
severally and not jointly, at any time and from time to time (from the
Effective Date to the Maturity Date or such earlier date on which the
Canadian Revolving Loan Commitment has been terminated as provided
herein), to create Bankers' Acceptances by accepting orders of the
Canadian Borrower presented to it for acceptance equal to such Canadian
Lender's Canadian Revolving Loan Commitment Percentage of such Bankers'
Acceptances as the Canadian Borrower may request on such date;
provided, however, that (i) the sum of the Face Amount of Bankers'
Acceptances outstanding plus the aggregate amount of Canadian Revolving
Loans outstanding plus Canadian LOC Obligations outstanding plus
Canadian Swingline Loans outstanding shall not exceed the Canadian
Revolving Committed Amount, (ii) with respect to each individual
Canadian Lender (other than the Canadian Swingline Lender in its
capacity as such), such Lender's pro rata share of outstanding Canadian
Revolving Loans plus its pro rata share of outstanding Canadian LOC
Obligations plus its pro rata share of Canadian Swingline Loans
outstanding plus its pro rata share of the Face Amount of Bankers'
Acceptances outstanding shall not exceed such Lender's Canadian
Revolving Loan Commitment Percentage of the Canadian Revolving
Committed Amount, and (iii) if the Face Amount of a Bankers'
Acceptance, which would otherwise be accepted by a Canadian Lender,
would not be C$100,000 or a larger multiple
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thereof, such Face Amount shall be increased or reduced by the Canadian
Administrative Agent in its discretion to the nearest multiple of
C$100,000. Upon the acceptance of any order of the Canadian Borrower
pursuant hereto, the Canadian Borrower shall pay to each of the
Canadian Lenders, in advance, the Acceptance Fee. Forthwith after each
request for drawdown of, continuation of or conversion into Bankers'
Acceptances, the Canadian Administrative Agent shall notify each
Canadian Lender of the amount of Bankers' Acceptances to be accepted by
such Canadian Lender. The Canadian Borrower shall as soon as practical
deliver to the Canadian Administrative Agent a notice confirming the
issuance of Bankers' Acceptances and specifying the BA Discount
Proceeds derived therefrom. For greater certainty, with respect to each
extension of credit by way of Bankers' Acceptances, each Bankers'
Acceptance shall have the same term and, upon sale, each Bankers'
Acceptance shall be discounted at the Applicable BA Discount Rate.
(c) Requirements of Bankers' Acceptances. Each Bankers'
Acceptance shall comply with the related BA Documents and shall be
executed by the Canadian Borrower and presented to the Canadian Lenders
pursuant to such procedures as are provided for in such BA Documents or
as otherwise provided or required by a Canadian Lender. The creation
and maturity date of each Bankers' Acceptance shall be a Business Day
and no Bankers' Acceptance shall have a maturity date later than the
Maturity Date.
(d) Method of Requesting a Bankers' Acceptance. By no later
than 10:00 a.m. (Toronto, Ontario time), two Business Days prior to the
date of the requested Bankers' Acceptance, the Canadian Borrower shall
submit an irrevocable notice, substantially in the form of Exhibit
3.4(d), to the Canadian Administrative Agent setting forth the
aggregate amount of Bankers' Acceptances requested and the maturity
date of the requested Bankers' Acceptances which shall be 30, 60, 90 or
180 days, at the election of the Canadian Borrower, and complying in
all respects with subsection 6.2.
(e) Safekeeping of Orders. Any executed orders to be used as
Bankers' Acceptances which are delivered to a Canadian Lender shall be
held in safekeeping with the same degree of care as if they were such
Canadian Lender's own property, and shall be kept at the place at which
such orders are ordinarily held by such Canadian Lender, provided that
such Canadian Lender shall not be deemed to be an insurer thereof.
(f) Maturity/Continuations. The Canadian Borrower shall pay to
the Canadian Administrative Agent, and there shall become due and
payable, at 1:00 p.m. (Toronto, Ontario time) on the maturity date for
each Bankers' Acceptance an amount in Canadian Dollars in same day
funds equal to the Face Amount of such Bankers' Acceptance
(notwithstanding that any Canadian Lender which accepted any such
Bankers' Acceptance may be the holder thereof at maturity); provided,
however, that subject to Section 4.10 and provided that the Canadian
Borrower has, by giving notice in accordance with Section 3.4(c) or
Section 3.5, requested the Canadian Lenders to accept its orders to
replace all or a portion of outstanding Bankers' Acceptances as they
mature, each Canadian Lender shall, on the maturity of such Bankers'
Acceptances and subject to Section 3.4(h), accept the Canadian
Borrower's order(s) having an aggregate Face Amount equal to such
Canadian Lender's pro rata share of such new Face Amount as will result
in the aggregate BA Discount Proceeds, net of the Acceptance Fees, of
the new order(s) being equal to (or, due
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to the operation of Section 3.4(h), exceeding to the least possible
extent) the aggregate Face Amount of the matured Bankers' Acceptances
or the portion thereof to be replaced.
(g) Repayments Prior to Maturity. Repayment of the Face Amount
of a Bankers' Acceptance may be made, prior to the maturity date
thereof, by the Canadian Borrower to the Canadian Lender which has
accepted such Bankers' Acceptance, but the amount repaid shall be held
on deposit by such Canadian Lender until the maturity date of such
Bankers' Acceptance. The Canadian Borrower shall be entitled to the
benefit of any interest accruing on such deposit, and on the maturity
date of such Bankers' Acceptance such Canadian Lender shall apply such
interest in payment of amounts owed by the Canadian Borrower hereunder.
Any such repayment of the Face Amount of a Bankers' Acceptance by the
Canadian Borrower to a Canadian Lender shall satisfy the Canadian
Borrower's obligations under the Bankers' Acceptance so repaid, and
such Canadian Lender shall thereafter be solely responsible for the
payment of such Bankers' Acceptance.
(h) Minimum Amounts. Each request for Bankers' Acceptances
shall be in a minimum aggregate amount of C$1,000,000 and in an
integral multiple of C$1,000,000 above such amount. The Face Amount of
each Bankers' Acceptance created hereunder shall be C$100,000 or any
multiple thereof.
(i) Funding of Bankers' Acceptances.
(i) Subject to subsections (ii) and (iii) below, each
Canadian Lender shall, not later than 1:00 p.m. (Toronto,
Ontario time), on the date of creation of Bankers'
Acceptances, accept orders of the Canadian Borrower which are
presented to it for acceptance in an amount equal to each
Canadian Lender's Canadian Revolving Loan Commitment
Percentage of the aggregate Face Amounts of Bankers'
Acceptances created on such date; provided, however, that if
the Face Amount of a Banker's Acceptance, which would
otherwise be accepted by a Canadian Lender, would not be
C$100,000 or a larger multiple thereof, such Face Amount shall
be increased or reduced by the Canadian Administrative Agent
in its discretion to the nearest multiple of C$100,000.
Subject to the provisions hereof, the Canadian Administrative
Agent shall be responsible for making all necessary
arrangements with each of the Canadian Lenders with respect to
the acceptance of Bankers' Acceptances.
(ii) Each Canadian Lender shall transfer to the Canadian
Administrative Agent for value on such creation date
immediately available Canadian Dollars in an aggregate amount
equal to the BA Discount Proceeds of all Bankers' Acceptances
accepted and sold or purchased by such Canadian Lender on such
date net of the applicable Acceptance Fee and net of the
amount required to pay any of its previously accepted Bankers'
Acceptances that are maturing on such date or its percentage
of any Canadian Revolving Loan that is being converted to
Bankers' Acceptances on such date.
(iii) Subject to subsection 4.10, in the sole judgment of
a Canadian Lender, if such Canadian Lender is unable to create
a Bankers' Acceptance in
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accordance with this Agreement, such Canadian Lender shall
give an irrevocable notice to such effect to the Canadian
Administrative Agent and the Canadian Borrower prior to 10:00
a.m. (Toronto, Ontario time) on the date of the requested
creation of the Bankers' Acceptances. Such Canadian Lender
shall make available to the Canadian Borrower prior to 1:00
p.m. (Toronto, Ontario time), one Business Day prior to the
date of such requested Bankers' Acceptance, a Canadian Dollar
loan in a principal amount equal to the BA Discount Proceeds
of such Canadian Lender's pro rata share of the aggregate of
the Face Amounts of Bankers' Acceptances to be created on such
date and all of such Canadian Dollar loans to be made pursuant
to this Section 3.4(i)(iii) on such date, such loan to be
funded in the same manner as the Bankers' Acceptances provided
by the other Canadian Lenders. Such loan shall have the same
term as the Bankers' Acceptance for which it is a substitute
and shall bear such interest per annum throughout the term
thereof as shall permit such Canadian Lender to obtain the
same effective rate as if such Canadian Lender had accepted
and purchased a Bankers' Acceptance at the same Acceptance Fee
and pricing at which the Canadian Administrative Agent would
have accepted and purchased such Bankers' Acceptance on the
bid side of the market at approximately 1:00 p.m. (Toronto,
Ontario time) on the date such loan is made. The Canadian
Borrower hereby agrees that if such loan is made by a Canadian
Lender interest shall be payable in advance on the date of
such loan by deducting the interest payable in respect thereof
from the principal amount of such loan.
No Canadian Lender shall be responsible for the failure or
delay by any other Canadian Lender in its obligation to create Bankers'
Acceptances hereunder; provided, however, that the failure of any
Canadian Lender to fulfill its Commitment hereunder shall not relieve
any other Canadian Lender of its Commitment hereunder.
3.5 CONTINUATIONS AND CONVERSIONS.
The Canadian Borrower shall have the option, on any Business Day, to
convert a Canadian Revolving Loan (other than a Canadian Swingline Loan) into a
Bankers' Acceptance, to continue a maturing Bankers' Acceptance in accordance
with Section 3.4 or to convert a maturing Bankers' Acceptance into a Canadian
Revolving Loan (other than a Canadian Swingline Loan); provided, however, (i)
each such continuation or conversion must be requested by the Canadian Borrower
pursuant to an irrevocable notice to the Canadian Administrative Agent,
substantially in the form of Exhibit 2.4, in compliance with the terms set forth
below, (ii) the Canadian Borrower must comply with all the requirements of
Section 3.4, and (iii) failure by the Canadian Borrower to properly continue a
Bankers' Acceptance shall be deemed a conversion to a Canadian Revolving Loan.
Each continuation or conversion must be requested by the Canadian Borrower no
later than 11:00 a.m. (Toronto, Ontario time) (A) two Business Days prior to the
date of a requested conversion of a Bankers' Acceptance to a Canadian Revolving
Loan or (B) two Business Days prior to the date of a requested continuation of a
Bankers' Acceptance or conversion of a Canadian Revolving Loan to a Bankers'
Acceptance, in each case pursuant to an irrevocable notice submitted to the
Canadian Administrative Agent which shall set forth (x) that the Loans to be
continued or converted are Canadian Revolving Loans, (y) whether the Canadian
Borrower wishes to continue or convert such Loans and (z) if the request is to
continue a Bankers' Acceptance or convert a Canadian Revolving Loan to a
Bankers' Acceptance, the maturity date applicable thereto. The Canadian
Administrative
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Agent shall give each Canadian Lender notice as promptly as practicable of any
such proposed continuation or conversion pursuant to this Section.
3.6 MINIMUM AMOUNTS.
Each request for a borrowing, conversion or continuation shall be
subject to the requirements that (a) each Canadian Revolving Loan shall be in a
minimum amount of the lesser of C$500,000 (and integral multiples of C$100,000
in excess thereof) or the remaining amount available under the Canadian
Revolving Committed Amount and (b) each Canadian Swingline Loan shall be in a
minimum amount of C$100,000 (and in integral multiples of C$100,000 in excess
thereof) or the remaining amount of the Canadian Swingline Committed Amount
(provided that this limitation in clause (b) shall not apply for amounts
requested to repay a drawn Letter of Credit pursuant to Section 3.2(d)).
SECTION 4
GENERAL PROVISIONS APPLICABLE TO LOANS,
BANKERS' ACCEPTANCES AND LETTERS OF CREDIT
4.1 INTEREST.
(a) Interest Rate. Subject to the provisions of
Section 4.1(b):
(i) Swingline Loans. All U.S. Swingline Loans shall
accrue interest at the Adjusted Base Rate or an alternative
rate mutually agreeable to the U.S. Swingline Lender and the
U.S. Borrower; provided that during an Event of Default all
U.S. Swingline Loans shall accrue interest at the Adjusted
Base Rate. All Canadian Swingline Loans shall accrue interest
at the Adjusted Canadian Prime Rate or an alternative rate
mutually agreeable to the Canadian Swingline Lender and the
Canadian Borrower; provided that during an Event of Default
all Canadian Swingline Loans shall accrue interest at the
Adjusted Canadian Prime Rate.
(ii) Base Rate Loans. During such periods as U.S.
Revolving Loans shall be comprised in whole or in part of Base
Rate Loans, such Base Rate Loans shall bear interest at a per
annum rate equal to the Adjusted Base Rate.
(iii) Eurodollar Loans. During such periods as U.S.
Revolving Loans shall be comprised in whole or in part of
Eurodollar Loans, such Eurodollar Loans shall bear interest at
a per annum rate equal to the Adjusted Eurodollar Rate.
(iv) Canadian Prime Rate Loans. During such periods
as Canadian Revolving Loans shall be comprised of Canadian
Prime Rate Loans, such Canadian Prime Rate Loans shall bear
interest at a rate per annum equal to the Adjusted Canadian
Prime Rate.
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(b) Default Rate of Interest. Upon the occurrence, and during
the continuance, of an Event of Default, the principal of and, to the
extent permitted by law, interest on the Loans and any other amounts
owing hereunder or under the other Credit Documents (including without
limitation fees and expenses) shall bear interest, payable on demand,
at a per annum rate equal to 2% plus the rate which would otherwise be
applicable (or if no rate is applicable, then the Adjusted Base Rate
plus two percent (2%) per annum).
(c) Interest Payments. Interest on Loans shall be due and
payable in arrears on each Interest Payment Date and each Borrower
hereby promises to pay interest on all Loans made to it on each such
Interest Payment Date.. If an Interest Payment Date falls on a date
which is not a Business Day, such Interest Payment Date shall be deemed
to be the next succeeding Business Day, except that in the case of
Eurodollar Loans where the next succeeding Business Day falls in the
next succeeding calendar month, then on the next preceding Business
Day.
4.2 PLACE AND MANNER OF PAYMENTS.
All payments of principal, interest and fees in connection with the
Canadian Revolving Loans, Canadian Swingline Loans, BA Obligations and Canadian
LOC Obligations shall be made by the Canadian Borrower to the Canadian
Administrative Agent or the Canadian Swingline Lender, as applicable, on the
date due by 2:00 p.m., Toronto, Ontario time, (in Canadian Dollars) in
immediately available funds, without setoff, deduction, counterclaim or
withholding of any kind. All other payments of principal, interest, fees,
expenses and other amounts to be made by the Borrowers under this Credit
Agreement (including, but not limited to, the U.S. Revolving Loans, the U.S.
Swing Line Loans and the U.S. LOC Obligations) shall be received not later than
2:00 p.m. on the date when due in Dollars and in immediately available funds,
without setoff, deduction, counterclaim or withholding of any kind, by the U.S.
Administrative Agent or the U.S. Swingline Lender, as applicable. A Borrower
shall, at the time it makes any payment under this Agreement, specify to the
U.S. Administrative Agent, or the Canadian Administrative Agent as applicable,
the Loans, Letters of Credit, Bankers' Acceptances, fees or other amounts
payable by the Borrowers hereunder to which such payment is to be applied (and
in the event that it fails to specify, or if such application would be
inconsistent with the terms hereof, the U.S. Administrative Agent, or the
Canadian Administrative Agent as applicable, shall distribute such payment to
the Lenders in the manner described in Section 10.3. The U.S. Administrative
Agent or the Canadian Administrative Agent, as applicable, will distribute such
payments to the applicable Lenders on the date of receipt if any such payment is
received prior to 2:00 p.m. (Eastern Standard or Eastern Daylight time or
Toronto, Ontario time, as applicable); otherwise the U.S. Administrative Agent
or the Canadian Administrative Agent, as applicable, will distribute such
payment to the applicable Lenders on the next succeeding Business Day. Whenever
any payment hereunder shall be stated to be due on a day which is not a Business
Day, the due date thereof shall be extended to the next succeeding Business Day
(subject to accrual of interest and fees for the period of such extension),
except that in the case of Eurodollar Loans, if the extension would cause the
payment to be made in the next following calendar month, then such payment shall
instead be made on the next preceding Business Day.
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4.3 VOLUNTARY PREPAYMENTS.
The Borrowers shall have the right to prepay Loans in whole or in part
from time to time without premium or penalty; provided, however, that (i)
Eurodollar Loans may only be prepaid on three Business Day's prior written
notice to the U.S. Administrative Agent and any prepayment of Eurodollar Loans
will be subject to Section 4.14; (ii) that portion of the Canadian Revolving
Loan Commitment subject to the creation of a Bankers' Acceptance may be prepaid
prior to the maturity of such Bankers' Acceptance only in accordance with
Section 3.4(g); (iii) each such partial prepayment of Loans (other than
Swingline Loans) shall be in the minimum principal amount of C$1,000,000 or
$1,000,000, as applicable, and integral multiples of C$500,000 or $500,000,
respectively; and (iv) any partial prepayment of Swingline Loans shall be in a
minimum aggregate principal amount of C$100,000 or $100,000, as applicable.
Amounts prepaid hereunder shall be applied as the Borrowers may elect; provided
that (A) if the U.S. Borrower fails to specify a voluntary prepayment as to the
U.S. Revolving Loans then such prepayment shall be applied first to Base Rate
Loans and then to Eurodollar Loans in direct order of Interest Period
maturities, and (B) if the Canadian Borrower fails to specify a voluntary
prepayment as to the Canadian Revolving Loan Commitment then such prepayments
shall be applied first to Canadian Revolving Loans and then to BA Obligations
(as they mature) in direct order of maturities.
4.4 FEES.
(a) Commitment Fees. In consideration of the U.S. Revolving
Committed Amount being made available by the U.S. Lenders hereunder,
the U.S. Borrower agrees to pay to the U.S. Administrative Agent, for
the pro rata benefit of each U.S. Lender (based on each U.S. Lender's
U.S. Revolving Loan Commitment Percentage of the U.S. Revolving
Committed Amount), a per annum fee equal to the Applicable Percentage
for Commitment Fees multiplied by the U.S. Unused Revolving Commitment
(the "U.S. Commitment Fees"). In consideration of the Canadian
Revolving Committed Amount being made available by the Canadian Lenders
hereunder, the Canadian Borrower agrees to pay to the Canadian
Administrative Agent, for the pro rata benefit of each Canadian Lender
(based on each Canadian Lender's Canadian Revolving Loan Commitment
Percentage of the Canadian Revolving Committed Amount), a per annum fee
equal to the Applicable Percentage for Commitment Fees multiplied by
the Canadian Unused Revolving Commitment (the "Canadian Commitment
Fees") (collectively, the U.S. Commitment Fees and the Canadian
Commitment Fees are referred to herein as the "Commitment Fees"). The
Commitment Fees shall commence to accrue on the Effective Date and
shall be due and payable in arrears on the last day of each calendar
quarter (as well as on the Maturity Date) for the immediately preceding
calendar quarter (or portion thereof), beginning with the first of such
dates to occur after the Closing Date.
(b) Letter of Credit Fees. In consideration of the issuance of
U.S. Letters of Credit hereunder, the U.S. Borrower agrees to pay to
the U.S. Issuing Lender for the pro rata benefit of the U.S. Lenders
(based on each U.S. Lender's U.S. Revolving Loan Commitment Percentage
of the U.S. Revolving Committed Amount), a per annum fee (the "U.S.
Letter of Credit Fees") equal to (i) the Applicable Percentage for U.S.
Standby Letter of Credit Fees multiplied by the U.S. Standby Letter of
Credit Outstanding Amount plus (ii) the Applicable Percentage for U.S.
Trade Letter of Credit Fees multiplied by the U.S. Trade
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Letter of Credit Outstanding Amount. In consideration of the issuance
of Canadian Letters of Credit hereunder, the Canadian Borrower agrees
to pay to the Canadian Issuing Lender for the pro rata benefit of the
Canadian Lenders (based on each Canadian Lender's Canadian Revolving
Loan Commitment Percentage of the Canadian Revolving Committed Amount),
a per annum fee (the "Canadian Letter of Credit Fees") equal to the
Applicable Percentage for the Canadian Letter of Credit Fees multiplied
by the Canadian Letter of Credit Outstanding Amount (collectively, the
U.S. Letter of Credit Fees and the Canadian Letter of Credit Fees
referred to as the "Letter of Credit Fees."). The Letter of Credit Fees
will be payable in arrears on the last day of each calendar quarter (as
well as on the Maturity Date) for the immediately preceding calendar
quarter (or portion thereof), beginning with the first of such dates to
occur after the Closing Date.
(c) Issuing Lender Fees. In addition to the Letter of Credit
Fees payable pursuant to clause (b) above, each Borrower shall pay to
the applicable Issuing Lender for its own account, without sharing by
the other Lenders, (i) the customary charges from time to time to the
Issuing Lender for its services in connection with the issuance,
amendment, payment, transfer, administration, cancellation and
conversion of, and drawings under, Letters of Credit, and (ii) a letter
of credit fronting fee of 0.125% of the face amount of each Letter of
Credit (collectively, the "Issuing Lender Fees").
(d) Administrative Fees. The Borrowers agree to pay to the
Administrative Agents, for their own account, an annual fee (the
"Administrative Fees") in accordance with the terms of the Fee Letter.
4.5 PAYMENT IN FULL AT MATURITY.
On the Maturity Date, the entire outstanding principal balance of all
Revolving Loans, Swingline Loans, LOC Obligations and BA Obligations, together
with accrued but unpaid interest and all other sums owing with respect thereto,
shall be due and payable in full, unless accelerated sooner pursuant to Section
10.2.
4.6 COMPUTATIONS OF INTEREST AND FEES.
(a) Except for Base Rate Loans and Canadian Prime Rate Loans,
in which case interest shall be computed on the basis of a 365 or 366
day year as the case may be, all computations of interest and fees
hereunder shall be made on the basis of the actual number of days
elapsed over a year of 360 days. Interest shall accrue from and include
the date of borrowing (or continuation or conversion) but exclude the
date of payment. For purposes of the Interest Act (Canada), if interest
computed on the basis of a 360-day year is payable for any part of a
calendar year, the equivalent yearly rate of interest may be determined
by multiplying the specified rate of interest by the number of days
(365 or 366) in such calendar year and dividing such product by 360.
(b) It is the intent of the Lenders and the Credit Parties to
conform to and contract in strict compliance with applicable usury law
from time to time in effect. All agreements between the Lenders and the
Borrowers are hereby limited by the provisions of this paragraph which
shall override and control all such agreements, whether now existing
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or hereafter arising and whether written or oral. In no way, nor in any
event or contingency (including but not limited to prepayment or
acceleration of the maturity of any obligation), shall the interest
taken, reserved, contracted for, charged, or received under this Credit
Agreement, under the Notes or otherwise, exceed the maximum nonusurious
amount permissible under applicable law. If, from any possible
construction of any of the Credit Documents or any other document,
interest would otherwise be payable in excess of the maximum
nonusurious amount, any such construction shall be subject to the
provisions of this paragraph and such documents shall be automatically
reduced to the maximum nonusurious amount permitted under applicable
law, without the necessity of execution of any amendment or new
document. If any Lender shall ever receive anything of value which is
characterized as interest on the Loans under applicable law and which
would, apart from this provision, be in excess of the maximum lawful
amount, an amount equal to the amount which would have been excessive
interest shall, without penalty, be applied to the reduction of the
principal amount owing on the Loans and not to the payment of interest,
or refunded to the Borrowers or the other payor thereof if and to the
extent such amount which would have been excessive exceeds such unpaid
principal amount of the Loans. The right to demand payment of the Loans
or any other Indebtedness evidenced by any of the Credit Documents does
not include the right to accelerate the payment of any interest which
has not otherwise accrued on the date of such demand, and the Lenders
do not intend to charge or receive any unearned interest in the event
of such demand. All interest paid or agreed to be paid to the Lenders
with respect to the Loans shall, to the extent permitted by applicable
law, be amortized, prorated, allocated, and spread throughout the full
stated term (including any renewal or extension) of the Loans so that
the amount of interest on account of such Indebtedness does not exceed
the maximum nonusurious amount permitted by applicable law.
4.7 PRO RATA TREATMENT.
Except to the extent otherwise provided herein:
(a) Loans. Each Revolving Loan borrowing (including, without
limitation, each Mandatory U.S. Borrowing and each Mandatory Canadian
Borrowing), each creation of Bankers' Acceptances, each payment or
prepayment of principal of any Loan, each payment of fees (other than
the Issuing Lender Fees retained by the applicable Issuing Lender for
its own account and the Administrative Fees retained by the applicable
Administrative Agent for its own account), each reduction of the U.S.
Revolving Committed Amount or the Canadian Revolving Committed Amount,
and each conversion or continuation of any Loan (other than a Swingline
Loan), shall (except as otherwise provided in Section 4.11) be
allocated pro rata among the relevant Lenders in accordance with the
respective U.S. Revolving Loan Commitment Percentages or Canadian
Revolving Loan Commitment Percentages, as applicable, of such Lenders
(or, if the Commitments of such Lenders have expired or been
terminated, in accordance with the respective principal amounts of the
outstanding Loans, Bankers' Acceptances and Participation Interests of
such Lenders); provided that, if any Lender shall have failed to pay
its applicable pro rata share of any Revolving Loan, then any amount to
which such Lender would otherwise be entitled pursuant to this
subsection (a) shall instead be payable to the applicable
Administrative Agent until the share of such Loan not funded by such
Lender has been repaid; provided
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further, that in the event any amount paid to any Lender pursuant to
this subsection (a) is rescinded or must otherwise be returned by an
Administrative Agent, each Lender shall, upon the request of such
Administrative Agent, repay to such Administrative Agent the amount so
paid to such Lender, with interest for the period commencing on the
date such payment is returned by such Administrative Agent until the
date such Administrative Agent receives such repayment at a rate per
annum equal to, during the period to but excluding the date two
Business Days after such request, the Federal Funds Rate (or, with
respect to a Canadian Lender, the CDOR Rate), and thereafter, the Base
Rate (or, with respect to a Canadian Lender, the Canadian Prime Rate)
plus two percent (2%) per annum.
(b) Letters of Credit.
(i) Each payment of unreimbursed drawings in respect
of U.S. LOC Obligations shall be allocated to each U.S. Lender
pro rata in accordance with its U.S. Revolving Loan Commitment
Percentage; provided that, if any U.S. Lender shall have
failed to pay its applicable pro rata share of any drawing
under any U.S. Letter of Credit, then any amount to which such
U.S. Lender would otherwise be entitled pursuant to this
subsection (b) shall instead (to the extent of such
non-payment) be payable to the U.S. Issuing Lender until the
share of such unreimbursed drawing not funded by such U.S.
Lender has been repaid; provided further, that in the event
any amount paid to any U.S. Lender pursuant to this subsection
(b) is rescinded or must otherwise be returned by the U.S.
Issuing Lender, each U.S. Lender shall, upon the request of
the Issuing Lender, repay to the U.S. Administrative Agent for
the account of the U.S. Issuing Lender the amount so paid to
such U.S. Lender, with interest for the period commencing on
the date such payment is returned by the U.S. Issuing Lender
until the date the U.S. Issuing Lender receives such repayment
at a rate per annum equal to, during the period to but
excluding the date two Business Days after such request, the
Federal Funds Rate, and thereafter, the Adjusted Base Rate
plus two percent (2%) per annum.
(ii) Each payment of unreimbursed drawings in respect
of Canadian LOC Obligations shall be allocated to each
Canadian Lender pro rata in accordance with its Canadian
Revolving Loan Commitment Percentage; provided that, if any
Canadian Lender shall have failed to pay its applicable pro
rata share of any drawing under any Canadian Letter of Credit,
then any amount to which such Canadian Lender would otherwise
be entitled pursuant to this subsection (b) shall instead be
payable to the Canadian Issuing Lender until the share of such
unreimbursed drawing not funded by such Canadian Lender has
been repaid; provided further, that in the event any amount
paid to any Canadian Lender pursuant to this subsection (b) is
rescinded or must otherwise be returned by the Canadian
Issuing Lender, each Canadian Lender shall, upon the request
of the Issuing Lender, repay to the Canadian Administrative
Agent for the account of the Canadian Issuing Lender the
amount so paid to such Canadian Lender, with interest for the
period commencing on the date such payment is returned by the
Canadian Issuing Lender until the date the Canadian Issuing
Lender receives such repayment at a rate per annum equal to,
during the period to but excluding the date two Business Days
after
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such request, the CDOR Rate, and thereafter, the Adjusted
Canadian Prime Rate plus two percent (2%) per annum.
4.8 SHARING OF PAYMENTS.
The Lenders agree among themselves that, except to the extent otherwise
provided herein, in the event that any Lender shall obtain payment in respect of
any Loan or Bankers' Acceptance, unreimbursed drawing with respect to any LOC
Obligations or any other obligation owing to such Lender under this Credit
Agreement through the exercise of a right of setoff, banker's lien or
counterclaim, or pursuant to a secured claim under Section 506 of the Bankruptcy
Code or other security or interest arising from, or in lieu of, such secured
claim, received by such Lender under any applicable bankruptcy, insolvency or
other similar law or otherwise, or by any other means, in excess of its pro rata
share of such payment as provided for in this Credit Agreement, such Lender
shall promptly pay in cash or purchase from the other applicable Lenders a
participation in such Loans, LOC Obligations, BA Obligations and other
obligations in such amounts, and make such other adjustments from time to time,
as shall be equitable to the end that all applicable Lenders share such payment
in accordance with their respective ratable shares as provided for in this
Credit Agreement. The Lenders further agree among themselves that if payment to
a Lender obtained by such Lender through the exercise of a right of setoff,
banker's lien, counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which shall have shared the benefit of
such payment shall, by payment in cash or a repurchase of a participation
theretofore sold, return its share of that benefit (together with its share of
any accrued interest payable with respect thereto) to each Lender whose payment
shall have been rescinded or otherwise restored. The Borrowers agree that any
Lender so purchasing such a participation may, to the fullest extent permitted
by law, exercise all rights of payment, including setoff, banker's lien or
counterclaim, with respect to such participation as fully as if such Lender were
a holder of such Loan, LOC Obligation, BA Obligation or other obligation in the
amount of such participation. Except as otherwise expressly provided in this
Credit Agreement, if any Lender or an Agent shall fail to remit to an Agent or
any other Lender an amount payable by such Lender or such Agent to such Agent or
such other Lender pursuant to this Credit Agreement on the date when such amount
is due, such payments shall be made together with interest thereon for each date
from the date such amount is due until the date such amount is paid to such
Agent or such other Lender at a rate per annum equal to the Federal Funds Rate.
If under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section 4.8 applies,
such Lender shall, to the extent practicable, exercise its rights in respect of
such secured claim in a manner consistent with the rights of the Lenders under
this Section 4.8 to share in the benefits of any recovery on such secured claim,
with the costs of such exercise of rights being shared pro rata among the
applicable Lenders sharing in such benefits.
4.9 CAPITAL ADEQUACY.
If, after the date hereof, any Lender has determined that the adoption
or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital adequacy, or
compliance by such Lender, or its parent corporation, with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency,
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has or would have the effect of reducing the rate of return on such Lender's (or
parent corporation's) capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender, or its parent
corporation, could have achieved but for such adoption, effectiveness, change or
compliance (taking into consideration such Lender's (or parent corporation's)
policies with respect to capital adequacy), then, upon notice from such Lender
to the Borrowers, the Borrowers shall be obligated to pay to such Lender such
additional amount or amounts as will compensate such Lender on an after-tax
basis (after taking into account applicable deductions and credits in respect of
the amount indemnified) for such reduction. Each determination by any such
Lender of amounts owing under this Section shall, absent manifest error, be
conclusive and binding on the parties hereto. This covenant shall survive the
termination of this Credit Agreement and the payment of the Loans and all other
amounts payable hereunder.
4.10 INABILITY TO DETERMINE INTEREST RATE OR CREATE
BANKERS' ACCEPTANCES.
(a) If prior to the first day of any Interest Period, the U.S.
Administrative Agent shall have determined in good faith (which
determination shall be conclusive and binding upon the U.S. Borrower)
that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, the U.S. Administrative Agent
shall give telecopy or telephonic notice thereof to the U.S. Borrower
and the U.S. Lenders as soon as practicable thereafter, and will also
give prompt written notice to the U.S. Borrower when such conditions no
longer exist. If such notice is given (a) any Eurodollar Loans
requested to be made on the first day of such Interest Period shall be
made as Base Rate Loans, (b) any Loans that were to have been converted
on the first day of such Interest Period to or continued as Eurodollar
Loans shall be converted to or continued as Base Rate Loans and (c) any
outstanding Eurodollar Loans shall be converted, on the first day of
such Interest Period, to Base Rate Loans. Until such notice is
withdrawn by the U.S. Administrative Agent, no further Eurodollar Loans
shall be made or continued as such, nor shall the U.S. Borrower have
the right to convert Base Rate Loans to Eurodollar Loans.
(b) If the Canadian Administrative Agent determines in good
faith, which determination shall be final, conclusive and binding upon
the Canadian Borrower absent manifest error, and notifies the Canadian
Borrower and each of the Canadian Lenders that, by reason of
circumstances affecting the money market (i) there is no market for
Bankers' Acceptances; or (ii) the demand for Bankers' Acceptances is
insufficient to allow the sale or trading of the Bankers' Acceptances
created and purchased hereunder, then,
(A) the right of the Canadian Borrower to request a
borrowing by way of Bankers' Acceptances shall be suspended
until the Canadian Administrative Agent determines in good
faith that the circumstances causing such suspension no longer
exist and the Canadian Administrative Agent so notifies the
Canadian Borrower; and
(B) any notice of requested Bankers' Acceptances
which is outstanding shall be canceled and the Bankers'
Acceptance requested therein shall not be made.
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(C) The Canadian Administrative Agent shall promptly
notify the Canadian Borrower of the suspension of the Canadian
Borrower's right to request a Bankers' Acceptance and of the
termination of any such suspension.
4.11 ILLEGALITY.
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
occurring after the Closing Date shall make it unlawful for any Lender to make
or maintain Eurodollar Loans as contemplated by this Credit Agreement, (a) such
Lender shall promptly give written notice of such circumstances to the Borrowers
and the Administrative Agents (which notice shall be withdrawn whenever such
circumstances no longer exist), (b) the commitment of such Lender hereunder to
make Eurodollar Loans, continue Eurodollar Loans as such and convert a Base Rate
Loan to a Eurodollar Loan shall forthwith be canceled and, until such time as it
shall no longer be unlawful for such Lender to make or maintain Eurodollar
Loans, such Lender shall then have a commitment only to make a Base Rate Loan
when a Eurodollar Loan is requested and (c) such Lender's Loans then outstanding
as Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days or the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrowers shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 4.14.
4.12 REQUIREMENTS OF LAW.
If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof applicable to any Lender, or compliance by
any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority, in each case made
subsequent to the Closing Date (or, if later, the date on which such Lender
becomes a Lender):
(a) shall subject such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit, any Eurodollar Loans
made by it, any Bankers Acceptances issued by it or its obligation to
make Eurodollar Loans, or change the basis of taxation of payments to
such Lender in respect thereof (except for Non-Excluded Taxes covered
by Section 4.13 (including Non-Excluded Taxes imposed solely by reason
of any failure of such Lender to comply with its obligations under
Section 4.13(b)) and changes in taxes measured by or imposed upon the
overall net income, or franchise tax (imposed in lieu of such net
income tax), of such Lender or its applicable lending office, branch,
or any affiliate thereof);
(b) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate or the
Acceptance Fee in respect of Bankers' Acceptances hereunder; or
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(c) shall impose on such Lender any other condition (excluding
any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or creating or accepting Bankers' Acceptances or to reduce any
amount receivable hereunder in respect thereof, then, in any such case, upon
notice to the Borrowers from such Lender, through either of the Agents, in
accordance herewith, the Borrowers shall be obligated to promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate such
Lender on an after-tax basis (after taking into account applicable deductions
and credits in respect of the amount indemnified) for such increased cost or
reduced amount receivable. This covenant shall survive the termination of this
Credit Agreement and the payment of the Loans and all other amounts payable
hereunder.
4.13 TAXES.
(a) Except as provided below in this Section 4.13, all
payments made by the Borrowers under this Credit Agreement and any
Notes shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp
or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any court, or governmental body, agency or other official,
excluding taxes measured by or imposed upon the net income of any
Lender or its applicable lending office, or any branch or affiliate
thereof, and all franchise taxes, branch taxes, taxes on doing business
or taxes on the capital or net worth of any Lender or its applicable
lending office, or any branch or affiliate thereof, in each case
imposed in lieu of net income taxes: (i) by the jurisdiction under the
laws of which such Lender, applicable lending office, branch or
affiliate is organized or is located, or in which its principal
executive office is located, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii)
by reason of any connection between the jurisdiction imposing such tax
and such Lender, applicable lending office, branch or affiliate other
than a connection arising solely from such Lender having executed,
delivered or performed its obligations, or received payment under or
enforced, this Credit Agreement or any Notes. If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from
any amounts payable to an Agent or any Lender hereunder or under any
Notes, (A) the amounts so payable to an Agent or such Lender shall be
increased to the extent necessary to yield to an Agent or such Lender
(after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in
this Credit Agreement and any Notes, provided, however, that the
Borrower shall be entitled to deduct and withhold any Non-Excluded
Taxes and shall not be required to increase any such amounts payable to
any Lender that is not organized under the laws of the United States of
America or a state thereof if such Lender fails to comply with the
requirements of paragraph (b) of this Section 4.13 whenever any
Non-Excluded Taxes are payable by the Borrowers, and (B) as promptly as
possible after requested the Borrowers shall send to such Agent for its
own account or for the account of such Lender, as the case may be, a
certified copy of an original official receipt received by the
Borrowers showing payment thereof. If the Borrowers fail to pay any
Non-Excluded Taxes when due to the appropriate taxing
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authority or fails to remit to the applicable Administrative Agent the
required receipts or other required documentary evidence, the Borrowers
shall indemnify the Agents and any Lender for any incremental
Non-Excluded Taxes, interest or penalties that may become payable by an
Agent or any Lender as a result of any such failure. The agreements in
this subsection shall survive the termination of this Credit Agreement
and the payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
(i) (A) on or before the date of any payment by the
U.S. Borrower under this Credit Agreement or Notes to such
Lender, deliver to the U.S. Borrower and the U.S.
Administrative Agent (x) two duly completed copies of United
States Internal Revenue Service Form 4224 or 1001, or
successor applicable form (including without limitation Form
W-8ECI or W-8BEN), as the case may be, certifying that it is
entitled to receive payments under this Credit Agreement and
any Notes without deduction or withholding of any United
States federal income taxes and (y) an Internal Revenue
Service Form W-8 or W-9, or successor applicable form, as the
case may be, certifying that it is entitled to an exemption
from United States backup withholding tax;
(B) deliver to the U.S. Borrower and the
U.S. Administrative Agent two further copies of any such form
or certification on or before the date that any such form or
certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent
form previously delivered by it to the U.S. Borrower; and
(C) obtain such extensions of time for
filing and complete such forms or certifications as may
reasonably be requested by the U.S. Borrower or the U.S.
Administrative Agent; or
(ii) in the case of any such Lender that is not a
"bank" within the meaning of Section 881(c)(3)(A) of the
Internal Revenue Code, (A) represent to the U.S. Borrower (for
the benefit of the U.S. Borrower and the U.S. Administrative
Agent) that it is not a bank within the meaning of Section
881(c)(3)(A) of the Internal Revenue Code, (B) agree to
furnish to the U.S. Borrower, on or before the date of any
payment by the U.S. Borrower, with a copy to the U.S.
Administrative Agent, two accurate and complete original
signed copies of Internal Revenue Service Form W-8, or
successor applicable form certifying to such Lender's legal
entitlement at the date of such certificate to an exemption
from U.S. withholding tax under the provisions of Section
881(c) of the Internal Revenue Code with respect to payments
to be made under this Credit Agreement and any Notes (and to
deliver to the U.S. Borrower and the U.S. Administrative Agent
two further copies of such form on or before the date it
expires or becomes obsolete and after the occurrence of any
event requiring a change in the most recently provided form
and, if necessary, obtain any extensions of time reasonably
requested by the U.S. Borrower or the U.S. Administrative
Agent for filing and completing such forms), and (C) agree, to
the
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extent legally entitled to do so, upon reasonable request by
the U.S. Borrower, to provide to the U.S. Borrower (for the
benefit of the U.S. Borrower and the U.S. Administrative
Agent) such other forms as may be reasonably required in order
to establish the legal entitlement of such Lender to an
exemption from withholding with respect to payments under this
Credit Agreement and any Notes.
Notwithstanding the above, if any change in treaty, law or regulation
has occurred after the date such Person becomes a Lender hereunder
which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect
to it and such Lender so advises the U.S. Borrower and the U.S.
Administrative Agent, then such Lender shall be exempt from such
requirements. Each Person that shall become a Lender or a participant
of a Lender pursuant to Section 12.3 shall, upon the effectiveness of
the related transfer, be required to provide all of the forms,
certifications and statements required pursuant to this subsection (b);
provided that in the case of a participant of a Lender, the obligations
of such participant of a Lender pursuant to this subsection (b) shall
be determined as if the participant of a Lender were a Lender except
that such participant of a Lender shall furnish all such required
forms, certifications and statements to the Lender from which the
related participation shall have been purchased.
4.14 COMPENSATION.
Each Borrower promises to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur as a
consequence of (a) default by such Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans or in creating Bankers' Acceptances
after such Borrower has given a notice requesting the same in accordance with
the provisions of this Credit Agreement, (b) default by the U.S. Borrower in
making any prepayment of a Eurodollar Loan after the U.S. Borrower has given a
notice thereof in accordance with the provisions of this Credit Agreement and
(c) the making of a prepayment of Eurodollar Loans on a day which is not the
last day of an Interest Period with respect thereto or the repayment of a
Bankers' Acceptance prior to its maturity date. Such indemnification may include
an amount equal to (i) the amount of interest which would have accrued on the
amount so prepaid, or not so borrowed, converted or continued, for the period
from the date of such prepayment or of such failure to borrow, convert or
continue to the last day of the applicable Interest Period (or, in the case of a
failure to borrow, convert or continue, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable rate of
interest for such Eurodollar Loans provided for herein (excluding, however, the
Applicable Percentage included therein, if any) minus (ii) the amount of
interest (as reasonably determined by such Lender) which would have accrued to
such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank Eurodollar market. The agreements in
this Section shall survive the termination of this Credit Agreement and the
payment of the Loans and all other amounts payable hereunder.
4.15 EVIDENCE OF DEBT.
(a) Each Lender shall maintain an account or accounts evidencing each
Loan made by such Lender to a Borrower from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Credit Agreement. Each Lender
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will make reasonable efforts to maintain the accuracy of its account or accounts
and to promptly update its account or accounts from time to time, as necessary.
(b) Each Administrative Agent shall maintain the Register pursuant to
Section 12.3(c), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount, type and Interest
Period of each such Loan hereunder, (ii) the amount of any principal or interest
due and payable or to become due and payable to each Lender hereunder, and (iii)
the amount of any sum received by such Administrative Agent hereunder from or
for the account of such Borrower and each Lender's share thereof, if any. The
Administrative Agent will make reasonable efforts to maintain the accuracy of
the subaccounts referred to in the preceding sentence and to promptly update
such subaccounts from time to time, as necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 4.15 (and, if consistent
with the entries of the U.S. Administrative Agent or the Canadian Administrative
Agent, as applicable, subsection (a)) shall be prima facie evidence of the
existence and amounts of the obligations of such Borrower therein recorded;
provided, however, that the failure of any Lender or any Administrative Agent to
maintain such account, such Register, or such subaccount, as applicable, or any
error therein, shall not in any manner affect the obligation of such Borrower to
repay the Loans made by such Lender in accordance with the terms hereof.
4.16 SUBSTITUTION OF LENDER; RELOCATION.
In the event a Lender makes a request to a Borrower for compensation in
accordance with Section 4.9, 4.11, 4.12, or 4.13, then; provided that no Event
of Default has occurred and is continuing at such time, the Borrowers may, at
their option either
(a) at their own expense (such expense to include any transfer
fee payable to the Administrative Agents under Section 12.3(b) and any
expense pursuant to Section 4.14), and in their sole discretion require
such Lender to transfer and assign in whole (but not in part), without
recourse (in accordance with and subject to the terms and conditions of
Section 12.3(b), all of its interests, rights and obligations under
this Credit Agreement to an Eligible Assignee which shall assume such
assigned obligations (which Eligible Assignee may be another Lender, if
a Lender accepts such assignment); provided that (i) such assignment
shall not conflict with any law, rule or regulation or order of any
court or other governmental authority, and (ii) the Borrowers or such
Eligible Assignee shall have paid to the assigning Lender in
immediately available funds the principal of and interest accrued to
the date of such payment on the portion of the Loans hereunder held by
such assigning Lender and all other amounts owed to such assigning
Lender hereunder, or
(b) request that such Lender use its reasonable efforts
(consistent with legal and regulatory restrictions) to avoid the need
for paying such compensation or such inability, including changing the
jurisdiction of its applicable lending office; provided, however, that
the taking of such action would not, in the sole judgment of such
Lender, be disadvantageous to such Lender and provided further that, if
and to the extent the Borrowers shall make the request described in
this paragraph (b) and such request shall be denied, such
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denial shall not preclude the Borrowers from exercising its rights
under paragraph (a) above.
4.17 ALL BORROWERS TREATED EQUALLY.
Each Lender agrees that it will not make a request for compensation
pursuant to any of Sections 4.9, 4.11, 4.12 or 4.13, or claim it is unable to
make or maintain Eurodollar Loans or to create Bankers' Acceptances, unless such
Lender at such time is making a similar claim for compensation or inability of
all its borrowers which are similarly situated.
SECTION 5
GUARANTY
5.1 GUARANTY OF PAYMENT.
Subject to Section 5.7 below, each of the Guarantors hereby, jointly
and severally, unconditionally guarantees to each Lender, each Affiliate of a
Lender that enters into a Hedging Agreement and the Agents the prompt payment of
the Guaranteed Obligations in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration or otherwise). This Guaranty is a guaranty
of payment and not of collection and is a continuing guaranty and shall apply to
all Guaranteed Obligations whenever arising.
5.2 OBLIGATIONS UNCONDITIONAL.
The obligations of the Guarantors hereunder are absolute and
unconditional, irrespective of the value, genuineness, validity, regularity or
enforceability of any of the Credit Documents or the Hedging Agreements, or any
other agreement or instrument referred to therein, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor. Each Guarantor agrees that this Guaranty may be enforced by
the Lenders without the necessity at any time of resorting to or exhausting any
other security or collateral and without the necessity at any time of having
recourse to the Notes or any other of the Credit Documents or any collateral, if
any, hereafter securing the Guaranteed Obligations or otherwise and each
Guarantor hereby waives the right to require the Lenders to proceed against a
Borrower or any other Person (including a co-guarantor) or to require the
Lenders to pursue any other remedy or enforce any other right. Each Guarantor
further agrees that it shall have no right of subrogation, indemnity,
reimbursement or contribution against a Borrower or any other Guarantor of the
Guaranteed Obligations for amounts paid under this Guaranty until such time as
the Lenders (and any Affiliates of Lenders entering into Hedging Agreements)
have been paid in full, all Commitments under the Credit Agreement have been
terminated and no Person or Governmental Authority shall have any right to
request any return or reimbursement of funds from the Lenders in connection with
monies received under the Credit Documents. Each Guarantor further agrees that
nothing contained herein shall prevent the Lenders from suing on the Notes or
any of the other Credit Documents or any of the Hedging Agreements or
foreclosing its security interest in or Lien on any collateral, if any, securing
the Guaranteed Obligations or from exercising any other rights available to it
under this Credit
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Agreement, the Notes, any other of the Credit Documents, or any other instrument
of security, if any, and the exercise of any of the aforesaid rights and the
completion of any foreclosure proceedings shall not constitute a discharge of
any of any Guarantor's obligations hereunder; it being the purpose and intent of
each Guarantor that its obligations hereunder shall be absolute, independent and
unconditional under any and all circumstances. Neither any Guarantor's
obligations under this Guaranty nor any remedy for the enforcement thereof shall
be impaired, modified, changed or released in any manner whatsoever by an
impairment, modification, change, release or limitation of the liability of a
Borrower or by reason of the bankruptcy or insolvency of a Borrower. Each
Guarantor waives any and all notice of the creation, renewal, extension or
accrual of any of the Guaranteed Obligations and notice of or proof of reliance
of by any Agent or any Lender upon this Guarantee or acceptance of this
Guarantee. The Guaranteed Obligations, and any of them, shall conclusively be
deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon this Guarantee. All dealings between the
Borrowers and any of the Guarantors, on the one hand, and the Agents and the
Lenders, on the other hand, likewise shall be conclusively presumed to have been
had or consummated in reliance upon this Guarantee. The Guarantors further agree
to all rights of set-off as set forth in Section 12.2.
5.3 MODIFICATIONS.
Each Guarantor agrees that (a) all or any part of the Collateral now or
hereafter held for the Guaranteed Obligations, if any, may be exchanged,
compromised or surrendered from time to time; (b) the Lenders shall not have any
obligation to protect, perfect, secure or insure any such security interests,
liens or encumbrances now or hereafter held, if any, for the Guaranteed
Obligations or the properties subject thereto; (c) the time or place of payment
of the Guaranteed Obligations may be changed or extended, in whole or in part,
to a time certain or otherwise, and may be renewed or accelerated, in whole or
in part; (d) the Borrowers and any other party liable for payment under the
Credit Documents may be granted indulgences generally; (e) any of the provisions
of the Notes or any of the other Credit Documents may be modified, amended or
waived; (f) any party (including any co-guarantor) liable for the payment
thereof may be granted indulgences or be released; and (g) any deposit balance
for the credit of the Borrowers or any other party liable for the payment of the
Guaranteed Obligations or liable upon any security therefor may be released, in
whole or in part, at, before or after the stated, extended or accelerated
maturity of the Guaranteed Obligations, all without notice to or further assent
by such Guarantor, which shall remain bound thereon, notwithstanding any such
exchange, compromise, surrender, extension, renewal, acceleration, modification,
indulgence or release.
5.4 WAIVER OF RIGHTS.
Each Guarantor expressly waives to the fullest extent permitted by
applicable law: (a) notice of acceptance of this Guaranty by the Lenders and of
all extensions of credit to a Borrower by the Lenders; (b) presentment and
demand for payment or performance of any of the Guaranteed Obligations; (c)
protest and notice of dishonor or of default (except as specifically required in
the Credit Agreement) with respect to the Guaranteed Obligations or with respect
to any security therefor; (d) notice of the Lenders obtaining, amending,
substituting for, releasing, waiving or modifying any security interest, lien or
encumbrance, if any, hereafter securing the Guaranteed Obligations, or the
Lenders' subordinating, compromising, discharging or releasing such security
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interests, liens or encumbrances, if any; (e) all other notices to which such
Guarantor might otherwise be entitled; and (f) demand for payment under this
Guaranty.
5.5 REINSTATEMENT.
The obligations of the Guarantors under this Section 5 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Guaranteed Obligations is rescinded
or must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agents and each Lender on demand for all reasonable costs and expenses
(including, without limitation, reasonable fees of counsel) incurred by an Agent
or such Lender in connection with such rescission or restoration, including any
such costs and expenses incurred in defending against any claim alleging that
such payment constituted a preference, fraudulent transfer or similar payment
under any bankruptcy, insolvency or similar law.
5.6 REMEDIES.
The Guarantors agree that, as between the Guarantors, on the one hand,
and the Agents and the Lenders, on the other hand, the Guaranteed Obligations
may be declared to be forthwith due and payable as provided in Section 10 (and
shall be deemed to have become automatically due and payable in the
circumstances provided in Section 10) notwithstanding any stay, injunction or
other prohibition preventing such declaration (or preventing such Guaranteed
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or such Guaranteed
Obligations being deemed to have become automatically due and payable), such
Guaranteed Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors. The Guarantors
acknowledge and agree that their obligations hereunder are secured in accordance
with the terms of the Collateral Documents and that the Lenders may exercise
their remedies thereunder in accordance with the terms thereof.
5.7 LIMITATION OF GUARANTY.
Notwithstanding any provision to the contrary contained herein or in
any of the other Credit Documents, to the extent the obligations of any
Guarantor shall be adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state or federal law
relating to fraudulent conveyances or transfers) then the obligations of such
Guarantor hereunder shall be limited to the maximum amount that is permissible
under applicable law (whether federal or state and including, without
limitation, the Bankruptcy Code).
5.8 RIGHTS OF CONTRIBUTION.
(a) The Total Facility Guarantors agree among themselves that,
in connection with payments made hereunder, each Total Facility
Guarantor shall have contribution rights against the other Total
Facility Guarantors as permitted under applicable law. Such
contribution rights shall be subordinate and subject in right of
payment to the obligations of such Total Facility Guarantors under the
Credit Documents and no Total Facility Guarantor
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shall exercise such rights of contribution until all Guaranteed
Obligations have been paid in full and the Commitments terminated.
(b) The Canadian Facility Guarantors agree among themselves
that, in connection with payments made hereunder, each Canadian
Facility Guarantor shall have contribution rights against the other
Canadian Facility Guarantors as permitted under applicable law. Such
contribution rights shall be subordinate and subject in right of
payment to the obligations of such Canadian Facility Guarantors under
the Credit Documents and no Canadian Facility Guarantor shall exercise
such rights of contribution until all Guaranteed Obligations have been
paid in full and the Commitments terminated.
SECTION 6
CONDITIONS PRECEDENT
6.1 CLOSING CONDITIONS.
The obligation of the Lenders to enter into this Credit Agreement and
make the initial Extension of Credit is subject to satisfaction (or waiver by
each of the Lenders) of the following conditions:
(a) Executed Credit Documents. Receipt by the U.S.
Administrative Agent of duly executed copies of: (i) this Credit
Agreement; (ii) the Notes; (iii) the Collateral Documents; and (iv) all
other Credit Documents, each in form and substance reasonably
acceptable to the U.S. Administrative Agent and the Lenders; provided
that receipt by the U.S. Administrative Agent of an executed signature
page to this Credit Agreement from a Lender shall be deemed approval by
such Lender of the form and substance of the Credit Documents.
(b) Corporate Documents. Receipt by the U.S. Administrative
Agent of the following:
(i) Charter Documents. Copies of the articles or
certificates of incorporation or other charter documents of
each Credit Party certified to be true and complete as of a
recent date by the appropriate Governmental Authority of the
state or other jurisdiction of its incorporation and certified
by a secretary or assistant secretary of such Credit Party to
be true and correct as of the Effective Date.
(ii) Bylaws. A copy of the bylaws of each Credit
Party certified by a secretary or assistant secretary of such
Credit Party to be true and correct as of the Effective Date.
(iii) Resolutions. Copies of resolutions of the Board
of Directors of each Credit Party approving and adopting the
Credit Documents to which it is a party, the transactions
contemplated therein and authorizing execution and delivery
thereof,
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certified by a secretary or assistant secretary of such Credit
Party to be true and correct and in force and effect as of the
Effective Date.
(iv) Good Standing. Copies of (A) certificates of
good standing, existence or its equivalent with respect to
each Credit Party certified as of a recent date by the
appropriate Governmental Authorities of the state or other
jurisdiction of its incorporation and the state or other
jurisdiction in which it has its chief executive office and/or
principal place of business and (B) to the extent available, a
certificate indicating payment of all corporate franchise
taxes certified as of a recent date by the appropriate
governmental taxing authorities.
(v) Incumbency. An incumbency certificate of each
Credit Party certified by a secretary or assistant secretary
to be true and correct as of the Effective Date.
(c) Opinion of Counsel. Receipt by the U.S. Administrative
Agent of an opinion or opinions from U.S. and Canadian legal counsel to
the Credit Parties (which shall cover, among other things, authority,
legality, validity, binding effect, and enforceability of the Credit
Documents and the attachment, perfection and validity of Liens),
reasonably satisfactory to the U.S. Administrative Agent, addressed to
the U.S. Administrative Agent and/or the Canadian Administrative Agent
and the applicable Lenders and dated as of the Effective Date.
(d) Financial Statements. Receipt by the Lenders of such
financial information regarding the Credit Parties as they may request,
including, but not limited to, (i) the consolidated financial
statements of the Credit Parties and their Subsidiaries for their 1996,
1997 and 1998 fiscal years, including balance sheets, income statements
and cash flow statements audited by independent public accountants of
recognized national standing and prepared in accordance with GAAP and
(ii) interim unaudited quarterly financial statements for the Credit
Parties and their Subsidiaries, prepared in accordance with GAAP for
the quarter ending as of March 31, 1999, prepared in accordance with
GAAP.
(e) Subordinated Debt. Confirmation that the Credit Parties
are in compliance with the terms and conditions of the Subordinated
Debt.
(f) Permitted Receivables Facility. Review and approval by the
U.S. Administrative Agent of the terms and conditions of the Permitted
Receivables Facility and confirmation that the Credit Parties are in
compliance thereof.
(g) Personal Property Collateral. The Collateral Agent shall
have received, in form and substance reasonably satisfactory to the
Collateral Agent:
(i) searches under the Uniform Commercial Code or
equivalent Canadian legislation ("UCC") in the jurisdiction of
the chief executive office of each Credit Party and each
jurisdiction where any Collateral is located or where a filing
would need to be made in order to perfect the Lenders'
security interest in the
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Collateral, copies of the financing statements on file in such
jurisdictions and evidence that no Liens exist other than
Permitted Liens;
(ii) duly executed UCC financing statements for each
appropriate jurisdiction as is necessary, in the Collateral
Agent's sole discretion, to perfect the Lenders' security
interest in the Collateral;
(iii) searches of ownership of intellectual property
in the appropriate governmental offices as requested by the
Collateral Agent and such patent, trademark and copyright
filings as requested by the Collateral Agent;
(iv) all stock certificates evidencing the stock
pledged to the Collateral Agent pursuant to the Pledge
Agreements, together with duly executed in blank undated stock
powers attached thereto;
(v) all instruments and chattel paper in the
possession of a Credit Party, as required by the Security
Agreements, together with allonges or assignments as may be
necessary to perfect the Lenders' security interest in such
Collateral;
(vi) in the case of any personal property Collateral
located at premises leased by a Credit Party, evidence that
such estoppel letters, consents and waivers from the landlords
of such real property as may be required by the Collateral
Agent shall have been delivered to such landlords with an
appropriate request for execution.
(h) Evidence of Insurance. Receipt by the Collateral Agent of
copies of insurance policies or certificates of insurance of the Credit
Parties evidencing liability and casualty insurance meeting the
requirements set forth in the Credit Documents, including, but not
limited to, naming the Collateral Agent as additional insured or loss
payee on behalf of the Lenders.
(i) Litigation. There shall not exist (i) any order, decree,
judgment, ruling or injunction which prohibits or restrains the
consummation of the Credit Documents or (ii) any pending or, to the
knowledge of any Credit Party, threatened action, suit, investigation
or proceeding against a Credit Party that could have or could be
reasonably expected to have a Material Adverse Effect.
(j) Officer's Certificates. The U.S. Administrative Agent
shall have received a certificate or certificates executed by the chief
financial officer of the U.S. Borrower as of the Effective Date stating
that (i) the Parent and each of its Subsidiaries are in compliance with
all existing material financial obligations, (ii) no action, suit,
investigation or proceeding is pending or, to the knowledge of any
Credit Party, threatened in any court or before any arbitrator or
governmental instrumentality that purports to affect the Parent, any of
its Subsidiaries or any transaction contemplated by the Credit
Documents, if such action, suit, investigation or proceeding could have
or could be reasonably expected to have a Material Adverse Effect,
(iii) the financial statements and information delivered to the
Administrative Agents on or before the Effective Date were prepared in
good faith and in
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accordance with GAAP, and (iv) immediately after giving effect to this
Credit Agreement, the other Credit Documents, and all the transactions
contemplated therein to occur on such date, (A) no Default or Event of
Default exists, (B) all representations and warranties contained
herein, in the other Credit Documents are true and correct in all
material respects, and (C) the Credit Parties are in compliance with
each of the financial covenants set forth in Section 8.2.
(k) Solvency Certificate. The U.S. Administrative Agent shall
have received a certificate, dated as of the Closing Date, from the
chief financial officer of the U.S. Borrower as to the financial
condition, solvency and related matters of the Credit Parties on a
consolidated basis after giving effect to the initial Extensions of
Credit hereunder.
(l) Material Adverse Effect. There shall not have occurred a
Material Adverse Effect since December 31, 1998.
(m) Fees and Expenses. Payment by the Credit Parties of the
fees and expenses owed by them pursuant to the terms of the Fee Letter
and/or this Credit Agreement (including without limitation any fees or
expenses owed pursuant to Section 12.5 for which demand has been made).
(n) Existing Credit Agreement; Other Indebtedness. Receipt by
the U.S. Administrative Agent of evidence that: (i) that certain Credit
Agreement, dated as of June 5, 1998, among the Parent, the Borrowers,
The Chase Manhattan Bank, as U.S. Administrative Agent, The Chase
Manhattan Bank Canada as Canadian Administrative Agent and the lenders
party thereto (as amended or modified from time to time, the "Existing
Credit Agreement"), and all documents executed or delivered in
connection therewith, have been terminated, and (ii) all amounts owing
in connection with the Existing Credit Agreement or any other
Indebtedness of the Credit Parties and their Subsidiaries (other than
Indebtedness permitted by the terms of this Credit Agreement) shall
have been paid in full and all Liens granted in connection therewith
shall have been or are agreed to be released upon such repayment in
full.
(o) Year 2000 Problem. Receipt and review of information, in
form and substance satisfactory to the U.S. Administrative Agent and
the Lenders, confirming that (i) the Credit Parties and their
subsidiaries are taking all necessary and appropriate steps to
ascertain the extent of, and to quantify and successfully address,
business and financial risks facing the Credit Parties and their
Subsidiaries as a result of the Year 2000 Problem, including risks
resulting from the failure of key vendors and customers of the Credit
Parties and their Subsidiaries to successfully address the Year 2000
Problem, and (ii) each Credit Party's material computer applications
and, to the knowledge of the Credit Parties and their Subsidiaries,
those of its key vendors and customers will, on a timely basis,
adequately address the Year 2000 Problem in all material respects.
(p) Other. Receipt and satisfactory review by the U.S.
Administrative Agent and its counsel of such other documents,
instruments, agreements or information as reasonably and timely
requested by the U.S. Administrative Agent, its counsel or any Lender,
including, but not limited to, shareholder agreements, management
agreements and
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information regarding litigation, tax, accounting, labor, insurance,
pension liabilities (actual or contingent), real estate leases,
material contracts, debt agreements, property ownership, contingent
liabilities and management of the Credit Parties and their
Subsidiaries.
6.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
In addition to the conditions precedent stated elsewhere herein, the
Lenders shall not be obligated to make Loans nor shall an Issuing Lender be
required to issue or extend a Letter of Credit nor shall a Canadian Lender be
required to create Bankers' Acceptances unless:
(a) Notice. The applicable Borrower shall have delivered (i)
in the case of any new Revolving Loan, a Notice of Borrowing, duly
executed and completed, by the time specified in Section 2.1 or Section
3.1, as applicable, (ii) in the case of any Letter of Credit, to the
applicable Issuing Lender an appropriate request for issuance in
accordance with the provisions of Section 2.2 or Section 3.2, as
applicable, (iii) in the case of a Swingline Loan, to the applicable
Swingline Lender, a Swingline Loan Request, duly executed and
completed, by the time specified in Section 2.3 or Section 3.3, as
applicable and (iv) in the case of a Bankers' Acceptance, to the
Canadian Administrative Agent, an appropriate notice in accordance with
Section 3.4.
(b) Representations and Warranties. The representations and
warranties made by the Credit Parties in any Credit Document are true
and correct in all material respects at and as if made as of such date
except to the extent they expressly relate to an earlier date.
(c) No Default. No Default or Event of Default shall exist or
be continuing either prior to or after giving effect thereto.
(d) Availability. Immediately after giving effect to the
making of a Loan (and the application of the proceeds thereof) or to
the issuance of a Letter of Credit or the creation of a Bankers'
Acceptance, as the case may be, the sum of (i) U.S. Revolving Loans
outstanding plus U.S. LOC Obligations outstanding plus U.S. Swingline
Loans outstanding shall not exceed the U.S. Revolving Committed Amount
and (ii) Canadian Revolving Loans outstanding plus Canadian LOC
obligations outstanding plus Canadian Swingline Loans outstanding plus
the Face Amount of BA Obligations shall not exceed the Canadian
Revolving Committed Amount.
The delivery of each Notice of Borrowing, each Swingline Loan Request and each
request for a Letter of Credit or Bankers' Acceptance shall constitute a
representation and warranty by the applicable Borrower of the correctness of the
matters specified in subsections (b), (c), and (d) above.
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SECTION 7
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agents and each Lender that:
7.1 FINANCIAL CONDITION.
(a) The financial statements delivered to the Lenders prior to
the Effective Date and pursuant to Section 8.1(a) and (b): (i) have
been prepared in accordance with GAAP and (ii) present fairly the
consolidated and consolidating (as applicable) financial condition,
results of operations and cash flows of the Credit Parties and their
Subsidiaries as of such date and for such periods.
(b) Since December 31, 1998 there has been no sale, transfer
or other disposition by any Credit Party or any of its Subsidiaries of
any material part of the business or property of the Credit Parties and
their Subsidiaries taken as a whole, and no purchase or other
acquisition by any of them of any business or property (including any
Capital Stock of any other Person) material in relation to the
consolidated financial condition of the Credit Parties and their
Subsidiaries taken as a whole, in each case which is not (i) reflected
in the most recent financial statements delivered to the Lenders
pursuant to Section 8.1 or in the notes thereto or (ii) otherwise
permitted by the terms of this Credit Agreement and communicated to the
Administrative Agents. The Agents and the Lenders hereby acknowledge
that the Parent on May 17, 1999 completed an initial public offering of
11.2 million shares of its common stock, pursuant to which it received
$201.3 million in gross proceeds.
7.2 NO MATERIAL CHANGE.
Since December 31, 1998, there has been no development or event
relating to or affecting a Credit Party which has had or could be reasonably
expected to have a Material Adverse Effect.
7.3 ORGANIZATION AND GOOD STANDING.
Each Credit Party that is domiciled in the United States (a) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the state (or other jurisdiction) of its incorporation, (b) is duly
qualified and in good standing as a foreign corporation and authorized to do
business in every jurisdiction unless the failure to be so qualified, in good
standing or authorized could be reasonably expected to have a Material Adverse
Effect and (c) has the requisite corporate power and authority to own its
properties and to carry on its business as now conducted and as proposed to be
conducted. Each Credit Party that is domiciled in Canada (a) is a corporation
duly incorporated or amalgamated and validly subsisting under the laws of its
jurisdiction of incorporation, (b) is duly qualified, licensed or registered to
carry on its business in each jurisdiction where the failure to do so would have
a Material Adverse Effect and (c) has the corporate power and authority to carry
on its business as now conducted and as proposed to be conducted.
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7.4 DUE AUTHORIZATION.
Each Credit Party (a) has the requisite corporate power and authority
to execute, deliver and perform this Credit Agreement and the other Credit
Documents to which it is a party and to incur the obligations herein and therein
provided for and (b) is duly authorized to, and has been authorized by all
necessary corporate action, to execute, deliver and perform this Credit
Agreement and the other Credit Documents to which it is a party.
7.5 NO CONFLICTS.
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Credit Party will (a)
violate or conflict with any provision of its articles or certificate of
incorporation or bylaws, (b) violate, contravene or materially conflict with any
Requirement of Law or any other law, regulation (including, without limitation,
Regulation T, U or X), order, writ, judgment, injunction, decree or permit
applicable to it, (c) violate, contravene or conflict with contractual
provisions of, or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement or instrument to
which it is a party or by which it may be bound, the violation of which could
have or could be reasonably expected to have a Material Adverse Effect, or (d)
result in or require the creation of any Lien (other than those contemplated in
or created in connection with the Credit Documents) upon or with respect to its
properties.
7.6 CONSENTS.
Except for consents, approvals and authorizations which have been
obtained, no consent, approval, authorization or order of, or filing,
registration or qualification with, any court or Governmental Authority or third
party in respect of any Credit Party is required in connection with the
execution, delivery or performance of this Credit Agreement or any of the other
Credit Documents by such Credit Party.
7.7 ENFORCEABLE OBLIGATIONS.
This Credit Agreement and the other Credit Documents have been duly
executed and delivered and constitute legal, valid and binding obligations of
each Credit Party enforceable against such Credit Party in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization or moratorium laws or similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
7.8 NO DEFAULT.
No Credit Party, nor any of its Subsidiaries, is in default in any
respect under any material contract, lease, loan agreement, indenture, mortgage,
security agreement or other agreement or obligation to which it is a party or by
which any of its properties is bound. No Default or Event of Default has
occurred or exists except as previously disclosed in writing to the Lenders.
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7.9 OWNERSHIP.
Each Credit Party, and each of its Subsidiaries, is the owner of, and
has good and marketable title to, or has a valid license to use all of its
respective assets and none of such assets is subject to any Lien other than
Permitted Liens.
7.10 INDEBTEDNESS.
The Credit Parties and their Subsidiaries have no Indebtedness except
(a) as disclosed in the financial statements referenced in Section 8.1, (b) as
set forth on Schedule 7.10, and (c) as otherwise permitted by this Credit
Agreement.
7.11 LITIGATION.
Except as set forth on Schedule 7.11, there are no material actions,
suits or legal, equitable, arbitration or administrative proceedings, pending
or, to the knowledge of any Credit Party, threatened against any Credit Party or
any of its Subsidiaries.
7.12 TAXES.
Each Credit Party, and each of its Subsidiaries, has filed, or caused
to be filed, all tax returns (federal, state, local and foreign) required to be
filed and paid (a) all amounts of taxes shown thereon to be due and payable
(including interest and penalties) and (b) all other taxes, fees, assessments
and other governmental charges (including mortgage recording taxes, documentary
stamp taxes and intangibles taxes) that are due and payable, except for such
taxes (i) which are not yet delinquent or (ii) that are being contested in good
faith and by proper proceedings, and against which adequate reserves are being
maintained in accordance with GAAP. To the knowledge of the Credit Parties,
there are no amounts claimed to be due against any of them by any Governmental
Authority.
7.13 COMPLIANCE WITH LAW.
Each Credit Party, and each of its Subsidiaries, is in compliance with
all material Requirements of Law and all other material laws, rules,
regulations, orders and decrees (including without limitation Environmental
Laws) applicable to it, or to its properties. No Requirement of Law could be
reasonably expected to cause a Material Adverse Effect.
7.14 ERISA.
Except as would not cause or be reasonably expected to cause a Material
Adverse Effect:
(a) During the five-year period prior to the date on which
this representation is made or deemed made: (i) no Termination Event
has occurred, and, to the knowledge of the Credit Parties, no event or
condition has occurred or exists as a result of which any Termination
Event could reasonably be expected to occur, with respect to any Plan;
(ii) no "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or not
waived, has occurred with respect to any Plan;
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(iii) each Plan has been maintained, operated, and funded in compliance
with its own terms and in material compliance with the provisions of
ERISA, the Code, and any other applicable federal or state laws; and
(iv) no lien in favor of the PBGC or a Plan has arisen or is reasonably
likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit liabilities"
(within the meaning of Section 4001 of ERISA) under each Single
Employer Plan (determined utilizing the actuarial assumptions used to
fund such Plans), whether or not vested, did not, as of the last annual
valuation date prior to the date on which this representation is made
or deemed made, exceed the fair market current value as of such date of
the assets of such Plan allocable to such accrued liabilities.
(c) Neither the Parent, nor any of its Subsidiaries, nor any
ERISA Affiliate has incurred, or, to the knowledge of such parties, are
reasonably expected to incur, any withdrawal liability under ERISA to
any Multiemployer Plan or Multiple Employer Plan. Neither the Parent,
nor any of its Subsidiaries, nor any ERISA Affiliate has received any
notification pursuant to ERISA that any Multiemployer Plan is in
reorganization (within the meaning of Section 4241 of ERISA), is
insolvent (within the meaning of Section 4245 of ERISA), or has been
terminated (within the meaning of Title IV of ERISA), and, to the best
knowledge of such parties, no Multiemployer Plan is reasonably expected
to be in reorganization, insolvent, or terminated.
(d) No nonexempt prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) or breach of
fiduciary responsibility has occurred with respect to a Plan which has
subjected or is reasonably expected to subject the Parent or any of its
Subsidiaries or any ERISA Affiliate to any liability under Sections
406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or
under any agreement or other instrument pursuant to which the Parent or
any of its Subsidiaries or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability.
(e) The present value of the liability of the Parent and its
Subsidiaries and each ERISA Affiliate for post-retirement welfare
benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(1) of
ERISA), net of all assets under all such Plans allocable to such
benefits, are reflected on the Financial Statements in accordance with
FASB 106.
(f) Each Plan which is a welfare plan (as defined in Section
3(1) of ERISA) to which Sections 601-609 of ERISA and Section 4980B of
the Code apply has been administered in material compliance with such
sections.
7.15 SUBSIDIARIES.
Set forth on Schedule 7.15 is a complete and accurate list of all
Subsidiaries of each Credit Party. Information on Schedule 7.15 includes
jurisdiction of incorporation, the number of shares of each class of Capital
Stock outstanding, the number and percentage of outstanding shares of each class
of Capital Stock owned (directly or indirectly) by such Credit Party, and the
number and effect, if exercised, of all outstanding options, warrants, rights of
conversion or purchase and all
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other similar rights with respect thereto. The outstanding Capital Stock of all
such Subsidiaries is validly issued, fully paid and non-assessable and is owned
by each such Credit Party, directly or indirectly, free and clear of all Liens
(other than those arising under or contemplated in connection with the Credit
Documents). Other than as set forth in Schedule 7.15, neither any Credit Party
nor any Subsidiary thereof has outstanding any securities convertible into or
exchangeable for its Capital Stock nor does any such Person have outstanding any
rights to subscribe for or to purchase or any options for the purchase of, or
any agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to its Capital Stock.
Schedule 7.15 may be updated from time to time by the Borrowers by giving
written notice thereof to the Administrative Agents.
7.16 USE OF PROCEEDS.
The proceeds of the Loans hereunder will be used solely for the
purposes specified in Section 8.11. No proceeds of the Loans hereunder have been
or will be used for the Acquisition of another Person unless the board of
directors (or other comparable governing body) or stockholders, as appropriate,
of such Person has approved such Acquisition.
7.17 GOVERNMENT REGULATION.
(a) No part of the Letters of Credit or proceeds of the Loans
will be used, directly or indirectly, for the purpose of purchasing or
carrying any "margin stock" within the meaning of Regulation U, or for
the purpose of purchasing or carrying or trading in any securities. If
requested by any Lender or the U.S. Administrative Agent, the Borrower
will furnish to the U.S. Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements
of FR Form U-1 referred to in Regulation U. No Indebtedness being
reduced or retired out of the proceeds of the Loans was or will be
incurred for the purpose of purchasing or carrying any margin stock
within the meaning of Regulation U or any "margin security" within the
meaning of Regulation T. "Margin stock" within the meaning of
Regulation U does not constitute more than 25% of the value of the
consolidated assets of the Credit Parties and their Subsidiaries. None
of the transactions contemplated by the Credit Documents (including,
without limitation, the direct or indirect use of the proceeds of the
Loans) will violate or result in a violation of (i) the Securities Act
of 1933, as amended, (ii) the Securities Exchange Act of 1934, as
amended, (iii) regulations issued pursuant to the Securities Act of
1933 or the Securities Exchange Act of 1934, or (iv) Regulations T, U
or X.
(b) No Credit Party, nor any of its Subsidiaries, is subject
to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act or the Investment Company Act of 1940, each as
amended. In addition, no Credit Party, nor any of its Subsidiaries, is
(i) an "investment company" registered or required to be registered
under the Investment Company Act of 1940, as amended, and is not
controlled by an "investment company", or (ii) a "holding company", or
a "subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as
amended.
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(c) No director, executive officer or principal shareholder of
any Credit Party or any of its Subsidiaries is a director, executive
officer or principal shareholder of any Lender. For the purposes hereof
the terms "director", "executive officer" and "principal shareholder"
(when used with reference to any Lender) have the respective meanings
assigned thereto in Regulation O.
7.18 ENVIRONMENTAL MATTERS.
(a) Except as would not have or be reasonably expected to have
a Material Adverse Effect:
(i) Each of the real properties owned or operated by
the Credit Parties and their Subsidiaries (the "Real
Properties") and all operations at the Real Properties are in
compliance with all applicable Environmental Laws, and there
is no violation of any Environmental Law with respect to the
Real Properties or the businesses operated by the Credit
Parties or any of their Subsidiaries (the "Businesses"), and
there are no conditions relating to the Businesses or Real
Properties that would reasonably be expected to give rise to
liability under any applicable Environmental Laws.
(ii) No Credit Party, nor any of its Subsidiaries,
has received any written notice of, or inquiry from any
Governmental Authority regarding, any violation, alleged
violation, non-compliance, liability or potential liability
regarding Hazardous Materials or compliance with Environmental
Laws with regard to any of the Real Properties or the
Businesses, nor, to the knowledge of a Credit Party, is any
such notice being threatened.
(iii) Hazardous Materials have not been transported
or disposed of from the Real Properties, or generated,
treated, stored or disposed of at, on or under any of the Real
Properties or any other location, in each case by, or on
behalf or with the permission of, a Credit Party or any of its
Subsidiaries in a manner that would give rise to liability
under any applicable Environmental Laws.
(iv) No judicial proceeding or governmental or
administrative action is pending or, to the knowledge of a
Credit Party, threatened under any Environmental Law to which
a Credit Party or any of its Subsidiaries is or will be named
as a party, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to a
Credit Party or any of its Subsidiaries, the Real Properties
or the Businesses.
(v) There has been no release (including, without
limitation, disposal) or threat of release of Hazardous
Materials at or from the Real Properties, or arising from or
related to the operations of a Credit Party or any of its
Subsidiaries in connection with the Real Properties or
otherwise in connection with the Businesses where such release
constituted a violation of, or would give rise to liability
under, any applicable Environmental Laws.
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(vi) None of the Real Properties contains, or has
previously contained, any Hazardous Materials at, on or under
the Real Properties in amounts or concentrations that, if
released, constitute or constituted a violation of, or could
give rise to liability under, Environmental Laws.
(vii) No Credit Party, nor any of its Subsidiaries,
has assumed any liability of any Person (other than another
Credit Party or Subsidiary thereof) under any Environmental
Law.
(b) The Credit Parties have adopted procedures that are
designed to (i) ensure that each Credit Party, any of its operations
and each of the properties owned or leased by each Credit Party
complies with applicable Environmental Laws and (ii) minimize any
liabilities or potential liabilities that each Credit Party, any of its
operations and each of the properties owned or leased by each Credit
Party may have under applicable Environmental Laws.
7.19 INTELLECTUAL PROPERTY.
Each Credit Party owns, or has the legal right to use, all patents,
trademarks, tradenames, copyrights, technology, know-how and processes (the
"Intellectual Property") necessary for each of them to conduct its business as
currently conducted. Except as set forth on Schedule 7.19, (a) no holding,
decision or judgment has been rendered by any Governmental Authority which would
limit, cancel or question the validity of any Intellectual Property and (b) no
action or proceeding is pending seeking to limit, cancel or question the
validity of any Intellectual Property. Set forth on Schedule 7.19 is a list of
all patents, registered and material unregistered trademarks, tradenames and
registered copyrights owned by each Credit Party or that any Credit Party has
the right to use. Except as provided on Schedule 7.19, no claim has been
asserted against any Credit Party or its Subsidiaries in writing and is pending
by any Person challenging or questioning the use of any Intellectual Property
owned by a Credit Party or its Subsidiaries or that any Credit Party or its
Subsidiaries has a right to use or the validity or effectiveness of any such
Intellectual Property, nor does any Credit Party have knowledge of any such
claim, and to the Credit Parties' knowledge the use of any Intellectual Property
by the Credit Parties and their Subsidiaries does not infringe on the rights of
any Person. Schedule 7.19 may be updated from time to time by the Borrowers by
giving written notice thereof to the Administrative Agents.
7.20 SOLVENCY.
Each Credit Party is and, after consummation of the transactions
contemplated by this Credit Agreement, will be Solvent.
7.21 INVESTMENTS.
All Investments of each Credit Party and its Subsidiaries are (a) as
set forth on Schedule 7.21 or (b) Permitted Investments.
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7.22 LOCATION OF COLLATERAL.
Set forth on Schedule 7.22(a) is a list of all locations where any
personal property of a Credit Party is located, including county and state where
located. Set forth on Schedule 7.22(b) is the chief executive office and
principal place of business of each Credit Party. Schedules 7.22(a) and 7.22(b)
may be updated from time to time by the Borrowers by giving written notice
thereof to the Administrative Agents.
7.23 DISCLOSURE.
Neither this Credit Agreement nor any financial statements delivered to
the Administrative Agents or the Lenders nor any other document, certificate or
statement furnished to the Administrative Agents or the Lenders by or on behalf
of any Credit Party in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein or herein,
taken as a whole, not misleading.
7.24 LICENSES, ETC.
The Credit Parties have obtained and hold in full force and effect, all
material franchises, licenses, permits, certificates, authorizations,
qualifications, accreditations, easements, rights of way and other rights,
consents and approvals which are necessary for the operation of their respective
businesses as presently conducted.
7.25 COLLATERAL DOCUMENTS.
The Collateral Documents create valid security interests in, and Liens
on, the Collateral purported to be covered thereby, which security interests and
Liens are currently perfected security interests and Liens, prior to all other
Liens other than Permitted Liens.
7.26 BURDENSOME RESTRICTIONS.
No Credit Party, nor any of its Subsidiaries, is a party to any
agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any Requirement of Law which,
individually or in the aggregate, could have or could be reasonably expected to
have a Material Adverse Effect.
7.27 YEAR 2000 COMPLIANCE.
Each Credit Party reasonably believes that the Year 2000 Problem has
been appropriately addressed by it and the Year 2000 Problem will not exist with
respect to it, to the extent such Year 2000 Problem could cause or could be
reasonably expected to cause a Material Adverse Effect.
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7.28 LABOR CONTRACTS AND DISPUTES.
Except as disclosed on Schedule 7.28, to any Credit Party's knowledge
(a) there is no collective bargaining agreement or other labor contract covering
employees of any Credit Party; (b) no union or other labor organization is
seeking to organize, or be recognized as, a collective bargaining unit of
employees of any Credit Party; and (c) there is no pending or threatened strike,
work stoppage, material unfair labor practice claim or other material labor
dispute against or affecting any Credit Party or its employees.
7.29 BROKER'S FEES.
No Credit Party will pay or agree to pay, or reimburse any other Person
(other than an Agent or Lender) with respect to, any finder's, broker's,
investment banking or other similar fee in connection with any of the
transactions evidenced by the Credit Documents.
SECTION 8
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this
Credit Agreement is in effect and until the Loans, LOC Obligations and BA
Obligations, together with interest and fees and other obligations then due and
payable hereunder, have been paid in full (other than any such obligations which
by the terms thereof are stated to survive termination of the Credit Documents)
and the Commitments, Letters of Credit and Bankers' Acceptances hereunder shall
have terminated:
8.1 INFORMATION COVENANTS.
The Credit Parties will furnish, or cause to be furnished, to the
Administrative Agents and, unless otherwise specified below, each of the
Lenders:
(a) Annual Financial Statements. To the U.S. Administrative
Agent (with sufficient copies for all of the Lenders), as soon as
available, and in any event within 90 days after the close of each
fiscal year of the Parent, a consolidated balance sheet and income
statement of the Parent and its Subsidiaries, as of the end of such
fiscal year, together with related consolidated statements of
operations, retained earnings and cash flows for such fiscal year,
setting forth in comparative form consolidated figures for the
preceding fiscal year, all such financial information described above
to be in reasonable form and detail and audited by independent
certified public accountants of recognized national standing reasonably
acceptable to the Administrative Agents and whose opinion shall be to
the effect that such financial statements have been prepared in
accordance with GAAP (except for changes with which such accountants
concur) and shall not be limited as to the scope of the audit or
qualified in any manner.
(b) Quarterly Financial Statements. To the U.S. Administrative
Agent (with sufficient copies for all of the Lenders), as soon as
available, and in any event within 45 days after the close of each of
the first three fiscal quarters of the fiscal year of the Parent, a
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consolidated balance sheet and income statement of the Parent and its
Subsidiaries, as of the end of such quarter, together with related
consolidated statements of cash flow for such quarter, in each case
setting forth in comparative form consolidated figures for the
corresponding period of the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and
reasonably acceptable to the U.S. Administrative Agent and accompanied
by a certificate of the chief financial officer of the U.S. Borrower to
the effect that such consolidated statements have been prepared in
accordance with GAAP, subject to changes resulting from audit and
normal year-end audit adjustments.
(c) Officer's Certificate. To the U.S. Administrative Agent,
at the time of delivery of the financial statements provided for in
Sections 8.1(a) and 8.1(b) above, a certificate of the chief financial
officer of the U.S. Borrower substantially in the form of Exhibit
8.1(c), (i) demonstrating compliance with the financial covenants
contained in Section 8.2 by calculation thereof as of the end of each
such period, (ii) demonstrating compliance with any other terms of this
Credit Agreement as requested by either Administrative Agent and (iii)
stating that no Default or Event of Default exists, or if any Default
or Event of Default does exist, specifying the nature and extent
thereof and what action the Borrowers propose to take with respect
thereto. If necessary, the Parent shall deliver financial statements
prepared in accordance with GAAP as of the Closing Date, to the extent
GAAP has changed since the Closing Date, in order to show compliance
with the terms of this Credit Agreement, including Section 8.2.
(d) Annual Business Plan and Budgets. To the U.S.
Administrative Agent (with sufficient copies for all of the Lenders),
as soon as available, and in any event within 45 days after the end of
each fiscal year of the Parent, an annual business plan and budget of
the Parent and its Subsidiaries on a consolidated basis containing,
among other things, pro forma quarterly financial projections for the
next fiscal year.
(e) Permitted Receivables Financing. Upon any of the Credit
Parties obtaining knowledge thereof, the Borrowers will give written
notice to the U.S. Administrative Agent promptly (and in any event
within two Business Days) of (i) any affirmative decision by a party to
a Permitted Receivables Financing not to extend the scheduled
termination date of such Permitted Receivables Financing or (ii) a
termination (whether scheduled or unscheduled) of a Permitted
Receivables Financing that is reasonably likely to occur within 60
days.
(f) Auditor's Reports. To the U.S. Administrative Agent,
promptly upon receipt thereof, a copy of any "management letter"
submitted by independent accountants to the Parent or any of its
Subsidiaries in connection with any annual, interim or special audit of
the books of the Parent or any of its Subsidiaries.
(g) Reports. Promptly upon transmission or receipt thereof,
(a) copies of any public filings and registrations with, and reports to
or from, the Securities and Exchange Commission, or any successor
agency, and copies of all financial statements, proxy statements,
notices and reports as the Parent or any of its Subsidiaries shall send
to its shareholders generally and (b) upon the written request of the
U.S. Administrative Agent,
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all reports and written information to and from the United States
Environmental Protection Agency, or any state or local agency
responsible for environmental matters, the United States Occupational
Health and Safety Administration, or any state or local agency
responsible for health and safety matters, or any successor agencies or
authorities concerning environmental, health or safety matters.
(h) Notices. Upon an officer of a Credit Party obtaining
knowledge thereof, the Borrowers will give written notice to the
Administrative Agents immediately of (a) the occurrence of an event or
condition consisting of a Default or Event of Default, specifying the
nature and existence thereof and what action the Credit Parties propose
to take with respect thereto, and (b) the occurrence of any of the
following with respect to the Parent or any of its Subsidiaries: (i)
the pendency or commencement of any litigation, arbitral or
governmental proceeding against a Credit Party or any of its
Subsidiaries which if adversely determined could have or could be
reasonably expected to have a Material Adverse Effect, (ii) the
institution of any proceedings against a Credit Party or any of its
Subsidiaries with respect to, or the receipt of written notice by such
Person of potential liability or responsibility for violation, or
alleged violation of any federal, state or local law, rule or
regulation (including but not limited to, Environmental Laws), the
violation of which could have or could be reasonably expected to have a
Material Adverse Effect, (iii) any information that a Credit Party may
have a Year 2000 Problem, or (iv) any loss of or damage to any property
of a Credit Party or the commencement of any proceeding for the
condemnation or other taking of any property of a Credit Party, if such
loss, damage or proceeding could have or could be reasonably expected
to have a Material Adverse Effect.
(i) ERISA. Upon any of the Credit Parties or any ERISA
Affiliate obtaining knowledge thereof, the Borrowers will give written
notice to the U.S. Administrative Agent promptly (and in any event
within two Business Days) of: (i) any event or condition, including,
but not limited to, any Reportable Event, that constitutes, or might
reasonably lead to, a Termination Event; (ii) with respect to any
Multiemployer Plan, the receipt of notice as prescribed in ERISA or
otherwise of any withdrawal liability assessed against the Credit
Parties or any of their ERISA Affiliates, or of a determination that
any Multiemployer Plan is in reorganization or insolvent (both within
the meaning of Title IV of ERISA); (iii) the failure to make full
payment on or before the due date (including extensions) thereof of all
amounts which a Credit Party or any ERISA Affiliates is required to
contribute to each Plan pursuant to its terms and as required to meet
the minimum funding standard set forth in ERISA and the Code with
respect thereto; or (iv) any change in the funding status of any Plan
that could have a Material Adverse Effect; together with a description
of any such event or condition or a copy of any such notice and a
statement by the principal financial officer of the U.S. Borrower
briefly setting forth the details regarding such event, condition, or
notice, and the action, if any, which has been or is being taken or is
proposed to be taken by the Credit Parties with respect thereto.
Promptly upon request, a Credit Party shall furnish the U.S.
Administrative Agent and each of the Lenders with such additional
information concerning any Plan as may be reasonably requested,
including, but not limited to, copies of each annual report/return
(Form 5500 series), as well as all schedules and attachments thereto
required to be filed with the Department of Labor and/or the Internal
Revenue Service pursuant to ERISA and the Code, respectively, for each
"plan year" (within the meaning of Section 3(39) of ERISA).
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(j) Environmental.
(i) Subsequent to a notice from any Governmental
Authority where the subject matter of such notice would
reasonably cause concern or during the existence of an Event
of Default, and upon the written request of an Administrative
Agent, the Credit Parties will furnish or cause to be
furnished to such Administrative Agent, at the Credit Parties'
expense, a report of an environmental assessment of reasonable
scope, form and depth, including, where appropriate, invasive
soil or groundwater sampling, by a consultant reasonably
acceptable to such Administrative Agent addressing the subject
of such notice or, if during the existence of an Event of
Default, regarding any release or threat of release of
Hazardous Materials on any real property owned, leased or
operated by a Credit Party and the compliance by the Credit
Parties with Environmental Laws. If the Credit Parties fail to
deliver such an environmental assessment within sixty (60)
days after receipt of such written request, then the
applicable Administrative Agent may arrange for same, and the
Credit Parties hereby grant to such Administrative Agent and
its representatives access to the Real Properties and a
license of a scope reasonably necessary to undertake such an
assessment (including, where appropriate, invasive soil or
groundwater sampling). The reasonable cost of any assessment
arranged for by an Administrative Agent pursuant to this
provision will be payable by the Credit Parties on demand and
added to the obligations secured by the Collateral Documents.
(ii) Each Credit Party will conduct and complete all
investigations, studies, sampling and testing and all
remedial, removal and other actions necessary to address all
Hazardous Materials on, from, or affecting any real property
owned, leased or operated by such Credit Party to the extent
necessary to be in compliance with all Environmental Laws and
all other applicable federal, state, and local laws,
regulations, rules and policies and with the orders and
directives of all Governmental Authorities exercising
jurisdiction over such real property to the extent any failure
could have or could be reasonably expected to have a Material
Adverse Effect.
(k) Other Information. With reasonable promptness upon any
such request, such other information regarding the business, properties
or financial condition of the Credit Parties and their Subsidiaries as
an Administrative Agent may reasonably request.
8.2 FINANCIAL COVENANTS.
(a) Leverage Ratio. The Leverage Ratio, as of the last day of
each fiscal quarter of the Credit Parties, for the twelve month period
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ending on such date, shall be less than or equal to the ratio shown
below for the period corresponding thereto:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From the Closing Date through June 30, 2000 4.25 to 1.0
From July 1, 2000 through June 30, 2001 4.00 to 1.0
From July 1, 2001 and thereafter 3.75 to 1.0
</TABLE>
(b) Interest Coverage Ratio. The Interest Coverage Ratio shall
be greater than or equal to the ratio shown below for the period
corresponding thereto:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
For the one quarter period ending September 30, 1999 2.25 to 1.0
For the two quarter period ending December 31, 1999 2.25 to 1.0
For the three quarter period ending March 31, 2000 2.25 to 1.0
For the four quarter period ending June 30, 2000 2.25 to 1.0
As of the end of each fiscal quarter of the Credit Parties thereafter, for the 2.50 to 1.0
four quarter period ending on such date
</TABLE>
(c) Working Capital Ratio. The ratio of (i) Working Capital to
(ii) Total Senior Debt shall, at all times, be greater than or equal to
1.20 to 1.0.
8.3 PRESERVATION OF EXISTENCE AND FRANCHISES.
Each of the Credit Parties will do all things necessary to preserve and
keep in full force and effect its existence, rights, franchises and authority
except as permitted by Section 9.4.
8.4 BOOKS AND RECORDS.
The Parent will, and will cause its Subsidiaries domiciled in the
United States to, keep complete and accurate books and records of its
transactions in accordance with GAAP (including the establishment and
maintenance of appropriate reserves). The Canadian Borrower will, and will cause
its Subsidiaries domiciled in Canada to, keep (or have kept for them by the
Parent or the U.S. Borrower) complete and accurate books and records of its
transactions in accordance with GAAP.
8.5 COMPLIANCE WITH LAW.
Each of the Credit Parties will, and will cause its Subsidiaries to,
comply in all material respects with all laws, rules, regulations and orders,
and all applicable material restrictions imposed by all Governmental
Authorities, applicable to it and its property (including, without limitation,
Environmental Laws).
8.6 PAYMENT OF TAXES AND OTHER INDEBTEDNESS.
Each of the Credit Parties will, and will cause its Subsidiaries to,
pay, settle or discharge (a) all taxes, assessments and governmental charges or
levies imposed upon it, or upon its income or profits, or upon any of its
properties, before they shall become delinquent, (b) all lawful claims
(including claims for labor, materials and supplies) which, if unpaid, might
give rise to a Lien upon
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any of its properties, and (c) all of its other Indebtedness as it shall become
due (to the extent such repayment is not otherwise prohibited by this Credit
Agreement); provided, however, that a Credit Party shall not be required to pay
any such tax, assessment, charge, levy, claim or Indebtedness which is being
contested in good faith by appropriate proceedings and as to which adequate
reserves therefor have been established in accordance with GAAP, unless the
failure to make any such payment (i) would give rise to an immediate right to
foreclose or collect on a Lien securing such amounts, but only to the extent
such amounts are in excess of $100,000 in the aggregate, or (ii) could have or
could be reasonably expected to have a Material Adverse Effect.
8.7 INSURANCE.
Each of the Credit Parties will, and will cause its Subsidiaries to, at
all times maintain in full force and effect insurance (including worker's
compensation insurance, liability insurance, casualty insurance and business
interruption insurance) from reputable insurance companies having a rating of at
least A by Best's Rating Services, in such amounts, covering such risks and
liabilities and with such deductibles or self-insurance retentions as are in
accordance with normal industry practice. All policies shall have the U.S.
Administrative Agent, on behalf of the Lenders, named as an additional insured
and loss payee.
In the event there occurs any material loss, damage to or destruction
of the Collateral of any Credit Party or any part thereof, such Credit Party
shall promptly give written notice thereof to the U.S. Administrative Agent
generally describing the nature and extent of such loss, damage or destruction.
Subsequent to any loss, damage to or destruction of the Collateral of any Credit
Party or any part thereof, such Credit Party, whether or not the insurance
proceeds, if any, received on account of such damage or destruction shall be
sufficient for that purpose, at such Credit Party's cost and expense, will
promptly repair or replace the Collateral of such Credit Party so lost, damaged
or destroyed; provided, however, that such Credit Party need not repair or
replace the Collateral of such Credit Party so lost, damaged or destroyed to the
extent the failure to make such repair or replacement (a) is desirable to the
proper conduct of the business of such Credit Party in the ordinary course and
otherwise is in the best interest of such Credit Party and (b) would not
materially impair the rights and benefits of the Agents or the Lenders under
this Credit Agreement or any other Credit Document.
The Administrative Agent is authorized, but not obligated, as the
attorney-in-fact of each of the Credit Parties and for the benefit of the
Lenders, upon the occurrence of an Event of Default, without the consent of the
applicable Credit Party, (i) to adjust and compromise proceeds payable under
such insurance policies, (ii) to collect, receive and give receipts for such
insurance proceeds in the name of such Credit Party, the U.S. Administrative
Agent and the Lenders and (iii) to endorse such Credit Party's name upon any
instrument in payment thereof.
In the event a Credit Party shall receive any insurance proceeds as a
result of any loss, damage or destruction of Collateral in a net amount in
excess of $1,000,000, such Credit Party will immediately pay over such proceeds
to the Collateral Agent as cash collateral for the Credit Party Obligations. The
Collateral Agent agrees to release such insurance proceeds to such Credit Party
for replacement or restoration of the portion of the Collateral of such Credit
Party lost, damaged or destroyed if (A) within 30 days from the date the
Collateral Agent receives such insurance proceeds, the Collateral Agent receives
written application for such release from such Credit Party
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together with evidence reasonably satisfactory to it that the Collateral lost,
damaged or destroyed has been or will be replaced (by Collateral having a value
at least equal to the asset subject to the loss, damage or destruction) or
restored to its condition immediately prior to the loss, destruction or other
event giving rise to the payment of such insurance proceeds and (B) on the date
of such release no Default or Event of Default exists. If the conditions in the
preceding sentence are not met, the Collateral Agent may or, upon the request of
the Required Lenders, shall at any time after the first Business Day subsequent
to the date 30 days after it received such insurance proceeds, forward such
proceeds to the applicable Administrative Agent so it can apply such insurance
proceeds as a mandatory prepayment of the Credit Party Obligations. All
insurance proceeds shall be subject to the security interest of the Lenders
under the Collateral Documents. All insurance policies maintained hereunder
shall contain a clause providing that such policies may not be canceled, reduced
in coverage or otherwise modified without 30 days prior written notice to the
U.S. Administrative Agent.
The present insurance coverage of the Credit Parties and their
Subsidiaries is outlined as to carrier, policy number, expiration date, type and
amount on Schedule 8.7. Schedule 8.7 shall be amended and updated by the Credit
Parties no less frequently than annually or upon the request of the
Administrative Agents.
8.8 MAINTENANCE OF PROPERTY.
Each of the Credit Parties will, and will cause its Subsidiaries to,
maintain and preserve its properties and equipment in good repair, working order
and condition, normal wear and tear excepted, and will make, or cause to be
made, in such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto as may
be needed or proper, to the extent and in the manner customary for companies in
similar businesses.
8.9 PERFORMANCE OF OBLIGATIONS.
Each of the Credit Parties will, and will cause its Subsidiaries to,
perform in all material respects all of its obligations under the terms of all
material agreements, indentures, mortgages, security agreements or other debt
instruments to which it is a party or by which it is bound.
8.10 COLLATERAL.
(a) The Credit Parties will, and will cause their Subsidiaries
to, at their own expense, (i) deliver to the Collateral Agent, within
90 days after the Closing Date, an executed landlord waiver or estoppel
letter in a form acceptable to the Collateral Agent with respect to the
regional distribution center of the Credit Parties in Sparks, Nevada,
(ii) use commercially reasonable efforts to cause to be delivered to
the Collateral Agent as soon as practicable following the Closing Date
an executed landlord waiver or estoppel letter in a form acceptable to
the Collateral Agent with respect to the other material leased real
property of the Credit Parties (it being understood that no Default or
Event of Default will result solely from a failure of the Credit
Parties to obtain and deliver executed landlord waivers or estoppel
letters with respect to 100% of their other material leased real
property subject to this clause (ii), as long as the Credit Parties use
commercially
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reasonable efforts to obtain and deliver such waivers and estoppel
letters) and (iii) deliver to the Collateral Agent, promptly upon its
request, copies of the leases entered into by the Credit Parties with
respect to their material leased real property.
(b) If, subsequent to the Closing Date, a Credit Party shall
(a) acquire any patented, registered or applied for intellectual
property or any securities or (b) acquire any other personal property
required to be delivered to the Collateral Agent as Collateral
hereunder or under any of the Collateral Documents, the U.S. Borrower
shall immediately notify the Collateral Agent of same. Each Credit
Party shall take such actions (including, but not limited to, the
actions set forth in Section 6.1(g)) as reasonably requested by the
Collateral Agent and at its own expense, to ensure that the Lenders
have a perfected Lien in such personal property of the Credit Parties
as set forth in the Security Agreements and the Pledge Agreements
(whether now owned or hereafter acquired), subject only to Permitted
Liens. Each Credit Party shall adhere to the covenants regarding the
location of personal property as set forth in the Security Agreements.
(c) If Fife has not been sold within 180 days of the Closing
Date, the Credit Parties shall take such actions as reasonably
requested by the Collateral Agent and at their own expense, to (i)
ensure that the Lenders have a perfected Lien in the equity interest in
Fife owned by the Credit Parties on the terms set forth in the U.S.
Pledge Agreement and (ii) pledge to the Collateral Agent, for the
benefit of the Lenders, the promissory note issued by Fife to the U.S.
Borrower.
8.11 USE OF PROCEEDS.
The Credit Parties will use the proceeds of the Loans solely (a) to
repay Indebtedness owing under the Existing Credit Agreement, (b) to provide
working capital for the Credit Parties and (c) for general corporate purposes of
the Credit Parties, including Permitted Acquisitions and permitted Capital
Expenditures. The Credit Parties will use the Letters of Credit solely for the
purposes set forth in Section 2.2(a) and Section 3.2(a).
8.12 AUDITS/INSPECTIONS.
Upon reasonable notice and during normal business hours, each Credit
Party will permit representatives appointed by the Administrative Agents,
including, without limitation, independent accountants, agents, attorneys and
appraisers to visit and inspect such Credit Party's property, including its
books and records, its accounts receivable (other than accounts receivable sold
to a Receivables Subsidiary pursuant to a Permitted Receivables Financing) and
inventory, its facilities and its other business assets, and to make photocopies
or photographs thereof and to write down and record any information such
representative obtains and shall permit the Administrative Agents or their
representatives to investigate and verify the accuracy of information provided
to the Lenders, including, without limitation, the performance of collateral
valuation reviews from time to time, and to discuss all such matters with the
officers, employees and representatives of the Credit Parties. The Credit
Parties agree that the Collateral Agent may conduct such collateral reviews, at
the Credit Parties' expense, as it reasonably deems appropriate; provided that,
absent an Event of Default, such reviews shall not occur more frequently than
once a year.
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8.13 ADDITIONAL CREDIT PARTIES.
At the time any Person becomes a Subsidiary of a Credit Party, the
Borrowers shall so notify the Administrative Agents and promptly thereafter (but
in any event within 30 days after the date thereof or within such longer period
of time as agreed to by an Administrative Agent):
(a) if such Person is a Subsidiary (other than a Receivables
Subsidiary) domiciled in the United States, shall cause such Person to
become a Total Facility Guarantor by (i) executing a Joinder Agreement
in substantially the same form as Exhibit 8.13, (ii) causing all of the
Capital Stock of such Person owned by a Credit Party to be delivered to
the Collateral Agent (together with undated stock powers signed in
blank) and pledged to the Collateral Agent to secure its parent's
guaranty of the Guaranteed Obligations pursuant to an appropriate
pledge agreement in substantially the form of the U.S. Pledge Agreement
(or a modification to the existing U.S. Pledge Agreement) and otherwise
in a form reasonably acceptable to the Collateral Agent, (iii) pledging
all of its personal property assets located in the United States to the
Collateral Agent to secure its guaranty of the Guaranteed Obligations
pursuant to an appropriate security agreement in substantially the form
of the U.S. Security Agreement (or a joinder to the existing U.S.
Security Agreement) and otherwise in a form reasonably acceptable to
the Collateral Agent, (iv) if such Person has any Subsidiaries
domiciled in the United States or any Material Foreign Subsidiaries,
(A) delivering (x) 100% of the Capital Stock of such Subsidiaries
domiciled in the United States owned by it and (y) 65% of the Capital
Stock of such Material Foreign Subsidiaries owned by it (in each case
together with undated stock powers signed in blank) to the Collateral
Agent and (B) executing an appropriate pledge agreement in
substantially the form of the U.S. Pledge Agreement (or a joinder to
the existing U.S. Pledge Agreement) and otherwise in a form acceptable
to the Collateral Agent, in each of cases (A) and (B) to secure its
guaranty of the Guaranteed Obligations, and (v) if such Person leases
any real property, using its commercially reasonable efforts to cause
to be delivered a landlord waiver or estoppel letter with respect
thereto in a form acceptable to the Collateral Agent;
(b) if such Person is a Subsidiary (other than a Receivables
Subsidiary) domiciled in Canada, shall cause such Person to become a
Canadian Facility Guarantor by (i) executing a Joinder Agreement in
substantially the same form as Exhibit 8.13, (ii) causing all of the
Capital Stock of such Person owned by a Credit Party to be delivered to
the Collateral Agent (together with undated stock powers signed in
blank) and pledged to the Collateral Agent to secure its parent's
guaranty of the Guaranteed Obligations pursuant to an appropriate
pledge agreement in substantially the form of the Canadian Pledge
Agreement (or a modification to the existing Canadian Pledge Agreement)
and otherwise in a form reasonably acceptable to the Collateral Agent,
(iii) pledging all of its personal property assets located in Canada to
the Collateral Agent to secure its guaranty of the Guaranteed
Obligations pursuant to an appropriate security agreement in
substantially the form of the Canadian Security Agreement (or a joinder
to the existing Canadian Security Agreement) and otherwise in a form
reasonably acceptable to the Collateral Agent, (iv) if such Person has
any Subsidiaries domiciled in the United States or Canada or any
Material Foreign Subsidiaries, (A) delivering all of the Capital Stock
of such Subsidiaries owned by it (together with undated stock powers
signed in blank) to the
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Collateral Agent and (B) executing an appropriate pledge agreement in
substantially the form of the Canadian Pledge Agreement (or a joinder
to the existing Canadian Pledge Agreement) and otherwise in a form
acceptable to the Collateral Agent, in each of cases (A) and (B) to
secure its guaranty of the Guaranteed Obligations, and (v) if such
Person leases any real property, using its commercially reasonable
efforts to cause to be delivered a landlord waiver or estoppel letter
with respect thereto in a form acceptable to the Collateral Agent;
provided, however, that if such Person is prohibited by applicable
Canadian federal or provincial corporate law from becoming a Canadian
Facility Guarantor (as evidenced by an opinion of Canadian counsel to
the Credit Parties delivered to the Administrative Agents), then this
Section 8.13(b) shall not require such Person to become a Canadian
Facility Guarantor so long as such prohibition continues in effect, and
if the extent to which such Person is permitted to guaranty the
Canadian Credit Party Obligations is limited by applicable Canadian
federal or provincial corporate law (as evidenced by an opinion of
Canadian counsel to the Credit Parties delivered to the Administrative
Agents), such Person shall, so long as such limitation continues in
effect, be required under this Section 8.13(b) to guaranty such
obligations only to the extent thereby permitted; and
(c) if such Person is (i)(A) a Receivables Subsidiary
domiciled in the United States and owned directly by one or more U.S.
Credit Parties, (B) a Receivables Subsidiary domiciled in Canada and
owned directly by one or more Canadian Credit Parties or (C) a Material
Foreign Subsidiary owned directly by one or more Canadian Credit
Parties, cause 100% of the Capital Stock of such Person to be pledged
to the Collateral Agent and (ii) a Material Foreign Subsidiary owned
directly by one or more U.S. Credit Parties, cause 65% of the Capital
Stock of such Person to be pledged to the Collateral Agent, in each
case in a manner reasonably acceptable to the Collateral Agent and to
the extent that no materially adverse tax consequences would result
therefrom.
In each case, the Borrowers shall (A) deliver such other documentation as the
Collateral Agent may reasonably request in connection with the foregoing,
including, without limitation, appropriate UCC-1 financing statements,
landlord's waivers, certified resolutions and other organizational and
authorizing documents of such Person and favorable opinions of counsel to such
Person (which shall cover, among other things, the legality, validity, binding
effect and enforceability of the documentation referred to above and the
attachment, perfection and validity of any Liens created thereby), all in form,
content and scope reasonably satisfactory to the Collateral Agent and (B)
provide to the U.S. Administrative Agent (i) a new Schedule 7.15 which shall
reflect the information regarding such new Subsidiary required by Section 7.15,
and (ii) if applicable, a new Schedule 2(a) to the appropriate Pledge Agreement
which shall reflect the pledge of the Capital Stock of such new Subsidiary.
SECTION 9
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this
Credit Agreement is in effect and until the Loans, LOC Obligations and BA
Obligations, together with interest, fees and other
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obligations then due and payable hereunder, have been paid in full and the
Commitments, Letters of Credit and Bankers' Acceptances hereunder shall have
terminated:
9.1 INDEBTEDNESS.
No Credit Party will, nor will it permit its Subsidiaries to, contract,
create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the
other Credit Documents;
(b) Indebtedness existing as of the Closing Date as referenced
in Section 7.10 (and renewals, refinancings, replacements or extensions
thereof on terms and conditions no more favorable, in the aggregate, to
such creditor than such existing Indebtedness and in a principal amount
not in excess of that outstanding as of the date of such renewal,
refinancing, replacement or extension; provided, however, that, with
respect to any Indebtedness which is being renewed, refinanced,
replaced or extended, the principal amount thereof which is permitted
to be renewed, refinanced, replaced or extended pursuant to the terms
of this clause (b) shall be an amount less than or equal to the
aggregate commitments of the lenders under the documents evidencing the
Indebtedness which is being so renewed, refinanced, replaced or
extended plus any financed fees and expenses, including without
limitation prepayment premiums and break funding fees, incurred by the
applicable Credit Party in connection with any such renewal,
refinancing, replacement or extension);
(c) Indebtedness in respect of current accounts payable and
accrued expenses incurred in the ordinary course of business and to the
extent not current, accounts payable and accrued expenses that are
subject to (i) bona fide dispute or (ii) an inventory assistance plan
or a similar supplier agreement; provided that the total of such
Indebtedness permitted pursuant to clause (ii) hereof shall not exceed
$25,000,000 at any one time outstanding.
(d) Indebtedness owing from the U.S. Borrower to its
Subsidiaries domiciled in the United States (other than a Receivables
Subsidiary) or from such Subsidiaries in the United States to the U.S.
Borrower;
(e) Indebtedness from the Canadian Borrower to its
Subsidiaries domiciled in Canada (other than a Receivables Subsidiary)
or from such Subsidiaries in Canada to the Canadian Borrower;
(f) purchase money Indebtedness (including Capital Leases) to
finance the purchase of fixed assets (including equipment); provided
that (i) the total of all such Indebtedness for all such Persons taken
together, together with any outstanding sale leaseback transactions
permitted under clause (i) of Section 9.6, shall not exceed, in the
aggregate, $20,000,000 at any one time outstanding (in addition to any
such Indebtedness referred to in subsection (b) above); (ii) such
Indebtedness when incurred shall not exceed the purchase price of the
asset(s) financed; and (iii) no such Indebtedness shall be
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refinanced for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing;
(g) the Subordinated Debt or Permitted Subordinated
Refinancing Debt;
(h) other subordinated Indebtedness; provided that (i) the
aggregate amount of such Indebtedness does not exceed $200,000,000 at
any one time outstanding (in addition to the Indebtedness referred to
in subsection (g) above); (ii) such Indebtedness is unsecured; (iii)
the loan documentation with respect to such Indebtedness shall not
contain covenants or default provisions relating to any Credit Party or
any of its Subsidiaries that are more restrictive than the covenants
and default provisions contained in the Credit Documents; (iv) the
scheduled maturity of all principal with respect to such Indebtedness
is subsequent to the Maturity Date and (v) the other terms of, and the
documentation evidencing, such Indebtedness are reasonably acceptable
to the U.S. Administrative Agent;
(i) Indebtedness arising from Hedging Agreements entered into
in the ordinary course of business and not for speculative purposes;
(j) Indebtedness arising from judgments that do not cause an
Event of Default;
(k) Indebtedness not to exceed, in the aggregate, $15,000,000
at any one time outstanding assumed in connection with Permitted
Acquisitions; provided that such Indebtedness existed at the time of
the relevant Permitted Acquisition and was not incurred in
contemplation thereof;
(l) Indebtedness constituting unsecured seller financing not
to exceed, in the aggregate, $100,000,000 at any one time outstanding
incurred in connection with Permitted Acquisitions;
(m) secured or unsecured Indebtedness incurred by Subsidiaries
of the Parent that are domiciled outside the United States and Canada
not to exceed, in the aggregate, $10,000,000 at any one time
outstanding;
(n) guaranties not to exceed, in the aggregate, $10,000,000 at
any one time outstanding of loans from PNC Bank National Association or
one of its Affiliates to senior managers of a Borrower, which loans
finance such senior managers' participation in the Borrowers' stock
purchase programs;
(o) Indebtedness arising from a Permitted Receivables
Financing incurred by the U.S. Credit Parties and/or their Subsidiaries
domiciled in the United States (including a Receivables Subsidiary) not
to exceed $375,000,000 at any one time outstanding;
(p) Indebtedness permitted by clause (i) or clause (iii) of
Section 9.6;
(q) Indebtedness the proceeds of which are used to finance the
U.S. Borrower's headquarters location, provided that the total of all
such Indebtedness, together with any outstanding sale leaseback
transactions permitted under clause (ii) of Section 9.6, (i) does
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not exceed, in the aggregate, $20,000,000 at any one time outstanding
and (ii) is included in the definition of Adjusted Funded Debt for
purposes of calculating the Applicable Percentages and the financial
covenants set forth in Section 8.2; and
(r) other unsecured Indebtedness up to $10,000,000, in the
aggregate, at any one time outstanding.
9.2 LIENS.
No Credit Party will, nor will it permit its Subsidiaries to, contract,
create, incur, assume or permit to exist any Lien with respect to any of its
property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or after acquired, except for Permitted Liens.
9.3 NATURE OF BUSINESS.
No Credit Party will, nor will it permit its Subsidiaries to, alter the
character of its business from that conducted as of the Effective Date or engage
in any business other than the business conducted as of the Effective Date and
activities which are substantially similar or related thereto or logical
extensions thereof.
9.4 CONSOLIDATION AND MERGER.
No Credit Party will, nor will it permit its Subsidiaries to, enter
into any transaction of merger, amalgamation or consolidation or liquidate, wind
up or dissolve itself; provided that a Credit Party or another Person may merge,
amalgamate or consolidate with or into another Credit Party if the following
conditions are satisfied:
(a) each Administrative Agent is given prior written notice of
such action;
(b) the Person formed by such amalgamation or consolidation or
into which such Credit Party is merged shall either (i) be a Credit
Party or (ii) be a Subsidiary of a Credit Party and expressly assume in
writing all of the obligations of such Credit Party under the Credit
Documents; provided that if the transaction is between a Borrower and
another Person, such Borrower must be the surviving entity;
(c) the Credit Parties execute and deliver such documents,
instruments and certificates as an Administrative Agent may request
(including, if necessary, to maintain its perfection and priority in
the Collateral pledged pursuant to the Collateral Documents);
(d) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and
(e) the Borrowers deliver to the Administrative Agents an
opinion of counsel stating that such consolidation, amalgamation or
merger and any written agreement entered into in connection therewith,
comply with this Section 9.4.
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9.5 SALE OR LEASE OF ASSETS.
No Credit Party will, nor will it permit its Subsidiaries to, convey,
sell, lease, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business or assets whether now owned or
hereafter acquired, including, without limitation, inventory, receivables,
equipment, real property interests (whether owned or leasehold), and securities,
other than (a) any inventory sold or otherwise disposed of in the ordinary
course of business; (b) the sale, lease, transfer or other disposal by a Credit
Party (other than a Borrower) of any or all of its assets to another Credit
Party; (c) obsolete, slow-moving, idle or worn-out assets no longer used or
useful in its business; (d) the transfer of assets which constitute a Permitted
Investment; (e) the issuance of Capital Stock by a Borrower; (f) the lease or
sublease of real property interests in the ordinary course of business; (g) the
license of intellectual property in the ordinary course of business; (h) the
sale of accounts receivable and related rights pursuant to a Permitted
Receivables Financing; (i) the sale of Fife for consideration that the Board of
Directors of the U.S. Borrower shall have determined in good faith is
economically fair and reasonable to the Credit Parties; and (j) other sales of
assets in the ordinary course of business not to exceed (x) $5,000,000, in the
aggregate for all Credit Parties and their Subsidiaries, during any fiscal year
of the Credit Parties or (y) $20,000,000, in the aggregate for all Credit
Parties and their Subsidiaries, during the term of this Credit Agreement;
provided that the net cash proceeds from any sale of assets pursuant to this
clause (h) must either (i) be reinvested by the Credit Parties within twelve
months of such sale in Eligible Assets or (ii) delivered to the U.S.
Administrative Agent and/or the Canadian Administrative Agent, as applicable, to
permanently reduce the U.S. Revolving Committed Amount and/or the Canadian
Revolving Committed Amount as requested by the applicable Credit Party and in
accordance with the terms hereof.
Upon a sale of assets permitted by this Section 9.5, the Collateral
Agent shall promptly deliver to the Borrowers, upon the Borrowers' request and
at the Borrowers' expense, such documentation as is reasonably necessary to
evidence the release of the Lenders' security interest in such assets,
including, without limitation, amendments or terminations of UCC financing
statements.
9.6 SALE LEASEBACKS.
No Credit Party will, nor will it permit its Subsidiaries to, directly
or indirectly become or remain liable as lessee or as guarantor or other surety
with respect to any lease of any property (whether real or personal or mixed),
whether now owned or hereafter acquired, (a) which such Credit Party has sold or
transferred or is to sell or transfer to any other Person other than a Credit
Party or (b) which such Credit Party intends to use for substantially the same
purpose as any other property which has been sold or is to be sold or
transferred by such Credit Party to any Person in connection with such lease,
other than (i) sale leaseback transactions the aggregate amount of which, when
added to the aggregate amount of Indebtedness then outstanding and permitted
under Section 9.1(f), shall not exceed $20,000,000 at any one time outstanding,
(ii) the sale leaseback of the U.S. Borrower's headquarters location in an
aggregate amount which, when added to the aggregate amount of Indebtedness then
outstanding and permitted under Section 9.1(q), shall not exceed $20,000,000, as
long as such amount is included in the definition of Adjusted Funded Debt for
purposes of calculating the Applicable Percentages and the financial covenants
set forth in Section 8.2 or (iii) sale leaseback transactions (A) the aggregate
amount of which does not exceed
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$80,000,000, (B) the aggregate amount of which is included in the definition of
Adjusted Funded Debt for purposes of calculating the Applicable Percentages and
the financial covenants set forth in Section 8.2, (C) the proceeds of which are
used by the Credit Parties to permanently reduce the U.S. Revolving Committed
Amount, subject to Section 2.1(e), (D) the aggregate amount of which when in
does not exceed the purchase price for such assets and (E) no amount of which
shall be refinanced for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing.
9.7 ADVANCES, INVESTMENTS AND LOANS.
No Credit Party will, nor will it permit its Subsidiaries to, make any
Investments except for Permitted Investments.
9.8 RESTRICTED PAYMENTS.
No Credit Party will, nor will it permit its Subsidiaries to, directly
or indirectly, (a) declare or pay any dividends or make any other distribution
upon any shares of its Capital Stock of any class (other than dividends payable
solely in the same class of Capital Stock) or (b) purchase, redeem or otherwise
acquire or retire or make any provisions for redemption, acquisition or
retirement of any shares of its Capital Stock of any class or any warrants or
options to purchase any such shares; provided that (i) any Subsidiary of a
Borrower may pay dividends to its parent, (ii) a Borrower may pay dividends to
the Parent to allow for the payment of (A) taxes, (B) dividends permitted
pursuant to the following clause (iii) and (C) customary fees and expenses of
the Parent in the ordinary course and (iii) as long as no Default or Event of
Default has occurred and is continuing, the Parent may pay dividends in an
amount not to exceed, in the aggregate, 25% of cumulative Net Income earned
after June 30, 1999.
9.9 TRANSACTIONS WITH AFFILIATES.
No Credit Party will, nor will it permit its Subsidiaries to, enter
into any transaction or series of transactions, whether or not in the ordinary
course of business, with any officer, director, shareholder, Subsidiary or
Affiliate other than on terms and conditions substantially as favorable as would
be obtainable in a comparable arm's-length transaction with a Person other than
an officer, director, shareholder, Subsidiary or Affiliate.
9.10 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS.
No Credit Party will, nor will it permit its Subsidiaries to, (a)
change its fiscal year (other than to change to a retail fiscal year ending
within five days of December 31) or (b) in any manner that would reasonably be
likely to adversely affect the rights of the Lenders, change its articles or
certificate of incorporation or its bylaws.
9.11 NO LIMITATIONS.
No Credit Party will, nor will it permit its Subsidiaries (other than a
Receivables Subsidiary) to, directly or indirectly, create or otherwise cause,
incur, assume, suffer or permit to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of
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any such Person to (a) pay dividends or make any other distribution on any of
such Person's Capital Stock, (b) pay any Indebtedness owed to any other Credit
Party, (c) make loans or advances to any other Credit Party or (d) transfer any
of its property to any other Credit Party, except for encumbrances or
restrictions existing under or by reason of (i) customary non-assignment or net
worth provisions in any lease governing a leasehold interest, (ii) any agreement
or other instrument of a Person existing at the time it becomes a Subsidiary of
a Credit Party; provided that such encumbrance or restriction is not applicable
to any other Person, or any property of any other Person, other than such Person
becoming a Subsidiary of a Credit Party and was not entered into in
contemplation of such Person becoming a Subsidiary of a Credit Party, (iii) the
Subordinated Debt Indenture as in effect on the Closing Date and any similar
provision in the documentation evidencing Permitted Subordinated Refinancing
Debt and (iv) this Credit Agreement and the other Credit Documents.
9.12 NO OTHER NEGATIVE PLEDGES.
No Credit Party will, nor will it permit its Subsidiaries (other than a
Receivables Subsidiary) to, enter into, assume or become subject to any
agreement prohibiting or otherwise restricting the creation or assumption of any
Lien upon its properties or assets, whether now owned or hereafter acquired, or
requiring the grant of any security for such obligation if security is given for
some other obligation except as set forth in the Credit Documents (it being
understood that the Subordinated Debt Indenture to which the U.S. Borrower is a
party contains such restrictions with respect to additional subordinated debt
and that the Permitted Subordinated Refinancing Debt may contain similar
restrictions).
9.13 OTHER INDEBTEDNESS.
No Credit Party will, if any Default or Event of Default has occurred
and is continuing or would be directly or indirectly caused as a result thereof,
(a) amend or modify (or permit the amendment or modification of) any of the
terms of any Indebtedness (other than the Indebtedness under the Credit
Documents) of such Credit Party or shorten the final maturity or average life to
maturity or require any payment to be made sooner than originally scheduled or
increase the interest rate applicable thereto or change any subordination
provision thereof or (b) make (or give any notice with respect thereto) any
voluntary or optional payment or prepayment, redemption, acquisition for value
or defeasance of (including without limitation, by way of depositing money or
securities with the trustee with respect thereto before due for the purpose of
paying when due), refund, refinance or exchange of any Indebtedness (other than
the Indebtedness under the Credit Documents) of such Credit Party.
Notwithstanding the above, the U.S. Borrower will not (i) amend, modify or waive
any of the terms and conditions of the Subordinated Debt without the prior
written consent of the Required Lenders, (ii) make an offer to make any
voluntary or optional principal payments with respect to the Subordinated Debt,
(iii) redeem or offer to redeem any of the Subordinated Debt or (iv) deposit any
funds intended to discharge or defease any or all of the Subordinated Debt.
9.14 LIMITATION ON PARENT.
The Parent will not sell, transfer or otherwise dispose of any shares
of capital stock of a Borrower. Furthermore, the Parent will not directly hold
any assets other than (a) the stock of
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the U.S. Borrower and WESCO Finance Corp., and (b) such amounts allowed to be
transferred to the Parent pursuant to Section 9.8. The Parent may not have any
liabilities other than the liabilities under the Credit Documents, tax
liabilities and other liabilities in the ordinary course of business (which
shall include liabilities under certain agreements with members of management
and indemnification obligations).
9.15 CAPITAL EXPENDITURES.
The Credit Parties will not permit Capital Expenditures (other than
Capital Expenditures in connection with a new headquarters for the U.S. Borrower
not to exceed $20,000,000) for (a) fiscal year 1999 to exceed $25,000,000, (b)
fiscal year 2000 to exceed $30,000,000 and (c) each fiscal year after fiscal
year 2000 to exceed $35,000,000; provided, however, that the maximum amount for
each such fiscal year shall be increased by the unused amount available for
Capital Expenditures under this Section 9.15 for the immediately preceding
fiscal year (excluding any carry forward available from any prior fiscal year).
9.16 LIMITATION ON OWNERSHIP OF ASSETS.
The Credit Parties will not permit the Total Facility Guarantors to own
at any time less than 85% of the total assets of the Credit Parties and their
Subsidiaries on a consolidated basis, as determined in accordance with GAAP.
SECTION 10
EVENTS OF DEFAULT
10.1 EVENTS OF DEFAULT.
An Event of Default shall exist upon the occurrence, and during the
continuance, of any of the following specified events (each an "Event of
Default"):
(a) Payment. Any Credit Party shall default in the payment (i)
when due of any principal of any of the Loans or any reimbursement
obligation arising from drawings under Letters of Credit or (ii) within
three Business Days of when due of any interest on the Loans or any
fees or other amounts owing hereunder, under any of the other Credit
Documents or in connection herewith.
(b) Representations. Any representation, warranty or statement
made or deemed to be made by any Credit Party herein, in any of the
other Credit Documents, or in any statement or certificate delivered or
required to be delivered pursuant hereto or thereto shall prove untrue
in any material respect on the date as of which it was made or deemed
to have been made.
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(c) Covenants. Any Credit Party shall:
(i) default in the due performance or observance of
any term, covenant or agreement contained in Sections 8.2,
8.3, 8.11, or 9.1 through 9.16 inclusive;
(ii) default in the due performance or observance by
it of any term, covenant or agreement contained in Section 8.1
and such default shall continue unremedied for a period of
five Business Days; or
(iii) default in the due performance or observance by
it of any term, covenant or agreement (other than those
referred to in subsections (a), (b) or (c)(i) or (ii) of this
Section 10.1) contained in this Credit Agreement and such
default shall continue unremedied for a period of at least 30
days after the earlier of a Credit Party becoming aware of
such default or notice thereof given by an Administrative
Agent.
(d) Other Credit Documents. (i) Any Credit Party shall default
in the due performance or observance of any term, covenant or agreement
in any of the other Credit Documents and such default shall continue
unremedied for a period of at least 30 days after the earlier of a
Credit Party becoming aware of such default or notice thereof given by
an Administrative Agent, or (ii) any Credit Document shall fail to be
in full force and effect or any Credit Party shall so assert or any
Credit Document shall fail to give the Collateral Agent and the Lenders
the security interests, liens, rights, powers and privileges purported
to be created thereby.
(e) Guaranties. The guaranty given by any Credit Party
hereunder or by any Additional Credit Party hereafter or any provision
thereof shall cease to be in full force and effect, or any guarantor
thereunder or any Person acting by or on behalf of such guarantor shall
deny or disaffirm such Guarantor's obligations under such guaranty.
(f) Bankruptcy, etc. The occurrence of any of the following:
(i) a court or governmental agency having jurisdiction in the premises
shall enter a decree or order for relief in respect of any Credit Party
or any of its Subsidiaries in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
or appoint a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of any Credit Party or any of its
Subsidiaries or for any substantial part of its property or ordering
the winding up or liquidation of its affairs; or (ii) an involuntary
case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect is commenced against any Credit Party or any
of its Subsidiaries and such petition remains unstayed and in effect
for a period of 60 consecutive days; or (iii) any Credit Party or any
of its Subsidiaries shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment or
taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of such Person or any
substantial part of its property or make any general assignment for the
benefit of creditors; or (iv) any Credit Party or any of its
Subsidiaries
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shall admit in writing its inability to pay its debts generally as they
become due or any action shall be taken by such Person in furtherance
of any of the aforesaid purposes.
(g) Defaults under Other Agreements.
(i) A Credit Party or any of its Subsidiaries shall
default in the due performance or observance (beyond the
applicable grace period with respect thereto) of any material
obligation or condition of any contract or lease to which it
is a party; or
(ii) With respect to any Indebtedness of a Credit
Party or any of its Subsidiaries in excess of $20,000,000
(specifically including any Permitted Receivables Financing in
which the Credit Parties have received consideration in excess
of $20,000,000 for the sale of Receivables but excluding
Indebtedness outstanding under this Credit Agreement), (A) any
such Credit Party or Subsidiary shall (x) default in any
payment (beyond the applicable grace period with respect
thereto, if any) with respect to any such Indebtedness, or (y)
default (after giving effect to any applicable grace period)
in the observance or performance relating to such Indebtedness
or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event or condition
shall occur or condition exist, the effect of which default or
other event or condition is to cause, or permit, the holder or
holders of such Indebtedness (or trustee or agent on behalf of
such holders) to cause (determined without regard to whether
any notice or lapse of time is required) any such Indebtedness
to become due prior to its stated maturity; (B) any such
Indebtedness shall be declared due and payable, or required to
be prepaid other than by a required prepayment prior to the
stated maturity thereof; or (C) any such Indebtedness shall
mature and remain unpaid.
(h) Judgments. One or more judgments, orders, or decrees
(including, without limitation, any judgment, order, or decree with
respect to any litigation disclosed pursuant to the Credit Documents)
shall be entered against any one or more of the Credit Parties
involving a liability of $20,000,000 or more, in the aggregate (to the
extent not paid or covered by insurance provided by a carrier who has
acknowledged coverage), and such judgments, orders or decrees (i) are
the subject of any enforcement proceeding commenced by any creditor or
(ii) shall continue unsatisfied, undischarged and unstayed for a period
ending on the first to occur of (A) the last day on which such
judgment, order or decree becomes final and unappealable or (B) 60
days.
(i) ERISA. The occurrence of any of the following events or
conditions: (A) any "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA and Section 412 of the Code, whether or
not waived, shall exist with respect to any Plan, or any Lien shall
arise on the assets of any Credit Party, any of its Subsidiaries or any
ERISA Affiliate in favor of the PBGC or a Plan; (B) a Termination Event
shall occur with respect to a Single Employer Plan, which is, in the
reasonable opinion of the U.S. Administrative Agent, likely to result
in the termination of such Plan for purposes of Title IV of ERISA; (C)
a Termination Event shall occur with respect to a Multiemployer Plan or
Multiple Employer Plan, which is, in the reasonable opinion of the U.S.
Administrative Agent, likely
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to result in (i) the termination of such Plan for purposes of Title IV
of ERISA, or (ii) any Credit Party, any of its Subsidiaries or any
ERISA Affiliate incurring any liability in connection with a withdrawal
from, reorganization of (within the meaning of Section 4241 of ERISA),
or insolvency (within the meaning of Section 4245 of ERISA) of such
Plan; or (D) any prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility shall occur which may subject any Credit Party, any of
its Subsidiaries or any ERISA Affiliate to any liability under Sections
406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or
under any agreement or other instrument pursuant to which any Credit
Party, any of its Subsidiaries or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability.
(j) Ownership. There shall occur a Change of Control.
(k) Material Loss of Collateral. There shall occur any loss,
theft, damage or destruction of any item or items of Collateral which
either (i) has had or could be reasonably expected to have a Material
Adverse Effect or (ii) materially and adversely affects the operation
of the Credit Parties' business, taken as a whole, and is not covered
by insurance as required herein.
(l) Subordinated Debt. The holders of the Subordinated Debt
assert (or any Governmental Authority determines) that (i) the Loans do
not constitute Senior Indebtedness (as defined in the Subordinated
Debt) or (ii) the obligations of the U.S. Borrower with respect to the
Subordinated Debt are not fully subordinate to the repayment of the
Loans and all other amounts owing under the Credit Documents.
10.2 ACCELERATION; REMEDIES.
Upon the occurrence and during the continuance of an Event of Default,
and at any time thereafter unless and until such Event of Default has been
waived in writing by the Required Lenders (or the Lenders as may be required
hereunder), the Administrative Agents shall, upon the request and direction of
the Required Lenders, by written notice to the Borrowers, take the following
actions without prejudice to the rights of the Agents or any Lender to enforce
its claims against the Credit Parties, except as otherwise specifically provided
for herein:
(a) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
(b) Acceleration of Loans. Declare the unpaid principal of and
any accrued interest in respect of all Loans, any reimbursement
obligations arising from drawings under Letters of Credit and any and
all other indebtedness or obligations of any and every kind owing by a
Credit Party to any of the Lenders hereunder to be due whereupon the
same shall be immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by
the Credit Parties.
(c) Cash Collateral. Direct the Borrowers to pay (and the
Borrowers agree that upon receipt of such notice, or upon the
occurrence of an Event of Default under
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Section 10.1(f), they will immediately pay) to the Administrative
Agents additional cash to be held by the Administrative Agents, for the
benefit of the Lenders, in a cash collateral account as additional
security for (i) the LOC Obligations in respect of subsequent drawings
under all then outstanding Letters of Credit in an amount equal to the
maximum aggregate amount which may be drawn under all Letters of
Credits then outstanding and (ii) the BA Obligations in respect of
subsequent maturities under all then outstanding Bankers' Acceptances
in an amount equal to the maximum aggregate amount of all BA
Obligations.
(d) Enforcement of Rights. Enforce any and all rights and
interests created and existing under the Credit Documents, including,
without limitation, all rights and remedies existing under the
Collateral Documents, all rights and remedies against a Guarantor and
all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
10.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations under Letters of Credit and Bankers'
Acceptances, all accrued interest in respect thereof, all cash necessary to
collateralize the LOC Obligations and BA Obligations pursuant to Section
10.2(c), all accrued and unpaid fees and other indebtedness or obligations owing
to the Lenders hereunder shall immediately become due and payable without the
giving of any notice or other action by the Agents or the Lenders, which notice
or other action is expressly waived by the Credit Parties.
Notwithstanding the fact that enforcement powers reside primarily with the
Administrative Agents, each Lender has, to the extent permitted by law, a
separate right of payment and shall be considered a separate "creditor" holding
a separate "claim" within the meaning of Section 101(5) of the Bankruptcy Code
or any other insolvency statute.
10.3 ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT.
Notwithstanding any other provisions of this Credit Agreement, after
the occurrence and during the continuance of an Event of Default, all amounts
collected or received by an Agent or any Lender on account of amounts
outstanding under any of the Credit Documents or in respect of the Collateral
shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation reasonable attorneys' fees)
of the Agents or any of the Lenders in connection with enforcing the
rights of the Lenders under the Credit Documents and any protective
advances made by the Agents or any of the Lenders with respect to the
Collateral under or pursuant to the terms of the Collateral Documents;
SECOND, to payment of any fees owed to an Agent, an Issuing
Lender or any Lender;
THIRD, to the payment of all accrued interest payable to the
Lenders hereunder and all other obligations (other than those
obligations to be paid pursuant to clause "FOURTH" below) which shall
have become due and payable under the Credit Documents and not repaid
pursuant to clauses "FIRST" and "SECOND" above;
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FOURTH, to the payment of the outstanding principal amount of
the Loans, unreimbursed drawings under Letters of Credit and matured
and unpaid Bankers' Acceptances, to the payment of any principal
amounts outstanding under Hedging Agreements between a Credit Party and
a Lender or an Affiliate of a Lender and to the payment or cash
collateralization of the outstanding LOC Obligations and BA
Obligations, pro rata as set forth below; and
FIFTH, to the payment of the surplus, if any, to whoever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (b) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans, LOC
Obligations, BA Obligations and obligations under Hedging Agreements held by
such Lender bears to the aggregate then outstanding Loans, LOC Obligations, BA
Obligations and obligations under Hedging Agreements) of amounts available to be
applied; and (c) to the extent that any amounts available for distribution
pursuant to clause "FOURTH" above are attributable to the issued but undrawn
amount of outstanding Letters of Credit, such amounts shall be held by the
Collateral Agent in a cash collateral account and applied (x) first, to
reimburse the Issuing Lenders from time to time for any drawings under such
Letters of Credit and (y) then, following the expiration of all Letters of
Credit, to all other obligations of the types described in clause "FOURTH" above
in the manner provided in this Section 10.3.
10.4 CONVERSION AND REDENOMINATION OF LOANS; PURCHASE OF RISK
PARTICIPATIONS.
(a) Conversion and Redenomination of Loans. Notwithstanding
anything herein to the contrary, upon a termination of the Commitments
following the occurrence of an Event of Default (a "Commitment
Termination Event"), (i) all outstanding Loans denominated in Canadian
Dollars or bearing interest at a rate other than the Adjusted Base Rate
shall be redenominated and/or converted into Base Rate Loans
denominated in Dollars and (ii) all BA Obligations and LOC Obligations
owed to a Lender in Canadian Dollars shall be redenominated into BA
Obligations and LOC Obligations owed in Dollars (and a demand for cash
collateralization of such obligations shall be made in accordance with
Section 10.2(c)), in each case on and with effect from the soonest
practicable date following the Commitment Termination Event as
determined by the Administrative Agents (the "Conversion Date") and at
the exchange rate in effect as of such Conversion Date as determined by
the Administrative Agents in accordance with their normal market
practice. The Borrowers hereby agree to pay to the Administrative
Agents, for the pro rata benefit of the Lenders, on the Conversion Date
any amounts owing pursuant to Section 4.14 as a result of any such
conversion occurring prior to the end of an Interest Period. The
Administrative Agents will promptly notify the Borrowers and the
Lenders of any such redenomination and conversion following a
Commitment Termination Event.
(b) Purchase of Risk Participations. Each Lender hereby agrees
that it shall forthwith purchase, as of the Conversion Date (but
adjusted for any payments received from a Borrower on or after such
date and prior to such purchase), from the other Lenders
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such Participation Interests in the outstanding Loans, LOC Obligations
and BA Obligations (whether or not such Loans, LOC Obligations and BA
Obligations have been redenominated or converted pursuant to subsection
10.4(a)) as shall be necessary to cause each such Lender to share in
all Loans, LOC Obligations and BA Obligations ratably based upon its
Total Facility Commitment Percentage (determined before giving effect
to any termination of the Commitments), provided that (A) all interest
and fees payable on a Loan, LOC Obligation or BA Obligation shall be
for the account of the Lender that originally extended such Extension
of Credit until the date as of which the respective Participation
Interest is purchased and (B) if any purchase of a Participation
Interest required to be made pursuant to this sentence is not made on
the Conversion Date, then at the time such purchase is actually made
the purchasing Lender shall be required to pay to the selling Lender,
to the extent not paid to such selling Lender by the applicable
Borrower in accordance with the terms of this Credit Agreement,
interest on the principal amount of the Participation Interest
purchased for each day from and including the day upon which such
purchase of the Participation Interest would otherwise have occurred to
but excluding the date of actual payment for the purchase of such
Participation Interest, at the rate equal to the Federal Funds Rate.
SECTION 11
AGENCY PROVISIONS
11.1 APPOINTMENT.
Each Lender hereby designates and appoints Bank of America as U.S.
Administrative Agent and as Collateral Agent and Bank of America Canada as
Canadian Administrative Agent of such Lender to act as specified herein and the
other Credit Documents, and each such Lender hereby authorizes the Agents, as
the agents for such Lender, to take such action on its behalf under the
provisions of this Credit Agreement and the other Credit Documents and to
exercise such powers and perform such duties as are expressly delegated by the
terms hereof and of the other Credit Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere herein and in the other Credit Documents, the Agents shall
not have any duties or responsibilities except those expressly set forth herein
and therein or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Credit Agreement or any of the other Credit Documents, or
shall otherwise exist against the Agents. The provisions of this Section are
solely for the benefit of the Agents and the Lenders and none of the Credit
Parties shall have any rights as a third party beneficiary of the provisions
hereof. In performing its functions and duties under this Credit Agreement and
the other Credit Documents, each Agent shall act solely as an agent of the
Lenders and does not assume and shall not be deemed to have assumed any
obligation or relationship of agency or trust with or for any Credit Party or
any of its Subsidiaries.
11.2 DELEGATION OF DUTIES.
An Agent may execute any of its duties hereunder or under the other
Credit Documents by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all
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matters pertaining to such duties. An Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
11.3 EXCULPATORY PROVISIONS.
Neither the Agents nor any of their officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection
herewith or in connection with any of the other Credit Documents (except for its
or such Person's own gross negligence or willful misconduct) or responsible in
any manner to any of the Lenders for any recitals, statements, representations
or warranties made by any of the Credit Parties contained herein or in any of
the other Credit Documents or in any certificate, report, document, financial
statement or other written or oral statement referred to or provided for in, or
received by an Agent under or in connection herewith or in connection with the
other Credit Documents, or enforceability or sufficiency therefor of any of the
other Credit Documents, or for any failure of the Borrower to perform its
obligations hereunder or thereunder. The Agents shall not be responsible to any
Lender for the effectiveness, genuineness, validity, enforceability,
collectability or sufficiency of this Credit Agreement, or any of the other
Credit Documents or for any representations, warranties, recitals or statements
made herein or therein or made by the Borrower or any of its Subsidiaries in any
written or oral statement or in any financial or other statements, instruments,
reports, certificates or any other documents in connection herewith or therewith
furnished or made by an Agent to the Lenders or by or on behalf of the Credit
Parties to the Agents or any Lender or be required to ascertain or inquire as to
the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds of the Loans or the use of the Letters of Credit or of the existence or
possible existence of any Default or Event of Default or to inspect the
properties, books or records of the Credit Parties. The Agents are not trustees
for the Lenders and owe no fiduciary duty to the Lenders.
11.4 RELIANCE ON COMMUNICATIONS.
The Agents shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation reasonably believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to any of the Credit Parties, independent
accountants and other experts selected by the Agents with reasonable care). The
Agents may deem and treat the Lenders as the owner of its interests hereunder
for all purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the U.S. Administrative Agent in accordance
with Section 12.3(b). The Agents shall be fully justified in failing or refusing
to take any action under this Credit Agreement or under any of the other Credit
Documents unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or 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 or continuing to take any such action. The
Agents shall in all cases be fully protected in acting, or in refraining from
acting, hereunder or under any of the other Credit Documents in accordance with
a request of the Required Lenders (or to the extent specifically provided in
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Section 12.6, all the Lenders) and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Lenders (including their
successors and assigns).
11.5 NOTICE OF DEFAULT.
Except for a default with respect to a payment due to it, an Agent
shall not be deemed to have knowledge or notice of the occurrence of any Default
or Event of Default hereunder unless such Agent has received notice from a
Lender, another Agent or a Credit Party referring to the Credit Document,
describing such Default or Event of Default and stating that such notice is a
"notice of default." In the event that the U.S. Administrative Agent receives
such a notice, the U.S. Administrative Agent shall give prompt notice thereof to
the Lenders. The Administrative Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the Required
Lenders and as is permitted by the Credit Documents.
11.6 NON-RELIANCE ON AGENTS AND OTHER LENDERS.
Each Lender expressly acknowledges that neither the Agents, BAS, Chase
Securities nor any of their officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or warranties to it
and that no act by the Agents or any affiliate thereof hereinafter taken,
including any review of the affairs of any Credit Party or any of its
Subsidiaries, shall be deemed to constitute any representation or warranty by
the Agents to any Lender. Each Lender represents to the Agents, Chase Securities
and BAS that it has, independently and without reliance upon the Agents or BAS
or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, assets, operations, property, financial and other conditions,
prospects and creditworthiness of the Credit Parties and made its own decision
to make its Loans hereunder and enter into this Credit Agreement. Each Lender
also represents that it will, independently and without reliance upon the
Agents, BAS, Chase Securities or any Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Credit Agreement, and to make such investigation as it deems necessary to
inform itself as to the business, assets, operations, property, financial and
other conditions, prospects and creditworthiness of the Credit Parties. Except
for notices, reports and other documents expressly required to be furnished to
the Lenders by the Administrative Agents hereunder, the Agents, Chase Securities
and BAS shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, assets,
property, financial or other conditions, prospects or creditworthiness of the
Credit Parties which may come into the possession of the Agents, Chase
Securities, BAS or any of their officers, directors, employees, agents,
attorneys-in-fact or affiliates.
11.7 INDEMNIFICATION.
The Lenders agree to indemnify each Agent in its capacity as such (to
the extent not reimbursed by the Borrowers and without limiting the obligation
of the Borrowers to do so), ratably according to their respective Commitments
(or if the Commitments have expired or been terminated, in accordance with the
respective principal amounts of outstanding Loans and Participation Interests of
the Lenders), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind
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whatsoever which may at any time (including without limitation at any time
following payment in full of the Credit Party Obligations) be imposed on,
incurred by or asserted against an Agent in its capacity as such in any way
relating to or arising out of this Credit Agreement or the other Credit
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by an Agent under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of an Agent. If any indemnity furnished to an Agent for any purpose
shall, in the opinion of such Agent, be insufficient or become impaired, such
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished. The
agreements in this Section shall survive the payment of the Credit Party
Obligations and all other amounts payable hereunder and under the other Credit
Documents.
11.8 AGENTS IN THEIR INDIVIDUAL CAPACITY.
Each Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Parent or any of its
Subsidiaries as though such Agent were not an Agent hereunder. With respect to
the Loans made, Letters of Credit issued and BA Obligations created and all
obligations owing to it, an Agent shall have the same rights and powers under
this Credit Agreement as any Lender and may exercise the same as though they
were not an Agent, and the terms "Lender" and "Lenders" shall include each Agent
in its individual capacity.
11.9 SUCCESSOR AGENT.
Any Agent may, at any time, resign upon 20 days written notice to the
Lenders. Upon any such resignation, the Required Lenders shall have the right to
appoint a successor Agent, which, so long as no Event of Default has occurred
and is continuing, shall be acceptable to the U.S. Borrower (such acceptance not
to be unreasonably withheld or delayed). If no successor Agent shall have been
so appointed by the Required Lenders, and shall have accepted such appointment,
within 60 days after the notice of resignation, then the resignation of the
retiring Agent shall nonetheless thereupon be effective and the retiring Agent
shall select a successor Agent, provided such successor is an Eligible Assignee
(or if no Eligible Assignee shall have been so appointed by the retiring Agent
and shall have accepted such appointment, then the U.S. Lenders or the Canadian
Lenders, as the case may be, shall perform all obligations of the retiring Agent
hereunder until such time, if any, as a successor Agent shall have been
appointed and shall have accepted such appointment as provided for above). Upon
the acceptance of any appointment as an Agent hereunder by a successor, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations as an Agent, as
appropriate, under this Credit Agreement and the other Credit Documents and the
provisions of this Section 11.9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was an Agent under this Credit
Agreement.
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SECTION 12
MISCELLANEOUS
12.1 NOTICES.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid (or on an invoice basis) to a reputable national
overnight air courier service, or (d) the third Business Day following the day
on which the same is sent by certified or registered mail, postage prepaid, in
each case to the respective parties at the address or telecopy numbers set forth
on Schedule 12.1, or at such other address as such party may specify by written
notice to the other parties hereto.
12.2 RIGHT OF SET-OFF.
In addition to any rights now or hereafter granted under applicable law
or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default and the commencement of remedies described in
Section 10.2, each Lender is authorized at any time and from time to time,
without presentment, demand, protest or other notice of any kind (all of which
rights being hereby expressly waived), to set-off and to appropriate and apply
any and all deposits (general or special) and any other indebtedness at any time
held or owing by such Lender (including, without limitation, branches, agencies
or Affiliates of such Lender wherever located) to or for the credit or the
account of any Credit Party or any of its Subsidiaries against Credit Party
Obligations of such Credit Party, irrespective of whether an Administrative
Agent or the Lenders shall have made any demand hereunder and although such
Credit Party Obligations may be contingent or unmatured, and any such set-off
shall be deemed to have been made immediately upon the occurrence of an Event of
Default even though such charge is made or entered on the books of such Lender
subsequent thereto. The Credit Parties hereby agree that any Person purchasing a
participation in the Loans and Commitments hereunder pursuant to Section 12.3(e)
or Section 4.8 may exercise all rights of set-off with respect to its
participation interest as fully as if such Person were a Lender hereunder.
12.3 BENEFIT OF AGREEMENT.
(a) Generally. This Credit Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; provided that none of the Credit
Parties may assign and transfer any of its interests (except as
permitted by Section 9.4 or 9.5) without the prior written consent of
the Lenders; and provided further that the rights of each Lender to
transfer, assign or grant participations in its rights and/or
obligations hereunder shall be limited as set forth below in this
Section 12.3.
(b) Assignments. Each Lender may assign to one or more
Eligible Assignees all or a portion of its rights and obligations under
this Credit Agreement (including,
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without limitation, all or a portion of its Loans, its Notes, and its
Commitments); provided, however, that:
(i) except in the case of an assignment to another
Lender or an assignment of all of a Lender's rights and
obligations under this Credit Agreement, any such partial
assignment shall be in an amount at least equal to $5,000,000
(or C$5,000,000, as applicable) (or, if less, the remaining
amount of the Commitment of such assigning Lender) or an
integral multiple of $1,000,000 (or C$1,000,000, as
applicable) in excess thereof;
(ii) each such assignment by a Lender of it rights
and obligations under Section 2 or Section 3 shall be of a
constant, and not varying, percentage of all of its rights and
obligations under such Section; and
(iii) the parties to such assignment shall execute
and deliver to the appropriate Administrative Agent for its
acceptance an Assignment Agreement in substantially the form
of Exhibit 12.3(b), together with a processing fee from the
assignor of $3,500.
Upon execution, delivery, and acceptance of such Assignment Agreement,
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 (other than indemnity and expense
reimbursement rights relating to the period during which such assigning
Lender was a Lender hereunder) and be released from its obligations
under this Credit Agreement. Upon the consummation of any assignment
pursuant to this Section 12.3(b), the assignor, the Administrative
Agents and the 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 United States of
America or a state thereof, it shall deliver to the U.S. Borrower and
the U.S. Administrative Agent certification as to exemption from
deduction or withholding of taxes in accordance with Section 4.13.
By executing and delivering an assignment agreement in accordance with
this Section 12.3(b), the assigning Lender thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each other and
the other parties hereto as follows: (A) such assigning Lender warrants
that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim and the assignee
warrants that it is an Eligible Assignee; (B) except as set forth in
clause (A) above, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Credit
Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto, or the execution,
legality, validity, enforceability, genuineness, sufficiency or value
of this Credit Agreement, any of the other Credit Documents or any
other instrument or document furnished pursuant hereto or thereto or
the financial condition of any Credit Party or any of its Subsidiaries
or the performance or observance by any Credit Party of any of its
obligations under this Credit Agreement, any of the other Credit
Documents or any other instrument or document furnished pursuant hereto
or thereto; (C) such assignee
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represents and warrants that it is legally authorized to enter into
such Assignment Agreement; (D) such assignee confirms that it has
received a copy of this Credit Agreement, the other Credit Documents
and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such
Assignment Agreement; (E) such assignee will independently and without
reliance upon the Agents, such assigning Lender or any other Lender,
and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Credit Agreement and the other
Credit Documents; (F) such assignee appoints and authorizes the Agents
to take such action on its behalf and to exercise such powers under
this Credit Agreement or any other Credit Document as are delegated to
the Agents by the terms hereof or thereof, together with such powers as
are reasonably incidental thereto; and (G) such assignee agrees that it
will perform in accordance with their terms all the obligations which
by the terms of this Credit Agreement and the other Credit Documents
are required to be performed by it as a Lender.
(c) Register. The Administrative Agents shall maintain a copy
of each Assignment Agreement 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 or
demonstrable error, and the Borrowers, the Administrative Agents and
the Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Credit
Agreement. The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time
upon reasonable prior notice.
(d) Acceptance. Upon its receipt of an Assignment Agreement
executed by the parties thereto, together with any Note relating to
such assignment, and payment of the processing fee, the Administrative
Agents shall, if such Assignment Agreement has been completed and is in
substantially the form of Exhibit 11.3(b) hereto and if the relevant
assignment is otherwise permitted by this Credit Agreement, (i) accept
such Assignment Agreement, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the
parties thereto.
(e) Participations. 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 Credit Agreement (including all or a
portion of its Commitments and its Loans); provided, however, that (i)
such Lender's obligations under this Credit 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 Sections 4.9 through 4.14, inclusive, and the
right of set-off contained in Section 12.2 and (iv) the Borrowers shall
continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Credit Agreement,
and such Lender shall retain the sole right to enforce the obligations
of the Borrowers relating to its Loans, its Notes and any other Credit
Party Obligations owing to it and to approve any amendment,
modification, or waiver of any provision of this Credit Agreement
(other than amendments,
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modifications, or waivers decreasing the amount of principal of or the
rate at which interest or fees are payable on such Loans, Notes or
other Credit Party Obligations, extending any scheduled principal
payment date or date fixed for the payment of interest or fees on such
Loans, Notes or other Credit Party Obligations, extending its
Commitments or releasing all or substantially all of the Collateral or
the Guarantors) and (v) such Lender shall provide written notice of any
participation to the Borrowers and the Administrative Agents.
(f) Nonrestricted Assignments. Notwithstanding any other
provision set forth in this Credit Agreement, any U.S. 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.
(g) Information. Any Lender may furnish any information
concerning the Parent or any of its Subsidiaries in the possession of
such Lender from time to time to assignees and participants (including
prospective assignees and participants), subject, however, to the
provisions of Section 12.15.
(h) CLO's. Notwithstanding anything to the contrary contained
herein, any Lender, (a "Granting Lender") may grant to a special
purpose funding vehicle (an "SPC") the option to fund all or any part
of any Loan that such Granting Lender would otherwise be obligated to
fund pursuant to this Credit Agreement; provided that (i) nothing
herein shall constitute a commitment by any SPC to fund any Loan, (ii)
if an SPC elects not to exercise such option or otherwise fails to fund
all or any part of such Loan, the Granting Lender shall be obligated to
fund such Loan pursuant to the terms hereof, (iii) no SPC shall have
any voting rights pursuant to Section 12.6 and (iv) with respect to
notices, payments and other matters hereunder, the Credit Parties, the
Agents and the Lenders shall not be obligated to deal with an SPC, but
may limit their communications and other dealings relevant to such SPC
to the applicable Granting Lender. The funding of a Loan by an SPC
hereunder shall utilize the U.S. Revolving Loan Commitment or Canadian
Revolving Loan Commitment, as applicable, of the Granting Lender to the
same extent that, and as if, such Loan were funded by such Granting
Lender. Each party hereto hereby agrees that no SPC shall be liable for
any indemnity or payment under this Credit Agreement for which a Lender
would otherwise be liable for so long as, and to the extent, the
Granting Lender provides such indemnity or makes such payment.
Notwithstanding anything to the contrary contained in this Credit
Agreement, any SPC may disclose on a confidential basis any non-public
information relating to its funding of Loans to any rating agency,
commercial paper dealer or provider of any surety or guarantee to such
SPC. This Section may not be amended without the prior written consent
of each Granting Lender, all or any part of whose Loan is being funded
by an SPC at the time of such amendment.
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<PAGE> 123
12.4 NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of an Agent or any Lender in exercising
any right, power or privilege hereunder or under any other Credit Document and
no course of dealing between the Parent or any of its Subsidiaries and the
Agents or any Lender shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any other
Credit Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder or thereunder. The rights and
remedies provided herein are cumulative and not exclusive of any rights or
remedies which the Agents or any Lender would otherwise have. No notice to or
demand on any Credit Party in any case shall entitle any Credit Party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agents or the Lenders to any other or
further action in any circumstances without notice or demand.
12.5 PAYMENT OF EXPENSES; INDEMNIFICATION.
The U.S. Credit Parties agree to: (a) pay all reasonable out-of-pocket
costs and expenses of (i) the Agents, BAS and Chase Securities in connection
with (A) the negotiation, preparation, execution and delivery and administration
of this Credit Agreement and the other Credit Documents and the documents and
instruments referred to therein (including, without limitation, the reasonable
fees and expenses of counsel to the Agents), and (B) any amendment, waiver or
consent relating hereto and thereto including, but not limited to, any such
amendments, waivers or consents resulting from or related to any work-out,
renegotiation or restructure relating to the performance by the Credit Parties
under this Credit Agreement and (ii) the Agents and the Lenders in connection
with (A) enforcement of the Credit Documents and the documents and instruments
referred to therein, including, without limitation, in connection with any such
enforcement, the reasonable fees and disbursements of counsel for the Agents and
each of the Lenders, and (B) any bankruptcy or insolvency proceeding of a Credit
Party or any of its Subsidiaries and (b) indemnify each Agent, BAS, Chase
Securities, each Lender and each of their officers, directors, employees,
representatives, Affiliates and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses (including,
without limitation, the reasonable fees and expenses of legal counsel, including
the allocated cost of internal counsel, and settlement costs) incurred by any of
them as a result of, or arising out of, or in any way related to, or by reason
of, any investigation, litigation or other proceeding (whether or not any Agent,
BAS, Chase Securities, or Lender is a party thereto) related to (i) the entering
into and/or performance of any Credit Document or the use of proceeds of any
Loans (including other Extensions of Credit) hereunder or the consummation of
any other transactions contemplated in any Credit Document, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding, (ii) any
Environmental Claim, (iii) any claims for Non-Excluded Taxes (but excluding in
the case of (i), (ii) and (iii) above, any such losses, liabilities, claims,
damages or expenses to the extent incurred by reason of gross negligence or
willful misconduct on the part of the Person to be indemnified). Without
limiting the U.S. Credit Parties' obligations under this Section 12.5, the
Canadian Credit Parties agree to pay any such costs and expenses referred to in
clause (a) above and to indemnify the parties referred to in clause (b) above
for any of the losses referred to in such clause, in each case to the extent (x)
such Canadian Credit Parties are responsible for such costs and expenses or
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<PAGE> 124
losses or such costs and expenses or losses can reasonably be attributed to them
and (y) such costs and expenses or losses are not otherwise paid or reimbursed
by the U.S. Credit Parties.
12.6 AMENDMENTS, WAIVERS AND CONSENTS.
Neither this Credit Agreement nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing and signed by the Required Lenders and the then Credit Parties; provided
that no such amendment, change, waiver, discharge or termination shall without
the consent of each Lender affected thereby:
(a) extend the Maturity Date;
(b) reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any
post-default increase in interest rates) thereon or fees hereunder;
(c) reduce or waive the principal amount of any Loan;
(d) increase or extend any Commitment of a Lender (it being
understood and agreed that a waiver of any Default or Event of Default
or a waiver of any mandatory reduction in the Commitments shall not
constitute a change in the terms of any Commitment of any Lender);
(e) release all or substantially all of the Collateral
securing the Credit Party Obligations hereunder (provided that the
Collateral Agent may, without consent from any other Lender, release
any Collateral that is sold or transferred by a Credit Party in
conformance with Section 9.5);
(f) release either Borrower or the Parent from its obligations
or release all or substantially all of the other Credit Parties from
their respective obligations under the Credit Documents;
(g) amend, modify or waive any provision of this Section or
Section 4.4, 4.7, 4.8, 6.2, 10.1(a), 12.2, 12.3 or 12.5;
(h) reduce any percentage specified in, or otherwise modify,
the definition of Required Lenders; or
(i) consent to the assignment or transfer by a Borrower of any
of its rights and obligations under (or in respect of) the Credit
Documents.
Notwithstanding the above, no provisions of Section 11 may be amended or
modified without the consent of the Agents. No provisions affecting an Issuing
Lender's rights to (a) reimbursement or indemnity under Section 2.2 or Section
3.2 or (b) any Issuing Lender Fees may be amended without the consent of the
applicable Issuing Lender. No provision of Section 2.3 or Section 3.3 affecting
the Swingline Loans may be amended without the consent of the applicable
Swingline Lender. No
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provision of Section 2 may be amended without the consent of the Required U.S.
Lenders and no provision of Section 3 may be amended without the consent of the
Required Canadian Lenders.
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
such Lender sees fit on any reorganization plan that affects the Loans or the
Letters of Credit, and each Lender acknowledges that the provisions of Section
1126(c) of the Bankruptcy Code supersede the unanimous consent provisions set
forth herein and (y) the Required Lenders may consent to allow a Credit Party to
use cash collateral in the context of a bankruptcy or insolvency proceeding.
12.7 COUNTERPARTS/TELECOPY.
This Credit Agreement and the other Credit Documents may be executed in
any number of counterparts, each of which where so executed and delivered shall
be an original, but all of which shall constitute one and the same instrument.
Delivery of executed counterparts by telecopy shall be as effective as an
original and shall constitute a representation that an original will be
delivered.
12.8 HEADINGS.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
12.9 DEFAULTING LENDER.
Each Lender understands and agrees that if such Lender is a Defaulting
Lender then notwithstanding the provisions of Section 12.6 it shall not be
entitled to vote on any matter requiring the consent of the Required Lenders or
to object to any matter requiring the consent of all the Lenders; provided,
however, that all other benefits and obligations under the Credit Documents
shall apply to such Defaulting Lender.
12.10 SURVIVAL OF INDEMNIFICATION AND REPRESENTATIONS AND
WARRANTIES.
All indemnities set forth herein and all representations and warranties
made herein shall survive the execution and delivery of this Credit Agreement,
the making of the Loans, the issuance of the Letters of Credit and the repayment
of the Loans, LOC Obligations, BA Obligations and other obligations and the
termination of the Commitments hereunder.
12.11 GOVERNING LAW; JURISDICTION.
(a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK. Any legal action or proceeding with respect
to this Agreement or any other Credit Document may be brought in the
courts of the State of North Carolina or of the United States for the
Western District of North Carolina, and, by execution and delivery of
this Credit Agreement, each Credit Party hereby irrevocably accepts for
itself and in respect of
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its property, generally and unconditionally, the jurisdiction of such
courts. Each Credit Party further irrevocably consents to the service
of process out of any of the aforementioned courts in any such action
or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at the address for notices
pursuant to Section 12.1, such service to become effective 10 days
after such mailing. Nothing herein shall affect the right of a Lender
to serve process in any other manner permitted by law or to commence
legal proceedings or to otherwise proceed against a Credit Party in any
other jurisdiction. Each Credit Party agrees that a final judgment in
any action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner
provided by law; provided that nothing in this Section 12.11(a) is
intended to impair a Credit Party's right under applicable law to
appeal or seek a stay of any judgment.
(b) Each Credit Party hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with
this Agreement or any other Credit Document brought in the courts
referred to in subsection (a) hereof and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought in an
inconvenient forum.
(c) Each Canadian Credit Party hereby appoints the U.S.
Borrower as its agent in the United States for service of process.
12.12 WAIVER OF JURY TRIAL; WAIVER OF CONSEQUENTIAL DAMAGES.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY. Each Credit Party agrees not to assert any
claim against the Agents, the Issuing Lenders, any Lender, any of their
Affiliates, or any of their respective directors, officers, employees, attorneys
or agents, on any theory of liability, for special, indirect, consequential or
punitive damages arising out of or otherwise relating to any of the transactions
contemplated herein.
12.13 SEVERABILITY.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
12.14 FURTHER ASSURANCES.
The Credit Parties agree, upon the request of an Administrative Agent,
to promptly take such actions, as reasonably requested, as is necessary to carry
out the intent of this Credit Agreement and the other Credit Documents,
including, but not limited to, such actions as are
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necessary to ensure that the Lenders have a perfected security interest in the
Collateral subject to no Liens other than Permitted Liens.
12.15 CONFIDENTIALITY.
Each of the Agents, the Issuing Lenders, the Swingline Lenders and the
other Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors, and to any direct or indirect contractual
counterparty in swap agreements or to such contractual counterparty's
professional advisor (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Credit Agreement or to an SPC (as defined in Section
12.3(h)) in connection with Section 12.3(h), (e) in connection with the exercise
of any remedies hereunder or any suit, action or proceeding relating to this
Credit Agreement or any other Credit Document or the enforcement of rights
hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to any assignee of or
participant in, or any prospective assignee of or participant in, any of its
rights or obligations under this Credit Agreement, (g) with the consent of
Parent and the Borrowers or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii)
becomes available to the Agents, any Issuing Lender or any Lender on a
nonconfidential basis from a source other than Parent or the Borrowers. For the
purposes of this Section, the term "Information" means all information received
from Parent or the Borrowers relating to Parent, the Borrowers, or their
Subsidiaries or their respective business other than any such information that
is available to the Agents, any Issuing Lender or any Lender on a
nonconfidential basis prior to disclosure by Parent or the Borrowers, provided
that, in the case of information received from Parent or the borrowers after the
date hereof (other than any such information received pursuant to Section 8.1)
such information is clearly identified at the time of delivery as confidential.
Any Person required to maintain the confidentiality of Information as provided
in this Section shall be considered to have complied with its obligation to do
so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
12.16 JUDGMENT CURRENCY.
(a) The Borrowers' obligations hereunder and under the Credit
Documents to make payments in Dollars or in Canadian Dollars (the
"Obligation Currency") shall not be discharged or satisfied by any
tender or recovery pursuant to any judgment expressed in or converted
into any currency other than the Obligation Currency, except to the
extent that such tender or recovery results in the effective receipt by
the Administrative Agents, the Collateral Agent or a Lender of the full
amount of the Obligation Currency expressed to be payable to such
Administrative Agent, Collateral Agent or Lender under this Agreement
or the other Credit Documents. If, for the purpose of obtaining or
enforcing judgment against either of the Borrowers or any other Credit
Party in any court or in any jurisdiction, it becomes necessary to
convert into or from any currency other than the Obligation Currency
(such other currency being hereinafter referred to as the "Judgment
Currency") an amount
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due in the Obligation Currency, the conversion shall be made, at the
Dollar Equivalent (as defined below) of such amount, in the case of any
Canadian Dollars or Dollars, and, in the case of other currencies, the
rate of exchange (as quoted by the U.S. Administrative Agent or if the
U.S. Administrative Agent does not quote a rate of exchange on such
currency, by a known dealer in such currency designated by the U.S.
Administrative Agent) determined, in each case, as of the date
immediately preceding the day on which the judgment is given (such
Business Day being hereinafter referred to as the "Judgment Currency
Conversion Date").
(b) If there is a change in the rate of exchange prevailing
between the Judgment Currency Conversion Date and the date of actual
payment of the amount due, the Borrowers covenant and agree to pay, or
cause to be paid, such additional amounts, if any (but in any event not
a lesser amount), as may be necessary to ensure that the amount paid in
the Judgment Currency, when converted at the rate of exchange
prevailing on the date of payment, will produce the amount of the
Obligation Currency which could have been purchased with the amount of
Judgment Currency stipulated in the judgment of judicial award at the
rate of exchange prevailing on the Judgment Currency Conversion Date.
(c) For purposes hereof, Dollar Equivalent means, with respect
to any amount of Canadian Dollars on any date, the amount of Dollars
that may be purchased with such amount of Canadian Dollars, as
determined by the rate at which Dollars are offered in Toronto, Ontario
on such date by the Canadian Administrative Agent for Canadian Dollars
at 11:00 a.m. (Toronto, Ontario time) in accordance with its normal
market practice. In determining the Dollar Equivalent or rate of
exchange for this Section, such amounts shall include any premium and
costs payable in connection with the purchase of the Obligation
Currency.
12.17 ENTIRETY.
This Credit Agreement together with the other Credit Documents and the
Fee Letter represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Credit
Documents or the transactions contemplated herein and therein.
12.18 BINDING EFFECT; CONTINUING AGREEMENT.
(a) This Credit Agreement shall become effective at such time
when all of the conditions set forth in Section 6.1 have been satisfied
or waived by the Lenders and it shall have been executed by the Credit
Parties and the Agents, and the Agents shall have received copies
hereof (telefaxed or otherwise) which, when taken together, bear the
signatures of each Lender, and thereafter this Credit Agreement shall
be binding upon and inure to the benefit of the Credit Parties, the
Agents and each Lender and their respective successors and assigns.
(b) This Credit Agreement shall be a continuing agreement and
shall remain in full force and effect until all Loans, LOC Obligations,
interest, fees and other Credit Party Obligations have been paid in
full and all Commitments and Letters of Credit have been terminated.
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<PAGE> 129
Upon termination, the Credit Parties shall have no further obligations
(other than the indemnification provisions that survive) under the
Credit Documents and the Collateral Agent shall, at the request and
expense of the Credit Parties, deliver all Collateral in its possession
to the Credit Parties and release all Liens on Collateral; provided
that should any payment, in whole or in part, of the Credit Party
Obligations be rescinded or otherwise required to be restored or
returned by an Agent or any Lender, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, then the
Credit Documents shall automatically be reinstated and all Liens of the
Lenders shall reattach to the Collateral and all amounts required to be
restored or returned and all costs and expenses incurred by an Agent or
Lender in connection therewith shall be deemed included as part of the
Credit Party Obligations.
12.19 DESIGNATED SENIOR INDEBTEDNESS.
The Parent and the U.S. Borrower hereby specifically designate the
Indebtedness evidenced by this Credit Agreement and the other Credit Documents
(specifically including all Credit Party Obligations) as "Designated Senior
Indebtedness" for all purposes, including without limitation for purposes of the
Subordinated Debt Indenture.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
Each of the parties hereto has caused a counterpart of this Credit
Agreement to be duly executed and delivered as of the date first above written.
U.S. BORROWER: WESCO DISTRIBUTION, INC.,
a Delaware corporation
By: /s/ STEVEN A. BURLESON
---------------------------------------
Name: Steven A. Burleson
-------------------------------------
Title: Vice President, CFO and Treasurer
------------------------------------
CANADIAN BORROWER: WESCO DISTRIBUTION-CANADA, INC.,
an Ontario corporation
By: /s/ STEVEN A. BURLESON
---------------------------------------
Name: Steven A. Burleson
-------------------------------------
Title: Vice President, CFO & Treasurer
------------------------------------
TOTAL FACILITY
GUARANTORS: WESCO INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ STEVEN A. BURLESON
---------------------------------------
Name: Steven A. Burleson
-------------------------------------
Title: Vice President, CFO & Treasurer
------------------------------------
CDW REALCO, INC.,
a Delaware corporation
By: /s/ STEVEN A. BURLESON
---------------------------------------
Name: Steven A. Burleson
-------------------------------------
Title: Vice President, CFO & Treasurer
------------------------------------
WESCO EQUITY CORPORATION,
a Delaware corporation
By: /s/ WILLIAM E. HORVATH
---------------------------------------
Name: William E. Horvath
-------------------------------------
Title: President/Treasurer
------------------------------------
WESCO FINANCE CORP.,
a Delaware corporation
By: /s/ STEVEN A. BURLESON
---------------------------------------
Name: Steven A. Burleson
-------------------------------------
Title: Vice President, CFO & Treasurer
------------------------------------
<PAGE> 131
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
WESCO - AZERBAIJAN, INC.,
a Delaware corporation
By: /s/ STEVEN A. BURLESON
---------------------------------------
Name: Steven A. Burleson
-------------------------------------
Title: Vice President, CFO & Treasurer
------------------------------------
S-2
<PAGE> 132
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
LENDERS: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
in its capacity as the
U.S. Administrative Agent
By: /s/ GARY FLIEGER
---------------------------------------
Name: Gary Flieger
-------------------------------------
Title: Vice President
------------------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
individually in its capacity as a
U.S. Lender, the U.S. Issuing Lender and
the U.S. Swingline Lender
By: /s/ LISA S. DONAGHUE
---------------------------------------
Name: Lisa S. Donaghue
-------------------------------------
Title: Managing Director
------------------------------------
BANK OF AMERICA CANADA,
in its capacity as a Canadian Lender,
the Canadian Administrative Agent, the
Canadian Issuing Lender and the
Canadian Swingline Lender
By: /s/ RICHARD J. HALL
---------------------------------------
Name: Richard J. Hall
-------------------------------------
Title: Vice President
------------------------------------
S-3
<PAGE> 133
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
ABN AMRO BANK N.V.
By: /s/ PATRICK M. PASTORE
---------------------------------------
Name: Patrick M. Pastore
-------------------------------------
Title: Vice President
------------------------------------
By: /s/ CARRIE A. PENCE
---------------------------------------
Name: Carrie A. Pence
-------------------------------------
Title: Vice President
------------------------------------
S-4
<PAGE> 134
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
BANKBOSTON, N.A.
By: /s/ JUAN R. NAVOS SACASA
---------------------------------------
Name: Juan R. Navos Sacasa
-------------------------------------
Title: Managing Director
------------------------------------
S-5
<PAGE> 135
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
BANK OF HAWAII
By: /s/ DONNA R. PARKER
---------------------------------------
Name: Donna R. Parker
-------------------------------------
Title: Vice President
------------------------------------
S-6
<PAGE> 136
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
THE BANK OF NEW YORK
By: /s/ ROBERT J. JOYCE
---------------------------------------
Name: Robert J. Joyce
-------------------------------------
Title: Vice President
------------------------------------
S-7
<PAGE> 137
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
THE BANK OF NOVA SCOTIA
By: /s/ FCH ASHBY
---------------------------------------
Name: FCH Ashby
-------------------------------------
Title: Senior Management Loan Operations
------------------------------------
S-8
<PAGE> 138
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
BANK ONE, MICHIGAN
By: /s/ GARY C. WILSON
---------------------------------------
Name: Gary C. Wilson
-------------------------------------
Title: First Vice President
------------------------------------
S-9
<PAGE> 139
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
THE CHASE MANHATTAN BANK
By: /s/ WILLIAM DE CAGGIANO
---------------------------------------
Name: William De Caggiano
-------------------------------------
Title: Managing Director
------------------------------------
S-10
<PAGE> 140
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
THE CHASE MANHATTAN BANK OF CANADA
By: /s/ CHRISTINE CHAN
---------------------------------------
Name: Christine Chan
-------------------------------------
Title: Vice President
------------------------------------
By: /s/ CHARLES D. RITCHIE
---------------------------------------
Name: Charles D. Ritchie
-------------------------------------
Title: Vice President
------------------------------------
S-11
<PAGE> 141
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
COMERICA BANK
By: /s/ DAVID SKIREY
---------------------------------------
Name: David Skirey
-------------------------------------
Title: Assistant Vice President
------------------------------------
S-12
<PAGE> 142
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
THE FUJI BANK, LIMITED
By: /s/ TEUI TERAMOTO
---------------------------------------
Name: Teui Teramoto
-------------------------------------
Title: Vice President and Manager
------------------------------------
S-13
<PAGE> 143
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
SYNDICATED LOAN FUNDING TRUST
BY: LEHMAN COMMERCIAL PAPER INC. NOT IN
ITS INDIVIDUAL CAPACITY BUT SOLELY AS
ASSET MANAGER
By: /s/ MICHELE SWANSON
---------------------------------------
Name: Michele Swanson
-------------------------------------
Title: Authorized Signatory
------------------------------------
S-14
<PAGE> 144
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
MELLON BANK, N.A.
By: /s/ MARK F. JOHNSTON
---------------------------------------
Name: Mark F. Johnston
-------------------------------------
Title: Vice President
------------------------------------
S-15
<PAGE> 145
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
MERITA BANK PLC
By: /s/ CLIFFORD ABRAMSKY
---------------------------------------
Name: Clifford Abramsky
-------------------------------------
Title: Vice President
------------------------------------
By: /s/ FRANK MAFFEI
---------------------------------------
Name: Frank Maffei
-------------------------------------
Title: Vice President
------------------------------------
S-16
<PAGE> 146
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
NATIONAL BANK OF CANADA
By: /s/ DONALD P. HADDAD
---------------------------------------
Name: Donald P. Haddad
-------------------------------------
Title: Vice President and Manager
------------------------------------
By: /s/ GERALD B. KNELL
---------------------------------------
Name: Gerald B. Knell
-------------------------------------
Title: Vice President
------------------------------------
S-17
<PAGE> 147
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
PNC BANK, NATIONAL ASSOCIATION
By: /s/ WILLIAM V. ARMITAGE
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Name: William V. Armitage
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Title: Vice President
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S-18
<PAGE> 148
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
THE TORONTO-DOMINION BANK
By: /s/ AZAR S. AZARPOUR
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Name: Azar S. Azarpour
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Title: Manager, Credit Administration
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S-19
<PAGE> 149
Signature pages to Credit Agreement
in favor of WESCO Distribution, Inc.
and WESCO Distribution-Canada, Inc.
TORONTO DOMINION (TEXAS), INC.
By: /s/ AZAR S. AZARPOUR
---------------------------------------
Name: Azar S. Azarpour
-------------------------------------
Title: Vice President
------------------------------------
S-20
<PAGE> 1
Exhibit 10.2
RECEIVABLES PURCHASE AGREEMENT
dated as of June 30, 1999
among
WESCO RECEIVABLES CORP.
WESCO DISTRIBUTION, INC.
MARKET STREET CAPITAL CORP.
and
PNC BANK, NATIONAL ASSOCIATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I. AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchase Facility 1
Section 1.2. Making Purchases 1
Section 1.3. Purchased Interest Computation 3
Section 1.4. Settlement Procedures 3
Section 1.5. Fees 6
Section 1.6. Payments and Computations, Etc 6
Section 1.7. Dividing or Combining Portions of the Capital of the Purchased Interest 7
Section 1.8. Increased Costs 7
Section 1.9. Requirements of Law 8
Section 1.10. Inability to Determine Euro-Rate 8
ARTICLE II. REPRESENTATIONS AND WARRANTIES; COVENANTS;TERMINATION EVENTS
Section 2.1. Representations and Warranties; Covenants 9
Section 2.2. Termination Events 9
ARTICLE III. INDEMNIFICATION
Section 3.1. Indemnities by the Seller 9
Section 3.2. Indemnities by the Servicer 11
ARTICLE IV. ADMINISTRATION AND COLLECTIONS
Section 4.1. Appointment of the Servicer 12
Section 4.2. Duties of the Servicer 12
Section 4.3. Lock-Box Arrangements 13
Section 4.4. Enforcement Rights 14
Section 4.5. Responsibilities of the Seller 15
Section 4.6. Servicing Fee 15
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE V. MISCELLANEOUS
Section 5.1. Amendments, Etc. 15
Section 5.2. Notices, Etc. 16
Section 5.3. Assignability 16
Section 5.4. Costs, Expenses and Taxes 17
Section 5.5. No Proceedings; Limitation on Payments 17
Section 5.6. GOVERNING LAW AND JURISDICTION 18
Section 5.7. Execution in Counterparts 19
Section 5.8. Survival of Termination 19
Section 5.9. WAIVER OF JURY TRIAL 19
Section 5.10. Entire Agreement 19
Section 5.11. Headings 19
Section 5.12. Issuer's Liabilities 19
EXHIBIT I Definitions
EXHIBIT II Conditions of Purchases
EXHIBIT III Representations and Warranties
EXHIBIT IV Covenants
EXHIBIT V Termination Events
SCHEDULE I Credit and Collection Policy
SCHEDULE II Lock-box Banks and Lock-box Accounts
SCHEDULE III Trade Names
ANNEX A Form of Information Package
ANNEX B Form of Purchase Notice
ANNEX C List of Special Obligors
</TABLE>
<PAGE> 4
This RECEIVABLES PURCHASE AGREEMENT (as amended, supplemented or
otherwise modified from time to time, this "Agreement") is entered into as of
June 30, 1999, among WESCO RECEIVABLES CORP., a Delaware corporation, as
seller (the "Seller"), WESCO DISTRIBUTION, INC., a Delaware corporation
("WESCO"), as initial servicer (in such capacity, together with its successors
and permitted assigns in such capacity, the "Servicer"), MARKET STREET CAPITAL
CORP., a Delaware corporation (together with its successors and permitted
assigns, the "Issuer"), and PNC BANK, NATIONAL ASSOCIATION, a national banking
association ("PNC"), as administrator (in such capacity, together with its
successors and assigns in such capacity, the "Administrator").
PRELIMINARY STATEMENTS. Certain terms that are capitalized and used
throughout this Agreement are defined in Exhibit I. References in the Exhibits
hereto to the "Agreement" refer to this Agreement, as amended, supplemented or
otherwise modified from time to time.
The Seller desires to sell, transfer and assign an undivided variable
percentage interest in a pool of receivables, and the Issuer desires to acquire
such undivided variable percentage interest, as such percentage interest shall
be adjusted from time to time based upon, in part, reinvestment payments that
are made by the Issuer.
In consideration of the mutual agreements, provisions and covenants
contained herein, the parties hereto agree as follows:
ARTICLE I.
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchase Facility. (a) On the terms and conditions
hereinafter set forth, the Issuer hereby agrees to purchase, and make
reinvestments of, undivided percentage ownership interests with regard to the
Purchased Interest from the Seller from time to time from the date hereof to the
Facility Termination Date. Under no circumstances shall the Issuer make any such
purchase or reinvestment if, after giving effect to such purchase or
reinvestment, the aggregate outstanding Capital of the Purchased Interest would
exceed the Purchase Limit.
(b) The Seller may, upon at least 30 days' written notice to the
Administrator, terminate the purchase facility provided in this Section in whole
or, upon at least 30 days' written notice to the Administrator, from time to
time, irrevocably reduce in part the unused portion of the Purchase Limit;
provided, that each partial reduction shall be in the amount of at least
$5,000,000, or an integral multiple of $1,000,000 in excess thereof, and that,
unless terminated in whole, the Purchase Limit shall in no event be reduced
below $200,000,000.
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Section 1.2. Making Purchases. (a) Each purchase (but not reinvestment)
of undivided percentage ownership interests with regard to the Purchased
Interest hereunder shall be made upon the Seller's irrevocable written notice in
the form of Annex B delivered to the Administrator in accordance with
Section 5.2 (which notice must be received by the Administrator before 11:00
a.m., New York City time): (i) at least three Business Days before the requested
purchase date, in the case of a purchase to be funded at the Alternate Rate and
based upon the Euro-Rate and (ii) at least one Business Day before the requested
purchase date, in the case of a purchase to be funded at the Alternate Rate and
based upon the Base Rate, which notice shall specify: (A) the amount requested
to be paid to the Seller (such amount, which shall not be less than $1,000,000,
being the Capital relating to the undivided percentage ownership interest then
being purchased), (B) the date of such purchase (which shall be a Business Day),
(C) the desired funding basis for such purchase (which shall be based upon the
Euro-Rate or the Base Rate) and (D) a pro forma calculation of the Purchased
Interest after giving effect to the increase in Capital.
(b) On the date of each purchase (but not reinvestment) of undivided
percentage ownership interests with regard to the Purchased Interest hereunder,
the Issuer shall, upon satisfaction of the applicable conditions set forth in
Exhibit II, make available to the Seller in same day funds, at PNC Bank,
National Association, account number 1006970651, ABA 043000096, an amount equal
to the Capital relating to the undivided percentage ownership interest then
being purchased.
(c) Effective on the date of each purchase pursuant to this Section and
each reinvestment pursuant to Section 1.4, the Seller hereby sells and assigns
to the Issuer an undivided percentage ownership interest in: (i) each Pool
Receivable then existing, (ii) all Related Security with respect to such Pool
Receivables, and (iii) all Collections with respect to, and other proceeds of,
such Pool Receivables and Related Security.
(d) To secure all of the Seller's obligations (monetary or otherwise)
under this Agreement and the other Transaction Documents to which it is a party,
whether now or hereafter existing or arising, due or to become due, direct or
indirect, absolute or contingent, the Seller hereby grants to the Issuer a
security interest in all of the Seller's right, title and interest (including
any undivided interest of the Seller) in, to and under all of the following,
whether now or hereafter owned, existing or arising: (i) all Pool Receivables,
(ii) all Related Security with respect to such Pool Receivables, (iii) all
Collections with respect to such Pool Receivables, (iv) the Lock-Box Accounts
and all amounts on deposit therein, and all certificates and instruments, if
any, from time to time evidencing such Lock-Box Accounts and amounts on deposit
therein, (v) all rights (but none of the obligations) of the Seller under the
Sale Agreement, and (vi) all proceeds of, and all amounts received or receivable
under any or all of, the foregoing (collectively, the "Pool Assets"). The Issuer
shall have, with respect to the Pool Assets, and in addition to all the other
rights and remedies available to the Issuer, all the rights and remedies of a
secured party under any applicable UCC.
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Section 1.3. Purchased Interest Computation. The Purchased Interest
shall be initially computed on the date of the initial purchase hereunder.
Thereafter, until the Facility Termination Date, the Purchased Interest shall be
automatically recomputed (or deemed to be recomputed) on each Business Day other
than a Termination Day. From and after the occurrence of any Termination Day,
the Purchased Interest shall (until the event(s) giving rise to such Termination
Day are satisfied or are waived by the Administrator) be deemed to be 100%. The
Purchased Interest shall become zero when the Capital thereof and Discount
thereon shall have been paid in full, all the amounts owed by the Seller and the
Servicer hereunder to the Issuer, the Administrator and any other Indemnified
Party or Affected Person are paid in full, and the Servicer shall have received
the accrued Servicing Fee thereon.
Section 1.4. Settlement Procedures. (a) The collection of the Pool
Receivables shall be administered by the Servicer in accordance with this
Agreement. The Seller shall provide to the Servicer on a timely basis all
information needed for such administration, including notice of the occurrence
of any Termination Day and current computations of the Purchased Interest.
(b) The Servicer shall, on each day on which Collections of Pool
Receivables are received (or deemed received) by the Seller or the Servicer:
(i) set aside and hold in trust (and shall, at the request of
the Administrator, segregate in a separate account approved by the
Administrator if, at the time of such request, there exists an
Unmatured Termination Event or a Termination Event or if the failure to
so segregate reasonably could be expected to cause a Material Adverse
Effect) for the Issuer, out of the Issuer's Share of such Collections,
first, an amount equal to the Discount accrued through such day for
each Portion of Capital and not previously set aside, second, an amount
equal to the fees set forth in the Fee Letter accrued and unpaid
through such day, and third, to the extent funds are available
therefor, an amount equal to the Issuer's Share of the Servicing Fee
accrued through such day and not previously set aside,
(ii) subject to Section 1.4(f), if such day is not a
Termination Day, remit to the Seller, on behalf of the Issuer, the
remainder of the Issuer's Share of such Collections. Such remainder
shall to the extent representing a return of Capital, be automatically
reinvested in Pool Receivables, and in the Related Security,
Collections and other proceeds with respect thereto; provided, however,
that if the Purchased Interest would exceed 100%, then the Servicer
shall not reinvest, but shall set aside and hold in trust for the
Issuer (and shall, at the request of the Administrator, segregate in a
separate account approved by the Administrator if, at the time of such
request, there exists an Unmatured Termination Event or a Termination
Event or if the failure to so segregate reasonably could be expected to
cause a Material Adverse Effect) a portion of such Collections that,
together with the other Collections set aside pursuant to this
paragraph, shall equal the amount necessary to reduce the Purchased
Interest to 100%,
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<PAGE> 7
(iii) if such day is a Termination Day, set aside, segregate
and hold in trust (and shall, at the request of the Administrator,
segregate in a separate account approved by the Administrator) for the
Issuer the entire remainder of the Issuer's Share of the Collections;
provided, that if amounts are set aside and held in trust on any
Termination Day of the type described in clause (a) of the definition
of "Termination Day" and, thereafter, the conditions set forth in
Section 2 of Exhibit II are satisfied or waived by the Administrator,
such previously set-aside amounts shall be reinvested in accordance
with clause (ii) on the day of such subsequent satisfaction or waiver
of conditions, and
(iv) subject to the Issuer's security interest under Section
1.2(d), release to the Seller (subject to Section 1.4(f)) for its own
account any Collections in excess of: (x) amounts required to be
reinvested in accordance with clause (ii) or the proviso to clause
(iii) plus (y) the amounts that are required to be set aside pursuant
to clause (i), the proviso to clause (ii) and clause (iii) plus (z) the
Seller's Share of the Servicing Fee accrued and unpaid through such day
and all reasonable and appropriate out-of-pocket costs and expenses of
the Servicer for servicing, collecting and administering the Pool
Receivables.
(c) The Servicer shall deposit into the Administration Account (or such
other account designated by the Administrator), on each Settlement Date relating
to a Portion of Capital or the payment of Fees, Collections held for the Issuer
pursuant to clause (b)(i) or (f) plus the amount of Collections then held for
the Issuer pursuant to clauses (b)(ii) and (iii) of Section 1.4; provided, that
if WESCO or an Affiliate thereof is the Servicer, such day is not a Termination
Day and the Administrator has not notified WESCO (or such Affiliate) that such
right is revoked, WESCO (or such Affiliate) may retain the portion of the
Collections set aside pursuant to clause (b)(i) that represents the Issuer's
Share of the Servicing Fee. On each Settlement Date, the Administrator will
notify the Servicer by facsimile of the amount of Discount accrued with respect
to each Portion of Capital during the Yield Period or portion thereof then
ending.
(d) Upon receipt of funds deposited into the Administration Account
pursuant to clause (c), the Administrator shall cause such funds to be
distributed as follows:
(i) if such distribution occurs on a day that is not a
Termination Day and the Purchased Interest does not exceed 100%, first
to the Issuer in payment in full of all accrued Discount and fees
(other than Servicing Fees) with respect to each Portion of Capital,
and second, if the Servicer has set aside amounts in respect of the
Servicing Fee pursuant to clause (b)(i) and has not retained such
amounts pursuant to clause (c), to the Servicer (payable in arrears on
each Monthly Settlement Date) in payment in full of the Issuer's Share
of accrued Servicing Fees so set aside, and
(ii) if such distribution occurs on a Termination Day or on a
day when the Purchased Interest exceeds 100%, first to the Issuer in
payment in full of all accrued Discount with respect to each Portion of
Capital, second to the Issuer in payment in full of Capital (or, if
such day is not a Termination Day, the amount
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<PAGE> 8
necessary to reduce the Purchased Interest to 100%), third, if WESCO or
an Affiliate thereof is not the Servicer, to the Servicer in payment in
full of all accrued Servicing Fees, fourth, if the Capital and accrued
Discount with respect to each Portion of Capital have been reduced to
zero, and all accrued Servicing Fees payable to the Servicer (if other
than WESCO or an Affiliate thereof) have been paid in full, to the
Issuer, the Administrator and any other Indemnified Party or Affected
Person in payment in full of any other amounts owed thereto by the
Seller hereunder and, fifth, unless such amount has been retained by
the Servicer pursuant to clause (c), then to the Servicer (if the
Servicer is WESCO or an Affiliate thereof) in payment in full of the
Issuer's Share of all accrued Servicing Fees.
After the Capital, Discount, fees payable pursuant to the Fee Letter and
Servicing Fees with respect to the Purchased Interest, and any other amounts
payable by the Seller and the Servicer to the Issuer, the Administrator or any
other Indemnified Party or Affected Person hereunder, have been paid in full,
all additional Collections with respect to the Purchased Interest shall be paid
to the Seller for its own account.
(e) For the purposes of this Section 1.4:
(i) if on any day the Outstanding Balance of any Pool
Receivable is reduced or adjusted as a result of any defective,
rejected, returned, repossessed or foreclosed goods or services, or any
revision, cancellation, allowance, discount or other adjustment made by
the Seller or any Affiliate of the Seller, or any setoff or dispute
between the Seller or any Affiliate of the Seller and an Obligor, the
Seller shall be deemed to have received on such day a Collection of
such Pool Receivable in the amount of such reduction or adjustment;
(ii) if on any day any of the representations or warranties in
Section 1(g) or (n) of Exhibit III is not true with respect to any Pool
Receivable, the Seller shall be deemed to have received on such day a
Collection of such Pool Receivable in full;
(iii) except as provided in clause (i) or (ii), or as
otherwise required by applicable law or the relevant Contract, all
Collections received from an Obligor of any Receivable shall be applied
to the Receivables of such Obligor in the order of the age of such
Receivables, starting with the oldest such Receivable, unless such
Obligor designates in writing its payment for application to specific
Receivables; and
(iv) if and to the extent the Administrator or the Issuer
shall be required for any reason to pay over to an Obligor (or any
trustee, receiver, custodian or similar official in any Insolvency
Proceeding) any amount received by it hereunder, such amount shall be
deemed not to have been so received by the Administrator or the Issuer
but rather to have been retained by the Seller and, accordingly, the
Administrator or the Issuer, as the case may be, shall have a claim
against the
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Seller for such amount, payable when and to the extent that any
distribution from or on behalf of such Obligor is made in respect
thereof.
(f) If at any time the Seller shall wish to cause the reduction of
Capital (but not to commence the liquidation, or reduction to zero, of the
entire Capital of the Purchased Interest), the Seller may do so as follows:
(i) the Seller shall give the Administrator and the Servicer
(A) at least two Business Days' prior written notice thereof for any
reduction of Capital less than or equal to $10,000,000 and (B) at least
ten Business Days' prior written notice thereof for any reduction of
Capital greater than $10,000,000 (in each case such notice shall
include the amount of such proposed reduction and the proposed date on
which such reduction will commence);
(ii) on the proposed date of commencement of such reduction
and on each day thereafter, the Servicer shall cause Collections not to
be reinvested until the amount thereof not so reinvested shall equal
the desired amount of reduction; and
(iii) the Servicer shall hold such Collections in trust for
the Issuer, for payment to the Administrator on the next Settlement
Date immediately following the current Yield Period, and Capital shall
be deemed reduced in the amount to be paid to the Administrator only
when in fact finally so paid;
provided, that:
(A) the amount of any such reduction shall be not less than
$1,000,000 and shall be an integral multiple of $500,000, and the
entire Capital of the Purchased Interest after giving effect to such
reduction shall be not less than $200,000,000 and shall be in an
integral multiple of $1,000,000 (unless Capital shall have been reduced
to zero); and
(B) the Seller shall choose a reduction amount, and the date
of commencement thereof, so that to the extent practicable such
reduction shall commence and conclude in the same Yield Period.
Section 1.5. Fees. The Seller shall pay to the Administrator certain
fees in the amounts and on the dates set forth in a letter, dated the date
hereof, among WESCO, the Seller and the Administrator (as such letter agreement
may be amended, supplemented or otherwise modified from time to time, the "Fee
Letter").
Section 1.6. Payments and Computations, Etc. (a) All amounts to be paid
or deposited by the Seller or the Servicer hereunder shall be made without
reduction for offset or counterclaim and shall be paid or deposited no later
than 2:00 p.m. (New York City time) on the day when due in same day funds to the
Administration Account. All amounts received after 2:00 p.m. (New York City
time) will be deemed to have been received on the next Business Day.
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(b) The Seller or the Servicer, as the case may be, shall, to the
extent permitted by law, pay interest on any amount not paid or deposited by the
Seller or the Servicer, as the case may be, when due hereunder, at an interest
rate equal to 2.0% per annum above the Base Rate, payable on demand.
(c) All computations of interest under clause (b) and all computations
of Discount, fees and other amounts hereunder shall be made on the basis of a
year of 360 (or 365 or 366, as applicable, with respect to Discount or other
amounts calculated by reference to the Base Rate) days for the actual number of
days elapsed. Whenever any payment or deposit to be made hereunder shall be due
on a day other than a Business Day, such payment or deposit shall be made on the
next Business Day and such extension of time shall be included in the
computation of such payment or deposit.
Section 1.7. Dividing or Combining Portions of the Capital of the
Purchased Interest. The Seller may, on the last day of any Yield Period,
pursuant to written notice delivered to the Administrator in accordance with
Section 5.2: (a) at least three Business Days before such last day in the case
of a Portion of Capital to be funded based upon the Euro-Rate and (b) at least
two Business Days before such last day in all other cases, either: (i) divide
the Capital of the Purchased Interest into two or more portions (each a "Portion
of Capital"), which Portions of Capital may accrue Discount by reference to
different rates, equal, in aggregate, to the Capital of the Purchased Interest;
provided, that after giving effect to such division the amount of each such
Portion of Capital shall be not less than $1,000,000 and shall be an integral
multiple of $250,000, or (ii) combine any two or more Portions of Capital
outstanding on such last day and having Yield Periods ending on such last day
into a single Portion of Capital equal to the aggregate of the Capital of such
Portions of Capital. Notwithstanding anything in this paragraph to the contrary,
there shall not be more than five Portions of Capital outstanding at any one
time.
Section 1.8. Increased Costs. (a) If the Administrator, the Issuer, any
Purchaser, any other Program Support Provider or any of their respective
Affiliates (each an "Affected Person") reasonably determines that the existence
of or compliance with: (i) any law or regulation or any change therein or in the
interpretation or application thereof, in each case adopted, issued or occurring
after the date hereof, or (ii) any request, guideline or directive from any
central bank or other Governmental Authority (whether or not having the force of
law) issued or occurring after the date of this Agreement, affects or would
affect the amount of capital required or expected to be maintained by such
Affected Person, and such Affected Person determines that the amount of such
capital is increased by or based upon the existence of any commitment to make
purchases of (or otherwise to maintain the investment in) Pool Receivables
related to this Agreement or any related liquidity facility, credit enhancement
facility and other commitments of the same type, then, upon demand by such
Affected Person (with a copy to the Administrator), the Seller shall promptly
pay to the Administrator, for the account of such Affected Person, from time to
time as specified by such Affected Person, additional amounts sufficient to
compensate such Affected Person in the light of such circumstances, to the
extent that such Affected Person reasonably determines such
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increase in capital to be allocable to the existence of any of such commitments.
A certificate as to such amounts submitted to the Seller and the Administrator
by such Affected Person shall be conclusive and binding for all purposes, absent
manifest error.
(b) If, due to either: (i) the introduction of or any change in or in
the interpretation of any law or regulation or (ii) compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to any Affected Person of agreeing to purchase or purchasing, or
maintaining the ownership of, the Purchased Interest in respect of which
Discount is computed by reference to the Euro-Rate, then, upon demand by such
Affected Person, the Seller shall promptly pay to such Affected Person, from
time to time as specified by such Affected Person, additional amounts sufficient
to compensate such Affected Person for such increased costs. A certificate as to
such amounts submitted to the Seller and the Administrator by such Affected
Person shall be conclusive and binding for all purposes, absent manifest error.
(c) If such increased costs affect the related Affected Person's
portfolio of financing transactions, such Affected Person shall use reasonable
averaging and attribution methods to allocate such increased costs to the
transactions contemplated by this Agreement.
Section 1.9. Requirements of Law. If any Affected Person reasonably
determines that the existence of or compliance with: (a) any law or regulation
or any change therein or in the interpretation or application thereof, in each
case adopted, issued or occurring after the date hereof, or (b) any request,
guideline or directive from any central bank or other Governmental Authority
(whether or not having the force of law) issued or occurring after the date of
this Agreement:
(i) does or shall subject such Affected Person to any tax of
any kind whatsoever with respect to this Agreement, any increase in the
Purchased Interest or in the amount of Capital relating thereto, or
does or shall change the basis of taxation of payments to such Affected
Person on account of Collections, Discount or any other amounts payable
hereunder (excluding taxes imposed on the overall pre-tax net income of
such Affected Person, and franchise taxes imposed on such Affected
Person, by the jurisdiction under the laws of which such Affected
Person is organized or a political subdivision thereof),
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, purchases, advances or loans by, or other credit extended
by, or any other acquisition of funds by, any office of such Affected
Person that are not otherwise included in the determination of the
Euro-Rate or the Base Rate hereunder, or
(iii) does or shall impose on such Affected Person any other
condition,
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and the result of any of the foregoing is: (A) to increase the cost to such
Affected Person of acting as Administrator, or of agreeing to purchase or
purchasing or maintaining the ownership of undivided percentage ownership
interests with regard to the Purchased Interest (or interests therein) or any
Portion of Capital, or (B) to reduce any amount receivable hereunder (whether
directly or indirectly), then, in any such case, upon demand by such Affected
Person, the Seller shall promptly pay to such Affected Person additional amounts
necessary to compensate such Affected Person for such additional cost or reduced
amount receivable. All such amounts shall be payable as incurred. A certificate
from such Affected Person to the Seller and the Administrator certifying, in
reasonably specific detail, the basis for, calculation of, and amount of such
additional costs or reduced amount receivable shall be conclusive and binding
for all purposes, absent manifest error; provided, however, that no Affected
Person shall be required to disclose any confidential or tax planning
information in any such certificate.
Section 1.10. Inability to Determine Euro-Rate. (a) If the
Administrator determines before the first day of any Yield Period (which
determination shall be final and conclusive) that, by reason of circumstances
affecting the interbank eurodollar market generally, deposits in dollars (in the
relevant amounts for such Yield Period) are not being offered to banks in the
interbank eurodollar market for such Yield Period, or adequate means do not
exist for ascertaining the Euro-Rate for such Yield Period, then the
Administrator shall give notice thereof to the Seller. Thereafter, until the
Administrator notifies the Seller that the circumstances giving rise to such
suspension no longer exist, (a) no Portion of Capital shall be funded at the
Yield Rate determined by reference to the Euro-Rate and (b) the Discount for any
outstanding Portions of Capital then funded at the Yield Rate determined by
reference to the Euro-Rate shall, on the last day of the then current Yield
Period, be converted to the Yield Rate determined by reference to the Base Rate.
(b) If, on or before the first day of any Yield Period, the
Administrator shall have been notified by any Purchaser that, such Purchaser has
determined (which determination shall be final and conclusive) that, any
enactment, promulgation or adoption of or any change in any applicable law, rule
or regulation, or any change in the interpretation or administration thereof by
a governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Purchaser with
any guideline, request or directive (whether or not having the force of law) of
any such authority, central bank or comparable agency shall make it unlawful or
impossible for such Purchaser to fund or maintain any Portion of Capital at the
Yield Rate and based upon the Euro-Rate, the Administrator shall notify the
Seller thereof. Upon receipt of such notice, until the Administrator notifies
the Seller that the circumstances giving rise to such determination no longer
apply, (a) no Portion of Capital shall be funded at the Yield Rate determined by
reference to the Euro-Rate and (b) the Discount for any outstanding Portions of
Capital then funded at the Yield Rate determined by reference to the Euro-Rate
shall be converted to the Yield Rate determined by reference to the Base Rate
either (i) on the last day of the then current Yield Period if such Purchaser
may lawfully continue to maintain such Portion of Capital at the Yield Rate
determined by reference to the Euro-Rate to such day, or (ii) immediately, if
such
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Purchaser may not lawfully continue to maintain such Portion of Capital at the
Yield Rate determined by reference to the Euro-Rate to such day.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
Section 2.1. Representations and Warranties; Covenants. Each of the
Seller, WESCO and the Servicer hereby makes the representations and warranties,
and hereby agrees to perform and observe the covenants, applicable to it set
forth in Exhibits III and IV, respectively.
Section 2.2. Termination Events. If any of the Termination Events set
forth in Exhibit V shall occur, the Administrator may, by notice to the Seller,
declare the Facility Termination Date to have occurred (in which case the
Facility Termination Date shall be deemed to have occurred); provided, that
automatically upon the occurrence of any event (without any requirement for the
passage of time or the giving of notice) described in paragraph (f) of Exhibit
V, the Facility Termination Date shall occur. Upon any such declaration,
occurrence or deemed occurrence of the Facility Termination Date, the Issuer and
the Administrator shall have, in addition to the rights and remedies that they
may have under this Agreement, all other rights and remedies provided after
default under the New York UCC and under other applicable law, which rights and
remedies shall be cumulative.
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ARTICLE III.
INDEMNIFICATION
Section 3.1. Indemnities by the Seller. Without limiting any other
rights that the Administrator, the Issuer, any Program Support Provider or any
of their respective Affiliates, employees, officers, directors, agents, counsel,
successors, transferees or assigns (each, an "Indemnified Party") may have
hereunder or under applicable law, the Seller hereby agrees to indemnify each
Indemnified Party from and against any and all claims, damages, expenses, costs,
losses and liabilities (including Attorney Costs) (all of the foregoing being
collectively referred to as "Indemnified Amounts") arising out of or resulting
from this Agreement (whether directly or indirectly), the use of proceeds of
purchases or reinvestments, the ownership of the Purchased Interest, or any
interest therein, or in respect of any Receivable, Related Security or Contract,
excluding, however: (a) Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of such Indemnified Party or its
officers, directors, agents or counsel, (b) recourse (except as otherwise
specifically provided in this Agreement) for Receivables, or (c) any overall net
income taxes or franchise taxes imposed on such Indemnified Party by the
jurisdiction under the laws of which such Indemnified Party is organized or any
political subdivision thereof. Without limiting or being limited by the
foregoing, and subject to the exclusions set forth in the preceding sentence,
the Seller shall pay on demand (which demand shall be accompanied by
documentation of the Indemnified Amounts, in reasonable detail) to each
Indemnified Party any and all amounts necessary to indemnify such Indemnified
Party from and against any and all Indemnified Amounts relating to or resulting
from any of the following:
(i) the failure of any Receivable included in the calculation
of the Net Receivables Pool Balance as an Eligible Receivable to be an
Eligible Receivable, the failure of any information contained in an
Information Package to be true and correct, or the failure of any other
information provided to the Issuer or the Administrator with respect to
Receivables or this Agreement to be true and correct,
(ii) the failure of any representation, warranty or statement
made or deemed made by the Seller (or any of its officers) under or in
connection with this Agreement to have been true and correct as of the
date made or deemed made in all respects when made,
(iii) the failure by the Seller to comply with any applicable
law, rule or regulation with respect to any Pool Receivable or the
related Contract, or the failure of any Pool Receivable or the related
Contract to conform to any such applicable law, rule or regulation,
(iv) the failure to vest in the Issuer a valid and
enforceable: (A) perfected undivided percentage ownership interest, to
the extent of the Purchased Interest, in the Receivables in, or
purporting to be in, the Receivables Pool and the other Pool Assets, or
(B) first priority perfected security interest in the Pool Assets, in
each case, free and clear of any Adverse Claim,
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(v) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivables in, or purporting to be in, the Receivables
Pool and the other Pool Assets, whether at the time of any purchase or
reinvestment or at any subsequent time,
(vi) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment
of any Receivable in, or purporting to be in, the Receivables Pool
(including a defense based on such Receivable or the related Contract
not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any other
claim resulting from the sale of the goods or services related to such
Receivable or the furnishing or failure to furnish such goods or
services or relating to collection activities with respect to such
Receivable,
(vii) any failure of the Seller, any Affiliates of the Seller
or the Servicer) to perform its duties or obligations in accordance
with the provisions hereof or under the Contracts,
(viii) any products liability or other claim, investigation,
litigation or proceeding arising out of or in connection with
merchandise, insurance or services that are the subject of any
Contract,
(ix) the commingling of Collections at any time with other
funds,
(x) the use of proceeds of purchases or reinvestments, or
(xi) any reduction in Capital as a result of the distribution
of Collections pursuant to Section 1.4(d), if all or a portion of such
distributions shall thereafter be rescinded or otherwise must be
returned for any reason.
Section 3.2. Indemnities by the Servicer. Without limiting any other
rights that the Administrator, the Issuer or any other Indemnified Party may
have hereunder or under applicable law, the Servicer hereby agrees to indemnify
each Indemnified Party from and against any and all Indemnified Amounts arising
out of or resulting from (whether directly or indirectly): (a) the failure of
any information contained in an Information Package to be true and correct, or
the failure of any other information provided to the Issuer or the Administrator
by, or on behalf of, the Servicer to be true and correct, (b) the failure of any
representation, warranty or statement made or deemed made by the Servicer (or
any of its officers) under or in connection with this Agreement to have been
true and correct as of the date made or deemed made in all respects when made,
(c) the failure by the Servicer to comply with any applicable law, rule or
regulation with respect to any Pool Receivable or the related Contract, (d) any
dispute, claim, offset or defense of the Obligor to the payment of any
Receivable in, or purporting to be in, the Receivables Pool resulting from or
related to the collection activities with respect to such Receivable,
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or (e) any failure of the Servicer to perform its duties or obligations in
accordance with the provisions hereof.
ARTICLE IV.
ADMINISTRATION AND COLLECTIONS
Section 4.1. Appointment of the Servicer. (a) The servicing,
administering and collection of the Pool Receivables shall be conducted by the
Person so designated from time to time as the Servicer in accordance with this
Section. Until the Administrator gives notice to WESCO (in accordance with this
Section) of the designation of a new Servicer, WESCO is hereby designated as,
and hereby agrees to perform the duties and obligations of, the Servicer
pursuant to the terms hereof. Upon the occurrence of a Termination Event, the
Administrator may designate as Servicer any Person (including itself) to succeed
WESCO or any successor Servicer, on the condition in each case that any such
Person so designated shall agree to perform the duties and obligations of the
Servicer pursuant to the terms hereof.
(b) Upon the designation of a successor Servicer as set forth in clause
(a), WESCO agrees that it will terminate its activities as Servicer hereunder in
a manner that the Administrator determines will facilitate the transition of the
performance of such activities to the new Servicer, and WESCO shall cooperate
with and assist such new Servicer. Such cooperation shall include access to and
transfer of related records and use by the new Servicer of all licenses,
hardware or software necessary or desirable to collect the Pool Receivables and
the Related Security.
(c) WESCO acknowledges that, in making their decision to execute and
deliver this Agreement, the Administrator and the Issuer have relied on WESCO's
agreement to act as Servicer hereunder. Accordingly, WESCO agrees that it will
not voluntarily resign as Servicer.
(d) The Servicer may delegate its duties and obligations hereunder to
any subservicer (each a "Sub-Servicer"); provided, that, in each such
delegation: (i) such Sub-Servicer shall agree in writing to perform the duties
and obligations of the Servicer pursuant to the terms hereof, (ii) the Servicer
shall remain primarily liable for the performance of the duties and obligations
so delegated, (iii) the Seller, the Administrator and the Issuer shall have the
right to look solely to the Servicer for performance, and (iv) the terms of any
agreement with any Sub-Servicer shall provide that the Administrator may
terminate such agreement upon the termination of the Servicer hereunder by
giving notice of its desire to terminate such agreement to the Servicer (and the
Servicer shall provide appropriate notice to each such Sub-Servicer); provided,
however, that if any such delegation is to any Person other than an Originator
or an Affiliate thereof, the Administrator shall have consented in writing in
advance to such delegation.
Section 4.2. Duties of the Servicer. (a) The Servicer shall take or
cause to be taken all such action as may be necessary or advisable to administer
and collect each Pool
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Receivable from time to time, all in accordance with this Agreement and all
applicable laws, rules and regulations, with reasonable care and diligence, and
in accordance with the Credit and Collection Policies. The Servicer shall set
aside, for the accounts of the Seller and the Issuer, the amount of the
Collections to which each is entitled in accordance with Article I. The Servicer
may, in accordance with the applicable Credit and Collection Policy, extend the
maturity of any Pool Receivable (but not beyond 30 days) and extend the maturity
or adjust the Outstanding Balance of any Defaulted Receivable as the Servicer
may determine to be appropriate to maximize Collections thereof; provided,
however, that: (i) such extension or adjustment shall not alter the status of
such Pool Receivable as a Delinquent Receivable or a Defaulted Receivable or
limit the rights of the Issuer or the Administrator under this Agreement and
(ii) if a Termination Event has occurred and WESCO or an Affiliate thereof is
serving as the Servicer, WESCO or such Affiliate may make such extension or
adjustment only upon the prior approval of the Administrator. The Seller shall
deliver to the Servicer and the Servicer shall hold for the benefit of the
Seller and the Administrator (individually and for the benefit of the Issuer),
in accordance with their respective interests, all records and documents
(including computer tapes or disks) with respect to each Pool Receivable.
Notwithstanding anything to the contrary contained herein, the Administrator may
direct the Servicer (whether the Servicer is WESCO or any other Person) to
commence or settle any legal action to enforce collection of any Pool Receivable
or to foreclose upon or repossess any Related Security; provided, however, that
no such direction may be given unless either: (A) a Termination Event has
occurred or (B) the Administrator believes in good faith that failure to
commence, settle or effect such legal action, foreclosure or repossession could
adversely affect Receivables constituting a material portion of the Pool
Receivables.
(b) The Servicer shall, as soon as practicable following actual receipt
of collected funds, turn over to the Seller the collections of any indebtedness
that is not a Pool Receivable, less, if WESCO or an Affiliate thereof is not the
Servicer, all reasonable and appropriate out-of-pocket costs and expenses of
such Servicer of servicing, collecting and administering such collections. The
Servicer, if other than WESCO or an Affiliate thereof, shall, as soon as
practicable upon demand, deliver to the Seller all records in its possession
that evidence or relate to any indebtedness that is not a Pool Receivable, and
copies of records in its possession that evidence or relate to any indebtedness
that is not a Pool Receivable.
(c) The Servicer's obligations hereunder shall terminate on the later
of: (i) the Facility Termination Date and (ii) the date on which all amounts
required to be paid to the Issuer, the Administrator and any other Indemnified
Party or Affected Person hereunder shall have been paid in full.
After such termination, if WESCO or an Affiliate thereof was not the
Servicer on the date of such termination, the Servicer shall promptly deliver to
the Seller all books, records and related materials that the Seller previously
provided to the Servicer, or that have been obtained by the Servicer, in
connection with this Agreement.
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Section 4.3. Lock-Box Arrangements. Within 30 days of the initial
purchase hereunder (or, in the case of any Lock-Box Accounts maintained at Bank
of America National Trust & Savings Association and PNC Bank, National
Association, prior to the initial purchase hereunder), the Seller shall enter
into Lock-Box Agreements with all of the Lock-Box Banks and deliver original
counterparts thereof to the Administrator. Upon the occurrence of a Termination
Event, the Administrator may at any time thereafter give notice to each Lock-Box
Bank that the Administrator is exercising its rights under the Lock-Box
Agreements to do any or all of the following: (a) to have the exclusive
ownership and control of the Lock-Box Accounts transferred to the Administrator
and to exercise exclusive dominion and control over the funds deposited therein,
(b) to have the proceeds that are sent to the respective Lock-Box Accounts
redirected pursuant to the Administrator's instructions rather than deposited in
the applicable Lock-Box Account, and (c) to take any or all other actions
permitted under the applicable Lock-Box Agreement. The Seller hereby agrees that
if the Administrator at any time takes any action set forth in the preceding
sentence, the Administrator shall have exclusive control of the proceeds
(including Collections) of all Pool Receivables and the Seller hereby further
agrees to take any other action that the Administrator may reasonably request to
transfer such control. Any proceeds of Pool Receivables received by the Seller
or the Servicer thereafter shall be sent immediately to the Administrator. The
parties hereto hereby acknowledge that if at any time the Administrator takes
control of any Lock-Box Account, the Administrator shall not have any rights to
the funds therein in excess of the unpaid amounts due to the Administrator, the
Issuer or any other Person hereunder, and the Administrator shall distribute or
cause to be distributed such funds in accordance with Section 4.2(b) and Article
I (in each case as if such funds were held by the Servicer thereunder).
Section 4.4. Enforcement Rights. (a) At any time following the
occurrence of a Termination Event:
(i) the Administrator may direct the Obligors that payment of
all amounts payable under any Pool Receivable is to be made directly to
the Administrator or its designee,
(ii) the Administrator may instruct the Seller or the Servicer
to give notice of the Issuer's interest in Pool Receivables to each
Obligor, which notice shall direct that payments be made directly to
the Administrator or its designee, and the Seller or the Servicer, as
the case may be, shall give such notice at the expense of the Seller or
the Servicer, as the case may be; provided, that if the Seller or the
Servicer, as the case may be, fails to so notify each Obligor, the
Administrator (at the Seller's or the Servicer's, as the case may be,
expense) may so notify the Obligors, and
(iii) the Administrator may request the Servicer to, and upon
such request the Servicer shall: (A) assemble all of the records
necessary or desirable to collect the Pool Receivables and the Related
Security, and transfer or license to a successor Servicer the use of
all software necessary or desirable to collect the Pool
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Receivables and the Related Security, and make the same available to
the Administrator or its designee at a place selected by the
Administrator, and (B) segregate all cash, checks and other instruments
received by it from time to time constituting Collections in a manner
acceptable to the Administrator and, promptly upon receipt, remit all
such cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to the Administrator or its designee.
(b) The Seller hereby authorizes the Administrator, and irrevocably
appoints the Administrator as its attorney-in-fact with full power of
substitution and with full authority in the place and stead of the Seller, which
appointment is coupled with an interest, to take any and all steps in the name
of the Seller and on behalf of the Seller necessary or desirable, in the
determination of the Administrator, after the occurrence of a Termination Event,
to collect any and all amounts or portions thereof due under any and all Pool
Assets, including endorsing the name of the Seller on checks and other
instruments representing Collections and enforcing such Pool Assets.
Notwithstanding anything to the contrary contained in this subsection, none of
the powers conferred upon such attorney-in-fact pursuant to the preceding
sentence shall subject such attorney-in-fact to any liability if any action
taken by it shall prove to be inadequate or invalid, nor shall they confer any
obligations upon such attorney-in-fact in any manner whatsoever.
Section 4.5. Responsibilities of the Seller. (a) Anything herein to the
contrary notwithstanding, the Seller shall: (i) perform all of its obligations,
if any, under the Contracts related to the Pool Receivables to the same extent
as if interests in such Pool Receivables had not been transferred hereunder, and
the exercise by the Administrator or the Issuer of their respective rights
hereunder shall not relieve the Seller from such obligations, and (ii) pay when
due any taxes, including any sales taxes payable in connection with the Pool
Receivables and their creation and satisfaction. The Administrator and the
Issuer shall not have any obligation or liability with respect to any Pool
Asset, nor shall either of them be obligated to perform any of the obligations
of the Seller, Servicer, WESCO or the Originators thereunder.
(b) WESCO hereby irrevocably agrees that if at any time it shall cease
to be the Servicer hereunder, it shall act (if the then-current Servicer so
requests) as the data-processing agent of the Servicer and, in such capacity,
WESCO shall conduct the data-processing functions of the administration of the
Receivables and the Collections thereon in substantially the same way that WESCO
conducted such data-processing functions while it acted as the Servicer.
Section 4.6. Servicing Fee. (a) Subject to clause (b), the Servicer
shall be paid a fee (the "Servicing Fee") equal to 0.50% per annum of the daily
average aggregate Outstanding Balance of the Pool Receivables. The Issuer's
Share of such fee shall be paid through the distributions contemplated by
Section 1.4(d), and the Seller's Share of such fee shall be paid by the Seller.
(b) If the Servicer ceases to be WESCO or an Affiliate thereof, the
servicing fee shall be the greater of: (i) the amount calculated pursuant to
clause (a), and (ii) an
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alternative amount specified by the successor Servicer not to exceed 100% of the
aggregate reasonable costs and expenses incurred by such successor Servicer in
connection with the performance of its obligations as Servicer.
ARTICLE V.
MISCELLANEOUS
Section 5.1. Amendments, Etc. No amendment or waiver of any provision
of this Agreement or any other Transaction Document, or consent to any departure
by the Seller or the Servicer therefrom, shall be effective unless in a writing
signed by the Administrator, and, in the case of any amendment, by the other
parties thereto; and then such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No
failure on the part of the Issuer or the Administrator to exercise, and no delay
in exercising any right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right.
Section 5.2. Notices, Etc. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (which shall
include facsimile communication) and be sent or delivered to each party hereto
at its address set forth under its name on the signature pages hereof or at such
other address as shall be designated by such party in a written notice to the
other parties hereto. Notices and communications by facsimile shall be effective
when sent (and shall be followed by hard copy sent by first class mail), and
notices and communications sent by other means shall be effective when received.
Section 5.3. Assignability. (a) This Agreement and the Issuer's rights
and obligations herein (including ownership of the Purchased Interest or an
interest therein) shall be assignable, in whole or in part, by the Issuer and
its successors and assigns with the prior written consent of the Seller;
provided, however, that such consent shall not be unreasonably withheld; and
provided further, that no such consent shall be required if the assignment is
made to PNC, any Affiliate of PNC (other than a director or officer of PNC), any
Purchaser or other Program Support Provider or any Person that is administered
by PNC or any Affiliate of PNC. Each assignor may, in connection with the
assignment, disclose to the applicable assignee any information relating to the
Servicer, the Seller or the Pool Receivables furnished to such assignor by or on
behalf of the Servicer, the Seller, the Issuer or the Administrator.
(b) The Issuer may at any time grant to one or more banks or other
institutions (each a "Purchaser") party to the Liquidity Agreement, or to any
other Program Support Provider, participating interests in the Purchased
Interest. In the event of any such grant by the Issuer of a participating
interest to a Purchaser or other Program Support Provider, the Issuer shall
remain responsible for the performance of its obligations hereunder. The
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Seller agrees that each Purchaser or other Program Support Provider shall be
entitled to the benefits of Sections 1.8 and 1.9.
(c) This Agreement and the rights and obligations of the Administrator
hereunder shall be assignable, in whole or in part, by the Administrator and its
successors and assigns; provided, that unless: (i) such assignment is to an
Affiliate of PNC, (ii) it becomes unlawful for PNC to serve as the Administrator
or (iii) a Termination Event exists, the Seller has consented to such
assignment, which consent shall not be unreasonably withheld.
(d) Except as provided in Section 4.1(d), none of the Seller, WESCO or
the Servicer may assign its rights or delegate its obligations hereunder or any
interest herein without the prior written consent of the Administrator.
(e) Without limiting any other rights that may be available under
applicable law, the rights of the Issuer may be enforced through it or by its
agents.
Section 5.4. Costs, Expenses and Taxes. (a) In addition to the rights
of indemnification granted under Section 3.1, the Seller agrees to pay on demand
(subject to any limits previously agreed upon in writing by the Administrator)
(which demand shall be accompanied by documentation thereof in reasonable
detail) all reasonable costs and expenses in connection with the preparation,
execution, delivery and administration (including periodic internal audits by
the Administrator of Pool Receivables) of this Agreement, the other Transaction
Documents and the other documents and agreements to be delivered hereunder (and
all reasonable costs and expenses in connection with any amendment, waiver or
modification of any thereof), including: (i) Attorney Costs for the
Administrator, the Issuer and their respective Affiliates and agents with
respect thereto and with respect to advising the Administrator, the Issuer and
their respective Affiliates and agents as to their rights and remedies under
this Agreement and the other Transaction Documents, and (ii) all reasonable
costs and expenses (including Attorney Costs), if any, of the Administrator, the
Issuer and their respective Affiliates and agents in connection with the
enforcement of this Agreement and the other Transaction Documents.
(b) In addition, the Seller shall pay on demand any and all stamp and
other taxes and fees payable in connection with the execution, delivery, filing
and recording of this Agreement or the other documents or agreements to be
delivered hereunder, and agrees to save each Indemnified Party harmless from and
against any liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.
Section 5.5. No Proceedings; Limitation on Payments. Each of the
Seller, WESCO, the Servicer, the Administrator, each assignee of the Purchased
Interest or any interest therein, and each Person that enters into a commitment
to purchase the Purchased Interest or interests therein, hereby covenants and
agrees that it will not institute against, or join any other Person in
instituting against, the Issuer any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other proceeding under any federal or
state bankruptcy or similar law, for one year and one day after the latest of
the Facility Termination Date, the date on which no Capital of or Discount in
respect of the
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Purchased Interest shall be outstanding or the date all other amounts owed by
the Seller under the Agreement to the Issuer, the Administrator and any other
Indemnified Party or Affected Person shall be paid in full. The provision of
this Section 5.5 shall survive any termination of this Agreement.
Section 5.6. GOVERNING LAW AND JURISDICTION. (a) THIS AGREEMENT SHALL
BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF A SECURITY INTEREST OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR
THE SOUTHERN DISTRICT OF NEW YORK; AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH OF THE PARTIES HERETO WAIVES
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH SERVICE MAY
BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
Section 5.7. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which, when so executed, shall be deemed
to be an original, and all of which, when taken together, shall constitute one
and the same agreement.
Section 5.8. Survival of Termination. The provisions of Sections 1.8,
1.9, 3.1, 3.2, 5.4, 5.5, 5.6, 5.9 and 5.12 shall survive any termination of this
Agreement.
Section 5.9. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR
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OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES THAT ITS RESPECTIVE RIGHT
TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING THAT SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT.
Section 5.10. Entire Agreement. This Agreement and the other
Transaction Documents embody the entire agreement and understanding between the
parties hereto, and supersede all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
Section 5.11. Headings. The captions and headings of this Agreement and
any Exhibit, Schedule or Annex hereto are for convenience of reference only and
shall not affect the interpretation hereof or thereof.
Section 5.12. Issuer's Liabilities. The obligations of the Issuer under
the Transaction Documents are solely the corporate obligations of the Issuer. No
recourse shall be had for any obligation or claim arising out of or based upon
any Transaction Document against any stockholder, employee, officer, director or
incorporator of the Issuer; provided, however, that this Section shall not
relieve any such Person of any liability it might otherwise have for its own
gross negligence or willful misconduct.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
WESCO RECEIVABLES CORP.
By: /s/ ROBERT M. NAPOLITAN
-----------------------
Name: Robert M. Napolitan
Title: Assistant Treasurer and
Assistant Secretary
Address:
Commerce Court, Suite 700
Four Station Square
Pittsburgh, Pennsylvania 15219
Attention: Secretary and General Counsel
Telephone: (412) 454-2254
Facsimile: (412) 454-2515
WESCO DISTRIBUTION, INC.,
as Servicer
By: /s/ STEVE A. BURLESON
---------------------
Name: Steve A. Burleson
Title: Vice President and
Chief Financial Officer
Address:
Commerce Court, Suite 700
Four Station Square
Pittsburgh, Pennsylvania 15219
Attention: Secretary and General Counsel
Telephone: (412) 454-2254
Facsimile: (412) 454-2515
20
<PAGE> 25
MARKET STREET CAPITAL CORP.
By: /s/ ELIZABETH S. ELDRIDGE
-------------------------
Name: Elizabeth S. Eldridge
Title: Vice President
Address:
Market Street Capital Corp.
c/o AMACAR Group, L.L.C.
6525 Morrison Blvd., Suite 318
Charlotte, North Carolina 28211
Attention: Douglas K. Johnson
Telephone No.: (704) 365-0569
Facsimile No.: (704) 365-1362
With a copy to:
PNC Bank, National Association
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
Attention: John Smathers
Telephone No.: (412) 762-6440
Facsimile No.: (412) 762-9184
PNC BANK, NATIONAL ASSOCIATION,
as Administrator
By: /s/ JOHN T. SMATHERS
--------------------
Name: John T. Smathers
Title: Vice President
Address:
PNC Bank, National Association
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
Attention: John Smathers
Telephone No.: (412) 762-6440
Facsimile No.: (412) 762-9184
RPA
21
<PAGE> 26
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits, Schedules and
Annexes), the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined). Unless otherwise indicated, all Section, Annex, Exhibit and Schedule
references in this Exhibit are to Sections of and Annexes, Exhibits and
Schedules to the Agreement.
"Administration Account" means the account (account number 1002420425)
of the Administrator maintained at the office of PNC at One PNC Plaza, 249 Fifth
Avenue, Pittsburgh, Pennsylvania 15222-2707, or such other account as may be so
designated in writing by the Administrator to the Servicer.
"Administrator" has the meaning set forth in the preamble to the
Agreement.
"Adverse Claim" means a lien, security interest or other charge or
encumbrance, or any other type of preferential arrangement; it being understood
that any thereof in favor of the Issuer or the Administrator (for the benefit of
the Issuer) shall not constitute an Adverse Claim.
"Affected Person" has the meaning set forth in Section 1.8 of the
Agreement.
"Affiliate" means, as to any Person: (a) any Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person, or (b) who is a director or officer: (i) of such Person or (ii) of
any Person described in clause (a), except that, with respect to the Issuer,
Affiliate shall mean the holder(s) of its capital stock. For purposes of this
definition, control of a Person shall mean the power, direct or indirect: (x) to
vote 25% or more of the securities having ordinary voting power for the election
of directors of such Person, or (y) to direct or cause the direction of the
management and policies of such Person, in either case whether by ownership of
securities, contract, proxy or otherwise.
"Agreement" has the meaning set forth in the preamble to the Agreement.
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the reasonable
allocated cost of internal legal services and all reasonable disbursements of
internal counsel.
"Bankruptcy Code" means the United States Bankruptcy Reform Act of 1978
(11 U.S.C. Section 101, et seq.), as amended from time to time.
"Base Rate" means, for any day, a fluctuating interest rate per annum
as shall be in effect from time to time, which rate shall be at all times equal
to the higher of:
<PAGE> 27
(a) the rate of interest in effect for such day as publicly
announced from time to time by PNC in Pittsburgh, Pennsylvania as its
"prime rate." Such "prime rate" is set by PNC based upon various
factors, including PNC's costs and desired return, general economic
conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above or below such
announced rate, and
(b) 0.50% per annum above the latest Federal Funds Rate.
"BBA" means the British Bankers' Association.
"Benefit Plan" means any employee benefit pension plan as defined in
Section 3(2) of ERISA in respect of which the Seller, any Originator, WESCO or
any ERISA Affiliate is, or at any time during the immediately preceding six
years was, an "employer" as defined in Section 3(5) of ERISA.
"Business Day" means any day (other than a Saturday or Sunday) on
which: (a) banks are not authorized or required to close in New York City, New
York or Pittsburgh, Pennsylvania, and (b) if this definition of "Business Day"
is utilized in connection with the Euro-Rate, dealings are carried out in the
London interbank market.
"Capital" means the amount paid to the Seller in respect of the
Purchased Interest by the Issuer pursuant to the Agreement, or such amount
divided or combined in accordance with Section 1.7 of the Agreement, in each
case reduced from time to time by Collections distributed and applied on account
of such Capital pursuant to Section 1.4(d) of the Agreement; provided, that if
such Capital shall have been reduced by any distribution, and thereafter all or
a portion of such distribution is rescinded or must otherwise be returned for
any reason, such Capital shall be increased by the amount of such rescinded or
returned distribution as though it had not been made.
"Change in Control" means that WESCO ceases to own, directly or
indirectly, 100% of the capital stock of the Seller free and clear of all
Adverse Claims or a majority of the capital stock of any Originator, subject to
the pledge by WESCO to Bank of America National Trust and Savings Association
pursuant to the Security Agreement, among WESCO, Bank of America National Trust
and Savings Association and various other parties..
"Closing Date" means June 30, 1999.
"Collections" means, with respect to any Pool Receivable: (a) all funds
that are received by any Originator, WESCO, the Seller or the Servicer in
payment of any amounts owed in respect of such Receivable (including purchase
price, finance charges, interest and all other charges), or applied to amounts
owed in respect of such Receivable (including insurance payments and net
proceeds of the sale or other disposition of repossessed goods or other
collateral or property of the related Obligor or any other
<PAGE> 28
Person directly or indirectly liable for the payment of such Pool Receivable and
available to be applied thereon), (b) all Collections deemed to have been
received pursuant to Section 1.4(e) of the Agreement and (c) all other proceeds
of such Pool Receivable.
"Company Note" has the meaning set forth in Section 3.1 of the Sale
Agreement.
"Concentration Percentage" means: (a) for any Obligor that is not a
Special Obligor, the Normal Concentration Percentage and (b) for any Special
Obligor, the "Special Obligor Concentration Percentage", approved in the sole
discretion of the Administrator, and set forth as such opposite its name on
Annex C to the Agreement; provided, however, that the Issuer may, with prior
written consent from the Administrator and the Liquidity Agent, and if the
Rating Agency Condition is satisfied, approve higher Concentration Percentages
for selected Obligors (which approved percentage shall become the "Concentration
Percentage" applicable to such Obligor).
"Contract" means, with respect to any Receivable, any and all
contracts, instruments, agreements, leases, invoices, notes or other writings
pursuant to which such Receivable arises or that evidence such Receivable or
under which an Obligor becomes or is obligated to make payment in respect of
such Receivable.
"Credit and Collection Policy" means, as the context may require, those
receivables credit and collection policies and practices of each Originator in
effect on the date of the Agreement and described in Schedule I to the
Agreement, as modified in compliance with the Agreement.
"Cut-off Date" has the meaning set forth in the Sale Agreement.
"Days' Sales Outstanding" means, for any calendar month, an amount
computed as of the last day of such calendar month equal to: (a) the average of
the Outstanding Balance of all Pool Receivables as of the last day of each of
the three most recent calendar months ended on the last day of such calendar
month divided by (b)(i) the aggregate credit sales made by the Originators
during the three calendar months ended on or before the last day of such
calendar month divided by (ii) 90.
"Debt" means: (a) indebtedness for borrowed money, (b) obligations
evidenced by bonds, debentures, notes or other similar instruments, (c)
obligations to pay the deferred purchase price of property or services, (d)
obligations as lessee under leases that shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases, and (e) obligations under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (d).
<PAGE> 29
"Defaulted Receivable" means a Receivable:
(a) as to which any payment, or part thereof, remains unpaid
for more than 180 days from the original invoice date for such payment,
or
(b) without duplication (i) as to which an Event of Bankruptcy
shall have occurred with respect to the Obligor thereof or any other
Person obligated thereon or owning any Related Security with respect
thereto, or (ii) that has been written off the Seller's books as
uncollectible.
"Default Ratio" means the ratio (expressed as a percentage and rounded
to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of
the last day of each calendar month by dividing: (a) the aggregate Outstanding
Balance of all Pool Receivables that became Defaulted Receivables during such
month, by (b) the aggregate credit sales made by the Originators during such
month.
"Delinquency Ratio" means the ratio (expressed as a percentage and
rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed
as of the last day of each calendar month by dividing: (a) the aggregate
Outstanding Balance of all Pool Receivables that were Delinquent Receivables on
such day by (b) the aggregate Outstanding Balance of all Pool Receivables on
such day.
"Delinquent Receivable" means a Receivable (a) as to which any payment,
or part thereof, remains unpaid for more than 90 days from the original
invoice date for such payment or (b) without duplication, which has been (or
consistent with the Credit and Collection Policy, would be) classified as a
Delinquent Receivable by the applicable Originator.
"Dilution Ratio" means the ratio (expressed as a percentage and rounded
to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward), computed as
of the last day of each calendar month by dividing: (a) the aggregate amount of
payments made or owed by the Seller pursuant to Section 1.4(e)(i) of the
Agreement (other than the amount which constitutes Advertising Allowance) during
such calendar month by (b) the aggregate credit sales made by all the
Originators during the calendar month that is [one ] month prior to such
calendar month.
"Discount" means for the Portion of Capital for any Yield Period an
amount determined in accordance with the following formula:
YR x C x ED/Year + TF
where:
C = the Portion of Capital outstanding during such Yield Period,
ED = the actual number of days during such Yield Period,
<PAGE> 30
TF = the Termination Fee, if any, for the Portion of Capital for
such Yield Period,
Year = if such Portion of Capital is funded based upon: (i) the
Euro-Rate, 360 days, and (ii) the Base Rate, 365 or 366 days,
as applicable, and
YR = the Yield Rate for the Portion of Capital for
such Yield Period;
provided, that no provision of the Agreement shall require the payment or permit
the collection of Discount in excess of the maximum permitted by applicable law;
and provided further, that Discount for the Portion of Capital shall not be
considered paid by any distribution to the extent that at any time all or a
portion of such distribution is rescinded or must otherwise be returned for any
reason.
"Eligible Receivable" means, at any time, a Pool Receivable:
(a) the Obligor of which is (i) a United States resident; (ii)
not a government or a governmental subdivision, affiliate or agency,
(iii) not subject to any action of the type described in paragraph (f)
of Exhibit V to the Agreement and (iv) not an Affiliate of WESCO or any
Affiliate of WESCO,
(b) that is denominated and payable only in U.S. dollars in
the United States,
(c) that does not have a stated maturity which is more than 90
days after the original invoice date of such Receivable, unless a
longer stated maturity is approved by and in the sole discretion of the
Administrator in writing, prior to the acquisition of such Receivable
(or any interest therein).
(d) that arises under a duly authorized Contract for the sale
and delivery of goods and services in the ordinary course of an
Originator's business,
(e) that arises under a duly authorized Contract that is in
full force and effect and that is a legal, valid and binding obligation
of the related Obligor, enforceable against such Obligor in accordance
with its terms,
(f) that conforms in all material respects with all applicable
laws, rulings and regulations in effect,
(g) that is not the subject of any asserted dispute, offset,
hold back defense, Adverse Claim or other claim,
<PAGE> 31
(h) that satisfies all applicable requirements of the
applicable Credit and Collection Policy,
(i) that has not been modified, waived or restructured since
its creation, except as permitted pursuant to Section 4.2 of the
Agreement,
(j) in which the Seller owns good and marketable title, free
and clear of any Adverse Claims, and that is freely assignable by the
Seller (including without any consent of the related Obligor),
(k) for which the Issuer shall have a valid and enforceable
undivided percentage ownership or security interest, to the extent of
the Purchased Interest, and a valid and enforceable first priority
perfected security interest therein and in the Related Security and
Collections with respect thereto, in each case free and clear of any
Adverse Claim,
(l) that constitutes an account as defined in the UCC, and
that is not evidenced by instruments or chattel paper,
(m) that is not a Defaulted Receivable,
(n) for which none of the Originator thereof, the Seller and
the Servicer has established any offset arrangements with the related
Obligor,
(o) for which Defaulted Receivables of the related Obligor do
not exceed 25% of the Outstanding Balance of all such Obligor's
Receivables, and
(p) that represents amounts earned and payable by the Obligor
that are not subject to the performance of additional services by the
Originator thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute of similar import, together
with the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections.
"ERISA Affiliate" means: (a) any corporation that is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Internal Revenue Code) as the Seller, any Originator or WESCO, (b) a trade
or business (whether or not incorporated) under common control (within the
meaning of Section 414(c) of the Internal Revenue Code) with the Seller, any
Originator or WESCO, or (c) a member of the same affiliated service group
(within the meaning of Section 414(m) of the Internal Revenue Code) as the
Seller, any Originator, any corporation described in clause (a) or any trade or
business described in clause (b).
"Euro-Rate" means with respect to any Yield Period the interest rate
per annum determined by the Administrator by dividing (the resulting quotient
rounded upwards, if
<PAGE> 32
necessary, to the nearest 1/100th of 1% per annum) (i) the rate of interest
determined by the Administrator in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) to be the average of
the London interbank market offered rates for U.S. dollars quoted by the British
Bankers' Association ("BBA") as set forth on Dow Jones Markets Service (formerly
known as Telerate) (or appropriate successor or, if British Bankers' Association
or its successor ceases to provide display page 3750 (or such other display page
on the Dow Jones Markets Service system as may replace display page 3750) at or
about 11:00 a.m. (London time) on the Business Day which is two (2) Business
Days prior to the first day of such Yield Period for an amount comparable to the
Portion of Capital to be funded at the Alternate Rate and based upon the
Euro-Rate during such Yield Period by (ii) a number equal to 1.00 minus the
Euro-Rate Reserve Percentage. The Euro-Rate may also be expressed by the
following formula:
Average of London interbank offered rates quoted by
BBA as shown on Dow Jones Markets Service display
page 3750 or appropriate successor
Euro-Rate = ----------------------------------------------------
1.00 - Euro-Rate Reserve Percentage
where "Euro-Rate Reserve Percentage" means, the maximum effective percentage in
effect on such day as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the reserve requirements
(including without limitation, supplemental, marginal, and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as
"Eurocurrency Liabilities"). The Euro-Rate shall be adjusted with respect to any
Portion of Capital funded at the Alternate Rate and based upon the Euro-Rate
that is outstanding on the effective date of any change in the Euro-Rate Reserve
Percentage as of such effective date. The Administrator shall give prompt notice
to the Seller of the Euro-Rate as determined or adjusted in accordance herewith
(which determination shall be conclusive absent manifest error).
"Event of Bankruptcy" means (a) any case, action or proceeding before
any court or other governmental authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors or (b) any general assignment for the benefit of creditors
of a Person composition, marshalling of assets for creditors of a Person, or
other similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; in each of cases (a) and (b) undertaken
under U.S. Federal, state or foreign law, including the U.S. Bankruptcy Code.
"Excess Concentration" means the sum of the amounts by which the
Outstanding Balance of Eligible Receivables of each Obligor then in the
Receivables Pool exceeds an amount equal to: (a) the applicable Concentration
Percentage for such Obligor multiplied by (b) the Outstanding Balance of all
Eligible Receivables then in the Receivables Pool.
<PAGE> 33
"Excluded Receivable" means any Receivable (without giving effect to
the exclusion of "Excluded Receivables" from the definition thereof) (i) owed by
an Obligor not a resident of the United States, which is denominated in a
currency other than U.S. dollars and (ii) originated by any of the New York City
Branch, the Fife Branch or the Tampa Major Projects Branch, identified on
WESCO's system as Branch Nos. 1225, 7147 and 3840, respectively.
"Facility Termination Date" means the earliest to occur of: (a)
September 15, 1999, (b) the date determined pursuant to Section 2.2 of the
Agreement, (c) the date the Purchase Limit reduces to zero pursuant to Section
1.1(b) of the Agreement and (d) the date that the commitments of all of the
Purchasers terminate under the Liquidity Agreement.
"Federal Funds Rate" means, for any day, the per annum rate set forth
in the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)." If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotations") for such day under the caption "Federal Funds Effective Rate." If
on any relevant day the appropriate rate is not yet published in either
H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be
the arithmetic mean as determined by the Administrator of the rates for the last
transaction in overnight Federal funds arranged before 9:00 a.m. (New York time)
on that day by each of three leading brokers of Federal funds transactions in
New York City selected by the Administrator.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any entity succeeding to any of its principal functions.
"Fee Letter" has the meaning set forth in Section 1.5 of the Agreement.
"Fees" means the fees payable by the Seller to the Administrator
pursuant to the Fee Letter.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any body or entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including any court, and any Person owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Indemnified Amounts" has the meaning set forth in Section 3.1 of the
Agreement.
<PAGE> 34
"Indemnified Party" has the meaning set forth in Section 3.1 of the
Agreement.
"Independent Director" has the meaning set forth in paragraph 3(c) of
Exhibit IV to the Agreement.
"Information Package" means a report, in substantially the form of
Annex A to the Agreement, furnished to the Administrator pursuant to the
Agreement.
"Insolvency Proceeding" means: (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshaling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors, in each case undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute of similar import, together
with the regulations thereunder, in each case as in effect from time to time.
References to sections of the Internal Revenue Code also refer to any successor
sections.
"Issuer" has the meaning set forth in the preamble to the Agreement.
"Issuer's Share" of any amount means such amount multiplied by the
percentage used to calculate Purchased Interest at the time of determination.
"LIBOR" means the rate of interest per annum determined by the
Administrator to be the arithmetic mean (rounded upward to the nearest 1/16th of
1%) of the rates of interest per annum notified to the Administrator by each
Reference Bank as the rate of interest at which dollar deposits in the
approximate amount of the Portion of Capital to be funded at the Euro-Rate
during such Yield Period would be offered by major banks in the London interbank
market to such Reference Bank at its request at or about 11:00 a.m. (London
time) on the second Business Day before the commencement of such Yield Period.
"Liquidity Agent" means PNC in its capacity as the Liquidity Agent
pursuant to the Liquidity Agreement.
"Liquidity Agreement" means and includes (a) the Liquidity Loan
Agreement, dated as of June 30, 1999 among the liquidity lenders from time to
time party thereto, the Issuer and PNC, as Administrator, as the same may be
further amended, supplemented or otherwise modified from time to time and (b)
any other agreement hereafter entered into by Issuer providing for the sale by
Issuer of Purchased Interests (or portions thereof), or the making of loans or
other extensions of credit to Issuer secured by security interests in such
Purchased Interests (or portions thereof), to provide an alternate means of
funding the Issuer's acquisition of Purchased Interests, and under which the
<PAGE> 35
amount available from such sale or such extension of credit is limited to an
amount calculated by reference to the value of such Purchased Interests or any
portion thereof, in each case as amended, supplemented or otherwise modified
from time to time.
"Lock-Box Account" means an account maintained at a bank or other
financial institution for the purpose of receiving Collections.
"Lock-Box Agreement" means an agreement, in substantially the form of
Annex A to the Agreement, among the Seller, the Servicer and a Lock-Box Bank.
"Lock-Box Bank" means any of the banks or other financial institutions
holding one or more Lock-Box Accounts.
"Loss-to-Liquidation Ratio" means the ratio (expressed as a percentage
and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward)
computed as of the last day of each calendar month by dividing: (a) the average,
for the three most recent calendar months ending on such date, of aggregate
Outstanding Balance of all Pool Receivables that became Defaulted Receivables
during each such month, by (b) the aggregate amount of Collections received by
any of the Seller, Servicer, WESCO or any Originator during the most recently
ended calendar month.
"Material Adverse Effect" means, relative to any Person with respect to
any event or circumstance, a material adverse effect on:
(a) the assets, operations, business or financial condition of
such Person,
(b) the ability of any of such Person to perform its
obligations under the Agreement or any other Transaction Document to
which it is a party,
(c) the validity or enforceability of any other Transaction
Document, or the validity, enforceability or collectability of a
material portion of the Pool Receivables, or
(d) the status, perfection, enforceability or priority of the
Issuer's or the Seller's interest in the Pool Assets.
"Monthly Settlement Date" means the second Business Day of each
calendar month.
"Net Receivables Pool Balance" means, at any time: (a) the Outstanding
Balance of Eligible Receivables then in the Receivables Pool minus (b) the
Excess Concentration.
"Normal Concentration Percentage" means, at any time, 2.0%.
<PAGE> 36
"Notes" means short-term promissory notes issued, or to be issued, by
the Issuer to fund its investments in accounts receivable or other financial
assets.
"Obligor" means, with respect to any Receivable, the Person obligated
to make payments pursuant to the Contract relating to such Receivable.
"Originator" has the meaning set forth in the Sale Agreement.
"Originator Assignment Certificate" means each assignment, in
substantially the form of Exhibit C to the Sale Agreement, evidencing Seller's
ownership of the Receivables generated by Originator, as the same may be
amended, supplemented, amended and restated, or otherwise modified from time to
time in accordance with the Sale Agreement.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Payment Date" has the meaning set forth in Section 2.1 of the Sale
Agreement.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company or other entity, or a government or any
political subdivision or agency thereof.
"PNC" has the meaning set forth in the preamble to the Agreement.
"Pool Assets" has the meaning set forth in Section 1.2(d) of the
Agreement.
"Pool Receivable" means a Receivable in the Receivables Pool.
"Portion of Capital" has the meaning set forth in Section 1.7 of the
Agreement. In addition, at any time when the Capital of the Purchased Interest
is not divided into two or more such portions, "Portion of Capital" means 100%
of the Capital.
"Program Support Agreement" means and includes the Liquidity Agreement
and any other agreement entered into by any Program Support Provider providing
for: (a) the issuance of one or more letters of credit for the account of the
Issuer, (b) the issuance of one or more surety bonds for which the Issuer is
obligated to reimburse the applicable Program Support Provider for any drawings
thereunder, (c) the sale by the Issuer to any Program Support Provider of the
Purchased Interest (or portions thereof) and/or (d) the making of loans and/or
other extensions of credit to the Issuer in connection with the Issuer's
securitization program contemplated in the Agreement, together with any letter
of credit, surety bond or other instrument issued thereunder (but excluding any
discretionary advance facility provided by the Administrator).
"Program Support Provider" means and includes any Purchaser and any
other Person (other than any customer of the Issuer) now or hereafter extending
credit or
<PAGE> 37
having a commitment to extend credit to or for the account of, or to make
purchases from, the Issuer pursuant to any Program Support Agreement.
"Purchase and Sale Indemnified Amounts" has the meaning set forth in
Section 9.1 of the Sale Agreement.
"Purchase and Sale Indemnified Party" has the meaning set forth in
Section 9.1 of the Sale Agreement.
"Purchase and Sale Termination Date" has the meaning set forth in
Section 1.4 of the Sale Agreement.
"Purchase and Sale Termination Event" has the meaning set forth in
Section 8.1 of the Sale Agreement.
"Purchase Facility" has the meaning set forth in Section 1.1 of the
Sale Agreement.
"Purchase Limit" means $350,000,000, as such amount may be reduced
pursuant to Section 1.1(b) of the Agreement. References to the unused portion of
the Purchase Limit shall mean, at any time, the Purchase Limit minus the then
outstanding Capital.
"Purchase Price" has the meaning set forth in Section 2.1 of the Sale
Agreement.
"Purchase Report" has the meaning set forth in Section 2.1 of the Sale
Agreement.
"Purchased Interest" means, at any time, the undivided percentage
ownership interest in: (a) each and every Pool Receivable now existing or
hereafter arising, (b) all Related Security with respect to such Pool
Receivables and (c) all Collections with respect to, and other proceeds of, such
Pool Receivables and Related Security. Such undivided percentage interest shall
be computed as:
Capital + Total Reserves
----------------------------
Net Receivables Pool Balance
The Purchased Interest shall be determined from time to time pursuant to
Section 1.3 of the Agreement.
"Purchaser" has the meaning set forth in Section 5.3(b) of the
Agreement.
"Receivable" means any indebtedness and other obligations (other than
Excluded Receivables) owed to the Seller or any Originator by, or any right of
the Seller or any Originator to payment from or on behalf of, an Obligor,
whether constituting an account, chattel paper, instrument or general
intangible, arising in connection with the sale of goods or the rendering of
services by an Originator, and includes the obligation to pay any finance
charges, fees and other charges with respect thereto. Indebtedness and other
obligations arising from any one transaction, including indebtedness and other
obligations
<PAGE> 38
represented by an individual invoice or agreement, shall constitute a Receivable
separate from a Receivable consisting of the indebtedness and other obligations
arising from any other transaction.
"Receivables Pool" means, at any time, all of the then outstanding
Receivables purchased or disposed of by the Seller pursuant to the Sale
Agreement prior to the Facility Termination Date.
"Reference Bank" means PNC.
"Related Rights" has the meaning set forth in Section 1.1 of the Sale
Agreement.
"Related Security" means, with respect to any Receivable:
(a) all of the Seller's and the Originator thereof's interest
in any goods (including returned goods), and documentation of title
evidencing the shipment or storage of any goods (including returned
goods), relating to any sale giving rise to such Receivable,
(b) all instruments and chattel paper that may evidence such
Receivable,
(c) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable
or otherwise, together with all UCC financing statements or similar
filings relating thereto, and
(d) all of the Seller's and the Originator thereof's rights,
interests and claims under the Contracts and all guaranties,
indemnities, insurance and other agreements (including the related
Contract) or arrangements of whatever character from time to time
supporting or securing payment of such Receivable or otherwise relating
to such Receivable, whether pursuant to the Contract related to such
Receivable or otherwise.
"Sale Agreement" means the Purchase and Sale Agreement, dated as of
June 30, 1999, among the Seller, the Originators and the Servicer, as such
agreement may be amended, amended and restated, supplemented or otherwise
modified from time to time.
"Seller" has the meaning set forth in the preamble to the Agreement.
"Seller's Share" of any amount means the greater of: (a) $0 and (b)
such amount minus the Issuer's Share.
"Servicer" has the meaning set forth in the preamble to the Agreement.
"Servicing Fee" shall mean the fee referred to in Section 4.6 of the
Agreement.
<PAGE> 39
"Settlement Date" means (a) with respect to any Portion of Capital, the
last day of the Yield Period for such Portion of Capital and (b) with respect to
any Fees, the Monthly Settlement Date.
"Solvent" means, with respect to any Person at any time, a condition
under which:
(i) the fair value and present fair saleable value of such
Person's total assets is, on the date of determination, greater than
such Person's total liabilities (including contingent and unliquidated
liabilities) at such time;
(ii) the fair value and present fair saleable value of such
Person's assets is greater than the amount that will be required to pay
such Person's probable liability on its existing debts as they become
absolute and matured ("debts," for this purpose, includes all legal
liabilities, whether matured or unmatured, liquidated or unliquidated,
absolute, fixed, or contingent);
(iii) such Person is and shall continue to be able to pay all
of its liabilities as such liabilities mature; and
(iv) such Person does not have unreasonably small capital with
which to engage in its current and in its anticipated business.
For purposes of this definition:
(A) the amount of a Person's contingent or unliquidated
liabilities at any time shall be that amount which, in light of all the
facts and circumstances then existing, represents the amount which can
reasonably be expected to become an actual or matured liability;
(B) the "fair value" of an asset shall be the amount which may
be realized within a reasonable time either through collection or sale
of such asset at its regular market value;
(C) the "regular market value" of an asset shall be the amount
which a capable and diligent business person could obtain for such
asset from an interested buyer who is willing to Purchase such asset
under ordinary selling conditions; and
(D) the "present fair saleable value" of an asset means the
amount which can be obtained if such asset is sold with reasonable
promptness in an arm's-length transaction in an existing and not
theoretical market.
"Special Obligor" means an Obligor specifically approved in writing by
the Administrator as a Special Obligor and set forth on Annex C to the
Agreement.
"Subsidiary" means, as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock of each class
or other interests having
<PAGE> 40
ordinary voting power (other than stock or other interests having such power
only by reason of the happening of a contingency) to elect a majority of the
Board of Directors or other managers of such entity are at the time owned, or
management of which is otherwise controlled: (a) by such Person, (b) by one or
more Subsidiaries of such Person or (c) by such Person and one or more
Subsidiaries of such Person.
"Termination Day" means: (a) each day on which the conditions set forth
in Section 2 of Exhibit II to the Agreement are not satisfied or (b) each day
that occurs on or after the Facility Termination Date.
"Termination Event" has the meaning specified in Exhibit V to the
Agreement.
"Termination Fee" means, for any Yield Period during which a
Termination Day occurs, the amount, if any, by which: (a) the additional
Discount (calculated without taking into account any Termination Fee or any
shortened duration of such Yield Period pursuant to the definition thereof) that
would have accrued during such Yield Period on the reductions of Capital
relating to such Yield Period had such reductions not been made, exceeds (b) the
income, if any, received by the Issuer from investing the proceeds of such
reductions of Capital, as determined by the Administrator, which determination
shall be binding and conclusive for all purposes, absent manifest error.
"Total Reserves" means, on any date, an amount equal to the product of:
(a) the Net Receivables Pool Balance at the close of business of the Servicer on
such date, multiplied by (b) 20%.
"Transaction Documents" means the Agreement, the Lock-Box Agreements,
the Fee Letter, the Sale Agreement and all other certificates, instruments, UCC
financing statements, reports, notices, agreements and documents executed or
delivered under or in connection with the Agreement, in each case as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with the Agreement.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the applicable jurisdiction.
"Unmatured Termination Event" means an event that, with the giving of
notice or lapse of time, or both, would constitute a Termination Event.
"WESCO" has the meaning set forth in the preamble to the Agreement.
"Year 2000 Problem" means with respect to any Person, the risk that
certain computer applications used by such Person may be unable to recognize and
perform properly date-sensitive functions involving dates prior to and after
December 31, 1999.
"Yield Period" means, with respect to each Portion of Capital:
(a) initially the period commencing on the date of a purchase
pursuant to Section 1.2 and ending such number of days as the Seller
shall select, subject to
<PAGE> 41
the approval of the Administrator pursuant to Section 1.2, up to 90
days after such date; and
(b) thereafter each period commencing on the last day of the
immediately preceding Yield Period for any Portion of Capital of the
Purchased Interest and ending such number of days (not to exceed 90
days) as the Seller shall select, subject to the approval of the
Administrator pursuant to Section 1.2, on notice by the Seller received
by the Administrator (including notice by telephone, confirmed in
writing) not later than noon (New York time) on such last day, except
that if the Administrator shall not have received such notice or
approved such period on or before noon (New York time) on such last
day, such period shall be one day; provided, that
(i) any Yield Period (other than of one day) which
would otherwise end on a day which is not a Business Day shall
be extended to the next succeeding Business Day; provided,
however, if Discount in respect of such Yield Period is
computed by reference to the Euro-Rate, and such Yield Period
would otherwise end on a day which is not a Business Day, and
there is no subsequent Business Day in the same calendar month
as such day, such Yield Period shall end on the next preceding
Business Day;
(ii) in the case of any Yield Period of one day, (A)
if such Yield Period is the initial Yield Period for a
purchase pursuant to Section 1.2, such Yield Period shall be
the day of purchase of the Purchased Interest; (B) any
subsequently occurring Yield Period which is one day shall, if
the immediately preceding Yield Period is more than one day,
be the last day of such immediately preceding Yield Period,
and, if the immediately preceding Yield Period is one day, be
the day next following such immediately preceding Yield
Period; and (C) if such Yield Period occurs on a day
immediately preceding a day which is not a Business Day, such
Yield Period shall be extended to the next succeeding Business
Day; and
(iii) in the case of any Yield Period for any Portion
of Capital of the Purchased Interest which commences before
the Facility Termination Date and would otherwise end on a
date occurring after the Facility Termination Date, such Yield
Period shall end on such Facility Termination Date and the
duration of each Yield Period which commences on or after the
Facility Termination Date shall be of such duration as shall
be selected in the sole discretion of the Administrator.
"Yield Rate" for any Yield Period for any Portion of Capital of the
Purchased Interest means an interest rate per annum equal to, at the Seller's
option: (a) 0.375% per annum above the Euro-Rate for such Yield Period, or (b)
the Base Rate for such Yield Period; provided, however, that in the case of:
<PAGE> 42
(i) any Yield Period on or before the first day of which the
Administrator shall have been notified by any Purchaser or other
Program Support Provider that the introduction of or any change in or
in the interpretation of any law or regulation makes it unlawful, or
any central bank or other Governmental Authority asserts that it is
unlawful, for such Person, to fund any Euro-Rate Portion of Capital
(and such Person shall not have subsequently notified the Administrator
that such circumstances no longer exist),
(ii) any Yield Period of one to (and including) 30 days,
(iii) any Yield Period as to which the Administrator does not
receive notice before noon (New York City time) on the third Business
Day preceding the first day of such Yield Period that the Seller
desires that the related Portion of Capital be a Euro-Rate Portion of
Capital, or
(iv) any Yield Period relating to a Portion of Capital that is
less than $5,000,000,
the "Yield Rate" for each such Yield Period shall be an interest rate per annum
equal to the Base Rate in effect on each day of such Yield Period. The "Yield
Rate" for any day while a Termination Event exists shall be an interest rate
equal to 2% per annum above the Base Rate in effect on such day.
Other Terms. All accounting terms not specifically defined herein shall
be construed in accordance with generally accepted accounting principles. All
terms used in Article 9 of the UCC in the State of New York, and not
specifically defined herein, are used herein as defined in such Article 9.
Unless the context otherwise requires, "or" means "and/or," and "including" (and
with correlative meaning "include" and "includes") means including without
limiting the generality of any description preceding such term.
<PAGE> 43
EXHIBIT II
CONDITIONS OF PURCHASES
1. Conditions Precedent to Initial Purchase. The Initial Purchase under
this Agreement is subject to the following conditions precedent that the
Administrator shall have received on or before the date of such purchase, each
in form and substance (including the date thereof) satisfactory to the
Administrator, unless waived by the Administrator in writing:
(a) A counterpart of the Agreement and the other Transaction Documents
executed by the parties thereto.
(b) Certified copies of: (i) the resolutions of the Board of Directors
of each of the Seller, the Originators and WESCO authorizing the execution,
delivery and performance by the Seller, such Originator and WESCO, as the case
may be, of the Agreement and the other Transaction Documents to which it is a
party; (ii) all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to the Agreement and the other
Transaction Documents and (iii) the certificate of incorporation and by-laws of
the Seller, each Originator and WESCO.
(c) A certificate of the Secretary or Assistant Secretary of the
Seller, the Originators and WESCO certifying the names and true signatures of
its officers who are authorized to sign the Agreement and the other Transaction
Documents. Until the Administrator receives a subsequent incumbency certificate
from the Seller, an Originator or WESCO, as the case may be, the Administrator
shall be entitled to rely on the last such certificate delivered to it by the
Seller, such Originator or WESCO, as the case may be.
(d) Acknowledgment copies, or time stamped receipt copies, of proper
financing statements, duly filed on or before the date of such initial purchase
under the UCC of all jurisdictions that the Administrator may deem necessary or
desirable in order to perfect the interests of the Seller, WESCO and the Issuer
contemplated by the Agreement and the Sale Agreement.
(e) Acknowledgment copies, or time-stamped receipt copies, of proper
financing statements, if any, necessary to release all security interests and
other rights of any Person in the Receivables, Contracts or Related Security
previously granted by the Originators, WESCO or the Seller.
(f) Completed UCC search reports, dated on or shortly before the date
of the initial purchase hereunder, listing the financing statements filed in all
applicable jurisdictions referred to in subsection (e) above that name the
Originators or the Seller as debtor, together with copies of such other
financing statements, and similar search reports with respect to judgment liens,
federal tax liens and liens of the Pension Benefit Guaranty
<PAGE> 44
Corporation in such jurisdictions, as the Administrator may request, showing no
Adverse Claims on any Pool Assets.
(g) Copies of executed Lock-Box Agreements with each Lock-Box Bank.
(h) Favorable opinions, in form and substance reasonably satisfactory
to the Administrator, of: (i) Sidley & Austin, counsel for the Seller, the
Originators, WESCO and the Servicer, and (ii) Jeffery B. Kramp, internal counsel
for Seller, WESCO and the Originators.
(i) Satisfactory results of a review and audit (performed by
representatives of the Administrator) of the Servicer's collection, operating
and reporting systems, the Credit and Collection Policy of each Originator,
historical receivables data and accounts, including satisfactory results of a
review of the Servicer's operating location(s) and satisfactory review and
approval of the Eligible Receivables in existence on the date of the initial
purchase under the Agreement, as confirmed in the agreed upon procedures report
prepared by PriceWaterhouseCoopers, L.L.P., and delivered to the Administrator
prior to the date hereof.
(j) A pro forma Information Package representing the performance of the
Receivables Pool for the calendar month before closing.
(k) Evidence of payment by the Seller of all accrued and unpaid fees
(including those contemplated by the Fee Letter), costs and expenses to the
extent then due and payable on the date thereof, including any such costs, fees
and expenses arising under or referenced in Section 5.4 of the Agreement and the
Fee Letter.
(l) The Fee Letter duly executed by the Seller and the Servicer.
(m) Good standing certificates with respect to each of the Seller, the
Originators and the Servicer issued by the Secretary of State (or similar
official) of the state of each such Person's organization and principal place of
business.
(n) The Liquidity Agreement and each of the Transaction Documents duly
executed by the parties thereto.
(o) A computer file containing all information with respect to the
Receivables as the Administrator or the Issuer may reasonably request.
(p) Such other approvals, opinions or documents as the Administrator or
the Issuer may reasonably request.
2. Conditions Precedent to All Purchases and Reinvestments. Each
purchase (except as to clause (a), including the initial purchase) and each
reinvestment shall be subject to the further conditions precedent that:
<PAGE> 45
(a) in the case of each purchase, the Servicer shall have delivered to
the Administrator on or before such purchase, in form and substance satisfactory
to the Administrator, a completed pro forma Information Package to reflect the
level of Capital and related reserves after such subsequent purchase; and
(b) on the date of such purchase or reinvestment the following
statements shall be true (and acceptance of the proceeds of such purchase or
reinvestment shall be deemed a representation and warranty by the Seller that
such statements are then true):
(i) the representations and warranties contained in Exhibit
III to the Agreement are true and correct in all material respects on
and as of the date of such purchase or reinvestment as though made on
and as of such date; and
(ii) no event has occurred and is continuing, or would result
from such purchase or reinvestment, that constitutes a Termination
Event or an Unmatured Termination Event.
<PAGE> 46
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
1. Representations and Warranties of the Seller. The Seller represents
and warrants as follows:
(a) The Seller is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, and is duly qualified
to do business and is in good standing as a foreign corporation in every
jurisdiction where the nature of its business requires it to be so qualified,
except where the failure to be so qualified would not have a Material Adverse
Effect.
(b) The execution, delivery and performance by the Seller of the
Agreement and the other Transaction Documents to which it is a party, including
its use of the proceeds of purchases and reinvestments: (i) are within its
corporate powers; (ii) have been duly authorized by all necessary corporate
action; (iii) do not contravene or result in a default under or conflict with:
(A) its charter or by-laws, (B) any law, rule or regulation applicable to it,
(C) any indenture, loan agreement, mortgage, deed of trust or other material
agreement or instrument to which it is a party or by which it is bound, or (D)
any order, writ, judgment, award, injunction or decree binding on or affecting
it or any of its property; and (iv) do not result in or require the creation of
any Adverse Claim upon or with respect to any of its properties. The Agreement
and the other Transaction Documents to which it is a party have been duly
executed and delivered by the Seller.
(c) No authorization, approval or other action by, and no notice to or
filing with, any Governmental Authority or other Person is required for its due
execution, delivery and performance by the Seller of the Agreement or any other
Transaction Document to which it is a party, other than the Uniform Commercial
Code filings referred to in Exhibit II to the Agreement, all of which shall have
been filed on or before the date of the first purchase hereunder.
(d) Each of the Agreement and the other Transaction Documents to which
the Seller is a party constitutes its legal, valid and binding obligation of the
Seller enforceable against the Seller in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws from time to time in effect affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) There is no pending or, to Seller's best knowledge, threatened
action or proceeding affecting Seller or any of its properties before any
Governmental Authority or arbitrator.
<PAGE> 47
(f) No proceeds of any purchase or reinvestment will be used to acquire
any equity security of a class that is registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
(g) The Seller is the legal and beneficial owner of the Pool
Receivables and Related Security, free and clear of any Adverse Claim. Upon each
purchase or reinvestment, the Issuer shall acquire a valid and enforceable
perfected undivided percentage ownership or security interest, to the extent of
the Purchased Interest, in each Pool Receivable then existing or thereafter
arising and in the Related Security, Collections and other proceeds with respect
thereto, free and clear of any Adverse Claim. The Agreement creates a security
interest in favor of the Issuer in the Pool Assets, and the Issuer has a first
priority perfected security interest in the Pool Assets, free and clear of any
Adverse Claims. No effective financing statement or other instrument similar in
effect covering any Pool Asset is on file in any recording office, except those
filed in favor of the Seller pursuant to the Sale Agreement and the Issuer
relating to the Agreement, or in respect of which the Administrator has received
evidence satisfactory to the Administrator of acknowledgment copies, or
time-stamped receipt copies, of proper financing statements releasing or
terminating, as applicable, all security interests and other rights of any
Person in such Pool Asset.
(h) Each Information Package (if prepared by the Seller or one of its
Affiliates, or to the extent that information contained therein is supplied by
the Seller or an Affiliate), information, exhibit, financial statement,
document, book, record or report furnished or to be furnished at any time by or
on behalf of the Seller to the Administrator in connection with the Agreement or
any other Transaction Document to which it is a party is or will be complete and
accurate in all material respects as of its date or (except as otherwise
disclosed to the Administrator at such time) as of the date so furnished,
(i) The Seller's principal place of business and chief executive office
(as such terms are used in the UCC) and the office where it keeps its records
concerning the Receivables are located at the address referred to in Sections
1(b) and 2(b) of Exhibit IV to the Agreement.
(j) The names and addresses of all the Lock-Box Banks, together with
the account numbers of the Lock-Box Accounts at such Lock-Box Banks, are
specified in Schedule II to the Agreement (or at such other Lock-Box Banks
and/or with such other Lock-Box Accounts as have been notified to the
Administrator in accordance with the Agreement) and all Lock-Box Accounts are
subject to Lock-Box Agreements (except as otherwise agreed to in writing by the
Administrator).
(k) The Seller is not in violation of any order of any court,
arbitrator or Governmental Authority.
(l) Neither the Seller nor any of its Affiliates has any direct or
indirect ownership or other financial interest in the Issuer.
<PAGE> 48
(m) No proceeds of any purchase or reinvestment will be used for any
purpose that violates any applicable law, rule or regulation, including
Regulations G or U of the Federal Reserve Board.
(n) Each Pool Receivable included as an Eligible Receivable in the
calculation of the Net Receivables Pool Balance is an Eligible Receivable.
(o) No event has occurred and is continuing, or would result from a
purchase in respect of, or reinvestment in respect of, the Purchased Interest or
from the application of the proceeds therefrom, that constitutes a Termination
Event or an Unmatured Termination Event.
(p) The Seller has accounted for each sale of undivided percentage
ownership interests in Receivables in its books and financial statements as
sales, consistent with generally accepted accounting principles.
(q) The Seller has complied in all material respects with the Credit
and Collection Policy of each Originator with regard to each Receivable
originated by such Originator.
(r) The Seller has complied in all material respects with all of the
terms, covenants and agreements contained in the Agreement and the other
Transaction Documents that are applicable to it.
(s) The Seller's complete corporate name is set forth in the preamble
to the Agreement, and it does not use and has not during the last six years used
any other corporate name, trade name, doing-business name or fictitious name,
except as set forth on Schedule III to the Agreement and except for names first
used after the date of the Agreement and set forth in a notice delivered to the
Administrator pursuant to Section 1(l)(iv) of Exhibit IV to the Agreement.
(t) The Seller is not an "investment company," or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended. In addition, the Seller is not a "holding
company," a "subsidiary company" of a "holding company" or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(u) The Seller has reviewed the areas within its business and
operations which could be adversely affected by, and has developed or is
developing a program to address on a timely basis, the Year 2000 Problem. The
Year 2000 Problem will not have any Material Adverse Effect.
2. Representations and Warranties of WESCO (including in its capacity
as the Servicer). WESCO, individually and in its capacity as the Servicer,
represents and warrants as follows:
<PAGE> 49
(a) WESCO is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and is duly qualified to
do business and is in good standing as a foreign corporation in every
jurisdiction where the nature of its business requires it to be so qualified,
except where the failure to be so qualified would not have a Material Adverse
Effect.
(b) The execution, delivery and performance by WESCO of the Agreement
and the other Transaction Documents to which it is a party, including the
Servicer's use of the proceeds of purchases and reinvestments: (i) are within
its corporate powers; (ii) have been duly authorized by all necessary corporate
action; (iii) do not contravene or result in a default under or conflict with:
(A) its charter or by-laws, (B) any law, rule or regulation applicable to it,
(C) any indenture, loan agreement, mortgage, deed of trust or other material
agreement or instrument to which it is a party or by which it is bound, or (D)
any order, writ, judgment, award, injunction or decree binding on or affecting
it or any of its property; and (iv) do not result in or require the creation of
any Adverse Claim upon or with respect to any of its properties. The Agreement
and the other Transaction Documents to which WESCO is a party have been duly
executed and delivered by WESCO.
(c) No authorization, approval or other action by, and no notice to or
filing with any Governmental Authority or other Person, is required for the due
execution, delivery and performance by WESCO of the Agreement or any other
Transaction Document to which it is a party.
(d) Each of the Agreement and the other Transaction Documents to which
WESCO is a party constitutes the legal, valid and binding obligation of WESCO
enforceable against WESCO in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar laws
from time to time in effect affecting the enforcement of creditors' rights
generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) The balance sheets of WESCO and its consolidated Subsidiaries as at
[December 31, 1998], and the related statements of income and retained earnings
for the fiscal year then ended, copies of which have been furnished to the
Administrator, fairly present the financial condition of WESCO and its
consolidated Subsidiaries as at such date and the results of the operations of
WESCO and its Subsidiaries for the period ended on such date, all in accordance
with generally accepted accounting principles consistently applied, and since
[December 31, 1998 ] there has been no event or circumstances which have had a
Material Adverse Effect.
(f) Except as disclosed in the most recent audited financial statements
of WESCO furnished to the Administrator, there is no pending or, to its best
knowledge, threatened action or proceeding affecting it or any of its
Subsidiaries before any Governmental Authority or arbitrator that could have a
Material Adverse Effect.
<PAGE> 50
(g) No proceeds of any purchase or reinvestment will be used to acquire
any equity security of a class that is registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
(h) Each Information Package (if prepared by WESCO or one of its
Affiliates, or to the extent that information contained therein is supplied by
WESCO or an Affiliate), information, exhibit, financial statement, document,
book, record or report furnished or to be furnished at any time by or on behalf
of the Servicer to the Administrator in connection with the Agreement is or will
be complete and accurate in all material respects as of its date or (except as
otherwise disclosed to the Administrator at such time) as of the date so
furnished.
(i) The principal place of business and chief executive office (as such
terms are used in the UCC) of WESCO and the office where it keeps its records
concerning the Receivables are located at the address referred to in Section
2(b) of Exhibit IV to the Agreement.
(j) WESCO is not in violation of any order of any court, arbitrator or
Governmental Authority, which could have a Material Adverse Effect.
(k) Neither WESCO nor any of its Affiliates has any direct or indirect
ownership or other financial interest in the Issuer.
(l) The Servicer has complied in all material respects with the Credit
and Collection Policy of each Originator with regard to each Receivable
originated by such Originator.
(m) WESCO has complied in all material respects with all of the terms,
covenants and agreements contained in the Agreement and the other Transaction
Documents that are applicable to it.
(n) WESCO is not an "investment company" or a company "controlled" by
an "investment company" within the meaning of the Investment Company Act of
1940, as amended. In addition, WESCO is not a "holding company," a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(o) The Servicer has reviewed the areas within its business and
operations which could be adversely affected by, and has developed or is
developing a program to address on a timely basis, the Year 2000 Problem. The
Year 2000 Problem will not have any Material Adverse Effect.
<PAGE> 51
EXHIBIT IV
COVENANTS
1. Covenants of the Seller. Until the latest of the Facility
Termination Date, the date on which no Capital of or Discount in respect of the
Purchased Interest shall be outstanding or the date all other amounts owed by
the Seller under the Agreement to the Issuer, the Administrator and any other
Indemnified Party or Affected Person shall be paid in full:
(a) Compliance with Laws, Etc. The Seller shall comply in all material
respects with all applicable laws, rules, regulations and orders, and preserve
and maintain its corporate existence, rights, franchises, qualifications and
privileges, except to the extent that the failure so to comply with such laws,
rules and regulations or the failure so to preserve and maintain such rights,
franchises, qualifications and privileges would not have a Material Adverse
Effect.
(b) Offices, Records and Books of Account, Etc. The Seller: (i) shall
keep its principal place of business and chief executive office (as such terms
or similar terms are used in the UCC) and the office where it keeps its records
concerning the Receivables at the address of the Seller set forth under its name
on the signature page to the Agreement or, pursuant to clause (l)(iv) below, at
any other locations in jurisdictions where all actions reasonably requested by
the Administrator to protect and perfect the interest of the Issuer in the
Receivables and related items (including the Pool Assets) have been taken and
completed and (ii) shall provide the Administrator with at least 30 days'
written notice before making any change in the Seller's name or making any other
change in the Seller's identity or corporate structure (including a Change in
Control) that could render any UCC financing statement filed in connection with
this Agreement "seriously misleading" as such term (or similar term) is used in
the UCC; each notice to the Administrator pursuant to this sentence shall set
forth the applicable change and the effective date thereof. The Seller also will
maintain and implement (or cause the Servicer to maintain and implement)
administrative and operating procedures (including an ability to recreate
records evidencing Receivables and related Contracts in the event of the
destruction of the originals thereof), and keep and maintain (or cause the
Servicer to keep and maintain) all documents, books, records, computer tapes and
disks and other information reasonably necessary or advisable for the collection
of all Receivables (including records adequate to permit the daily
identification of each Receivable and all Collections of and adjustments to each
existing Receivable).
(c) Performance and Compliance with Contracts and Credit and Collection
Policy. The Seller shall (and shall cause the Servicer to), at its expense,
timely and fully perform and comply with all material provisions, covenants and
other promises required to be observed by it under the Contracts related to the
Receivables, and timely and fully comply in all material respects with the
applicable Credit and Collection Policies with regard to each Receivable and the
related Contract.
<PAGE> 52
(d) Ownership Interest, Etc. The Seller shall (and shall cause the
Servicer to), at its expense, take all action necessary or desirable to
establish and maintain a valid and enforceable undivided percentage ownership or
security interest, to the extent of the Purchased Interest, in the Pool
Receivables, the Related Security and Collections with respect thereto, and a
first priority perfected security interest in the Pool Assets, in each case free
and clear of any Adverse Claim, in favor of the Issuer, including taking such
action to perfect, protect or more fully evidence the interest of the Issuer as
the Issuer, through the Administrator, may reasonably request.
(e) Sales, Liens, Etc. The Seller shall not sell, assign (by operation
of law or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon or with respect to, any or all of its right, title or
interest in, to or under any Pool Assets (including the Seller's undivided
interest in any Receivable, Related Security or Collections, or upon or with
respect to any account to which any Collections of any Receivables are sent), or
assign any right to receive income in respect of any items contemplated by this
paragraph.
(f) Extension or Amendment of Receivables. Except as provided in the
Agreement, the Seller shall not, and shall not permit the Servicer to, extend
the maturity or adjust the Outstanding Balance or otherwise modify the terms of
any Pool Receivable, or amend, modify or waive any term or condition of any
related Contract.
(g) Change in Business or Credit and Collection Policy. The Seller
shall not make (or permit any Originator to make) any material change in the
character of its business or in any Credit and Collection Policy, or any change
in any Credit and Collection Policy that would have a Material Adverse Effect
with respect to the Receivables. The Seller shall not make (or permit any
Originator to make) any other change in any Credit and Collection Policy without
giving prior written notice thereof to the Administrator.
(h) Audits. The Seller shall (and shall cause each Originator to), from
time to time during regular business hours, but no more frequently than annually
unless (x) a Termination Event or Unmatured Termination Event has occurred and
is continuing or (y) in the opinion of the Administrator reasonable grounds for
insecurity exist with respect to the collectability of a material portion of the
Pool Receivables or with respect to the Seller's performance or ability to
perform in any material respect its obligations under the Agreement, as
reasonably requested in advance (unless a Termination Event or Unmatured
Termination Event exists) by the Administrator, permit the Administrator, or its
agents or representatives: (i) to examine and make copies of and abstracts from
all books, records and documents (including computer tapes and disks) in the
possession or under the control of the Seller (or any such Originator) relating
to Receivables and the Related Security, including the related Contracts, and
(ii) to visit the offices and properties of the Seller and the Originators for
the purpose of examining such materials described in clause (i) above, and to
discuss matters relating to Receivables and the Related Security or the
Seller's, WESCO's or the Originators' performance under the Transaction
Documents or under the Contracts with any of the officers, employees,
<PAGE> 53
agents or contractors of the Seller, WESCO or the Originators having knowledge
of such matters.
(i) Change in Lock-Box Banks, Lock-Box Accounts and Payment
Instructions to Obligors. The Seller shall not, and shall not permit the
Servicer or any Originator to, add or terminate any bank as a Lock-Box Bank or
any account as a Lock-Box Account from those listed in Schedule II to the
Agreement, or make any change in its instructions to Obligors regarding payments
to be made to the Seller, the Originators, the Servicer or any Lock-Box Account
(or related post office box), unless the Administrator shall have consented
thereto in writing and the Administrator shall have received copies of all
agreements and documents (including Lock-Box Agreements) that it may request in
connection therewith.
(j) Deposits to Lock-Box Accounts. The Seller shall (or shall cause the
Servicer to): (i) instruct all Obligors to make payments of all Receivables to
one or more Lock-Box Accounts or to post office boxes to which only Lock-Box
Banks have access (and shall instruct the Lock-Box Banks to cause all items and
amounts relating to such Receivables received in such post office boxes to be
removed and deposited into a Lock-Box Account on a daily basis), and (ii)
deposit, or cause to be deposited, any Collections received by it, the Servicer
or any Originator into Lock-Box Accounts not later than one Business Day after
receipt thereof. Except as otherwise agreed to in writing by the Administrator,
each Lock-Box Account shall at all times be subject to a Lock-Box Agreement. The
Seller will not (and will not permit the Servicer to) deposit or otherwise
credit, or cause or permit to be so deposited or credited, to any Lock-Box
Account cash or cash proceeds other than Collections.
(k) [Intentionally Omitted].
(l) Reporting Requirements. The Seller will provide to the
Administrator (in multiple copies, if requested by the Administrator) the
following:
(i) as soon as available and in any event within 90 days after
the end of each fiscal year of the Seller, a copy of the annual report
for such year for the Seller, containing unaudited financial statements
for such year certified as to accuracy by the chief financial officer
or treasurer of the Seller;
(ii) as soon as possible and in any event within five days
after the occurrence of each Termination Event or Unmatured Termination
Event, a statement of the chief financial officer of the Seller setting
forth details of such Termination Event or Unmatured Termination Event
and the action that the Seller has taken and proposes to take with
respect thereto;
(iii) promptly after the filing or receiving thereof, copies
of all reports and notices that the Seller or any Affiliate files under
ERISA with the Internal Revenue Service, the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or that the Seller or any
Affiliate receives from any of the
<PAGE> 54
foregoing or from any multiemployer plan (within the meaning of
Section 4001(a)(3) of ERISA) to which the Seller or any of its
Affiliates is or was, within the preceding five years, a contributing
employer, in each case in respect of the assessment of withdrawal
liability or an event or condition that could, in the aggregate, result
in the imposition of liability on the Seller and/or any such Affiliate;
(iv) at least thirty days before any change in the Seller's
name or any other change requiring the amendment of UCC financing
statements, a notice setting forth such changes and the effective date
thereof;
(v) promptly after the Seller obtains knowledge thereof,
notice of any: (A) material litigation, investigation or proceeding
that may exist at any time between the Seller and any Person or (B)
material litigation or proceeding relating to any Transaction Document;
(vi) promptly after the occurrence thereof, notice of a
material adverse change in the business, operations, property or
financial or other condition of the Seller, the Servicer or any
Originator; and
(vii) such other information respecting the Receivables or the
condition or operations, financial or otherwise, of the Seller or any
of its Affiliates as the Administrator may from time to time reasonably
request.
(m) Certain Agreements. Without the prior written consent of the
Administrator, the Seller will not (and will not permit any Originator to)
amend, modify, waive, revoke or terminate any Transaction Document to which it
is a party or any provision of Seller's certificate of incorporation or by-laws.
(n) Restricted Payments. (i) Except pursuant to clause (ii) below, the
Seller will not: (A) purchase or redeem any shares of its capital stock, (B)
declare or pay any dividend or set aside any funds for any such purpose, (C)
prepay, purchase or redeem any Debt, (D) lend or advance any funds or (E) repay
any loans or advances to, for or from any of its Affiliates (the amounts
described in clauses (A) through (E) being referred to as "Restricted
Payments").
(ii) Subject to the limitations set forth in clause (iii)
below, the Seller may make Restricted Payments so long as such
Restricted Payments are made only in one or more of the following ways:
(A) the Seller may make cash payments (including prepayments) on the
Company Note in accordance with its terms, and (B) if no amounts are
then outstanding under the Company Note, the Seller may declare and pay
dividends.
(iii) The Seller may make Restricted Payments only out of the
funds it receives pursuant to Sections 1.4(b)(ii) and (iv) of the
Agreement. Furthermore, the Seller shall not pay, make or declare: (A)
any dividend if, after giving effect
<PAGE> 55
thereto, the Seller's tangible net worth would be less than
$50,000,000, or (B) any Restricted Payment (including any dividend) if,
after giving effect thereto, any Termination Event or Unmatured
Termination Event shall have occurred and be continuing.
(o) Other Business. The Seller will not: (i) engage in any business
other than the transactions contemplated by the Transaction Documents; (ii)
create, incur or permit to exist any Debt of any kind (or cause or permit to be
issued for its account any letters of credit or bankers' acceptances) other than
pursuant to this Agreement or the Company Note; or (iii) form any Subsidiary or
make any investments in any other Person; provided, however, that the Seller
shall be permitted to incur minimal obligations to the extent necessary for the
day-to-day operations of the Seller (such as expenses for stationery, audits,
maintenance of legal status, etc.).
(p) Use of Seller's Share of Collections. The Seller shall apply the
Seller's Share of Collections to make payments in the following order of
priority: (i) the payment of its expenses (including all obligations payable to
the Issuer and the Administrator under the Agreement and under the Fee Letter);
(ii) the payment of accrued and unpaid interest on the Company Note; and (iii)
other legal and valid corporate purposes.
(q) Tangible Net Worth. The Seller will not permit its tangible net
worth, at any time, to be less than $50,000,000.
2. Covenants of the Servicer and WESCO. Until the latest of the
Facility Termination Date, the date on which no Capital of or Discount in
respect of the Purchased Interest shall be outstanding or the date all other
amounts owed by the Seller under the Agreement to the Issuer, the Administrator
and any other Indemnified Party or Affected Person shall be paid in full:
(a) Compliance with Laws, Etc. The Servicer and, to the extent that it
ceases to be the Servicer, WESCO shall comply (and shall cause each Originator
to comply) in all material respects with all applicable laws, rules, regulations
and orders, and preserve and maintain its corporate existence, rights,
franchises, qualifications and privileges, except to the extent that the failure
so to comply with such laws, rules and regulations or the failure so to preserve
and maintain such existence, rights, franchises, qualifications and privileges
would not have a Material Adverse Effect.
(b) Offices, Records and Books of Account, Etc. The Servicer and, to
the extent that it ceases to be the Servicer, WESCO, shall keep (and shall cause
each Originator to keep) its principal place of business and chief executive
office (as such terms or similar terms are used in the applicable UCC) and the
office where it keeps its records concerning the Receivables at the address of
the Servicer set forth under its name on the signature page to the Agreement or,
upon at least 30 days' prior written notice of a proposed change to the
Administrator, at any other locations in jurisdictions where all actions
reasonably requested by the Administrator to protect and perfect the interest of
the Issuer in the Receivables and related items (including the Pool Assets) have
been
<PAGE> 56
taken and completed. The Servicer and, to the extent that it ceases to be the
Servicer, WESCO, also will (and will cause each Originator to) maintain and
implement administrative and operating procedures (including an ability to
recreate records evidencing Receivables and related Contracts in the event of
the destruction of the originals thereof), and keep and maintain all documents,
books, records, computer tapes and disks and other information reasonably
necessary or advisable for the collection of all Receivables (including records
adequate to permit the daily identification of each Receivable and all
Collections of and adjustments to each existing Receivable).
(c) Performance and Compliance with Contracts and Credit and Collection
Policy. The Servicer and, to the extent that it ceases to be the Servicer,
WESCO, shall (and shall cause each Originator to), at its expense, timely and
fully perform and comply with all material provisions, covenants and other
promises required to be observed by it under the Contracts related to the
Receivables, and timely and fully comply in all material respects with the
Credit and Collection Policy with regard to each Receivable and the related
Contract.
(d) Extension or Amendment of Receivables. Except as provided in the
Agreement, the Servicer and, to the extent that it ceases to be the Servicer,
WESCO, shall not extend (and shall not permit any Originator to extend), the
maturity or adjust the Outstanding Balance or otherwise modify the terms of any
Pool Receivable, or amend, modify or waive any term or condition of any related
Contract.
(e) Change in Business or Credit and Collection Policy. The Servicer
and, to the extent that it ceases to be the Servicer, WESCO, shall not make (and
shall not permit any Originator to make) any material change in the character of
its business or in any Credit and Collection Policy, or any change in any Credit
and Collection Policy that would have a Material Adverse Effect. The Servicer
and, to the extent that it ceases to be the Servicer, WESCO, shall not make (and
shall not permit any Originator to make) any other change in any Credit and
Collection Policy without giving prior written notice thereof to the
Administrator.
(f) Audits. The Servicer and, to the extent that it ceases to be the
Servicer, WESCO, shall (and shall cause each Originator to), from time to time
during regular business hours, but no more frequently than annually unless (x) a
Termination Event or Unmatured Termination Event has occurred and is continuing
or (y) in the opinion of the Administrator reasonable grounds for insecurity
exist with respect to the collectability of a material portion of the Pool
Receivables or with respect to the Servicer's performance or ability to perform
in any material respect its obligations under the Agreement, as reasonably
requested in advance (unless a Termination Event or Unmatured Termination Event
exists) by the Administrator, permit the Administrator, or its agents or
representatives: (i) to examine and make copies of and abstracts from all books,
records and documents (including computer tapes and disks) in its possession or
under its control relating to Receivables and the Related Security, including
the related Contracts; and (ii) to visit its offices and properties for the
purpose of examining such materials described in clause (i) above, and to
discuss matters relating to Receivables and the Related Security
<PAGE> 57
or its performance hereunder or under the Contracts with any of its officers,
employees, agents or contractors having knowledge of such matters.
(g) Change in Lock-Box Banks, Lock-Box Accounts and Payment
Instructions to Obligors. The Servicer and, to the extent that it ceases to be
the Servicer, WESCO, shall not (and shall not permit any Originator to) add or
terminate any bank as a Lock-Box Bank or any account as a Lock-Box Account from
those listed in Schedule II to the Agreement, or make any change in its
instructions to Obligors regarding payments to be made to the Servicer or any
Lock-Box Account (or related post office box), unless the Administrator shall
have consented thereto in writing and the Administrator shall have received
copies of all agreements and documents (including Lock-Box Agreements) that it
may request in connection therewith.
(h) Deposits to Lock-Box Accounts. The Servicer shall: (i) instruct all
Obligors to make payments of all Receivables to one or more Lock-Box Accounts or
to post office boxes to which only Lock-Box Banks have access (and shall
instruct the Lock-Box Banks to cause all items and amounts relating to such
Receivables received in such post office boxes to be removed and deposited into
a Lock-Box Account on a daily basis); and (ii) deposit, or cause to be
deposited, any Collections received by it into Lock-Box Accounts not later than
one Business Day after receipt thereof. Except as otherwise agreed to in writing
by the Administrator, each Lock-Box Account shall at all times be subject to a
Lock-Box Agreement. The Servicer will not deposit or otherwise credit, or cause
or permit to be so deposited or credited, to any Lock-Box Account cash or cash
proceeds other than Collections.
(i) [Intentionally Omitted].
(j) Reporting Requirements. WESCO shall provide to the Administrator
(in multiple copies, if requested by the Administrator) the following:
(i) as soon as available and in any event within 45 days after
the end of the first three quarters of each fiscal year of WESCO,
balance sheets of WESCO and its consolidated Subsidiaries as of the end
of such quarter and statements of income, retained earnings and cash
flow of WESCO and its consolidated Subsidiaries for the period
commencing at the end of the previous fiscal year and ending with the
end of such quarter, certified by the chief financial officer of such
Person;
(ii) as soon as available and in any event within 90 days
after the end of each fiscal year of such Person, a copy of the annual
report for such year for such Person and its consolidated Subsidiaries,
containing financial statements for such year audited by independent
certified public accountants of nationally recognized standing;
(iii) as to the Servicer only, as soon as available and in any
event not later than the twentieth day after the last day of each
calendar month, an Information
<PAGE> 58
Package as of the last day of such month or, within 10 Business Days of
a request by the Administrator, an Information Package for such periods
as is specified by the Administrator (including on a semi-monthly,
weekly or daily basis);
(iv) as soon as possible and in any event within five days
after becoming aware of the occurrence of each Termination Event or
Unmatured Termination Event, a statement of the chief financial officer
of WESCO setting forth details of such Termination Event or Unmatured
Termination Event and the action that such Person has taken and
proposes to take with respect thereto;
(v) promptly after the sending or filing thereof, copies of
all reports that WESCO sends to any of its security holders, and copies
of all reports and registration statements that WESCO or any Subsidiary
files with the Securities and Exchange Commission or any national
securities exchange; provided, that any filings with the Securities and
Exchange Commission that have been granted "confidential" treatment
shall be provided promptly after such filings have become publicly
available;
(vi) promptly after the filing or receiving thereof, copies of
all reports and notices that WESCO or any of its Affiliate files under
ERISA with the Internal Revenue Service, the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or that such Person or any
of its Affiliates receives from any of the foregoing or from any
multiemployer plan (within the meaning of Section 4001(a)(3) of ERISA)
to which such Person or any of its Affiliate is or was, within the
preceding five years, a contributing employer, in each case in respect
of the assessment of withdrawal liability or an event or condition that
could, in the aggregate, result in the imposition of liability on WESCO
and/or any such Affiliate;
(vii) at least thirty days before any change in WESCO's or any
Originator's name or any other change requiring the amendment of UCC
financing statements, a notice setting forth such changes and the
effective date thereof;
(viii) promptly after WESCO obtains knowledge thereof, notice
of any: (A) litigation, investigation or proceeding that may exist at
any time between WESCO or any of its Subsidiaries and any Governmental
Authority that, if not cured or if adversely determined, as the case
may be, would have a Material Adverse Effect; (B) litigation or
proceeding adversely affecting such Person or any of its Subsidiaries
in which the amount involved is $500,000 or more and not covered by
insurance or in which injunctive or similar relief is sought; or (C)
litigation or proceeding relating to any Transaction Document;
(ix) promptly after the occurrence thereof, notice of a
material adverse change in the business, operations, property or
financial or other condition of WESCO or any of its Subsidiaries; and
<PAGE> 59
(x) such other information respecting the Receivables or the
condition or operations, financial or otherwise, of WESCO or any of its
Affiliates as the Administrator may from time to time reasonably
request.
3. Separate Existence. Each of the Seller and WESCO hereby acknowledges
that the Purchasers, the Issuer and the Administrator are entering into the
transactions contemplated by this Agreement and the other Transaction Documents
in reliance upon the Seller's identity as a legal entity separate from WESCO and
its Affiliates. Therefore, from and after the date hereof, each of the Seller
and WESCO shall take all steps specifically required by the Agreement or
reasonably required by the Administrator to continue the Seller's identity as a
separate legal entity and to make it apparent to third Persons that the Seller
is an entity with assets and liabilities distinct from those of WESCO and any
other Person, and is not a division of WESCO, its Affiliates or any other
Person. Without limiting the generality of the foregoing and in addition to and
consistent with the other covenants set forth herein, each of the Seller and
WESCO shall take such actions as shall be required in order that:
(a) The Seller will be a limited purpose corporation whose
primary activities are restricted in its certificate of incorporation
to: (i) purchasing or otherwise acquiring from the Originators, owning,
holding, granting security interests or selling interests in Pool
Assets, (ii) entering into agreements for the selling and servicing of
the Receivables Pool, and (iii) conducting such other activities as it
deems necessary or appropriate to carry out its primary activities;
(b) The Seller shall not engage in any business or activity,
or incur any indebtedness or liability, other than as expressly
permitted by the Transaction Documents;
(c) Not less than one member of the Seller's Board of
Directors (the "Independent Director") shall be an individual who is
not a direct, indirect or beneficial stockholder, officer, director,
employee, affiliate, associate or supplier of WESCO or any of its
Affiliates. The certificate of incorporation of the Seller shall
provide that: (i) the Seller's Board of Directors shall not approve, or
take any other action to cause the filing of, a voluntary bankruptcy
petition with respect to the Seller unless the Independent Director
shall approve the taking of such action in writing before the taking of
such action, and (ii) such provision cannot be amended without the
prior written consent of the Independent Director;
(d) The Independent Director shall not at any time serve as a
trustee in bankruptcy for the Seller, WESCO or any Affiliate thereof;
(e) Any employee, consultant or agent of the Seller will be
compensated from the Seller's funds for services provided to the
Seller. The Seller will not engage any agents other than its attorneys,
auditors and other professionals, and a servicer and any other agent
contemplated by the Transaction Documents for the
<PAGE> 60
Receivables Pool, which servicer will be fully compensated for its
services by payment of the Servicing Fee, and a manager, which manager
will be fully compensated from the Seller's funds;
(f) The Seller will contract with the Servicer to perform for
the Seller all operations required on a daily basis to service the
Receivables Pool. The Seller will pay the Servicer the Servicing Fee
pursuant hereto. The Seller will not incur any material indirect or
overhead expenses for items shared with WESCO (or any other Affiliate
thereof) that are not reflected in the Servicing Fee. To the extent, if
any, that the Seller (or any Affiliate thereof) shares items of
expenses not reflected in the Servicing Fee or the manager's fee, such
as legal, auditing and other professional services, such expenses will
be allocated to the extent practical on the basis of actual use or the
value of services rendered, and otherwise on a basis reasonably related
to the actual use or the value of services rendered; it being
understood that WESCO shall pay all expenses relating to the
preparation, negotiation, execution and delivery of the Transaction
Documents, including legal, agency and other fees;
(g) The Seller's operating expenses will not be paid by WESCO
or any other Affiliate thereof;
(h) All of the Seller's business correspondence and other
communications shall be conducted in the Seller's own name and on its
own separate stationery;
(i) The Seller's books and records will be maintained
separately from those of WESCO and any other Affiliate thereof;
(j) All financial statements of WESCO or any Affiliate thereof
that are consolidated to include Seller will contain detailed notes
clearly stating that: (i) a special purpose corporation exists as a
Subsidiary of WESCO, and (ii) the Originators has sold receivables and
other related assets to such special purpose Subsidiary that, in turn,
has sold undivided interests therein to certain financial institutions
and other entities;
(k) The Seller's assets will be maintained in a manner that
facilitates their identification and segregation from those of WESCO or
any Affiliate thereof;
(l) The Seller will strictly observe corporate formalities in
its dealings with WESCO or any Affiliate thereof, and funds or other
assets of the Seller will not be commingled with those of WESCO or any
Affiliate thereof except as permitted by the Agreement in connection
with servicing the Pool Receivables. The Seller shall not maintain
joint bank accounts or other depository accounts to which WESCO or any
Affiliate thereof (other than WESCO in its capacity as the Servicer)
has independent access. The Seller is not named, and has not entered
into any agreement to be named, directly or indirectly, as a direct or
contingent beneficiary or loss payee on any insurance policy with
respect to any loss relating to the
<PAGE> 61
property of WESCO or any Subsidiary or other Affiliate of WESCO. The
Seller will pay to the appropriate Affiliate the marginal increase or,
in the absence of such increase, the market amount of its portion of
the premium payable with respect to any insurance policy that covers
the Seller and such Affiliate; and
(m) The Seller will maintain arm's-length relationships with
WESCO (and any Affiliate thereof). Any Person that renders or otherwise
furnishes services to the Seller will be compensated by the Seller at
market rates for such services it renders or otherwise furnishes to the
Seller. Neither the Seller nor WESCO will be or will hold itself out to
be responsible for the debts of the other or the decisions or actions
respecting the daily business and affairs of the other. The Seller and
WESCO will immediately correct any known misrepresentation with respect
to the foregoing, and they will not operate or purport to operate as an
integrated single economic unit with respect to each other or in their
dealing with any other entity.
(n) WESCO shall not pay the salaries of Seller's employees, if
any.
<PAGE> 62
EXHIBIT V
TERMINATION EVENTS
Each of the following shall be a "Termination Event":
(a)(i) the Seller, WESCO, any Originator or the Servicer shall fail to
perform or observe any term, covenant or agreement under the Agreement or any
other Transaction Document and, except as otherwise provided herein, such
failure shall continue for 10 days after knowledge or notice thereof, (ii) the
Seller or the Servicer shall fail to make when due any payment or deposit to be
made by it under the Agreement and such failure shall continue unremedied for
[three ] Business Days or (iii) WESCO shall resign as Servicer, and no successor
Servicer reasonably satisfactory to the Administrator shall have been appointed;
(b) WESCO (or any Affiliate thereof) shall fail to transfer to any
successor Servicer when required any rights pursuant to the Agreement that WESCO
(or such Affiliate) then has as Servicer;
(c) any representation or warranty made or deemed made by the Seller,
WESCO or any Originator (or any of their respective officers) under or in
connection with the Agreement or any other Transaction Document, or any
information or report delivered by the Seller, WESCO or any Originator or the
Servicer pursuant to the Agreement or any other Transaction Document, shall
prove to have been incorrect or untrue in any material respect when made or
deemed made or delivered, and shall remain incorrect or untrue for 10 days after
notice to the Seller or the Servicer of such inaccuracy;
(d) the Seller or the Servicer shall fail to deliver the Information
Package pursuant to the Agreement, and such failure shall remain unremedied for
two days;
(e) the Agreement or any purchase or reinvestment pursuant to the
Agreement shall for any reason: (i) cease to create, or the Purchased Interest
shall for any reason cease to be, a valid and enforceable perfected undivided
percentage ownership or security interest to the extent of the Purchased
Interest in each Pool Receivable, the Related Security and Collections with
respect thereto, free and clear of any Adverse Claim, or (ii) cease to create
with respect to the Pool Assets, or the interest of the Issuer with respect to
such Pool Assets shall cease to be, a valid and enforceable first priority
perfected security interest, free and clear of any Adverse Claim,
(f) the Seller, WESCO or any Originator shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Seller, WESCO
or any Originator seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement,
<PAGE> 63
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by it), either such proceeding shall remain undismissed or
unstayed for a period of 60 days, or any of the actions sought in such
proceeding (including the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official for, it
or for any substantial part of its property) shall occur; or the Seller, WESCO
or any Originator shall take any corporate action to authorize any of the
actions set forth above in this paragraph;
(g) the (A) Default Ratio shall exceed 10%; (B) the Delinquency
Ratio shall exceed 25%, or (C) the Dilution Ratio shall exceed 10%.
(h) a Change in Control shall occur,
(i) at any time (i) the sum of (A) the Capital plus (B) the Total
Reserves, exceeds (ii) the sum of (A) the Net Receivables Pool Balance at such
time plus (B) the Issuer's Share of the amount of Collections then on deposit in
the Lock-Box Accounts (other than amounts set aside therein representing
Discount and fees), and such circumstance shall not have been cured within two
Business Days,
(j) (i) WESCO or any of its Subsidiaries shall fail to pay any
principal of or premium or interest on any of its Debt that is outstanding in a
principal amount of at least $20,000,000 in the aggregate when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement, mortgage, indenture
or instrument relating to such Debt (and shall have not been waived); or (ii)
any other event shall occur or condition shall exist under any agreement,
mortgage, indenture or instrument relating to any such Debt and shall continue
after the applicable grace period, if any, specified in such agreement,
mortgage, indenture or instrument (and shall have not been waived), if, in
either case: (a) the effect of such non-payment, event or condition is to give
the applicable debtholders the right (whether acted upon or not) to accelerate
the maturity of such Debt, or (b) any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), redeemed, purchased or defeased, or an offer to repay, redeem,
purchase or defease such Debt shall be required to be made, in each case before
the stated maturity thereof;
(k) either: (i) a contribution failure shall occur with respect to any
Benefit Plan sufficient to give rise to a lien under Section 302(f) of ERISA,
(ii) the Internal Revenue Service shall file a notice of lien asserting a claim
or claims of $250,000 or more in the aggregate pursuant to the Internal Revenue
Code with regard to any of the
<PAGE> 64
assets of Seller, any Originator, WESCO or any ERISA Affiliate and such lien
shall have been filed and not released within 10 days, or (iii) the Pension
Benefit Guaranty Corporation shall, or shall indicate its intention in writing
to the Seller, any Originator, WESCO or any ERISA Affiliate to, either file a
notice of lien asserting a claim pursuant to ERISA with regard to any assets of
the Seller, any Originator, WESCO or any ERISA Affiliate or terminate any
Benefit Plan that has unfunded benefit liabilities, or any steps shall have been
taken to terminate any Benefit Plan subject to Title IV of ERISA so as to result
in any liability in excess of $1,000,000 and such lien shall have been filed and
not released within 10 days.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WESCO
INTERNATIONAL, INC. AND SUBSIDIAIRIES' UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 41,331
<SECURITIES> 0
<RECEIVABLES> 238,331
<ALLOWANCES> 6,817
<INVENTORY> 385,296
<CURRENT-ASSETS> 707,630
<PP&E> 109,066
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,089,824
<CURRENT-LIABILITIES> 486,008
<BONDS> 476,526
0
0
<COMMON> 477
<OTHER-SE> 99,577
<TOTAL-LIABILITY-AND-EQUITY> 1,089,824
<SALES> 1,641,566
<TOTAL-REVENUES> 1,641,566
<CGS> 1,345,772
<TOTAL-COSTS> 1,581,125
<OTHER-EXPENSES> 9,547
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,791
<INCOME-PRETAX> 24,103
<INCOME-TAX> 9,638
<INCOME-CONTINUING> 14,465
<DISCONTINUED> 0
<EXTRAORDINARY> 10,507
<CHANGES> 0
<NET-INCOME> 3,958
<EPS-BASIC> 0.11
<EPS-DILUTED> 0.10
</TABLE>
