CREDIT AGREEMENT
Published on November 14, 2001
EXHIBIT 10.1
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CREDIT AGREEMENT
DATED AS OF SEPTEMBER 28, 2001
BY AND AMONG
THE HILLMAN GROUP, INC.
AS BORROWER
AND
HELLER FINANCIAL, INC.
AS AGENT, AN ISSUING LENDER AND A LENDER
AND
ANTARES CAPITAL CORPORATION,
GENERAL ELECTRIC CAPITAL CORPORATION AND
MADISON CAPITAL FUNDING LLC,
EACH AS A CO-AGENT
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
AS LENDERS
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TABLE OF CONTENTS
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INDEX OF DEFINED TERMS
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CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of September 28, 2001 and
entered into by and among THE HILLMAN GROUP, INC., a Delaware Corporation
("Borrower"), with its principal place of business at 10590 Hamilton Avenue,
Cincinnati, Ohio 45231, the financial institutions who are or hereafter become
parties to this Agreement as "Lenders" (as defined in subsection 10.1 hereof),
and HELLER FINANCIAL, INC., a Delaware corporation (in its individual capacity
"Heller"), with its principal place of business at 500 West Monroe Street,
Chicago, Illinois 60661, as the initial "Issuing Lender" and as "Agent" (as such
terms are defined in subsection 10.1 hereof) and each of ANTARES CAPITAL
CORPORATION, GENERAL ELECTRIC CAPITAL CORPORATION and MADISON CAPITAL FUNDING
LLC, each as a Co-Agent ("Co-Agents").
R E C I T A L S:
WHEREAS, Borrower desires that Lenders extend term credit
facilities and a revolving credit facility to Borrower (a) to fund the repayment
of certain indebtedness of Borrower and its Affiliates (as hereinafter defined
in subsection 10.1), in conjunction with the acquisition ("Acquisition") of the
outstanding shares of SunSource Inc., a Delaware corporation ("First Tier
Holdings") by Allied Capital Corporation, a Maryland corporation ("Allied") and
certain other Persons (as hereinafter defined in subsection 10.1) pursuant to a
Merger Agreement dated June 18, 2001 among First Tier Holdings, Allied and
Allied Capital Lock Acquisition Corporation, a Delaware corporation (the "Merger
Agreement"), (b) to provide funds for costs associated with the Acquisition (it
being understood that such costs, whether or not funded hereunder, shall not
exceed $12,000,000), (c) to provide working capital financing for Borrower and
(d) to provide funds for other general corporate purposes of Borrower; and
WHEREAS, Borrower desires to secure all of its Obligations (as
hereinafter defined in subsection 10.1) under the Loan Documents (as hereinafter
defined in subsection 10.1) by granting to Agent, for the benefit of Agent and
Lenders, a security interest in and lien upon all of its personal and real
property; and
WHEREAS, SunSource Investment Company, Inc., a Delaware
corporation that owns all of the capital stock of Borrower ("Second Tier
Holdings"), and First Tier Holdings each are willing to guaranty all of the
Obligations of Borrower to Lenders under the Loan Documents and to pledge to
Agent, for the benefit of Agent and Lenders, all of the capital stock of
Borrower and Second Tier Holdings, respectively, to secure the Obligations;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Borrower, Lenders and
Agent agree as follows:
SECTION 1
AMOUNTS AND TERMS OF LOANS
1.1 Loans.
Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Borrower contained herein:
(A) Term Loans. Each Lender agrees, severally and not
jointly, to lend to Borrower in one draw, on the Closing
Date, its Pro Rata Share of the following amounts:
(i) "Term Loan A", in an amount equal to $20,000,000; and
(ii) "Term Loan B", in an amount equal to $35,000,000.
Term Loan A and Term Loan B will be referred to together as the
"Term Loans".
Borrower shall repay the Term Loans through periodic payments on
the dates and in the amounts indicated below ("Scheduled Installments").
Term Loan A
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Term Loan B
Notwithstanding the foregoing, the outstanding principal balance
of the Term Loans shall be due and payable in full at par on the date, if any,
that interest on the Debentures has been actually deferred for a period of
fifty-four (54) consecutive months pursuant to Section 2.04 of the Indenture
(the "Early Termination"). Amounts borrowed under this subsection 1.1(A) and
repaid may not be reborrowed.
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(B) Revolving Loans.
(1) Each Lender agrees, severally and not jointly, to lend
to Borrower from the Closing Date to September 27, 2006 (the "Commitment
Termination Date") its Pro Rata Share of the loans requested by Borrower to be
made by Lenders under this subsection 1.1(B), up to an aggregate maximum for all
Lenders of $50,000,000 (as the same may be reduced from time to time hereunder,
the "Revolving Loan Commitment"). Advances or amounts outstanding under the
Revolving Loan Commitment will be called "Revolving Loans". Revolving Loans may
be repaid and reborrowed. All Revolving Loans shall be repaid in full on the
Commitment Termination Date. If at any time the outstanding Revolving Loans
exceed the Maximum Revolving Loan Balance (as it may be deemed increased from
time to time pursuant to subsection 1.1(B)(2)), Lenders shall not be obligated
to make Revolving Loans, no additional Letters of Credit shall be issued and
Revolving Loans must be repaid immediately in an amount sufficient to eliminate
any excess. Revolving Loans may be requested in any amount with one (1) Business
Day prior written or telephonic notice required for amounts equal to or greater
than $5,000,000. For amounts less than $5,000,000, written or telephonic notice
must be provided by noon Chicago time on the day on which the Loan is to be
made. All LIBOR Loans require three (3) Business Days prior written notice. All
Loans requested telephonically must be confirmed in writing within twenty-four
(24) hours. Written notices for funding requests shall be in the form attached
as Exhibit 1.1(B). Neither Agent nor any Lender shall incur any liability to
Borrower for acting upon any telephonic notice that Agent believes in good faith
to have been given by a duly authorized officer or other person authorized to
borrow on behalf of Borrower. In addition to providing the appropriate notice
pursuant to the immediately preceding sentences, Loans used to consummate
Permitted Acquisitions will only be made after the satisfaction of all terms and
conditions contained within the definition of the term "Permitted Acquisition"
and elsewhere herein. The "Maximum Revolving Loan Balance" will be the lesser of
(a) the "Governor" (as calculated on Exhibit 4.8(E), the "Availability
Certificate") less outstanding Letter of Credit Liability ("Governor
Availability") or (b) the Revolving Loan Commitment less outstanding Letter of
Credit Liability.
(2) If Borrower requests that Lenders make, or permit to
remain outstanding, Revolving Loans in an aggregate amount in excess of Governor
Availability, Lenders having sixty percent (60%) or more of the Revolving Loan
Commitment may in their discretion elect to cause all Lenders having a Revolving
Loan Commitment to make, or permit to remain outstanding, such excess Revolving
Loans (such Revolving Loans in excess of Governor Availability being referred to
as "Overadvance Revolving Loans"), provided, however, that such Lenders may not
cause all Lenders having a Revolving Loan Commitment to make, or permit to
remain outstanding, (a) Revolving Loans in excess of the Revolving Loan
Commitment less outstanding Letter of Credit Liability or (b) Overadvance
Revolving Loans in excess of $5,000,000. If Overadvance Revolving Loans are
made, or permitted to remain outstanding, pursuant to the preceding sentence,
then (a) the Maximum Revolving Loan Balance shall be deemed increased by the
amount of such permitted
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Overadvance Revolving Loans, but only for so long as Lenders having sixty
percent (60%) or more of the Revolving Loan Commitment allow such Overadvance
Revolving Loans to be outstanding and (b) all Lenders that have committed to
make Revolving Loans shall be bound to make, or permit to remain outstanding,
such Overadvance Revolving Loans based upon their Pro Rata Shares of the
Revolving Loan Commitment in accordance with the terms of this Agreement. If
Overadvance Revolving Loans are outstanding for more than a total of ninety (90)
days during any one hundred eighty (180) day period, Revolving Loans must be
repaid immediately in an amount sufficient to eliminate all of such Overadvance
Revolving Loans.
(C) Letters of Credit.
The Revolving Loan Commitment may, in addition to advances under
the Revolving Loan, be utilized, upon the request of Borrower, for (i) the
issuance of standby letters of credit for the account of Borrower by Heller or
any other Issuing Lender, (ii) the issuance of commercial letters of credit for
the account of Borrower by any Issuing Lender other than Heller or (iii) the
issuance of standby letters of credit or commercial letters of credit for the
account of Borrower under risk participation agreements entered into by Heller,
as Issuing Lender, with other banks or financial institutions (the letters of
credit described in clauses (i), (ii) and (iii) will be referred to hereinafter
collectively as "Letters of Credit"). Immediately upon the issuance by an
Issuing Lender or a Bank Line Issuer of a Letter of Credit, and without further
action on the part of Agent or any of the Lenders, each Lender with a Revolving
Loan Commitment shall be deemed to have purchased from such Issuing Lender a
participation in such Letter of Credit (or in its obligation under a risk
participation agreement with respect thereto) equal to such Lender's Pro Rata
Share of the aggregate amount available to be drawn under such Letter of Credit.
(1) Maximum Amount. The aggregate amount of Letter of Credit
Liability with respect to all Letters of Credit outstanding at any time shall
not exceed $10,000,000.
(2) Reimbursement. Borrower shall be irrevocably and
unconditionally obligated forthwith without presentment, demand, protest or
other formalities of any kind, to reimburse any Issuing Lender on demand in
immediately available funds for any amounts paid by such Issuing Lender with
respect to a Letter of Credit, including all reimbursement payments, fees,
charges, costs and expenses paid by Heller, as Issuing Lender, to any bank that
issues Letters of Credit under a risk participation agreement (a "Bank Line
Issuer"). Borrower hereby authorizes and directs Agent to debit Borrower's
account (by increasing the outstanding principal balance of the Revolving Loan)
in the amount of any payment made by an Issuing Lender with respect to any
Letter of Credit. Agent shall debit Borrower's account as aforesaid if all the
conditions precedent to make Revolving Loans, as set forth in Section 7, have
been satisfied. If all such conditions have not been satisfied, Agent shall have
the option to debit Borrower's account as aforesaid. All amounts paid by an
Issuing Lender with respect to any Letter of Credit that are not immediately
repaid by Borrower with the proceeds
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of a Revolving Loan or otherwise shall bear interest at the interest rate
applicable to Revolving Loans which are Base Rate Loans plus, at the election of
Agent or Requisite Lenders, an additional two percent (2.00%) per annum. Each
Lender agrees to fund its Pro Rata Share of any Revolving Loan made pursuant to
this subsection 1.1(C)(2). In the event Agent does not debit Borrower's account
and Borrower fails to reimburse an Issuing Lender in full on the date of any
payment in respect of a Letter of Credit, Agent shall promptly notify each
Lender with a Revolving Loan Commitment of the amount of such unreimbursed
payment and the accrued interest thereon and each Lender, on the next Business
Day, shall deliver to Agent an amount equal to its Pro Rata Share thereof in
same day funds. Each Lender with a Revolving Loan Commitment hereby absolutely
and unconditionally agrees to pay to each Issuing Lender upon demand by such
Issuing Lender such Lender's Pro Rata Share of each payment made by such Issuing
Lender in respect of a Letter of Credit and not immediately reimbursed by
Borrower or satisfied through a debit of Borrower's account. Each Lender with a
Revolving Loan Commitment acknowledges and agrees that its obligations to
acquire participations pursuant to this subsection in respect of Letters of
Credit and to make the payments to each Issuing Lender required by the preceding
sentence are absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or an Event of Default or any failure by Borrower to satisfy any of the
conditions set forth in subsection 7.2. If any Lender fails to make available to
an Issuing Lender the amount of such Lender's Pro Rata Share of any payments
made by such Issuing Lender in respect of a Letter of Credit as provided in this
subsection 1.1(C)(2), such Issuing Lender shall be entitled to recover such
amount on demand from such Lender together with interest at the Base Rate.
(3) Request for Letters of Credit. Borrower shall give Agent
at least three (3) Business Days prior written notice specifying the date a
Letter of Credit is requested to be issued, the amount, the name and address of
the beneficiary, the proposed identity of the Issuing Lender and a description
of the transactions proposed to be supported thereby. If Agent informs Borrower
that an Issuing Lender cannot issue the requested Letter of Credit directly,
Borrower may request that Heller arrange for the issuance of the requested
Letter of Credit under a risk participation agreement with another financial
institution reasonably acceptable to Heller and Borrower. The issuance of any
Letter of Credit under this Agreement shall be subject to the conditions that
the Letter of Credit (i) supports a transaction entered into in the ordinary
course of business of Borrower and (ii) is in a form, is for an amount and
contains such terms and conditions as are reasonably satisfactory to the Issuing
Lender or the Bank Line Issuer asked to issue such Letter of Credit and, in the
case of standby letters of credit, Agent. In the event that Borrower seeks the
issuance of a Letter of Credit through a Bank Line Issuer or an Issuing Lender
other than Heller, the issuance of such Letter of Credit shall be further
conditioned on Borrower either maintaining an operating account with such Bank
Line Issuer or other Issuing Lender or otherwise arranging to be charged
directly by such Bank Line Issuer or other Issuing Lender for drawings under any
such Letters of Credit and any related fees and expenses. Any notice requesting
the issuance of a Letter of Credit shall be accompanied by the form of the
Letter of Credit and
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the application or reimbursement agreement, if any, then required by the Issuing
Lender or Bank Line Issuer asked to issue such Letter of Credit completed in a
manner satisfactory to such Issuing Lender or Bank Line Issuer. If any provision
of any application or reimbursement agreement is inconsistent with the terms of
this Agreement, then the provisions of this Agreement, to the extent of such
inconsistency, shall control.
(4) Expiration Dates of Letters of Credit. The expiration
date of each Letter of Credit shall be on a date which is not later than the
earlier of (a) one year from its date of issuance or (b) the thirtieth (30th)
day prior to the Commitment Termination Date. Notwithstanding the foregoing, a
Letter of Credit may provide for automatic extensions of its expiration date for
one or more successive one year periods provided that the Issuing Lender or Bank
Line Issuer that issued such Letter of Credit has the right to terminate such
Letter of Credit on each such annual expiration date and no renewal term may
extend the term of the Letter of Credit to a date that is later than the
thirtieth (30th) day prior to the Commitment Termination Date. An Issuing Lender
may elect not to renew any such Letter of Credit and, upon direction by Agent or
Requisite Lenders, shall not renew any such Letter of Credit at any time during
the continuance of an Event of Default, provided that, in the case of a
direction by Agent or Requisite Lenders, such Issuing Lender receives such
directions prior to the date notice of non-renewal is required to be given by
such Issuing Lender and such Issuing Lender has had a reasonable period of time
to act on such notice.
(5) Obligations Absolute. The obligation of Borrower to
reimburse an Issuing Lender for payments made in respect of Letters of Credit
issued by such Issuing Lender shall be unconditional and irrevocable and shall
be paid under all circumstances strictly in accordance with the terms of this
Agreement including, without limitation, the following circumstances: (a) any
lack of validity or enforceability of any Letter of Credit; (b) any amendment or
waiver of or any consent or departure from all or any of the provisions of any
Letter of Credit or any Loan Document; (c) the existence of any claim, set-off,
defense or other right which Borrower, any of its Subsidiaries or Affiliates or
any other Person may at any time have against any beneficiary of any Letter of
Credit, Agent, any Issuing Lender, any Bank Line Issuer, any Lender or any other
Person, whether in connection with this Agreement, any other Loan Document or
any other related or unrelated agreements or transactions; (d) any draft or
other document presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; (e) payment under any Letter of
Credit against presentation of a draft or other document that does not
substantially comply with the terms of such Letter of Credit; or (f) any other
act or omission to act or delay of any kind of any Issuing Lender, any Bank Line
Issuer, Agent, any Lender or any other Person or any other event or circumstance
whatsoever that might, but for the provisions of this subsection, constitute a
legal or equitable discharge of Borrower's obligations hereunder.
(6) Obligations of Issuing Lenders. Each Issuing Lender
(other than Heller) hereby agrees that it will not issue a Letter of Credit
hereunder until it has provided
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Agent with written notice specifying the amount and intended issuance date of
such Letter of Credit and Agent has returned a written acknowledgment of such
notice to Issuing Lender. Each Issuing Lender (other than Heller) further agrees
to provide to Agent: (a) a copy of each Letter of Credit issued by such Issuing
Lender promptly after its issuance; (b) a weekly report summarizing available
amounts under Letters of Credit issued by such Issuing Lender, the dates and
amounts of any draws under such Letters of Credit, the effective date of any
increase or decrease in the face amount of any Letters of Credit during such
week and the amount of any unreimbursed draws under such Letters of Credit; and
(c) such additional information reasonably requested by Agent from time to time
with respect to the Letters of Credit issued by such Issuing Lender. Without
limiting the generality of the foregoing, it is expressly understood and agreed
by Borrower that the absolute and unconditional obligation of Borrower hereunder
to reimburse payments made under a Letter of Credit will not be excused by the
gross negligence or willful misconduct of the Issuing Lender or a Bank Line
Issuer that issued such Letter of Credit. However, the foregoing shall not be
construed to excuse an Issuing Lender from liability to Borrower to the extent
of any direct damages (as opposed to consequential damages, claims in respect of
which are hereby waived by Borrower to the extent permitted by applicable law)
suffered by Borrower that are caused by such Issuing Lender's or Bank Line
Issuer's gross negligence or willful misconduct (as determined by a court of
competent jurisdiction) in determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. Agent and
Lenders shall have no liability or responsibility for any action or omission by
any Bank Line Issuer. It is understood and agreed by Borrower that any Issuing
Lender or Bank Line Issuer may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary. As between Borrower and the issuer of any
Letter of Credit, Borrower assumes all risks of the acts and omissions of, or
misuse of the Letter of Credit by, the beneficiary thereof.
(7) Existing Letters of Credit. The parties hereto hereby
agree that each of the Existing Letters of Credit shall constitute a Letter of
Credit hereunder and that PNC Bank, National Association is the Issuing Lender
with respect to each such Letter of Credit.
(D) Notes.
Borrower shall execute and deliver to each Lender (i) a Note to
evidence the Revolving Loans, such Note to be in the principal amount of such
Lender's Pro Rata Share of the Revolving Loan Commitment and (ii) a Note to
evidence each Term Loan, such Notes to be in the principal amount of such
Lender's Pro Rata Share of each Term Loan. In the event of an assignment under
subsection 8.1, Borrower shall, upon surrender of the assigning Lender's Notes,
issue new Notes to reflect the interests of the assigning Lender and the Person
to which interests are to be assigned.
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(E) Funding Authorization.
The proceeds of all Loans made pursuant to this Agreement
subsequent to the Closing Date are to be funded by Agent by wire transfer to the
account designated by Borrower below:
Borrower shall provide Agent with written notice of any change in the foregoing
instructions at least three (3) Business Days before the desired effective date
of such change.
1.2 Interest and Related Fees.
(A) Interest.
From the date the Loans are made and the date the other
Obligations become due, depending upon Borrower's election from time to time, as
permitted herein, to have portions of the Loans accrue interest determined by
reference to the Base Rate ("Base Rate Loans") or the LIBOR ("LIBOR Loans"), the
Loans and the other Obligations shall bear interest at the applicable rates set
forth below:
(1) The Revolving Loan and all other Obligations (other than
the principal portion of the Term Loans) shall bear interest as follows:
(a) If a Base Rate Loan, then at the sum of the Base
Rate plus the Base Rate Margin.
(b) If a LIBOR Loan, then at the sum of the LIBOR
plus the LIBOR Margin.
(2) Term Loan A shall bear interest as follows:
(a) If a Base Rate Loan, then at the sum of the Base
Rate plus the Base Rate Margin.
(b) If a LIBOR Loan then at the sum of the LIBOR plus the
LIBOR Margin.
(3) Term Loan B shall bear interest as follows:
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(a) If a Base Rate Loan, then at the sum of the Base Rate
plus 2.50% per annum.
(b) If a LIBOR Loan then at the sum of the LIBOR plus 3.75%
per annum.
"Base Rate" means a variable rate of interest per annum equal to
the greater of (a) the rate of interest from time to time published by the Board
of Governors of the Federal Reserve System in Federal Reserve statistical
release H.15 (519) entitled "Selected Interest Rates" as the Bank prime loan
rate or (b) the Federal Funds Effective Rate plus fifty (50) basis points. Base
Rate also includes rates published in any successor publications of the Federal
Reserve System reporting the Bank prime loan rate or its equivalent. The
statistical release generally sets forth a Bank prime loan rate for each
business day. The applicable Bank prime loan rate for any date not set forth
shall be the rate set forth for the last preceding date. In the event the Board
of Governors of the Federal Reserve System ceases to publish a Bank prime loan
rate or its equivalent, the term "Base Rate" shall mean a variable rate of
interest per annum equal to the greater of (a) the highest of the "prime rate,"
"reference rate," "base rate" or other similar rate as determined by Agent
announced from time to time by any of the three largest banks (based on combined
capital and surplus) headquartered in New York, New York (with the understanding
that any such rate may merely be a reference rate and may not necessarily
represent the lowest or best rate actually charged to any customer by such bank)
or (b) the Federal Funds Effective Rate plus fifty (50) basis points.
"Base Rate Margin" shall mean (i) as of the Closing Date, 2.00%
per annum, and (ii) thereafter, as of February 1, May 1, August 1 and November 1
of each year (commencing on August 1, 2002) and on the date on which each
Permitted Acquisition is consummated pursuant to subsection 3.15 (each, an
"Adjustment Date"), the Base Rate Margin shall be adjusted, if necessary, to the
applicable percent per annum set forth in the pricing table set forth on
Schedule 1.2 hereto corresponding to the Senior Indebtedness to Adjusted EBITDA
Ratio for the trailing twelve (12) month period ending on the last day of the
most recently completed calendar quarter prior to the applicable Adjustment Date
(each such period, a "Calculation Period") calculated in the manner described in
Exhibit 4.8(C) hereto.
"LIBOR" means, for each Interest Period, a rate per annum equal
to:
(a) the offered rate for deposits in U.S. dollars in an
amount comparable to the amount of the applicable Loan in the London interbank
market which is published by the British Bankers' Association, and that
currently appears on Telerate Page 3750, or any other source available to Agent,
as of 11:00 a.m. (London time) on the day which is two (2) Business Days prior
to the first day of the relevant Interest Period for a term comparable to such
Interest Period; or if, for any reason, such a rate is not published by the
British Bankers' Association on Telerate or any other source available to Agent,
the rate per annum equal to the average rate (rounded upwards, if necessary, to
the nearest 1/100 of 1%) at which Agent
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determines that U.S. dollars in an amount comparable to the amount of the
applicable Loans are being offered to prime banks at approximately 11:00 a.m.
(London time) on the day which is two (2) Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period for
settlement in immediately available funds by leading banks in the London
interbank market selected by Agent; divided by
(b) a number equal to 1.0 minus the maximum reserve
percentages (expressed as a decimal fraction) (including, without limitation,
basic, supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve System or other governmental
authority having jurisdiction with respect thereto, as now and from time to time
in effect) for Eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) which are required to be maintained
by any Lender by the Board of Governors of the Federal Reserve System; such rate
to be rounded upward to the next whole multiple of one-sixteenth of one percent
(.0625%). LIBOR shall be adjusted automatically on and as of the effective date
of any change in any such reserve percentage.
"LIBOR Margin" shall mean (i) as of the Closing Date, 3.25% per
annum, and (ii) thereafter, as of each Adjustment Date, commencing on August 1,
2002, the LIBOR Margin shall be adjusted, if necessary, to the applicable
percent per annum set forth in the pricing table set forth on Schedule 1.2
hereto corresponding to the Senior Indebtedness to Adjusted EBITDA Ratio for the
applicable Calculation Period.
If an Event of Default has occurred and is continuing on an
Adjustment Date, no reduction in the Base Rate Margin or LIBOR Margin shall
occur on such Adjustment Date.
If Borrower shall fail to deliver a Compliance and Pricing
Certificate by the date required pursuant to subsection 4.8(C), effective as of
the tenth Business Day following the date on which such Compliance and Pricing
Certificate was due, each applicable Base Rate Margin and each applicable LIBOR
Margin shall be conclusively presumed to equal the highest applicable Base Rate
Margin and the highest applicable LIBOR Margin specified in the pricing table
set forth on Schedule 1.2 hereto until the date of delivery of the Compliance
and Pricing Certificate.
Subject to paragraph (H) below, each LIBOR Loan may be obtained
for a one, two, three or six month period (each being an "Interest Period").
With respect to all LIBOR Loans: (a) the Interest Period will commence on the
date that the LIBOR Loan is made or the date on which a Base Rate Loan is
converted into a LIBOR Loan, as applicable, or in the case of immediately
successive Interest Periods, each successive Interest Period shall commence on
the day on which the next preceding Interest Period expires, (b) if the Interest
Period expires on a day that is not a Business Day, then it will expire on the
next Business Day (unless the result of such extension would be to extend such
Interest Period into another
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calendar month in which event such Interest Period shall end on the immediately
preceding Business Day), (c) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month, (d) no Interest Period
for Revolving Loans shall extend beyond the Commitment Termination Date, (e) no
Interest Period for any portion of a Term Loan shall extend beyond the date of
the final Scheduled Installment thereof and (f) an Interest Period may not be
selected for any portion of a Term Loan if a Scheduled Installment for such Term
Loan is payable during such Interest Period and the portion of such Term Loan
which constitutes a Base Rate Loan does not equal or exceed the amount of such
Scheduled Installment.
(B) Commitment Fee. From the Closing Date, Borrower shall pay
Agent, for the benefit of all Lenders committed to make Revolving Loans, a fee
in an amount equal to (1) (a) the Revolving Loan Commitment less (b) the sum of
(i) the average daily balance of the Revolving Loans plus (ii) the average daily
aggregate amount of outstanding Letter of Credit Liability, in each case during
the preceding month, multiplied by (2) one-half of one percent (0.50 %) per
annum. Such fee is to be paid monthly in arrears on the first day of each month.
(C) Letter of Credit Fee. From the Closing Date, Borrower
shall pay Agent a fee for each Letter of Credit from the date of issuance to the
date of termination equal to the average daily aggregate amount of outstanding
Letter of Credit Liability during the preceding month multiplied by three and
one-quarter percent (3.25 %) per annum until the first Adjustment Date and
thereafter by a per annum rate equal to the LIBOR Margin as in effect on the
date on which the fee is payable, which fee shall be payable to Agent for the
benefit of all Lenders committed to make Revolving Loans (based upon their
respective Pro Rata Shares). Borrower shall also pay Agent, for the account of
each Issuing Lender, a fronting fee for each Letter of Credit issued or obtained
by such Issuing Lender from the date of issuance to the date of termination
equal to the average daily aggregate outstanding Letter of Credit Liability with
respect to such Letter of Credit during the preceding month multiplied by one
quarter percent (.25%) per annum. Such fees are to be paid monthly in arrears on
the first day of each month. Borrower shall also pay or reimburse each Issuing
Lender for its payment of any and all issuance, negotiation, processing or
administrative fees and expenses payable under any risk participation agreement
to any other issuer with respect to any Letters of Credit issued for the benefit
of Borrower or any of its Subsidiaries.
(D) Computation of Interest and Related Fees. Interest on
LIBOR Loans and all other Obligations (exclusive of Base Rate Loans), and all
fees set forth in this subsection 1.2, shall be calculated daily on the basis of
a three hundred sixty (360) day year for the actual number of days elapsed in
the period during which it accrues and interest on all Base Rate Loans shall be
calculated on the basis of a 365/366 day year for the actual number of days
elapsed in the period during which it accrues. The date of funding a Base Rate
Loan and the first day of an Interest Period with respect to a LIBOR Loan shall
be included in the
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calculation of interest. The date of payment of a Base Rate Loan and the last
day of an Interest Period with respect to a LIBOR Loan shall be excluded from
the calculation of interest. If a Loan is repaid on the same day that it is
made, one (1) days' interest shall be charged. Interest on all Base Rate Loans
is payable in arrears on the first day of each month and on the maturity of such
Loans, whether by acceleration or otherwise. Interest on LIBOR Loans shall be
payable on the last day of the applicable Interest Period, unless the Interest
Period is greater than three (3) months, in which case interest will be payable
on the last day of each three (3) month interval. In addition, interest on LIBOR
Loans is due on the maturity of such Loans, whether by acceleration or
otherwise.
(E) Default Rate of Interest. At the election of Agent or
Requisite Lenders, after the occurrence of an Event of Default (but without the
need for any election with respect to an Event of Default described in
subsections 6.1(F) or 6.1(G)) and for so long as it continues, the Loans and
other Obligations shall bear interest at a rate that is two percent (2.0%) in
excess of the rates otherwise payable under this Agreement. Furthermore, at the
election of Agent or Requisite Lenders during any period in which any Event of
Default is continuing (1) as the Interest Periods for LIBOR Loans then in effect
expire, such Loans shall be converted into Base Rate Loans and (2) the LIBOR
election will not be available to Borrower.
(F) Excess Interest. Under no circumstances will the rate of
interest chargeable be in excess of the maximum amount permitted by law. If
excess interest is charged and paid in error, then the excess amount will be
promptly refunded or applied to repayment or prepayment of principal in the
manner set forth in subsection 1.5(E).
(G) LIBOR Election. All Loans made on the Closing Date shall
be Base Rate Loans and shall remain so until ten (10) days after the Closing
Date. Thereafter, Borrower may request that Revolving Loans to be made be LIBOR
Loans, that outstanding portions of Revolving Loans and outstanding portions of
the Term Loans be converted to LIBOR Loans and that all or any portion of a
LIBOR Loan be continued as a LIBOR Loan upon expiration of the applicable
Interest Period. Any such request will be made by submitting a written notice to
Agent in the form of Exhibit 1.1(B). Once given, and except as provided in
subsection 1.2(H), a LIBOR Loan request shall be irrevocable and Borrower shall
be bound thereby. Upon the expiration of an Interest Period, in the absence of a
new LIBOR Loan request submitted to Agent not less than three (3) Business Days
prior to the end of such Interest Period, the LIBOR Loan then maturing shall be
automatically converted to a Base Rate Loan. There may be no more than seven (7)
LIBOR Loans outstanding at any one time. Loans which are not the subject of a
LIBOR Loan request shall be Base Rate Loans. Agent will notify Lenders, by
telephonic or facsimile notice, of each LIBOR Loan request received by Agent not
less than two (2) Business Days prior to the first day of the Interest Period of
the LIBOR Loan requested thereby.
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(H) Inability to Determine LIBOR. In the event, prior to
commencement of any Interest Period relating to a LIBOR Loan, Agent shall
determine or be notified in writing by Requisite Lenders that adequate and
reasonable methods do not exist for ascertaining LIBOR, Agent shall promptly
provide notice of such determination to Borrower and Lenders (which shall be
conclusive and binding on Borrower and Lenders). In such event (1) any request
for a LIBOR Loan or for a conversion to or continuation of a LIBOR Loan shall be
automatically withdrawn and shall be deemed a request for a Base Rate Loan, (2)
each LIBOR Loan will automatically, on the last day of the then current Interest
Period relating thereto, become a Base Rate Loan and (3) the obligations of
Lenders to make LIBOR Loans shall be suspended until Agent or Requisite Lenders
determine that the circumstances giving rise to such suspension no longer exist,
in which event Agent upon the instructions of Requisite Lenders, shall so notify
Borrower and Lenders.
(I) Illegality. Notwithstanding any other provisions hereof,
if any law, rule, regulation, treaty or directive or interpretation or
application thereof shall make it unlawful for any Lender to make, fund or
maintain LIBOR Loans, such Lender shall promptly give notice of such
circumstances to Agent, Borrower and the other Lenders. In such an event, (1)
the commitment of such Lender to make LIBOR Loans or convert Base Rate Loans to
LIBOR Loans shall be immediately suspended and (2) such Lender's outstanding
LIBOR Loans shall be converted automatically to Base Rate Loans on the last day
of the Interest Period thereof or at such earlier time as may be required by
law.
1.3 Other Fees and Expenses.
(A) Certain Fees. Borrower shall pay to Heller, individually,
the fees specified in that certain letter agreement dated the date of this
Agreement between Borrower and Heller in the amounts and at the times specified
therein.
(B) Prepayment Fee. If Borrower voluntarily prepays Term Loan
B in full or in part prior to the third anniversary of the Closing Date,
Borrower shall pay to Agent, for the benefit of Lenders holding Term Loan B, as
compensation for the costs of Lenders being prepared to continue to make funds
available to Borrower under this Agreement with respect to Term Loan B, an
amount determined by multiplying three (3.00%) percent by the amount of such
prepayment of Term Loan B. Such amount shall be due and payable on the date of
such prepayment. No amount will be payable pursuant to this subsection 1.3(B)
with respect to any full or partial voluntary prepayment of Term Loan B made
after the third anniversary of the Closing Date, or made pursuant to subsection
1.5(B).
(C) LIBOR Breakage Fee. Upon (i) any default by Borrower in
making any borrowing of, conversion into or continuation of any LIBOR Loan
following Borrower's delivery to Agent of any LIBOR Loan request in respect
thereof or (ii) any payment of a LIBOR Loan on any day that is not the last day
of the Interest Period applicable thereto (regardless of the source of such
prepayment and whether voluntary, by acceleration or
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otherwise), Borrower shall pay Agent, for the benefit of all Lenders that funded
or were prepared to fund any such LIBOR Loan, an amount (the "LIBOR Breakage
Fee") equal to the amount of any losses, expenses and liabilities (including,
without limitation, any loss (including interest paid) in connection with the
re-employment of such funds) that any Lender may sustain as a result of such
default or such payment. For purposes of calculating amounts payable to a Lender
under this subsection, each Lender shall be deemed to have actually funded its
relevant LIBOR Loan through the purchase of a deposit bearing interest at LIBOR
in an amount equal to the amount of that LIBOR Loan and having a maturity and
repricing characteristics comparable to the relevant Interest Period; provided,
however, that each Lender may fund each of its LIBOR Loans in any manner it sees
fit, and the foregoing assumption shall be utilized only for the calculation of
amounts payable under this subsection.
(D) [INTENTIONALLY RESERVED.]
(E) Expenses and Attorneys' Fees. Borrower agrees to promptly
pay all reasonable fees, costs and expenses (including reasonable attorneys'
fees and expenses and the allocated cost of internal legal staff) incurred by
Agent in connection with any matters contemplated by or arising out of the Loan
Documents, in connection with the examination, review, due diligence
investigation, documentation, negotiation, closing and syndication of the
transactions contemplated herein and in connection with the continued
administration of the Loan Documents including any amendments, modifications,
consents and waivers. Borrower agrees to promptly pay reasonable documentation
charges assessed by Agent for amendments, waivers, consents and any of the
documentation prepared by Agent's internal legal staff. Borrower agrees to
promptly pay all fees, costs and expenses (including attorneys' fees and
expenses, the allocated cost of internal legal staff and costs of financial
consultants and other professionals) incurred by Agent and Lenders in connection
with any action to enforce any Loan Document or to collect any payments due from
Borrower or any other Loan Party. All fees, costs and expenses for which
Borrower is responsible under this subsection 1.3(E) shall be deemed part of the
Obligations when incurred, payable in accordance with the final two sentences of
subsection 1.4 and secured by the Collateral.
1.4 Payments.
All payments by Borrower of the Obligations shall be without
deduction, defense, setoff or counterclaim and shall be made in same day funds
and delivered to Agent, for the benefit of Agent and Lenders, as applicable, by
wire transfer to the following account or such other place as Agent may from
time to time designate in writing.
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ABA No.
Account Number
Bank One, N.A.
1 Bank One Plaza
Chicago, IL 60670
Reference: Heller Corporate Finance
for the benefit of The Hillman Group, Inc.
Borrower shall receive credit on the day of receipt for funds received by Agent
by 1:00 p.m. Chicago time. In the absence of timely receipt, such funds shall be
deemed to have been paid on the next Business Day. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a Business Day,
the payment may be made on the next succeeding Business Day and such extension
of time shall be included in the computation of the amount of interest and fees
due hereunder.
Borrower hereby authorizes Lenders to make Revolving Loans, on
the basis of their Pro Rata Shares, for the payment of Scheduled Installments,
interest, commitment fees, Letter of Credit fees, LIBOR Breakage Fees, Letter of
Credit reimbursement obligations and any amounts required to be deposited with
respect to outstanding Letter of Credit Liability pursuant to subsections 1.5(F)
or 6.3. Prior to an Event of Default, other fees, costs and expenses (including
those of attorneys) reimbursable to Agent pursuant to subsections 1.3(A) and (E)
or elsewhere in any Loan Document may be debited to the Revolving Loan after
fifteen (15) days notice. After the occurrence of an Event of Default and so
long as it exists, no notice will be required.
1.5 Prepayments.
(A) Voluntary Prepayments of Loans. At any time, Borrower may
prepay the Loans, in whole or in part, subject to the payment of the fees
specified in subsection 1.3(B) and LIBOR Breakage Fees, if applicable.
Prepayments of Term Loans shall be applied in accordance with subsection 1.5(E)
or as otherwise may be agreed by Requisite Lenders.
(B) Prepayments from Excess Cash Flow. On the earlier of one
hundred (100) days after the end of each of its fiscal years or the tenth (10th)
Business Day after the delivery of Borrower's fiscal year end financial
statements pursuant to subsection 4.8(B) hereof, in each case commencing with
the fiscal year ended December 31, 2002, Borrower shall prepay the Loans in an
amount equal to: (1) the applicable percent set forth in the pricing table set
forth on Schedule 1.2 hereto corresponding to the Senior Indebtedness to
Adjusted EBITDA Ratio for such fiscal year, multiplied by (2) the Excess Cash
Flow for such fiscal year determined pursuant to the calculation on Exhibit
1.5(B). The calculation shall be based on the audited financial statements of
First Tier Holdings and its Subsidiaries
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(other than the Excluded Subsidiaries). The payments shall be applied in
accordance with subsection 1.5(E).
(C) Prepayments from Asset Dispositions. Immediately upon
receipt of any Net Proceeds in excess of $1,000,000 for any single transaction
or series of related transactions constituting any Asset Disposition, Borrower
shall repay the outstanding principal balance of the Revolving Loan (without
reduction of the Revolving Loan Commitment) by an amount equal to the amount of
such Net Proceeds. Borrower may reinvest all or part of such Net Proceeds of
such Asset Disposition, within one hundred and eighty (180) days, in productive
replacement assets of a kind then used or usable in the business of Borrower.
Promptly following receipt of such Net Proceeds, Borrower will provide Agent
with a certificate setting forth Borrower's intended use of such Net Proceeds
(i.e., whether Borrower intends to reinvest all or part of such Net Proceeds, as
described in the immediately preceding sentence, and if so, details pertaining
to any intended reinvestment). If Borrower does not intend to so reinvest all of
such Net Proceeds or if the period set forth in the immediately preceding
sentence expires without Borrower having reinvested all of such Net Proceeds,
Borrower shall prepay the Term Loans in an amount equal to such Net Proceeds of
such Asset Disposition not intended to be reinvested or not actually reinvested.
The payments shall be applied in accordance with subsection 1.5(E).
(D) Prepayments from Issuance of Securities. Immediately upon
the receipt by First Tier Holdings or any of its Subsidiaries (other than the
Excluded Subsidiaries) of the proceeds of the issuance of equity securities
(other than (1) proceeds of the issuance of equity securities by First Tier
Holdings received on or before the Closing Date, (2) proceeds from the issuance
of equity securities to members of the management of First Tier Holdings and/or
any of its Subsidiaries, (3) proceeds of the issuance of equity securities to
Borrower or any Subsidiary of Borrower, (4) proceeds which concurrently are
contributed to the capital of any of the Excluded Subsidiaries and (5) in the
absence of any Default or Event of Default, proceeds obtained from any Person
who was a shareholder of First Tier Holdings as of the Closing Date, but only if
such proceeds are used following the contribution thereof to the capital of
Borrower solely for Capital Expenditures otherwise permitted hereunder and until
used are segregated exclusively for such purpose), Borrower shall prepay the
Loans in an amount equal to such proceeds, net of underwriting discounts and
commissions and other reasonable costs associated therewith. The payments shall
be applied in accordance with subsection 1.5(E).
(E) Application of Proceeds. With respect to the prepayments
described in subsections 1.5(A), 1.5(B), 1.5(C) and 1.5(D), such prepayments
shall first be applied in payment of any applicable premium with respect to
prepayments described in subsection 1.5(A), shall then be applied to any
applicable LIBOR Breakage Fees, shall then be applied to the Term Loans pro rata
in the inverse order of maturity of the Scheduled Installments and, at any time
after the Term Loans shall have been prepaid in full, such prepayments shall
then be applied to reduce the outstanding principal balance of the Revolving
Loans and as a
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permanent reduction of the Revolving Loan Commitment. Notwithstanding the
foregoing, any Lender holding any portion of Term Loan A or Term Loan B may
elect, by notice to Agent and Borrower at least one Business Day prior to any
prepayment of Term Loan A and/or Term Loan B required or permitted to be made by
Borrower for the account of such Lender pursuant to subsection 1.5(B), to cause
all or a portion of such prepayment allocated to Term Loan A and Term Loan B
(but only in pro rata portions of Term Loan A and Term Loan B) not to be applied
to the Term Loan A and Term Loan B held by such Lender, in which case Borrower
shall retain the proceeds of such waived prepayment. Considering each type of
Loan being prepaid separately, any such prepayment shall be applied first to
Base Rate Loans of the type required to be prepaid before application to LIBOR
Loans of the type required to be prepaid, in each case in a manner which
minimizes any resulting LIBOR Breakage Fee.
(F) Letter of Credit Liability. In the event any Letters of
Credit are outstanding at the time that Borrower prepays the Obligations or
terminates the Revolving Loan Commitment, Borrower shall (1) deposit with Agent
for the benefit of all Lenders with a Revolving Loan Commitment cash in an
amount equal to one hundred and five percent (105%) of the aggregate outstanding
Letter of Credit Liability to be available to Agent to reimburse payments of
drafts drawn under such Letters of Credit and pay any fees and expenses related
thereto and (2) prepay the fee payable under subsection 1.2(C) with respect to
such Letters of Credit for the full remaining terms of such Letters of Credit.
Upon termination of any such Letter of Credit, the unearned portion of such
prepaid fee attributable to such Letter of Credit shall be refunded to Borrower.
1.6 Maturity.
All of the Obligations shall become due and payable as otherwise
set forth herein, but in any event all of the remaining Obligations shall become
due and payable upon termination of the Credit Agreement and/or upon Early
Termination as set forth in subsection 1.1(A). Until all Obligations have been
fully paid and satisfied (other than contingent indemnification obligations to
the extent no unsatisfied claim has been asserted), the Revolving Loan
Commitment has been terminated and all Letters of Credit have been terminated or
otherwise secured to the satisfaction of Agent, Agent shall be entitled to
retain the security interests in the Collateral granted under the Security
Documents and the ability to exercise all rights and remedies available to them
under the Loan Documents and applicable laws.
1.7 Loan Accounts.
Agent will maintain loan account records for (a) all Loans,
interest charges and payments thereof, (b) all Letter of Credit Liability, (c)
the charging and payment of all fees, costs and expenses and (d) all other
debits and credits pursuant to this Agreement. The balance in the loan accounts
shall be presumptive evidence of the amounts due and owing to
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Lenders, provided that any failure by Agent to so record shall not limit or
affect the Borrower's obligation to pay. Within five (5) days of the first of
each month, Agent shall provide a statement for each loan account setting forth
the principal of each account and interest due thereon. Borrower must deliver a
written objection within sixty (60) days after receipt of the statement or the
statement will be presumptive evidence of the Obligations absent manifest error.
During the continuance of an Event of Default, Borrower irrevocably waives the
right to direct the application of any and all payments and Borrower hereby
irrevocably agrees that Agent shall have the continuing exclusive right to
thereafter apply payments in any manner it deems appropriate.
1.8 Yield Protection
(A) Capital Adequacy and Other Adjustments. In the event that
any Lender shall have determined that the adoption after the date hereof of any
law, treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by any Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) from any central bank or governmental
agency or body having jurisdiction does or shall have the effect of increasing
the amount of capital, reserves or other funds required to be maintained by such
Lender or any corporation controlling such Lender and thereby reducing the rate
of return on such Lender's or such corporation's capital as a consequence of its
obligations hereunder, then Borrower shall from time to time within fifteen (15)
days after notice and demand from such Lender (together with the certificate
referred to in the next sentence and with a copy to Agent) pay to Agent, for the
account of such Lender, additional amounts sufficient to compensate such Lender
for such reduction. A certificate as to the amount of such cost and showing the
basis of the computation of such cost submitted by such Lender to Borrower and
Agent shall, absent manifest error, be final, conclusive and binding for all
purposes.
(B) Increased LIBOR Funding Costs. If, after the date hereof,
the introduction of, change in or interpretation of any law, rule, regulation,
treaty or directive would impose or increase reserve requirements (other than as
taken into account in the definition of LIBOR) or otherwise increase the cost to
any Lender of making or maintaining a LIBOR Loan, then Borrower shall from time
to time within fifteen (15) days after notice and demand from Agent (together
with the certificate referred to in the next sentence) pay to Agent, for the
account of all such affected Lenders, additional amounts sufficient to
compensate such Lenders for such increased cost. A certificate as to the amount
of such cost and showing the basis of the computation of such cost submitted by
Agent on behalf of all such affected Lenders to Borrower shall, absent manifest
error, be final, conclusive and binding for all purposes.
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1.9 Taxes.
(A) No Deductions. Any and all payments or reimbursements
made hereunder or under the Notes shall be made free and clear of and without
deduction for any and all taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto of any nature whatsoever
imposed by any taxing authority, excluding such taxes to the extent imposed on
Agent's or a Lender's net income by the jurisdiction in which Agent or such
Lender is organized. If Borrower shall be required by law to deduct any such
amounts from or in respect of any sum payable hereunder to any Lender or Agent,
then the sum payable hereunder shall be increased as may be necessary so that,
after making all required deductions, such Lender or Agent receives an amount
equal to the sum it would have received had no such deductions been made.
(B) Changes in Tax Laws. In the event that, subsequent to the
Closing Date, (1) any changes in any existing law, regulation, treaty or
directive or in the interpretation or application thereof, (2) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (3) compliance by Agent or any Lender with any request or directive
(whether or not having the force of law) from any governmental authority, agency
or instrumentality:
(a) does or shall subject Agent or any Lender to any tax of
any kind whatsoever with respect to this Agreement, the other Loan Documents or
any Loans made or Letters of Credit issued hereunder, or change the basis of
taxation of payments to Agent or such Lender of principal, fees, interest or any
other amount payable hereunder (except for net income taxes, or franchise taxes
imposed in lieu of net income taxes, imposed generally by federal, state or
local taxing authorities with respect to interest or commitment fees or other
fees payable hereunder or changes in the rate of tax on the overall net income
of Agent or such Lender); or
(b) does or shall impose on Agent or any Lender any other
condition or increased cost in connection with the transactions contemplated
hereby or participations herein;
and the result of any of the foregoing is to increase the cost to Agent or any
such Lender of issuing any Letter of Credit or making or continuing any Loan
hereunder, as the case may be, or to reduce any amount receivable hereunder,
then, in any such case, Borrower shall promptly pay to Agent or such Lender,
upon its demand, any additional amounts necessary to compensate Agent or such
Lender, on an after-tax basis, for such additional cost or reduced amount
receivable, as determined by Agent or such Lender with respect to this Agreement
or the other Loan Documents. If Agent or such Lender becomes entitled to claim
any additional amounts pursuant to this subsection, it shall promptly notify
Borrower of the event by reason of which Agent or such Lender has become so
entitled. A certificate as to any additional
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amounts payable pursuant to the foregoing sentence submitted by Agent or such
Lender to Borrower shall, absent manifest error, be final, conclusive and
binding for all purposes.
(C) Foreign Lenders. Each Lender organized under the laws of
a jurisdiction outside the United States (a "Foreign Lender") as to which
payments to be made under this Agreement or under the Notes are exempt from
United States withholding tax or are subject to United States withholding tax at
a reduced rate under an applicable statute or tax treaty shall provide to
Borrower and Agent (1) a properly completed and executed Internal Revenue
Service Form W-8BEN or Form W-8ECI or other applicable form, certificate or
document prescribed by the Internal Revenue Service of the United States
certifying as to such Foreign Lender's entitlement to such exemption or reduced
rate of withholding with respect to payments to be made to such Foreign Lender
under this Agreement and under the Notes (a "Certificate of Exemption") or (2) a
letter from any such Foreign Lender stating that it is not entitled to any such
exemption or reduced rate of withholding (a "Letter of Non-Exemption"). Prior to
becoming a Lender under this Agreement and within fifteen (15) days after a
reasonable written request of Borrower or Agent from time to time thereafter,
each Foreign Lender that becomes a Lender under this Agreement shall provide a
Certificate of Exemption or a Letter of Non-Exemption to Borrower and Agent. If
a Foreign Lender is entitled to an exemption with respect to payments to be made
to such Foreign Lender under this Agreement (or to a reduced rate of
withholding) and does not provide a Certificate of Exemption to Borrower and
Agent within the time periods set forth in the preceding paragraph, Borrower
shall withhold taxes from payments to such Foreign Lender at the applicable
statutory rates and Borrower shall not be required to pay any additional amounts
as a result of such withholding, provided that all such withholding shall cease
upon delivery by such Foreign Lender of a Certificate of Exemption to Borrower
and Agent.
1.10 Optional Prepayment/Replacement of Lenders.
Within fifteen (15) days after receipt by Borrower of written
notice and demand from any Lender for payment pursuant to subsection 1.8 or 1.9
or, as provided in subsection 8.3(C), in the case of certain refusals by any
Lender to consent to certain proposed amendments, modifications, terminations or
waivers with respect to this Agreement that have been approved by Requisite
Lenders (any such Lender demanding such payment or refusing to so consent being
referred to herein as an "Affected Lender"), Borrower may, at its option, notify
Agent and such Affected Lender of its intention to do one of the following:
(A) Borrower may obtain, at Borrower's expense, a replacement
Lender ("Replacement Lender") for such Affected Lender, which Replacement Lender
shall be reasonably satisfactory to Agent. In the event Borrower obtains a
Replacement Lender that will purchase all outstanding Obligations owed to such
Affected Lender and assume its commitments hereunder within ninety (90) days
following notice of Borrower's intention to do so, the Affected Lender shall
sell and assign all of its rights and delegate all of its obligations under this
Agreement to such Replacement Lender in accordance with the
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provisions of subsection 8.1, provided that Borrower has reimbursed such
Affected Lender for any administrative fee payable pursuant to subsection 8.1
and, in any case where such replacement occurs as the result of a demand for
payment pursuant to subsection 1.8 or 1.9, paid all amounts required to be paid
to such Affected Lender pursuant to subsection 1.8 or 1.9 through the date of
such sale and assignment; or
(B) With the prior written approval of the Requisite Lenders
(calculated without giving effect to the Loans and Revolving Loan Commitment of
the applicable Affected Lender), Borrower may prepay in full all outstanding
Obligations owed to such Affected Lender (without any premium required with
respect to the prepayment of Term Loan B) and terminate such Affected Lender's
Pro Rata Share of the Revolving Loan Commitment, in which case the Revolving
Loan Commitment will be reduced by the amount of such Pro Rata Share. Borrower
shall, within ninety (90) days following notice of its intention to do so,
prepay in full all outstanding Obligations owed to such Affected Lender
(including, in any case where such prepayment occurs as the result of a demand
for payment for increased costs, such Affected Lender's increased costs for
which it is entitled to reimbursement under this Agreement through the date of
such prepayment), and terminate such Affected Lender's obligations under the
Revolving Loan Commitment.
SECTION 2
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as the Revolving Loan
Commitment is in effect and until payment in full of all Obligations (other than
contingent indemnification obligations to the extent no unsatisfied claim has
been asserted) and termination of the obligations of Lenders with respect to all
Letters of Credit, Borrower shall perform and comply with, and shall cause each
of the other Loan Parties to perform and comply with, all covenants in this
Section 2 applicable to such Person.
2.1 Compliance With Laws and Contractual Obligations.
Borrower will (a) comply with and cause each of its Subsidiaries
to comply with (i) the requirements of all applicable laws, rules, regulations
and orders of any governmental authority (including, without limitation, laws,
rules, regulations and orders relating to taxes, employer and employee
contributions, securities, employee retirement and welfare benefits,
environmental protection matters and employee health and safety) as now in
effect and which may be imposed in the future in all jurisdictions in which
Borrower or its Subsidiaries are now doing business or may hereafter be doing
business and (ii) the obligations, covenants and conditions contained in all
Contractual Obligations of Borrower or such Subsidiary, as applicable other than
those laws, rules, regulations, orders and provisions of such Contractual
Obligations the noncompliance with which could not be reasonably expected to
have, either individually or in the aggregate, a Material Adverse Effect, and
(b) maintain or obtain and will cause each of its Subsidiaries to maintain or
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obtain, all licenses, qualifications and permits now held or hereafter required
to be held by Borrower and its Subsidiaries, for which the loss, suspension,
revocation or failure to obtain or renew, could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect. This
subsection 2.1 shall not preclude the Borrower or any Subsidiary from contesting
any taxes or other payments, if they are being diligently contested in good
faith in a manner which stays enforcement thereof and if appropriate expense
provisions have been recorded in conformity with GAAP. Borrower represents and
warrants that, it (i) is in compliance and each of its Subsidiaries is in
compliance with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority other than those laws, rules, regulations,
orders and provisions of such Contractual Obligations the noncompliance with
which could not be reasonably expected to have, either individually or in the
aggregate, a Material Adverse Effect and (ii) maintains and each of its
Subsidiaries maintains all licenses, qualifications and permits referred to
above. The Borrower represents and warrants that the Loan Parties are in
compliance with the Indenture and the Allied Subordinated Loan Documents.
"Contractual Obligations," as applied to any Person, means any
indenture, mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject
including, without limitation, the Related Transactions Documents.
2.2 Maintenance of Properties; Insurance.
Borrower will maintain or cause to be maintained in good repair,
working order and condition all material properties used in the business of
Borrower and its Subsidiaries and will make or cause to be made all appropriate
repairs, renewals and replacements thereof. Borrower will maintain or cause to
be maintained, with financially sound and reputable insurers, public liability
and property damage insurance with respect to its business and properties and
the business and properties of its Subsidiaries against loss or damage of the
kinds customarily carried or maintained by corporations of established
reputation engaged in similar businesses and in amounts reasonably acceptable to
Agent and will deliver evidence thereof to Agent. Borrower will maintain
business interruption insurance providing coverage for a period of at least six
(6) months and in an amount not less than $10,000,000. Borrower shall cause
Agent, pursuant to endorsements and/or assignments in form and substance
reasonably satisfactory to Agent, to be named as lender's loss payee in the case
of casualty insurance, additional insured in the case of all liability insurance
and assignee in the case of all business interruption insurance, in each case
for the benefit of Agent and Lenders. Borrower represents and warrants that it
and each of its Subsidiaries currently maintains all material properties as set
forth above and maintains all insurance described above. In the event Borrower
fails to provide Agent with evidence of the insurance coverage required by this
Agreement, Agent may purchase insurance at Borrower's expense to protect Agent's
interests in the Collateral. This insurance may, but need not, protect
Borrower's interests. The coverage purchased by Agent may not pay any claim made
by
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Borrower or any claim that is made against Borrower in connection with the
Collateral. Borrower may later cancel any insurance purchased by Agent, but only
after providing Agent with evidence that Borrower has obtained insurance as
required by this Agreement. If Agent purchases insurance for the Collateral,
Borrower will be responsible for the costs of that insurance, including interest
and other charges imposed by Agent in connection with the placement of the
insurance, until the effective date of the cancellation or expiration of the
insurance. The costs of the insurance shall be added to the Obligations. The
costs of the insurance may be more than the cost of insurance Borrower is able
to obtain on its own.
2.3 Inspection; Lender Meeting.
Borrower shall permit any authorized representatives of Agent to
visit and inspect any of the properties of Borrower or any of its Subsidiaries,
including its and their financial and accounting records, and to make copies and
take extracts therefrom, and to discuss its and their affairs, finances and
business with its and their officers and certified public accountants, at such
reasonable times during normal business hours and as often as may be reasonably
requested. Representatives of each Lender will be permitted to accompany
representatives of Agent during each visit, inspection and discussion referred
to in the immediately preceding sentence. Without in any way limiting the
foregoing, Borrower will participate and will cause its key management personnel
to participate in a meeting with Agent and Lenders at least once during each
year, which meeting shall be held at such time and such place as may be
reasonably requested by Agent.
2.4 Organizational Existence.
Except as otherwise permitted by subsection 3.6, Borrower will,
and will cause each of its Subsidiaries (other than the Excluded Subsidiaries)
to, at all times preserve and keep in full force and effect its organizational
existence and all rights and franchises material to its business.
2.5 Further Assurances.
(A) Borrower shall and shall cause each Loan Party to, from
time to time, execute such guaranties, financing statements, documents, security
agreements and reports as Agent or Requisite Lenders at any time may reasonably
request to evidence, perfect or otherwise implement the guaranties and security
for repayment of the Obligations contemplated by the Loan Documents.
(B) In the event any Loan Party acquires an interest in real
property (other than an interest as lessee under an operating lease) after the
Closing Date, Borrower shall and shall cause each Loan Party to deliver to Agent
a fully executed mortgage or deed of trust over such real property in form and
substance satisfactory to Agent, together with such title insurance policies,
surveys, appraisals, evidence of insurance, legal opinions, environmental
assessments and other documents and certificates as shall be required by Agent.
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(C) Borrower shall (i) cause each Person, upon its a
Subsidiary of Borrower, promptly to guaranty the Obligations and to grant to
Agent, for the benefit of Agent and Lenders, a security interest in the real,
personal and mixed property of such Person to secure the Obligations and (ii)
pledge, or cause to be pledged, to Agent, for the benefit of Agent and Lenders,
all of the equity securities of such Subsidiary to secure the Obligations. The
documentation for such guaranty and security shall be substantially similar to
the Loan Documents executed concurrently herewith with such modifications as are
reasonably requested by Agent.
(D) Within ninety (90) days after the Closing Date, Borrower
shall pledge to Agent, for the benefit of Agent and Lenders, sixty-six percent
(66%) of the outstanding equity securities of SunSource Mexico, pursuant to
documents reasonably requested by Agent.
2.6 Interest Rate Agreement.
Within ninety (90) days after the Closing Date, Borrower shall
enter into, and shall thereafter maintain, Interest Rate Agreements with
counterparties reasonably acceptable to Agent providing for interest rate
protection (1) for an aggregate amount of fifty percent (50%) of the principal
amount of the outstanding Term Loans, and (2) with other terms and conditions
reasonably satisfactory to Agent.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or similar agreement
or arrangement designed to protect Borrower against fluctuations in interest
rates entered into between Borrower and any Person pursuant to this Section 2.6.
2.7 Certain Real Estate Leases.
Borrower will cause SunSource Technology Services, LLC ("STS") to
maintain cash balances in the amount of $1,600,000 from the proceeds of the sale
of its assets and will cause STS to use such cash balances for the sole purpose
of satisfying indemnification obligations of any Loan Party or any Subsidiary
thereof pertaining to the following leased facilities of STS (in the case of
(a), (b) and (c) below) and leased facilities of Kar Products, Inc. (in the case
of items (d) and (e) below):
(a) Savage, Minnesota;
(b) Addison, Illinois;
(c) Homewood, Alabama;
(d) Itasca, Illinois; and
(e) Reno, Nevada.
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At such time as First Tier Holdings (and/or any of its Subsidiaries which is
liable with respect to such indemnification obligations) is released from all
letter of credit and guaranty liabilities associated with all of the leases set
forth above, Borrower shall be entitled to permit STS to release the specified
amount and to cause such amount to be distributed to the shareholders of First
Tier Holdings.
SECTION 3
NEGATIVE COVENANTS
Borrower covenants and agrees that so long as the Revolving Loan
Commitment is in effect and until payment in full of all Obligations (other than
contingent indemnification obligations to the extent no unsatisfied claim has
been asserted) and termination of the obligations of Lenders with respect to all
Letters of Credit, Borrower shall perform and comply with, and shall cause each
of the other Loan Parties to perform and comply with, all covenants in this
Section 3 applicable to such Person.
3.1 Indebtedness.
Borrower will not and will not permit any of its Subsidiaries
(other than any Excluded Subsidiary) or First Tier Holdings or Second Tier
Holdings directly or indirectly to create, incur, assume, or otherwise become or
remain directly or indirectly liable with respect to any Indebtedness (other
than pursuant to a Contingent Obligation) except:
(A) the Obligations;
(B) intercompany Indebtedness arising from loans made between
Borrower and any of its wholly-owned domestic Subsidiaries (other than SunSource
Mexico or any Excluded Subsidiary) or between any of such Subsidiaries;
provided, however, that upon the request of Agent at any time, such Indebtedness
shall be evidenced by promissory notes having terms reasonably satisfactory to
Agent, the sole originally executed counterparts of which shall be pledged and
delivered to Agent, for the benefit of Agent and Lenders, as security for the
Obligations;
(C) unsecured subordinated Indebtedness of Borrower to Allied
in the original principal amount of $40,000,000 pursuant to the Allied
Subordinated Loan Documents;
(D) unsecured subordinated Indebtedness of First Tier
Holdings evidenced by the Debentures in the par value principal amount of
$105,000,000 pursuant to the Indenture;
(E) additional unsecured Indebtedness which is subordinated
to the Obligations in a manner satisfactory to Agent and Requisite Lenders and
the financial terms of which are satisfactory to Agent and Requisite Lenders;
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(F) Indebtedness not to exceed $3,000,000 (increasing to
$4,000,000 on January 1, 2003 and increasing to $5,000,000 on January 1, 2004)
in the aggregate at any time outstanding (x) secured by purchase money Liens,
(y) incurred with respect to capital leases or (z) secured by Liens described in
subsection 3.2(14);
(G) Indebtedness owing by Borrower to Second Tier Holdings;
and
(H) additional unsecured Indebtedness not to exceed
$1,000,000 in the aggregate at any time outstanding.
3.2 Liens and Related Matters.
(A) No Liens. Borrower will not and will not permit any of
its Subsidiaries (other than any Excluded Subsidiary) directly or indirectly to
create, incur, assume or permit to exist any Lien on or with respect to any
property or asset of Borrower or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, except Permitted
Encumbrances.
"Permitted Encumbrances" means the following:
(1) Liens for taxes, assessments or other governmental
charges not yet due and payable or which are being diligently contested in good
faith in a manner which stays enforcement of such Liens, provided that
appropriate provisions shall have been established therefor in accordance with
GAAP;
(2) statutory and common law Liens of landlords, carriers,
warehousemen, mechanics, materialmen and other similar liens imposed by law,
which are incurred in the ordinary course of business for sums not more than
thirty (30) days delinquent or which are being diligently contested in good
faith in a manner which stays enforcement of such Liens, provided that
appropriate provisions shall have been established therefore in accordance with
GAAP;
(3) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety, stay, customs
and appeal bonds, bids, government contracts, trade contracts, performance and
return of money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money);
(4) deposits made in the ordinary course of business to
secure liability to insurance carriers;
(5) Liens securing purchase money Indebtedness or capital
lease obligations; provided that: (a) the purchase or lease of the asset subject
to any such Lien is
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permitted under subsection 4.1; (b) the Indebtedness or other obligation secured
by any such Lien is permitted under subsection 3.1; (c) any such Lien encumbers
only the asset so purchased or leased; and (d) the Indebtedness or other
obligation secured by such Lien is incurred within ninety (90) days after the
purchase or lease of such asset;
(6) any attachment or judgment Lien not constituting an Event
of Default under subsection 6.1(H);
(7) easements, rights of way, restrictions, and other similar
charges or encumbrances not interfering in any material respect with the
ordinary conduct of the business of Borrower or any of its Subsidiaries;
(8) any interest or title of a lessor or sublessor under any
lease not prohibited by this Agreement;
(9) bankers' liens on bank accounts of Borrower or any of its
Subsidiaries but only to the extent such Liens encumber Excluded Deposit
Accounts or are permitted by, and such bank accounts are continuously subject
to, bank agency (or comparable) agreements or a risk participation agreement
with a Bank Line Issuer;
(10) Liens in favor of Agent, for the benefit of Agent and
Lenders;
(11) Liens existing on the date hereof and renewals and
extensions thereof, which Liens are set forth on Schedule 3.2(A)(11) hereto;
(12) Liens which secure Indebtedness used to refinance the
Indebtedness secured by Liens described in subsections (5) or (11) above,
provided that such Liens do not encumber any additional assets and that the
amount of the Indebtedness does not exceed the amount being refinanced;
(13) Liens on cash or Cash Equivalents securing a Contingent
Obligation permitted under subsection 3.4(I); and
(14) Liens on fixed assets acquired in connection with any
Permitted Acquisition, provided that such Liens (and the obligations secured
thereby) were not granted (incurred) in contemplation of the consummation of the
Permitted Acquisition.
(B) No Negative Pledges. Borrower will not and will not
permit any of its Subsidiaries (other than the Excluded Subsidiaries) directly
or indirectly to enter into or assume any agreement (other than the Loan
Documents and the Allied Subordinated Loan Documents) prohibiting the creation
or assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired, except upon property or assets subject to a Permitted
Encumbrance described in subsections 3.2(A)(5), (11), (12) or (14).
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(C) No Restrictions on Subsidiary Distributions to Borrower.
Except as provided herein, Borrower will not and will not permit any of its
Subsidiaries (other than the Excluded Subsidiaries) directly or indirectly to
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any such Subsidiary to:
(1) pay dividends or make any other distribution on any of such Subsidiary's
capital stock or other equity interest owned by Borrower or any other
Subsidiary; (2) pay any Indebtedness owed to Borrower or any other Subsidiary;
(3) make loans or advances to Borrower or any other Subsidiary; or (4) transfer
any of its property or assets to Borrower or any other Subsidiary.
3.3 Investments.
Borrower will not and will not permit any of its Subsidiaries
(other than the Excluded Subsidiaries) directly or indirectly to make or own any
Investment in any Person except:
(A) Borrower and its Subsidiaries may make and own
Investments in Cash Equivalents; provided that such Cash Equivalents are not
subject to setoff rights;
(B) Borrower and its Subsidiaries may make intercompany loans
to the extent permitted under subsection 3.1;
(C) Borrower and its Subsidiaries (other than the Excluded
Subsidiaries) may make Investments to consummate a Permitted Acquisition;
(D) Borrower and its Subsidiaries may make loans and
advances to employees for moving, entertainment, travel and other similar
expenses in the ordinary course of business not to exceed $250,000 in the
aggregate at any time outstanding;
(E) Borrower and its Subsidiaries may make capital
contributions to their wholly-owned domestic Subsidiaries (other than the
Excluded Subsidiaries);
(F) the Investments set forth on Schedule 3.3(F) hereto;
(G) additional Investments made by Borrower in any Excluded
Subsidiary, provided that such Investments are made solely with the proceeds of
new capital contributions made by any Person who was a shareholder of First Tier
Holdings as of the Closing Date to First Tier Holdings concurrently therewith;
and
(H) other Investments (made to Persons other than SunSource
Mexico or any of the Excluded Subsidiaries), provided that the aggregate amount
of all such Investments at any time does not exceed $2,000,000.
"Investment" means (i) any direct or indirect purchase or other
acquisition by Borrower or any of its Subsidiaries of any beneficial interest
in, including stock, partnership
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interest or other equity securities of, or ownership interest in, any other
Person; and (ii) any direct or indirect loan, advance or capital contribution by
Borrower or any of its Subsidiaries to any other Person, including all
indebtedness and accounts receivable from that other Person that are not current
assets or did not arise from sales to that other Person in the ordinary course
of business. For purposes of clause (H) above, the amount of any Investment
shall be the original cost of such Investment plus the cost of all additions
thereto, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment.
"Cash Equivalents" means: (i) marketable securities (A) issued or
directly and unconditionally guaranteed as to interest and principal by the
United States government or (B) issued by any agency of the United States
government the obligations of which are backed by the full faith and credit of
the United States, in each case maturing within one year after acquisition
thereof; (ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after acquisition
thereof and having, at the time of acquisition, a rating of at least A-1 from
Standard & Poor's Ratings Group ("S&P") or at least P-1 from Moody's Investors
Service, Inc. ("Moody's"); (iii) commercial paper maturing no more than one year
from the date of acquisition and, at the time of acquisition, having a rating of
at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of deposit
or bankers' acceptances issued or accepted by any Lender or by any commercial
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia that is at least (A) "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (B) has Tier 1 capital (as defined in such regulations) of not
less than $250,000,000, in each case maturing within one year after issuance or
acceptance thereof; and (v) shares of any money market mutual or similar funds
that (A) has substantially all of its assets invested continuously in the types
of investments referred to in clauses (i) through (iv) above, (B) has net assets
of not less than $500,000,000 and (C) has the highest rating obtainable from
either S&P or Moody's.
3.4 Contingent Obligations.
Borrower will not and will not permit any of its Subsidiaries
(other than the Excluded Subsidiaries) or any other Loan Party directly or
indirectly to create or become or be liable with respect to any Contingent
Obligation except:
(A) Letter of Credit Liability;
(B) those resulting from endorsement of negotiable
instruments for collection in the ordinary course of business;
(C) those existing on the Closing Date and described in
Schedule 3.4 annexed hereto;
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(D) those arising under indemnity agreements to title
insurers to cause such title insurers to issue to Agent mortgagee title
insurance policies;
(E) those arising with respect to customary indemnification
obligations incurred in connection with Asset Dispositions (other than Asset
Dispositions made by any Excluded Subsidiary or SunSource Mexico);
(F) those incurred in the ordinary course of business with
respect to surety and appeal bonds, performance and return-of-money bonds and
other similar obligations;
(G) those incurred with respect to Indebtedness permitted by
subsection 3.1 provided that any guaranty of Indebtedness that is subordinated
to the Obligations shall be subordinated to the same extent;
(H) any other Contingent Obligation not expressly permitted
by clauses (A) through (G) above, so long as any such other Contingent
Obligations, in the aggregate at any time outstanding, do not exceed $1,000,000
and are not incurred for the benefit of SunSource Mexico or any of the Excluded
Subsidiaries; and
(I) Interest Rate Agreements and other Contingent Obligations
of the type described in clause (iii) of the "Contingent Obligation" definition
below, which are entered into solely for hedging purposes and not for
speculative purposes, provided that Borrower's maximum exposure with respect
thereto does not at any time exceed the original cost of the hedging product
plus the amount of all cash and Cash Equivalents initially required to be posted
to secure Borrower's liabilities with respect thereto.
"Contingent Obligation", as applied to any Person, means any
direct or indirect liability of that Person: (i) with respect to any
indebtedness, lease, dividend or other obligation of another Person if the
purpose or intent of the Person incurring such liability, or the effect thereof,
is to provide assurance to the obligee of such liability that such liability
will be paid or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such liability will be protected (in whole
or in part) against loss with respect thereto; (ii) with respect to any letter
of credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings; (iii) under any foreign exchange
contract, currency swap agreement, interest rate swap agreement or other similar
agreement or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates; (iv) to make take-or-pay or
similar payments if required regardless of nonperformance by any other party or
parties to an agreement, or (v) pursuant to any agreement to purchase,
repurchase or otherwise acquire any obligation or any property constituting
security therefore, to provide funds for the payment or discharge of such
obligation or to maintain the solvency, financial condition or any balance sheet
item or level of income of another. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if not a fixed and determined amount, the maximum amount so
guaranteed.
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3.5 Restricted Junior Payments.
Borrower will not and will not permit any of its Subsidiaries
(other than Excluded Subsidiaries) or First Tier Holdings directly or indirectly
to declare, order, pay, make or set apart any sum for any Restricted Junior
Payment, except that:
(A) Borrower may make payments and distributions to Second
Tier Holdings, which are immediately thereafter distributed in full by Second
Tier Holdings to First Tier Holdings, that are used by First Tier Holdings to
pay federal and state income taxes then due and owing, franchise taxes and other
similar licensing expenses incurred in the ordinary course of business,
Contingent Obligations described on Schedule 3.4 (other than items (A)(4),
(A)(5), (A)(7) (but solely with respect to items 4 and 5 of Schedule 10.1(D)),
(B)(1), (B)(2) and (B)(3)), professional fees and other ordinary course
operating expenses; provided that Borrower's aggregate contribution to taxes as
a result of the filing of a consolidated or combined return by First Tier
Holdings shall not be greater, nor the aggregate receipt of tax benefits less,
than they would have been had Borrower and its Subsidiaries (other than the
Excluded Subsidiaries) not filed a consolidated or combined return with First
Tier Holdings;
(B) Wholly-owned Subsidiaries of Borrower may make Restricted
Junior Payments to Borrower;
(C) Borrower may make regularly scheduled cash interest
payments (including cash payments of accrued interest on which interest has
accrued) pursuant to the terms of the Allied Subordinated Loan Documents as in
effect on the date hereof provided that no Default or Event of Default under
subsection 6.1(A) hereof exists at the time of any such Restricted Junior
Payment or would occur as a result thereof and provided that Borrower is in
compliance with the provisions of each of subsection 3.10 and each subsection of
Section 4 hereof, in the case of each financial covenant recomputed on a pro
forma basis for the most recently ended fiscal period for which financial
statements have been delivered to the Agent hereunder assuming that the payment
proposed to be made pursuant to this subsection 3.5(C) had been made on the last
day of such fiscal period; and
(D) Borrower may make payments and distributions to Second
Tier Holdings, which are immediately thereafter distributed in full by Second
Tier Holdings to First Tier Holdings, that are used by First Tier Holdings to
make regularly scheduled cash interest payments pursuant to the terms of the
Debentures as in effect on the date hereof provided that no Default or Event of
Default under subsection 6.1(A) hereof exists at the time of any such Restricted
Junior Payment or would occur as a result thereof and provided that Borrower is
in compliance with the provisions of each of subsection 3.10 and each subsection
of Section 4 hereof, in the case of each financial covenant recomputed on a pro
forma basis for the most recently ended fiscal period for which financial
statements have been delivered
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to the Agent hereunder assuming that the payment proposed to be made pursuant to
this subsection 3.5(D) had been made on the last day of such fiscal period;
(E) Borrower may make payments and distributions to Second Tier Holdings, which
are immediately thereafter distributed in full by Second Tier Holdings to First
Tier Holdings, that are used by First Tier Holdings to redeem shares in First
Tier Holdings from managers, officers, directors or employees upon termination
of employment or other relationship with the Borrower, provided that such
payments and distributions do not exceed $2,000,000 in any fiscal year, provided
that no Default or Event of Default under subsection 6.1(A) hereof exists at the
time of any such Restricted Junior Payment or would occur as a result thereof
and provided that Borrower is in compliance with the provisions of each of
subsection 3.10 and each subsection of Section 4 hereof, in the case of each
financial covenant recomputed on a pro forma basis for the most recently ended
fiscal period for which financial statements have been delivered to the Agent
hereunder assuming that the payment proposed to be made pursuant to this
subsection 3.5(E) had been made on the last day of such fiscal period;
(F) Borrower may make payments and distributions to Second
Tier Holdings, which are immediately thereafter distributed in full by Second
Tier Holdings to First Tier Holdings, that are used by First Tier Holdings to
make regularly scheduled management fee payments described on Schedule 3.8
hereof provided that no Default or Event of Default under subsection 6.1(A)
hereof exists at the time of any such Restricted Payment or would occur as a
result thereof and provided that Borrower is in compliance with the provisions
of each of subsection 3.10 and each subsection of Section 4 hereof, in the case
of each financial covenant recomputed on a pro forma basis for the most recently
ended fiscal period for which financial statements have been delivered to the
Agent hereunder assuming that the payment proposed to be made pursuant to this
subsection 3.5(F) had been made on the last day of such fiscal period; and
(G) On the Closing Date, Borrower may make up to $1,300,000
of payments and distributions to Second Tier Holdings, which are immediately
thereafter distributed in full by Second Tier Holdings to First Tier Holdings
and that are used by First Tier Holdings to repay a promissory note issued by
First Tier Holdings to Allied, which promissory note was issued in exchange for
121,524 warrants to purchase stock of First Tier Holdings.
"Restricted Junior Payment" means: (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
or other equity security of, or ownership interest in, Borrower or any of its
Subsidiaries now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class; (ii) any redemption,
conversion, exchange, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class of
stock or other equity security of, or ownership interest in, Borrower or any of
its Subsidiaries now
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or hereafter outstanding; (iii) any payment or prepayment of interest on,
principal of, premium, if any, redemption, conversion, exchange, purchase,
retirement, defeasance, sinking fund or similar payment with respect to, any
Indebtedness subordinated to the Obligations including, without limitation, the
Indebtedness incurred pursuant to the Allied Subordinated Loan Documents or the
Debentures; and (iv) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of stock or other equity security of, or ownership interest in, Borrower or any
of its Subsidiaries now or hereafter outstanding; provided, however, that the
term "Restricted Junior Payment" shall not include any distribution to any
Person of (x) any cash or preferred stock which Borrower receives or is entitled
to receive, with respect to the sale of the assets of any Excluded Subsidiary;
(y) the interest of Borrower in any Excluded Subsidiary or (z) any distribution
of cash or other property received by Borrower from any Excluded Subsidiary.
3.6 Restriction on Fundamental Changes.
Borrower will not and will not permit any of its Subsidiaries
(other than SunSource Mexico or the Excluded Subsidiaries) or First Tier
Holdings or Second Tier Holdings directly or indirectly to: (a) amend, modify or
waive any term or provision of its organizational documents, including without
limitation its articles of incorporation, certificates of designations
pertaining to preferred stock, by-laws, partnership agreement or operating
agreement unless required by law or unless any such amendment, modification or
waiver is not in any way adverse to the Lenders; (b) enter into any transaction
of merger or consolidation except to consummate a Permitted Acquisition and
except, upon not less than five (5) Business Days prior written notice to Agent,
any wholly-owned Subsidiary of Borrower (other than the Excluded Subsidiaries)
may be merged with or into Borrower (provided that Borrower is the surviving
entity) or any other wholly-owned Subsidiary of Borrower domiciled and
incorporated in the United States; (c) liquidate, wind-up or dissolve itself (or
suffer any liquidation or dissolution) except in connection with a merger or
consolidation permitted above; or (d) except for Permitted Acquisitions, acquire
by purchase or otherwise all or any substantial part of the business or assets
of any other Person.
3.7 Disposal of Assets or Subsidiary Stock.
Borrower will not and will not permit any of its Subsidiaries
(other than the Excluded Subsidiaries) directly or indirectly to convey, sell,
lease, sublease, transfer or otherwise dispose of, or grant any Person an option
to acquire, in one transaction or a series of related transactions, any of its
property, business or assets, or the capital stock of or other equity interests
in any of its Subsidiaries, whether now owned or hereafter acquired, except for
(a) sales of inventory in good faith to customers for fair value in the ordinary
course of business and dispositions of obsolete equipment not used or useful in
the business, (b) sales of an asset in order to immediately enter into a
leaseback of such asset under a capital lease which is permitted pursuant to the
provisions of subsection 3.2, (c) transfers of assets
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described in clauses (x), (y) and (z) of the definition of the term "Restricted
Junior Payment" and (d) Asset Dispositions if all of the following conditions
are met: (i) the market value of assets sold or otherwise disposed of in any
single transaction or series of related transactions does not exceed $500,000
and the aggregate market value of assets sold or otherwise disposed of in any
fiscal year of Borrower does not exceed $1,000,000; (ii) the consideration
received is at least equal to the fair market value of such assets; (iii) the
sole consideration received is cash or an Investment permitted pursuant to
subsection 3.3 hereof; (iv) the Net Proceeds of such Asset Disposition are
applied as required by subsection 1.5(C); (v) after giving effect to the Asset
Disposition and the repayment of Indebtedness with the proceeds thereof,
Borrower is in compliance on a pro forma basis with the covenants set forth in
Section 4 recomputed for the most recently ended quarter for which information
is available and is in compliance with all other terms and conditions of this
Agreement; and (vi) no Default or Event of Default then exists or would result
from such Asset Disposition.
3.8 Transactions with Affiliates.
Borrower will not and will not permit any of its Subsidiaries or
any other Loan Party (other than the Excluded Subsidiaries) directly or
indirectly to enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of any property or the rendering of any
management, consulting, investment banking, advisory or other similar services)
with any Affiliate or with any director, officer or employee of any Loan Party,
except (a) as set forth on Schedule 3.8, (b) transactions in the ordinary course
of and pursuant to the reasonable requirements of the business of Borrower or
any of its Subsidiaries and upon fair and reasonable terms which are fully
disclosed to Agent and which are no less favorable to Borrower or such
Subsidiary than would be obtained in a comparable arm's length transaction with
a Person that is not an Affiliate, (c) payment of reasonable compensation to
officers and employees for services actually rendered to Borrower or such
Subsidiary and (d) payment of director's fees to Persons not otherwise
affiliated with Allied or any Loan Party in an amount consistent with that paid
by similar companies. Notwithstanding the foregoing, unless otherwise approved
by Requisite Lenders, no payments may be made with respect to any management fee
set forth on Schedule 3.8 unless Borrower is permitted to make payments and
distributions for such purpose pursuant to the provisions of subsection 3.5(F).
3.9 Conduct of Business.
Borrower will not and will not permit any of its Subsidiaries
directly or indirectly to engage in any business other than businesses of the
type described on Schedule 3.9.
3.10 Changes Relating to Indebtedness.
Borrower will not and will not permit any of its Subsidiaries or
First Tier Holdings directly or indirectly to change or amend the terms of any
of its Indebtedness
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permitted by subsections 3.1(C), (D) and (E) if the effect of such amendment is
to: (a) increase the interest rate on such Indebtedness; (b) change the dates
upon which payments of principal or interest are due on or principal amount of
such Indebtedness; (c) change any event of default or add or make more
restrictive any covenant with respect to such Indebtedness; (d) change the
prepayment provisions of such Indebtedness; (e) change the subordination
provisions thereof (or the subordination terms of any guaranty thereof); or (f)
change or amend any other term if such change or amendment would materially
increase the obligations of the obligor or confer additional material rights on
the holder of such Indebtedness in a manner adverse to Borrower, any of its
Subsidiaries, First Tier Holdings or Lenders.
3.11 Fiscal Year.
Borrower will not and will not permit any of its Subsidiaries to
change its fiscal year.
3.12 Press Release; Public Offering Materials.
Borrower will not and will not permit any of its Subsidiaries to
disclose the name of Agent or any Lender in any press release or in any
prospectus, proxy statement or other materials filed with any governmental
entity relating to a public offering of the securities of any Loan Party unless
Agent or the applicable Lender has approved the content of any such disclosure.
3.13 Subsidiaries.
Except for Subsidiaries created or acquired to consummate a
Permitted Acquisition, Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to establish, create or acquire any new
Subsidiary.
3.14 Bank Accounts.
Borrower will not and will not permit any of its Subsidiaries
(other than the Excluded Subsidiaries) to maintain or establish any bank account
without prior written notice to Agent and unless Agent, Borrower or such
Subsidiary and the bank at which the account is maintained or to be opened enter
into a tri-party agreement regarding such bank account pursuant to which such
bank acknowledges the security interest of Agent in such bank account, agrees to
comply with instructions originated by Agent directing disposition of the funds
in the bank account without further consent from Borrower, and agrees to
subordinate and limit any security interest the bank may have in the bank
account on terms satisfactory to Agent. The preceding sentence shall not apply
to bank accounts which, in the aggregate, will at no time contain cash and Cash
Equivalents with a value in excess of $100,000 ("Excluded Deposit Accounts").
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3.15 Permitted Acquisitions.
Borrower will not and will not permit any of its Subsidiaries
(other than the Excluded Subsidiaries) to acquire all or substantially all of
the assets or more than fifty percent (50%) of the stock of any Person (or if
such Person is not a corporation, other equity interests of such Person) unless
(i) such acquisition is consented to in writing by the Requisite Lenders, or
(ii) each of the following conditions has been satisfied:
(a) Agent shall have received (1) such duly executed and
delivered agreements, instruments and documents as Agent shall request in order
to create in favor of Agent a perfected, priority Lien in the real, personal and
mixed property so acquired to secure the Obligations (including without
limitation a collateral assignment of applicable acquisition documents), and (2)
such lien searches relating to the property being acquired as Agent shall
request;
(b) If such acquisition is an acquisition of stock or other
equity interests in a Person, such Person guarantees the Obligations;
(c) At the time of such acquisition, no Default and no Event
of Default exists, or would exist upon the consummation thereof, both on an
actual and a pro forma basis;
(d) Borrower has demonstrated in writing to the satisfaction
of Agent that the business to be acquired has had EBITDA (calculated in the
manner set forth on Exhibit 4.8(C)) for the twelve (12) month period most
recently ended of not less than negative $1,000,000, and that after giving
effect thereto, EBITDA (calculated in the manner set forth on Exhibit 4.8(C))
for First Tier Holdings and its Subsidiaries (other than the Excluded
Subsidiaries) for the twelve (12) month period most recently ended would be
positive, if calculated on a pro forma basis after giving effect to the
consummation of such acquisition; provided that if EBITDA for the business to be
acquired (as calculated above) is a negative number, then Agent must be
satisfied with the EBITDA level, in its sole discretion, even if said EBITDA
level is between $0 and negative $1,000,000;
(e) The amount of additional Loans available to Borrower
under subsection 1.1(B) after giving effect to such acquisition shall equal or
exceed $500,000;
(f) The Total Consideration to be paid for such acquisition
does not exceed $3,000,000, and together with the Total Consideration paid with
respect to all other acquisitions that comply with this subsection 3.15 does not
exceed $15,000,000;
(g) The assets so acquired are located in the United States
or Canada or, if such acquisition is structured as a purchase of stock, the
Person so acquired is organized under the laws of Canada or a state in the
United States, and the assets owned by such Person located in the United States
or Canada;
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(h) Borrower has delivered to Agent not less than ten (10)
Business Days prior to the consummation of the acquisition an acquisition
summary providing a reasonably detailed description of the Person whose stock or
assets are proposed to be acquired and the terms and conditions of the proposed
purchase, along with such due diligence information (including, without
limitation, due diligence information regarding any environmental matters)
reasonably requested by, and in form and content acceptable to, Agent;
(i) Borrower has delivered to Agent all legal documentation
pertaining to such acquisition, which documentation shall be in form and
substance reasonably acceptable to Agent (including without limitation a
collateral assignment thereof in favor of Agent and legal opinions which allow
for Agent's reliance thereon);
(j) Borrower has delivered to Agent evidence in form and
substance acceptable to Agent that Borrower is in compliance with the provisions
of Section 4 hereof for the most recent fiscal period measured hereunder,
recalculated as if the acquisition and related borrowing of Loans were
consummated on the last day of such fiscal period;
(k) The business being acquired is in the same line of
business as described on Schedule 3.9; and
(l) Borrower updates the schedules hereto and to each of the
other Loan Documents, as applicable, provided in no event may any schedule be
updated in a manner that would reflect or evidence a Default or Event of
Default.
"Total Consideration" means the total consideration paid with
respect to any acquisition, including without limitation, (i) all payments made
in cash and property, (ii) to the extent not included in clause (i) above, the
amount paid or to be paid pursuant to non-compete agreements and consulting
agreements, (iii) the amount of debt and other liabilities assumed and/or
incurred (including in the case of an acquisition of stock or other equity
interests, the amount of debt and other liabilities of the Person to be
acquired), (iv) anticipated capital expenditures related to an acquisition and
identified to Agent prior to the consummation of such acquisition and (v) the
amount of all transaction fees.
Each acquisition consummated in accordance with the provisions of
this subsection 3.15 shall be referred to as a "Permitted Acquisition."
SECTION 4
FINANCIAL COVENANTS/REPORTING
Borrower covenants and agrees that so long as the Revolving Loan
Commitment is in effect and until payment in full of all Obligations (other than
contingent indemnification obligations to the extent no unsatisfied claim has
been asserted) and termination of the Obligations of Lenders with respect to all
Letters of Credit, Borrower shall
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perform and comply with, and shall cause each of the other Loan Parties to
perform and comply with, all covenants in this Section 4 applicable to such
Person.
4.1 Capital Expenditure Limits.
The aggregate amount of all Capital Expenditures of Borrower and
its Subsidiaries (other than the Excluded Subsidiaries) will not exceed
$15,500,000 in fiscal year 2001 or $13,500,000 in any fiscal year of Borrower
thereafter. "Capital Expenditures" will be calculated as illustrated on Exhibit
4.8(C).
4.2 Lease Limits.
Borrower will not and will not permit any of its Subsidiaries
(other than the Excluded Subsidiaries) directly or indirectly to become or
remain liable in any way, whether directly or by assignment or as a guarantor or
other surety, for the obligations of the lessee under any operating lease,
synthetic lease or similar off-balance sheet financing, if the aggregate amount
of all rents (or substantially equivalent payments) paid by Borrower and its
Subsidiaries (other than the Excluded Subsidiaries) under all such leases would
exceed $9,500,000 in fiscal year 2001 or 2002 or $10,500,000 in any fiscal year
of Borrower thereafter.
4.3 Adjusted EBITDA.
Borrower shall not permit Adjusted EBITDA for the twelve (12)
month period ending on the last day of any month set forth below to be less than
the amount set forth below for such month, plus for each Permitted Acquisition,
85% of the sum of the Permitted Acquisition EBITDA and the Pro Forma Cost
Reduction for the target thereof, each calculated as of the closing date of such
Permitted Acquisition; provided that Permitted Acquisition EBITDA must be
calculated by Borrower and acceptable to Agent and Requisite Lenders prior to
the closing of the Permitted Acquisition.
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"Adjusted EBITDA" will be calculated as illustrated on Exhibit 4.8(C).
Notwithstanding the foregoing, at all times after the calculation of this
financial covenant as of June 30, 2002, this
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covenant will only be calculated as of the last day of each calendar quarter,
rather than as of the last day of each month, until such time as Requisite
Lenders provide the Borrower with a written notice reinstituting monthly
covenant testing.
4.4 Fixed Charge Coverage.
Borrower shall not permit Fixed Charge Coverage for any twelve
(12) month period ending on the last day of any month ending during any of the
periods set forth below to be less than the ratio set forth below for such
period.
"Fixed Charge Coverage" will be calculated as illustrated on Exhibit 4.8(C).
4.5 Total Interest Coverage.
Borrower shall not permit Total Interest Coverage for any twelve
(12) month period ending on the last day of any month ending during any of the
periods set forth below to be less than the ratio set forth below for such
period.
"Total Interest Coverage" will be calculated as illustrated on Exhibit 4.8(C).
Notwithstanding the foregoing, at all times after the calculation of this
financial covenant as of June 30, 2002, this covenant will only be calculated as
of the last day of each calendar quarter, rather than as of the last day of each
month, until such time as Requisite Lenders provide the Borrower with a written
notice reinstituting monthly covenant testing.
4.6 Senior Indebtedness to Adjusted EBITDA Ratio.
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Borrower shall not permit the ratio of Senior Indebtedness
calculated as of the last day of any month during any of the periods set forth
below to Adjusted EBITDA for the twelve (12) month period ending on such day to
be greater than the ratio set forth below for such period.
"Senior Indebtedness" and "Adjusted EBITDA" will be calculated as illustrated on
Exhibit 4.8(C). Notwithstanding the foregoing, at all times after the
calculation of this financial covenant as of June 30, 2002, this covenant will
only be calculated as of the last day of each calendar quarter, rather than as
of the last day of each month, until such time as Requisite Lenders provide the
Borrower with a written notice reinstituting monthly covenant testing.
4.7 Total Indebtedness to Adjusted EBITDA Ratio.
Borrower shall not permit the ratio of Total Indebtedness
calculated as of the last day of any month during any of the periods set forth
below to Adjusted EBITDA for the twelve (12) month period ending on such day to
be greater than the ratio set forth below for such period.
"Total Indebtedness" will be calculated as illustrated on Exhibit 4.8(C).
Notwithstanding the foregoing, at all times after the calculation of this
financial covenant as of June 30, 2002, this covenant will only be calculated as
of the last day of each calendar quarter, rather than as of the last day of each
month, until such time as Requisite Lenders provide the Borrower with a written
notice reinstituting monthly covenant testing.
4.8 Financial Statements and Other Reports.
Borrower will maintain, and cause each of its Subsidiaries and
each other Loan Party to maintain, a system of accounting established and
administered in accordance with sound business practices to permit preparation
of financial statements in conformity with GAAP (it being understood that
monthly financial statements are not required to have footnote disclosures).
Borrower will deliver each of the financial statements and other reports
described below to Agent (and each Lender in the case of the financial
statements and other reports described in subsections (A), (B), (C), (E), (F),
(I), (J) and (K)).
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(A) Monthly/Quarterly Financials. As soon as available and in
any event within thirty (30) days after the end of each month (including the
last month of Borrower's fiscal year), Borrower will deliver (1) the
consolidated and consolidating balance sheets of First Tier Holdings and its
Subsidiaries, as at the end of such month, and the related consolidated and
consolidating statements of income, stockholders' equity and cash flow for such
month and for the period from the beginning of the then current fiscal year of
Borrower to the end of such month (it being understood that consolidating
financial statements are only required to be delivered within thirty (30) days
after the end of each calendar quarter), (2) a schedule of the outstanding
Indebtedness for borrowed money of First Tier Holdings and its Subsidiaries
(other than the Obligations) describing in reasonable detail each such debt
issue or loan outstanding and the principal amount and amount of accrued and
unpaid interest with respect to each such debt issue or loan and (3) a "Hillman
Performance Report" (in the form provided to Agent prior to Closing Date) for
the periods for which financial statements are being delivered.
(B) Year-End Financials. As soon as available and in any
event within ninety (90) days after the end of each fiscal year of Borrower,
Borrower will deliver (1) the consolidated balance sheet of First Tier Holdings
and its Subsidiaries as at the end of such year, and the related consolidated
statement of income, stockholders' equity and cash flow for such fiscal year,
(2) a schedule of the outstanding Indebtedness for borrowed money of First Tier
Holdings and its Subsidiaries (other than the Obligations) describing in
reasonable detail each such debt issue or loan outstanding and the principal
amount and amount of accrued and unpaid interest with respect to each such debt
issue or loan and (3) a report with respect to the consolidated financial
statements from a firm of Certified Public Accountants selected by Borrower and
reasonably acceptable to Agent, which report shall be prepared in accordance
with Statement of Auditing Standards No. 58 (the "Statement") entitled "Reports
on Audited Financial Statements" and such report shall be "Unqualified" (as such
term is defined in such Statement).
(C) Compliance and Pricing Certificate. Together with each
delivery of financial statements of First Tier Holdings and its Subsidiaries
pursuant to subsection 4.8(A) above, Borrower will deliver a fully and properly
completed Compliance and Pricing Certificate (in substantially the same form as
Exhibit 4.8(C)) signed by Borrower's chief executive officer or chief financial
officer.
(D) Accountants' Reports. Promptly upon receipt thereof,
Borrower will deliver copies of all significant reports submitted by Borrower's
firm of certified public accountants in connection with each annual, interim or
special audit or review of any type of the financial statements or related
internal control systems of First Tier Holdings or its Subsidiaries made by such
accountants, including any comment letter submitted by such accountants to
management in connection with their services.
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(E) Availability Certificate. As soon as available and in any
event within ten (10) Business Days after the end of each month, and from time
to time upon the request of Agent, Borrower will deliver an Availability
Certificate (in substantially the same form as Exhibit 4.8(E)) as at the last
day of such period.
(F) Management Report. Together with each delivery of
financial statements pursuant to subsections 4.8(A) (but solely with respect to
the financial statements delivered as of the last day of each of the first three
fiscal quarters of each year) and 4.8(B), Borrower will deliver a management
report (1) describing the operations and financial condition of First Tier
Holdings and its Subsidiaries (other than the Excluded Subsidiaries) for the
fiscal quarter then ended and the portion of the current fiscal year then
elapsed (or for the fiscal year then ended in the case of year-end financials),
(2) setting forth in comparative form the corresponding figures for the
corresponding periods of the previous fiscal year and the corresponding figures
from the most recent Projections for the current fiscal year delivered pursuant
to subsection 4.8(I) and (3) discussing the reasons for any significant
variations. The information above shall be presented in reasonable detail and
shall be certified by the chief financial officer of Borrower to the effect that
such information fairly presents the results of operations and financial
condition of Borrower and its Subsidiaries as at the dates and for the periods
indicated.
(G) [Intentionally Omitted]
(H) Appraisals. From time to time, if Agent or any Lender
determines that obtaining appraisals is necessary in order for Agent or such
Lender to comply with applicable laws or regulations, Agent will, at Borrower's
expense, obtain appraisal reports in form and substance and from appraisers
satisfactory to Agent stating the then current fair market values of all or any
portion of the real estate owned by Borrower or any of its Subsidiaries. In
addition to the foregoing, from time to time, but in the absence of a Default or
Event of Default not more than once during each calendar year, Agent may require
Borrower to obtain and deliver to Agent appraisal reports in form and substance
and from appraisers satisfactory to Agent stating the then current market values
of all or any portion of the real estate owned by Borrower or any of its
Subsidiaries (other than the Excluded Subsidiaries). In addition to the
foregoing, during the continuance of any Default or any Event of Default, Agent
may obtain, at Borrower's expense, appraisal reports in form and substance and
from appraisers satisfactory to Agent stating the then current market values of
all or any portion of the real estate and personal property owned by Borrower or
any of its Subsidiaries (other than the Excluded Subsidiaries).
(I) Projections. As soon as available and in any event no
later than forty-five (45) days after the end of each fiscal year of Borrower,
Borrower will deliver a budget for, and Projections of, First Tier Holdings and
its Subsidiaries (other than the Excluded Subsidiaries) for the forthcoming
three (3) fiscal years (or for the forthcoming one (1) fiscal
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year in the case of the budget), year by year, and for the forthcoming fiscal
year, month by month.
(J) SEC Filings and Press Releases. Promptly upon their
becoming available, Borrower will deliver copies of (1) all financial
statements, reports, notices and proxy statements sent or made available by
First Tier Holdings or any of its Subsidiaries to its security holders, (2) all
regular and periodic reports and all registration statements and prospectuses,
if any, filed by First Tier Holdings or any of its Subsidiaries with any
securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority, and (3) all press releases and
other statements made available by First Tier Holdings or any of its
Subsidiaries to the public concerning developments in the business of any such
Person.
(K) Events of Default, Etc. Promptly upon any officer of
Borrower obtaining knowledge of any of the following events or conditions,
Borrower shall deliver copies of all notices given or received by First Tier
Holdings or any of its Subsidiaries with respect to any such event or condition
and a certificate of Borrower's chief financial officer specifying the nature
and period of existence of such event or condition and what action First Tier
Holdings or any of its Subsidiaries has taken, is taking and proposes to take
with respect thereto: (1) any condition or event that constitutes, or which
could reasonably be expected to result in the occurrence of, an Event of Default
or Default; (2) any notice that any Person has given to Borrower or any of its
Subsidiaries or any other action taken with respect to a claimed default or
event or condition of the type referred to in subsection 6.1(B); or (3) any
event or condition that could reasonably be expected to result in any Material
Adverse Effect.
(L) Litigation. Promptly upon any officer of Borrower
obtaining knowledge of (1) the institution of any action, suit, proceeding,
governmental investigation or arbitration against or affecting any Loan Party or
any property of any Loan Party not previously disclosed by Borrower to Agent or
(2) any material development in any action, suit, proceeding, governmental
investigation or arbitration at any time pending against or affecting any Loan
Party or any property of any Loan Party which, in each case, could reasonably be
expected to have a Material Adverse Effect, Borrower will promptly give notice
thereof to Agent and provide such other information as may be reasonably
available to them to enable Agent and its counsel to evaluate such matter.
(M) Notice of Corporate and other Changes. Borrower shall
provide prompt written notice of (1) all jurisdictions in which a Loan Party
becomes qualified after the Closing Date to transact business, (2) any change
after the Closing Date in the authorized and issued equity securities of any
Loan Party or any amendment to their articles or certificate of incorporation,
by-laws, partnership agreement or other organizational documents, (3) any
Subsidiary created or acquired by any Loan Party after the Closing Date, such
notice, in each case, to identify the applicable jurisdictions, capital
structures or Subsidiaries, as applicable, and (4) any other event that occurs
after the Closing Date which
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would cause any of the representations and warranties in Section 5 of this
Agreement or in any other Loan Document to be untrue or misleading in any
material respect. The foregoing notice requirement shall not be construed to
constitute Requisite Lenders' consent to any transaction referred to above which
is not expressly permitted by the terms of this Agreement.
(N) Debenture Interest Deferral. Borrower shall provide
prompt written notice of any election to defer interest on the Debentures
pursuant to Section 2.04 of the Indenture.
(O) Other Information. With reasonable promptness, Borrower
will deliver such other information and data with respect to any Loan Party or
any Subsidiary of any Loan Party as from time to time may be reasonably
requested by Agent.
4.9 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement.
For purposes of this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP. Financial statements and other information furnished to
Agent pursuant to subsection 4.8 shall be prepared in accordance with GAAP as in
effect at the time of such preparation and unless otherwise expressly provided
herein, shall apply to First Tier Holdings and its consolidated Subsidiaries on
a consolidated basis. No "Accounting Changes" (as defined below) shall affect
financial covenants, standards or terms in this Agreement; provided that
Borrower shall prepare footnotes to each Compliance and Pricing Certificate and
the financial statements required to be delivered hereunder that show the
differences between the financial statements delivered (which reflect such
Accounting Changes) and the basis for calculating financial covenant compliance
(without reflecting such Accounting Changes). "Accounting Changes" means: (a)
changes in accounting principles required by GAAP and implemented by Borrower;
(b) changes in accounting principles recommended by Borrower's certified public
accountants and implemented by Borrower; and (c) changes in carrying value of
First Tier Holdings' or any of its Subsidiaries' assets, liabilities or equity
accounts resulting from (i) the application of purchase accounting principles
(A.P.B. 16 and/or 17 and EITF 88-16 and FASB 109) to the Related Transactions or
(ii) as the result of any other adjustments that, in each case, were applicable
to, but not included in, the Pro Forma. All such adjustments described in clause
(c) above resulting from expenditures made subsequent to the Closing Date
(including, but not limited to, capitalization of costs and expenses or payment
of pre-Closing Date liabilities) shall be treated as expenses in the period the
expenditures are made.
SECTION 5
REPRESENTATIONS AND WARRANTIES
To induce Agent and Lenders to enter into the Loan Documents, to
make Loans and to issue or cause to be issued Letters of Credit, Borrower
represents, warrants and
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covenants to Agent and each Lender that the following statements are and, after
giving effect to the Related Transactions, will remain true, correct and
complete for so long the Revolving Loan Commitment shall be in effect and until
payment in full of all Obligations:
5.1 Disclosure.
No representation or warranty of any Loan Party contained in this
Agreement, the financial statements referred to in subsection 5.5 (other than
the Pro Forma), the other Related Transactions Documents or any other document,
certificate or written statement furnished to Agent or any Lender by or on
behalf of any such Person for use in connection with the Loan Documents or the
Related Transactions Documents contains any untrue statement of a material fact
or omitted, omits or will omit to state a material fact necessary in order to
make the statements contained herein or therein (taken as a whole) not
misleading in light of the circumstances in which the same were made.
5.2 No Material Adverse Effect.
Since December 31, 2000 there have been no events or changes in
facts or circumstances affecting any Loan Party which individually or in the
aggregate have had or could reasonably be expected to have a Material Adverse
Effect and that have not been disclosed herein or in the attached Schedules.
5.3 No Conflict.
The consummation of the Related Transactions does not and will
not violate or conflict with any laws, rules, regulations or orders of any
governmental authority or violate, conflict with, result in a breach of, or
constitute a default (with due notice or lapse of time or both) under any
Contractual Obligation or organizational documents of any Loan Party except if
such violations, conflicts, breaches or defaults could not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect.
5.4 Organization, Powers, Capitalization and Good Standing.
(A) Organization and Powers. Each of the Loan Parties is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization and qualified to do business in all states where
such qualification is required except where failure to be so qualified could not
reasonably be expected to have a Material Adverse Effect. The jurisdiction of
organization and all jurisdictions in which each Loan Party is qualified to do
business are set forth on Schedule 5.4(A). Each of the Loan Parties has all
requisite organizational power and authority to own and operate its properties,
to carry on its business as now conducted and proposed to be conducted, to enter
into each Related Transactions Document to which it is a party and to incur the
Obligations, grant liens and security interests in the Collateral and carry out
the Related Transactions.
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(B) Capitalization. The authorized equity securities of each
of the Loan Parties is as set forth on Schedule 5.4(B). All issued and
outstanding equity securities of each of the Loan Parties are duly authorized
and validly issued, fully paid, nonassessable, free and clear of all Liens other
than those in favor of Agent for the benefit of Agent and Lenders, and such
equity securities were issued in compliance with all applicable state, federal
and foreign laws concerning the issuance of securities. The identity of the
holders of the equity securities of each of the Loan Parties and the percentage
of their fully-diluted ownership of the equity securities of each of the Loan
Parties is set forth on Schedule 5.4(B). No shares of the capital stock or other
equity securities of any Loan Party, other than those described above, are
issued and outstanding. Except as provided in Schedule 5.4(B), there are no
preemptive or other outstanding rights, options, warrants, conversion rights or
similar agreements or understandings for the purchase or acquisition from any
Loan Party of any equity securities of any such entity.
(C) Binding Obligation. This Agreement is, and the other
Related Transactions Documents when executed and delivered will be, the legally
valid and binding obligations of the applicable parties thereto, each
enforceable against each of such parties, as applicable, in accordance with
their respective terms.
5.5 Financial Statements and Projections.
All financial statements concerning First Tier Holdings and its
Subsidiaries which have been or will hereafter be furnished to Agent pursuant to
this Agreement, including those listed below, have been or will be prepared in
accordance with GAAP consistently applied (except as disclosed therein) and do
or will present fairly the financial condition of the entities covered thereby
as at the dates thereof and the results of their operations for the periods then
ended, subject to, in the case of unaudited financial statements, the absence of
footnotes and year-end adjustments.
(A) The consolidated balance sheets at December 31, 2000 and
the related statement of income of First Tier Holdings and its Subsidiaries, for
the fiscal year then ended, audited by Price Waterhouse Coopers.
(B) The consolidated balance sheet at August 31, 2001 and
the related statement of income of First Tier Holdings and its Subsidiaries for
the eight (8) months then ended.
The Pro Forma delivered on or prior to the Closing Date and the updated
Projections delivered pursuant to subsection 4.8(I) are and will be based upon
good faith estimates and assumptions believed by management of the relevant Loan
Party to be reasonable at the time made, it being recognized by the Lenders that
such financial information as it relates to future events is not to be viewed as
fact and that actual results during the period or periods covered by such
financial information may differ from the projected results as set forth therein
by a material amount.
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5.6 Intellectual Property.
Borrower and each of its Subsidiaries (other than the Excluded
Subsidiaries) owns, is licensed to use or otherwise has the right to use, all
patents, trademarks, trade names, copyrights, technology, know-how and processes
used in or necessary for the conduct of its business as currently conducted that
are material to the condition (financial or other), business or operations of
Borrower or such Subsidiaries (collectively called "Intellectual Property") and
all such Intellectual Property is identified on Schedule 5.6. Such Intellectual
Property is duly and properly registered, filed or issued in the appropriate
office and jurisdictions for such registrations, filings or issuances, except
where failure to do so could not reasonably be expected to be material to the
continued business of Borrower. Except as disclosed in Schedule 5.6, the use of
such Intellectual Property by Borrower and such Subsidiaries has not been
alleged by any Person to infringe on the rights of any Person and does not
infringe on any material rights of any Person.
5.7 Investigations, Audits, Etc.
Except as set forth on Schedule 5.7, (a) no claim for assessment
or collection of taxes is presently being asserted against First Tier Holdings
or any of its Subsidiaries, (b) neither First Tier Holdings nor any of its
Subsidiaries is a party to any pending action, proceeding or investigation by
any taxing authority relating to taxes, and (c) no such action, proceeding or
investigation has been threatened. Except as set forth on Schedule 5.7, none of
First Tier Holdings or any of its Subsidiaries, is the subject of any
governmental investigation concerning the violation or possible violation of any
law.
5.8 Employee Matters.
Except as set forth on Schedule 5.8, (a) no Loan Party nor any of
their respective employees is subject to any collective bargaining agreement,
(b) no petition for certification or union election is pending with respect to
the employees of any Loan Party and no union or collective bargaining unit has
sought such certification or recognition with respect to the employees of any
Loan Party and (c) there are no strikes, slowdowns, work stoppages or
controversies pending or, to the best knowledge of Borrower after due inquiry,
threatened between any Loan Party and its respective employees, other than
employee grievances arising in the ordinary course of business which could not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. Except as set forth on Schedule 5.8, neither Borrower
nor any of its Subsidiaries (other than the Excluded Subsidiaries) is party to
an employment contract.
5.9 Solvency.
Borrower and its Subsidiaries (other than SunSource Mexico and
the Excluded Subsidiaries), taken as a whole: (a) own and will own assets the
fair saleable value of which are (i) greater than the total amount of their
liabilities (including contingent liabilities) and
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(ii) greater than the amount that will be required to pay the probable
liabilities of their then existing debts as they become absolute and matured
considering all financing alternatives and potential asset sales reasonably
available to them; (b) have capital that is not unreasonably small in relation
to their business as presently conducted or after giving effect to any
contemplated transaction; and (c) do not intend to incur and do not believe that
they will incur debts beyond their ability to pay such debts as they become due.
5.10 Litigation; Adverse Facts.
Except as set forth on Subschedule 7.1, there are no judgments
outstanding against any Loan Party or affecting any property of any Loan Party,
nor is there any action, charge, claim, demand, suit, proceeding, petition,
governmental investigation or arbitration now pending or, to the best knowledge
of Borrower after due inquiry, threatened against or affecting any Loan Party or
any property of any Loan Party which could reasonably be expected to result in
any Material Adverse Effect.
5.11 Use of Proceeds; Margin Regulations.
No part of the proceeds of any Loan will be used for "buying" or
"carrying" "margin stock" within the respective meanings of such terms under
Regulation U of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect or for any other purpose that violates the
provisions of the regulations of the Board of Governors of the Federal Reserve
System. If requested by Agent, Borrower will furnish to Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
G-3 or FR Form U-1, as applicable, referred to in Regulation U.
SECTION 6
DEFAULT, RIGHTS AND REMEDIES
6.1 Event of Default.
"Event of Default" shall mean the occurrence or existence of any
one or more of the following:
(A) Payment. (1) Failure to pay any installment or other
payment of principal of any Loan when due, or to repay Revolving Loans to reduce
their balance to the Maximum Revolving Loan Balance or to reimburse any Issuing
Lender for any payment made by such Issuing Lender under or in respect of any
Letter of Credit when due or (2) failure to pay, within five (5) days after the
due date, any interest on any Loan or any other amount due under this Agreement
or any of the other Loan Documents; or
(B) Default in Other Agreements. (1) Any event occurs that,
after notice or the passage of time, requires the prepayment of all or any
portion of the principal amount of any of the Indebtedness evidenced by any
Debenture, or (2) failure of First Tier Holdings,
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Borrower or any of their respective Subsidiaries to pay when due or within any
applicable grace period any principal or interest on Indebtedness (other than
the Loans) or any Contingent Obligations or (3) breach or default of First Tier
Holdings, Borrower or any of their respective Subsidiaries, or the occurrence of
any condition or event, with respect to any Indebtedness (other than the Loans)
or any Contingent Obligations, if the effect of such failure to pay, breach,
default or occurrence referred to in clause (2) or (3) is to cause or to permit
the holder or holders then to cause, Indebtedness and/or Contingent Obligations
having an individual principal amount in excess of $500,000 or having an
aggregate principal amount in excess of $1,000,000 to become or be declared due
prior to their stated maturity; or
(C) Breach of Certain Provisions. Failure of Borrower to
perform or comply with any term or condition contained in that portion of
subsection 2.2 relating to Borrower's obligation to maintain insurance,
subsection 2.3, Section 3 or Section 4; or
(D) Breach of Warranty. Any representation, warranty,
certification or other statement made by any Loan Party in any Loan Document or
in any statement or certificate at any time given by such Person in writing
pursuant or in connection with any Loan Document is false in any material
respect on the date made; or
(E) Other Defaults Under Loan Documents. Borrower or any
other Loan Party defaults in the performance of or compliance with any term
contained in this Agreement or the other Loan Documents (other than occurrences
described in other provisions of this subsection 6.1 for which a different grace
or cure period is specified or which constitute immediate Events of Default) and
such default is not remedied or waived within thirty (30) days after the earlier
of (1) receipt by Borrower of notice from Agent or Requisite Lenders of such
default or (2) actual knowledge of Borrower or any other Loan Party of such
default; or
(F) Involuntary Bankruptcy; Appointment of Receiver, Etc.
(1) A court enters a decree or order for relief with respect to First Tier
Holdings, Borrower or any of their respective Subsidiaries (other than SunSource
Mexico and the Excluded Subsidiaries) in an involuntary case under the
Bankruptcy Code, which decree or order is not stayed or other similar relief is
not granted under any applicable federal or state law; or (2) the continuance of
any of the following events for forty-five (45) days unless dismissed, bonded or
discharged: (a) an involuntary case is commenced against First Tier Holdings,
Borrower or any of their respective Subsidiaries (other than SunSource Mexico
and the Excluded Subsidiaries), under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect; or (b) a decree or order of a
court for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over First Tier Holdings,
Borrower or any of their respective Subsidiaries (other than SunSource Mexico
and the Excluded Subsidiaries), or over all or a substantial part of their
respective property, is entered; or (c) an interim receiver, trustee or other
custodian is appointed without
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the consent of First Tier Holdings, Borrower or any of their respective
Subsidiaries (other than SunSource Mexico and the Excluded Subsidiaries), for
all or a substantial part of the property of First Tier Holdings, Borrower or
any such Subsidiary; or
(G) Voluntary Bankruptcy; Appointment of Receiver, Etc. (1)
First Tier Holdings, Borrower or any of their respective Subsidiaries (other
than SunSource Mexico and the Excluded Subsidiaries) commences a voluntary case
under the Bankruptcy Code, or consents to the entry of an order for relief in an
involuntary case or to the conversion of an involuntary case to a voluntary case
under any such law or consents to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of their
respective property; or (2) First Tier Holdings, Borrower or any of their
respective Subsidiaries (other than SunSource Mexico and the Excluded
Subsidiaries) makes any assignment for the benefit of creditors; or (3) the
Board of Directors of First Tier Holdings, Borrower or any of their respective
Subsidiaries (other than SunSource Mexico and the Excluded Subsidiaries) adopts
any resolution or otherwise authorizes action to approve any of the actions
referred to in this subsection 6.1(G); or
(H) Judgment and Attachments. Any money judgment, writ or
warrant of attachment, or similar process (other than those described elsewhere
in this subsection 6.1) involving (1) an amount in any individual case in excess
of $500,000 or (2) an amount in the aggregate at any time in excess of
$1,000,000 (in either case to the extent not adequately covered by insurance as
to which the insurance company has acknowledged coverage) is entered or filed
against First Tier Holdings, Borrower or any of their respective Subsidiaries or
any of their respective assets and remains undischarged, unvacated, unbonded or
unstayed for a period of thirty (30) days or in any event later than five (5)
Business Days prior to the date of any proposed sale thereunder; or
(I) Dissolution. Any order, judgment or decree is entered
against First Tier Holdings, Borrower or any of their respective Subsidiaries
(other than SunSource Mexico and the Excluded Subsidiaries) decreeing the
dissolution or split up of First Tier Holdings, Borrower or such Subsidiary and
such order remains undischarged or unstayed for a period in excess of fifteen
(15) days; or
(J) Solvency. First Tier Holdings, Borrower and all of their
respective Subsidiaries (other than SunSource Mexico and the Excluded
Subsidiaries) considered in the aggregate, cease to be solvent (as represented
in subsection 5.9) or admit in writing their present or prospective inability to
pay their debts as they become due; or
(K) Injunction. First Tier Holdings, Borrower or any of
their respective Subsidiaries (other than SunSource Mexico and the Excluded
Subsidiaries) is enjoined, restrained or in any way prevented by the order of
any court or any administrative or regulatory agency from conducting all or any
material part of its business for more than fifteen (15) days; or
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(L) ERISA; Pension Plans. (1) Institution of any steps by
Borrower or any member of the Controlled Group or any other Person to terminate
a Pension Plan if as a result of such termination Borrower or any member of the
Controlled Group could reasonably be expected to be required to make a
contribution to such Pension Plan, or could incur a liability or obligation to
such Pension Plan, in excess of $500,000; (2) a contribution failure occurs with
respect to any Pension Plan sufficient to give rise to a Lien under Section 302
of ERISA securing more than $500,000; (3) there shall occur any withdrawal or
partial withdrawal from a Multiemployer Plan and the withdrawal liability
(without unaccrued interest) to Multiemployer Plans as a result of such
withdrawal (including any outstanding withdrawal liability that Borrower and the
members of the Controlled Group have incurred on the date of such withdrawal)
exceeds $500,000; (4) with respect to any Plan, Borrower or any member of the
Controlled Group shall incur an accumulated funding deficiency or request a
funding waiver from the IRS; or (5) there shall occur an ERISA Event or a
non-exempt prohibited transaction within the meaning of Section 406 of ERISA or
IRC Section 4975; provided, however, that the events listed in clauses (4) and
(5) hereof shall constitute Events of Default only if the liability, deficiency
or waiver request, whether or not assessed, could reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect; or
(M) Environmental Matters. First Tier Holdings, Borrower or
any of their respective Subsidiaries fails to: (1) obtain or maintain any
operating licenses or permits required by environmental authorities; (2) begin,
continue or complete any remediation activities as required by any environmental
authorities; (3) store or dispose of any hazardous materials in accordance with
applicable environmental laws and regulations; or (4) comply with any
environmental laws; if any such failure under clauses (1), (2), (3) or (4),
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect; or
(N) Invalidity of Loan Documents. Any of the Loan Documents
for any reason, other than a partial or full release in accordance with the
terms thereof, ceases to be in full force and effect or is declared to be null
and void, or any Loan Party denies that it has any further liability under any
Loan Documents to which it is party, or gives notice to such effect; or
(O) Damage; Strike; Casualty. Any material damage to, or
loss, theft or destruction of, any Collateral, whether or not insured, or any
strike, lockout, labor dispute, embargo, condemnation, act of God or public
enemy, or other casualty which causes, for more than fifteen (15) consecutive
days, the cessation or substantial curtailment of revenue producing activities
at any facility of Borrower or any of its Subsidiaries, if any such event or
circumstance could reasonably be expected to have a Material Adverse Effect; or
(P) Licenses and Permits. The loss, suspension or revocation
of, or failure to renew, any license or permit now held or hereafter acquired by
Borrower or any of its
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Subsidiaries, if such loss, suspension, revocation or failure to renew could
reasonably be expected to have a Material Adverse Effect; or
(Q) Failure of Security. Agent, for the benefit of Agent and
Lenders, does not have or ceases to have a valid and perfected first priority
security interest in the Collateral (subject to Permitted Encumbrances) or any
substantial portion thereof, in each case, for any reason other than the failure
of Agent to take any action within its control; or
(R) Business Activities.
(1) First Tier Holdings engages in any type of business
activity other than the ownership of stock of Second Tier Holdings and SunSource
Capital Trust, the payment of Contingent Obligations binding on it and set forth
on Schedule 3.4 and performance of its obligations under the Related Transaction
Documents to which it is a party and the Indenture; or
(2) Second Tier Holdings engages in any type of business
activity other than the ownership of stock of Borrower, the maintenance of the
Indebtedness described in subsection 3.1(G) and performance of its obligations
under the Related Transaction Documents to which it is a party; or
(3) First Tier Holdings or Second Tier Holdings takes any
action that would result in a breach by Borrower of any provision of this
Agreement or First Tier Holdings amends or otherwise modifies its Management
Agreement with Allied; or
(4) Second Tier Holdings fails, within ten days after the
end of any calendar year, to contribute to the capital of Borrower any and all
cash and Cash Equivalents owned by Second Tier Holdings as of the last day of
such year, which cash and Cash Equivalents shall include any and all payments of
principal and interest made during such year to Second Tier Holdings by Borrower
with respect to Indebtedness owing from time to time by Borrower to Second Tier
Holdings; or
(5) SunSource Mexico engages in any type of business other
than business associated with the winding down and cessation of its current
operations; or
(S) Change in Control.
(1) Allied ceases to beneficially and of record own and
control, directly or indirectly, free and clear of all Liens other than Liens in
favor of Agent, at least fifty-one percent (51%) of the issued and outstanding
shares of each class of capital stock or other equity securities of First Tier
Holdings; or
(2) First Tier Holdings ceases to beneficially and of record
own and control one hundred percent (100%) of the issued and outstanding capital
stock or other equity
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securities of Second Tier Holdings free and clear of all Liens other than Liens
in favor of Agent; or
(3) Second Tier Holdings ceases to beneficially and of
record own and control one hundred percent (100%) of the issued and outstanding
capital stock or other equity securities of Borrower free and clear of all Liens
other than Liens in favor of Agent; or
(4) Borrower ceases to beneficially own and control,
directly or indirectly, free and clear of all Liens other than Liens in favor of
Agent, 100% of the issued and outstanding shares of each class of capital stock
or other equity securities entitled (without regard to the occurrence of any
contingency) to vote for the election of a majority of the members of the boards
of directors of any Loan Party other than First Tier Holdings and Second Tier
Holdings; or
(5) The occurrence of a "Change of Control," as defined in
the Allied Subordinated Loan Documents; or
(T) Subordinated Indebtedness. The failure of First Tier
Holdings, Borrower or any of their respective Subsidiaries or the failure of
Allied to comply with the terms of any subordination or intercreditor agreement
or any subordination provisions of any note or other document running to the
benefit of Agent or Lenders; or
(U) Debentures.
(1) First Tier Holdings fails to exercise its rights
pursuant to Section 2.04 of the Indenture to extend the interest payment period
of the Debentures at any time that Borrower is precluded from making payments
and distributions pursuant to the provisions of subsection 3.5(D); or
(2) A "Tax Event" (as defined in the Indenture) occurs.
6.2 Suspension or Termination of Commitments.
Upon the occurrence of any Default or Event of Default, Agent
may, and at the request of Requisite Lenders Agent shall, without notice or
demand, immediately suspend or terminate all or any portion of Lenders'
obligations to make additional Loans or issue or cause to be issued Letters of
Credit under the Revolving Loan Commitment; provided that, in the case of a
Default, if the subject condition or event is waived by Requisite Lenders or
cured within any applicable grace or cure period, the Revolving Loan Commitment
shall be reinstated.
6.3 Acceleration and other Remedies.
Upon the occurrence of any Event of Default described in
subsections 6.1(F) or 6.1(G), the unpaid principal amount of and accrued
interest and fees on the Term Loans
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and the Revolving Loans, the aggregate outstanding Letter of Credit Liability
and all other Obligations shall automatically become immediately due and
payable, without presentment, demand, protest, notice of intent to accelerate,
notice of acceleration or other requirements of any kind, all of which are
hereby expressly waived by Borrower, and the Revolving Loan Commitment shall
thereupon terminate. Upon the occurrence and during the continuance of any other
Event of Default, Agent may, and at the request of the Requisite Lenders Agent
shall, by written notice to Borrower (a) declare all or any portion of the Loans
and all or any portion of the other Obligations to be, and the same shall
forthwith become, immediately due and payable together with accrued interest
thereon, and the obligations of Agent, Issuing Lenders and Lenders to make
Revolving Loans and issue Letters of Credit shall thereupon terminate, (b)
demand that Borrower immediately deposit cash with Agent for the benefit of
Issuing Lenders in an amount equal to 105% of the aggregate outstanding Letter
of Credit Liability and (c) exercise any other remedies which may be available
under the Loan Documents or applicable law. Borrower hereby grants to Agent, for
the benefit of Issuing Lenders and each Lender with a participation in any
Letters of Credit then outstanding, a security interest in such cash collateral
to secure all of the Letter of Credit Liability. Any such cash collateral shall
be made available by Agent to Issuing Lenders to reimburse Issuing Lenders for
payments of drafts drawn under such Letters of Credit and any fees and expenses
of Bank Line Issuers or Issuing Lenders with respect to such Letters of Credit
and the unused portion thereof, after all such Letters of Credit shall have
expired or been fully drawn upon, shall be applied to repay any other
Obligations. After all such Letters of Credit shall have expired or been fully
drawn upon and all Obligations shall have been satisfied and paid in full, the
balance, if any, of such cash collateral shall be returned to Borrower. Borrower
shall from time to time execute and deliver to Agent such further documents and
instruments as Agent may request with respect to such cash collateral.
6.4 Performance by Agent.
If Borrower shall fail to perform any covenant, duty or
agreement contained in any of the Loan Documents, Agent may perform or attempt
to perform such covenant, duty or agreement on behalf of Borrower after the
expiration of any cure or grace periods set forth herein. In such event,
Borrower shall, at the request of Agent, promptly pay any amount reasonably
expended by Agent in such performance or attempted performance to Agent,
together with interest thereon at the highest rate of interest in effect upon
the occurrence of an Event of Default as specified in subsection 1.2(E) from the
date of such expenditure until paid. Notwithstanding the foregoing, it is
expressly agreed that Agent shall not have any liability or responsibility for
the performance of any obligation of Borrower under this Agreement or any other
Loan Document.
6.5 Application of Proceeds.
Notwithstanding anything to the contrary contained in this
Agreement, upon the occurrence and during the continuance of an Event of
Default, (a) Borrower irrevocably
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waives the right to direct the application of any and all payments at any time
or times thereafter received by Agent from or on behalf of Borrower, and Agent
shall have the continuing and exclusive right to apply and to reapply any and
all payments received at any time or times after the occurrence and during the
continuance of an Event of Default against the Obligations in such manner as
Agent may deem advisable notwithstanding any previous application by Agent
(provided that Agent does not prefer any Lender over any other Lender) and (b)
in the absence of a specific determination by Agent with respect thereto, the
proceeds of any sale of, or other realization upon, all or any part of the
Collateral shall be applied: first, to all fees, costs and expenses incurred by
or owing to Agent and any Lender with respect to this Agreement, the other Loan
Documents or the Collateral; second, to accrued and unpaid interest on the
Obligations (including any interest which but for the provisions of the
Bankruptcy Code, would have accrued on such amounts); third, to the principal
amount of the Obligations outstanding (other than Obligations owed to any Lender
under an Interest Rate Agreement); and fourth to any other indebtedness or
obligations of Borrower owing to Agent or any Lender under the Loan Documents
(provided that in all such cases, Agent does not prefer any Lender over any
other Lender). Any balance remaining shall be delivered to Borrower or to
whomever may be lawfully entitled to receive such balance or as a court of
competent jurisdiction may direct.
SECTION 7
CONDITIONS TO LOANS
The obligations of Lenders to make Loans and to issue or cause
to be issued Letters of Credit are subject to satisfaction of all of the
applicable conditions set forth below.
7.1 Conditions to Initial Loans.
The obligations of Lenders to make the initial Loans and to
issue or cause to be issued Letters of Credit on the Closing Date are, in
addition to the conditions precedent specified in subsection 7.2, subject to the
delivery of all documents listed on, the taking of all actions set forth on and
the satisfaction of all other conditions precedent listed on Schedule 7.1, all
in form and substance, or in a manner, satisfactory to Agent and Lenders. In
addition to the foregoing, the obligations of the Lenders to make the initial
Loans and to issue or cause to be issued Letters of Credit on the Closing Date
is subject to the condition that the Senior Indebtedness to Adjusted EBITDA
Ratio (as provided in subsection 4.6) is less than 2.4.
7.2 Conditions to All Loans.
The obligations of Lenders to make Loans and to issue or cause
to be issued Letters of Credit on any date ("Funding Date") are subject to the
further conditions precedent set forth below.
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(A) Agent shall have received a request for an advance of a
Loan or the issuance of a Letter of Credit, in each case in accordance with the
applicable provisions of subsection 1.1.
(B) The representations and warranties contained in Section
5 of this Agreement and elsewhere herein and in the Loan Documents shall be (and
each request by Borrower for a Loan or a Letter of Credit shall constitute a
representation and warranty by Borrower that such representations and warranties
are) true, correct and complete in all material respects on and as of that
Funding Date to the same extent as though made on and as of that date, except
for any representation or warranty expressly limited by its terms to a specific
date and taking into account any amendments to the schedules, subschedules or
exhibits as a result of any disclosures made in writing by Borrower to Agent
after the Closing Date which disclosures do not evidence an Event of Default.
(C) No event shall have occurred and be continuing or would
result from the funding or such Loans or the issuance of such Letters of Credit
that would constitute an Event of Default or a Default.
(D) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making any Loan or from issuing or causing to be issued any Letter of Credit.
SECTION 8
ASSIGNMENT AND PARTICIPATION
8.1 Assignments and Participations.
(A) Assignments. Each Lender may from time to time assign,
subject to the terms of an Assignment and Acceptance Agreement, its rights and
delegate its obligations under this Agreement to another Person, provided that
(1) such Lender (excluding Heller) shall first obtain the written consent of
Agent and Borrower (except Borrower's consent shall not be required during the
existence of a Default or Event of Default), which consents shall not be
unreasonably withheld; (2) the Pro Rata Share of the Revolving Loan Commitment
and/or Term Loans being assigned shall in no event be less than the lesser of
(a) $3,000,000 and (b) the entire amount of the Pro Rata Share of the Revolving
Loan Commitment and/or Term Loans of the assigning Lender; and (3) upon the
consummation of each such assignment the assigning Lender shall pay Agent an
administrative fee of $3,500. The administrative fee referred to in clause (3)
of the preceding sentence shall not apply to an assignment of security interest
in the Obligations as described in paragraph (E)(1) below or to an assignment to
an affiliate. In the case of an assignment authorized under this subsection 8.1,
the assignee shall have, to the extent of such assignment, the same rights,
benefits and obligations as it would if it were an initial Lender hereunder. The
assigning Lender shall be relieved of its obligations hereunder with respect to
its Pro Rata Share of the Revolving Loan Commitment or assigned portion thereof.
Borrower hereby acknowledges and agrees that
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any assignment will give rise to a direct obligation of Borrower to the assignee
and that the assignee shall be considered to be a Lender hereunder.
(B) Recording of Assignments. Agent shall maintain at its
office in Chicago, Illinois a copy of each Assignment and Acceptance Agreement
delivered to it and a register for the recordation of the names and addresses of
Lenders, and the commitments of, and principal amount of the Loans owing to each
Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be presumptive evidence of the amounts due and
owing to Lender in the absence of manifest error. Borrower, Agent and each
Lender may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by Borrower and any Lender, at any
reasonable time upon reasonable prior notice.
(C) Acceptance of Assignment by Agent. Upon its receipt of a
duly completed Assignment and Acceptance Agreement executed by an assigning
Lender and its assignee (together with the Notes subject to such assignment) and
the administrative fee referred to above, Agent shall (subject to the consent of
Agent and Borrower to such assignment, if required) (1) accept such Assignment
and Acceptance Agreement, (2) record the information contained therein in the
Register and replace Schedule 10.1(C) to reflect such Assignment and Acceptance
Agreement and (3) give prompt notice thereof to Borrower and Lenders. Upon
request by Agent, Borrower shall promptly execute and deliver to Agent Notes
evidencing the Obligations owed by Borrower to the assignee and, if applicable,
the assigning Lender, after giving effect to the assignment. Agent shall cancel
the Notes delivered to it by the assigning Lender and deliver the new Notes to
the assignee and, unless the assigning Lender has assigned all of its interests
under this Agreement, the assigning Lender.
(D) Participations. Any Lender may sell participations in
all or any part of its Pro Rata Share of the Revolving Loan Commitment and/or
Term Loans to another Person provided that such Lender (excluding Heller) shall
first obtain the prior written consent of Agent, which consent shall not be
unreasonably withheld. All amounts payable by Borrower hereunder shall be
determined as if that Lender had not sold such participation and the holder of
any such participation shall not be entitled to require such Lender to take or
omit to take any action hereunder except action directly effecting (i) any
reduction in the principal amount or interest rate payable with respect to any
Loan in which such holder participates; (ii) any extension of the Commitment
Termination Date, the date on which any Scheduled Installment is to be paid or
the date fixed for any payment of interest payable with respect to any Loan in
which such holder participates; or (iii) any release of all or substantially all
of the Collateral (except if the sale, disposition or release of such Collateral
is permitted under subsection 3.7 or 8.2 or any other Loan Document). Borrower
hereby acknowledges and agrees that any participation will give rise to a direct
obligation of Borrower to the
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participant, and the participant shall for purposes of subsections 1.8, 1.9, 8.4
and 9.1 be considered to be a Lender hereunder.
(E) Security Interests in Obligations; Assignments to
Affiliates. Notwithstanding any other provision of this Agreement, any Lender
may at any time, following written notice to Agent, (1) pledge the Obligations
held by it or create a security interest in all or any portion of its rights
under this Agreement or the other Loan Documents in favor of any Person;
provided, however, that (a) no such pledge or grant of security interest to any
Person shall release such Lender from its obligations hereunder or under any
other Loan Document and (b) the acquisition of title to such Lender's
Obligations pursuant to any foreclosure or other exercise of remedies by such
Person shall be subject to the provisions of this Agreement and the other Loan
Documents in all respects including, without limitation, any consent required by
subsection 8.1(A) and (2) assign all or any portion of its funded loans to an
Affiliate of such Lender which is at least 50% owned by such Lender or its
parent company, to one or more other Lenders or to a Related Fund. For purposes
of this paragraph, a "Related Fund" shall mean, with respect to any Lender, a
fund or other investment vehicle that invests in commercial loans and is managed
by such Lender or by the same investment advisor that manages such Lender or by
an Affiliate of such investment advisor.
(F) Other Matters. Except as otherwise provided in this
subsection 8.1 no Lender shall, as between Borrower and that Lender, be relieved
of any of its obligations hereunder as a result of any sale, assignment,
transfer or negotiation of, or granting of a participation in, all or any part
of the Loans, the Notes or other Obligations owed to such Lender. Each Lender
may furnish any information concerning First Tier Holdings and its Subsidiaries
in the possession of that Lender from time to time to assignees and participants
(including prospective assignees and participants), subject to the provisions of
subsection 9.13. Borrower agrees that it will use its best efforts to assist and
cooperate with Agent and any Lender in any manner reasonably requested by Agent
or such Lender to effect the sale of a participation or an assignment described
above. Notwithstanding anything contained in this Agreement to the contrary, so
long as the Requisite Lenders shall remain capable of making LIBOR Loans, no
Person shall become a Lender hereunder unless such Person shall also be capable
of making LIBOR Loans.
8.2 Agent.
(A) Appointment. Each Lender hereby designates and appoints
Heller as its Agent under this Agreement and the other Loan Documents, and each
Lender hereby irrevocably authorizes Agent to execute and deliver the Security
Documents and to take such action or to refrain from taking such action on its
behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers as are set forth herein or therein, together with such
other powers as are reasonably incidental thereto. Agent is authorized and
empowered to amend, modify, or waive any provisions of this Agreement or
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the other Loan Documents on behalf of Lenders subject to the requirement that
certain of Lenders' consent be obtained in certain instances as provided in this
subsection 8.2 and subsections 8.3 and 9.2. The provisions of this subsection
8.2 are solely for the benefit of Agent and Lenders and neither Borrower nor any
other Loan Party shall have any rights as a third party beneficiary of any of
the provisions hereof. In performing its functions and duties under this
Agreement, Agent shall act solely as agent of Lenders and does not assume and
shall not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for Borrower or any other Loan Party. Agent may perform
any of its duties hereunder, or under the Loan Documents, by or through its
agents or employees.
(B) Nature of Duties. The duties of Agent shall be
mechanical and administrative in nature. Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Lender. Nothing in this
Agreement or any of the Loan Documents, express or implied, is intended to or
shall be construed to impose upon Agent any obligations in respect of this
Agreement or any of the Loan Documents except as expressly set forth herein or
therein. Each Lender shall make its own independent investigation of the
financial condition and affairs of Borrower in connection with the extension of
credit hereunder and shall make its own appraisal of the creditworthiness of
Borrower, and Agent shall have no duty or responsibility, either initially or on
a continuing basis, to provide any Lender with any credit or other information
with respect thereto (other than as expressly required herein). If Agent seeks
the consent or approval of any Lenders to the taking or refraining from taking
any action hereunder, then Agent shall send notice thereof to each Lender. Agent
shall promptly notify each Lender any time that the Requisite Lenders have
instructed Agent to act or refrain from acting pursuant hereto.
(C) Rights, Exculpation, Etc. Neither Agent nor any of its
officers, directors, employees or agents shall be liable to any Lender for any
action taken or omitted by them hereunder or under any of the Loan Documents, or
in connection herewith or therewith, except that Agent shall be liable to the
extent of its own gross negligence or willful misconduct as determined by a
court of competent jurisdiction. Agent shall not be liable for any apportionment
or distribution of payments made by it in good faith and if any such
apportionment or distribution is subsequently determined to have been made in
error the sole recourse of any Lender to whom payment was due but not made,
shall be to recover from other Lenders any payment in excess of the amount to
which they are determined to be entitled (and such other Lenders hereby agree to
return to such Lender any such erroneous payments received by them). In
performing its functions and duties hereunder, Agent shall exercise the same
care which it would in dealing with loans for its own account, but neither Agent
nor any of its agents or representatives shall be responsible to any Lender for
any recitals, statements, representations or warranties herein or for the
execution, effectiveness, genuineness, validity, enforceability, collectibility,
or sufficiency of this Agreement or any of the Loan Documents or the
transactions contemplated thereby, or for the financial condition of any Loan
Party. Agent shall not be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or
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any of the Loan Documents or the financial condition of any Loan Party, or the
existence or possible existence of any Default or Event of Default. Agent may at
any time request instructions from Lenders with respect to any actions or
approvals which by the terms of this Agreement or of any of the Loan Documents
Agent is permitted or required to take or to grant, and if such instructions are
promptly requested, Agent shall be absolutely entitled to refrain from taking
any action or to withhold any approval and shall not be under any liability
whatsoever to any Person for refraining from any action or withholding any
approval under any of the Loan Documents until it shall have received such
instructions from Requisite Lenders or all or such other portion of the Lenders
as shall be prescribed by this Agreement. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against Agent as a result of
Agent acting or refraining from acting under this Agreement or any of the other
Loan Documents in accordance with the instructions of Requisite Lenders and,
notwithstanding the instructions of Requisite Lenders, Agent shall have no
obligation to take any action if it believes, in good faith, that such action
exposes Agent to any liability for which it has not received satisfactory
indemnification in accordance with subsection 8.2(E).
(D) Reliance. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any written or oral notices, statements,
certificates, orders or other documents or any telephone message or other
communication (including any writing, telex, telecopy or telegram) believed by
it in good faith to be genuine and correct and to have been signed, sent or made
by the proper Person, and with respect to all matters pertaining to this
Agreement or any of the Loan Documents and its duties hereunder or thereunder.
Agent shall be entitled to rely upon the advice of legal counsel, independent
accountants, and other experts selected by Agent in its sole discretion.
(E) Indemnification. Lenders will reimburse and indemnify
Agent for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, attorneys' fees and expenses), advances or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any of the Loan
Documents or any action taken or omitted by Agent under this Agreement or any of
the Loan Documents, in proportion to each Lender's Pro Rata Share, but only to
the extent that any of the foregoing is not reimbursed by Borrower; provided,
however, that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, advances or disbursements to the extent resulting from Agent's gross
negligence or willful misconduct as determined by a court of competent
jurisdiction. If any indemnity furnished to Agent for any purpose shall, in the
opinion of Agent, be insufficient or become impaired, Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against even if so directed by Requisite Lenders until such additional indemnity
is furnished. The obligations of Lenders under this subsection 8.2(E) shall
survive the payment in full of the Obligations and the termination of this
Agreement.
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(F) Heller Individually. With respect to its obligations
under the Revolving Loan Commitment and the Loans made by it, Heller shall have
and may exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any other
Lender. The terms "Lenders" or "Requisite Lenders" or any similar terms shall,
unless the context clearly otherwise indicates, include Heller in its individual
capacity as a Lender or one of the Requisite Lenders. Heller, either directly or
through strategic affiliations, may lend money to, acquire equity or other
ownership interests in, provide advisory services to and generally engage in any
kind of banking, trust or other business with any Loan Party as if it were not
acting as Agent pursuant hereto and without any duty to account therefore to
Lenders. Heller, either directly or through strategic affiliations, may accept
fees and other consideration from any Loan Party for services in connection with
this Agreement or otherwise without having to account for the same to Lenders.
(G) Successor Agent.
(1) Resignation. Agent may resign from the performance of
all its agency functions and duties hereunder at any time by giving at least
thirty (30) Business Days' prior written notice to Borrower and the Lenders.
Such resignation shall take effect upon the acceptance by a successor Agent of
appointment pursuant to clause (2) below or as otherwise provided below.
(2) Appointment of Successor. Upon any such notice of
resignation pursuant to clause (1) above, Requisite Lenders shall appoint a
successor Agent which, unless an Event of Default has occurred and is
continuing, shall be reasonably acceptable to Borrower. If a successor Agent
shall not have been so appointed within the thirty (30) Business Day period
referred to in clause (1) above, the retiring Agent, upon notice to Borrower,
shall then appoint a successor Agent who shall serve as Agent until such time,
if any, as Requisite Lenders appoint a successor Agent as provided above.
(3) Successor Agent. Upon the acceptance of any appointment
as Agent under the Loan Documents by a successor Agent, 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 under the Loan Documents. After any
retiring Agent's resignation as Agent, the provisions of this subsection 8.2
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent.
(H) Collateral Matters.
(1) Release of Collateral. Lenders hereby irrevocably
authorize Agent, at its option and in its discretion, to release any Lien
granted to or held by Agent upon any Collateral (i) upon termination of the
Revolving Loan Commitment and payment and satisfaction of all Obligations (other
than contingent indemnification obligations to the extent
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no claims giving rise thereto have been asserted); (ii) constituting property
being sold or disposed of if Borrower certifies to Agent that the sale or
disposition is made in compliance with the provisions of this Agreement (and
Agent may rely in good faith conclusively on any such certificate, without
further inquiry); or (iii) in accordance with the provisions of the next
sentence. In addition, with the consent of Requisite Lenders, Agent may release
any Lien granted to or held by Agent upon any Collateral having a book value not
greater than ten percent (10%) of the total book value of all Collateral, either
in a single transaction or in a series of related transactions; provided,
however, that in no event will Agent, acting under the authority granted to it
pursuant to this sentence, release Collateral having a total book value in
excess of twenty percent (20%) of the book value of all Collateral, as
determined by Agent, during any calendar year.
(2) Confirmation of Authority; Execution of Releases.
Without in any manner limiting Agent's authority to act without any specific or
further authorization or consent by Lenders (as set forth in subsection
8.2(H)(1)), each Lender agrees to confirm in writing, upon request by Agent or
Borrower, the authority to release any Collateral conferred upon Agent under
clauses (i) and (ii) of subsection 8.2(H)(1). Upon receipt by Agent of any
required confirmation from the Requisite Lenders of its authority to release any
particular item or types of Collateral, and upon at least ten (10) Business Days
prior written request by Borrower, Agent shall (and is hereby irrevocably
authorized by Lenders to) execute such documents as may be necessary to evidence
the release of the Liens granted to Agent upon such Collateral; provided,
however, that (i) Agent shall not be required to execute any such document on
terms which, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon (or obligations of
any Loan Party, in respect of), all interests retained by any Loan Party,
including (without limitation) the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.
(3) Absence of Duty. Agent shall have no obligation
whatsoever to any Lender or any other Person to assure that the property covered
by the Security Documents exists or is owned by Borrower or is cared for,
protected or insured or has been encumbered or that the Liens granted to Agent
have been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent in this subsection 8.2(H) or in any of the Loan Documents, it
being understood and agreed that in respect of the property covered by the
Security Documents or any act, omission or event related thereto, Agent may act
in any manner it may deem appropriate, in its discretion, given Agent's own
interest in property covered by the Security Documents as one of the Lenders and
that Agent shall have no duty or liability whatsoever to any of the other
Lenders, provided that Agent shall exercise the same care which it would in
dealing with loans for its own account.
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(I) Agency for Perfection. Agent and each Lender hereby
appoint each other Lender as agent for the purpose of perfecting Agent's
security interest in assets which, in accordance with the Uniform Commercial
Code in any applicable jurisdiction, can be perfected by possession or control.
Should any Lender (other than Agent) obtain possession or control of any such
assets, such Lender shall notify Agent thereof, and, promptly upon Agent's
request therefore, shall deliver such assets to Agent or in accordance with
Agent's instructions or transfer control to Agent in accordance with Agent's
instructions. Each Lender agrees that it will not have any right individually to
enforce or seek to enforce any Security Document or to realize upon any
collateral security for the Loans unless instructed to do so by Agent, it being
understood and agreed that such rights and remedies may be exercised only by
Agent.
(J) Notice of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default except
with respect to defaults in the payment of principal, interest and fees required
to be paid to Agent for the account of Lenders, unless Agent shall have received
written notice from a Lender or Borrower referring to this Agreement, describing
such Default or Event of Default and stating that such notice is a "notice of
default". Agent will notify each Lender of its receipt of any such notice. Agent
shall take such action with respect to such Default or Event of Default as may
be requested by Requisite Lenders in accordance with Section 6. Unless and until
Agent has received any such request, Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interests
of Lenders.
8.3 Amendments, Consents and Waivers.
(A) Except as otherwise provided in subsection 8.2, this
subsection 8.3 or in subsection 9.2 and except as to matters set forth in other
subsections hereof or in any other Loan Document as requiring only Agent's
consent, the consent of Requisite Lenders and Borrower will be required to
amend, modify, terminate, or waive any provision of this Agreement or any of the
other Loan Documents. The consent of Borrower shall constitute consent of all of
its Subsidiaries.
(B) In the event Agent requests the consent of a Lender and
does not receive a written consent or denial thereof within ten (10) Business
Days after such Lender's receipt of such request, then such Lender will be
deemed to have denied the giving of such consent.
(C) If, in connection with any proposed amendment,
modification, termination or waiver of any of the provisions of this Agreement
requiring the consent or approval of all Lenders under subsection 9.2, the
consent of Requisite Lenders is obtained but the consent of one or more other
Lenders whose consent is required is not obtained, then Borrower shall have the
right, so long as all such non-consenting Lenders are either replaced
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or prepaid as described in clauses (A) or (B) below, to either (A) replace the
non-consenting Lenders with one or more Replacement Lenders pursuant to
subsection 1.10(A) so long as each such Replacement Lender consents to the
proposed amendment, modification, termination or waiver or (B) prepay in full
the Obligations of the non-consenting Lenders and terminate the non-consenting
Lenders' Pro Rata Shares of the Revolving Loan Commitment in accordance with
subsection 1.10(B).
8.4 Set Off and Sharing of Payments.
In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, during the
continuance of any Event of Default, each Lender is hereby authorized by
Borrower at any time or from time to time, with reasonably prompt subsequent
notice to Borrower (any prior or contemporaneous notice being hereby expressly
waived) to set off and to appropriate and to apply any and all (A) balances held
by such Lender at any of its offices for the account of Borrower or any of its
Subsidiaries (regardless of whether such balances are then due to Borrower or
its Subsidiaries), and (B) other property at any time held or owing by such
Lender to or for the credit or for the account of Borrower or any of its
Subsidiaries, against and on account of any of the Obligations; except that no
Lender shall exercise any such right without the prior written consent of Agent.
Any Lender exercising a right to set off shall purchase for cash (and the other
Lenders shall sell) interests in each of such other Lender's Pro Rata Share of
the Obligations as would be necessary to cause all Lenders to share the amount
so set off with each other Lender in accordance with their respective Pro Rata
Shares. Borrower agrees, to the fullest extent permitted by law, that any Lender
may exercise its right to set off with respect to amounts in excess of its Pro
Rata Share of the Obligations and upon doing so shall deliver such amount so set
off to the Agent for the benefit of all Lenders in accordance with their Pro
Rata Shares.
8.5 Disbursement of Funds.
Agent may, on behalf of Lenders, disburse funds to Borrower for
Loans requested. Each Lender shall reimburse Agent on demand for all funds
disbursed on its behalf by Agent, or if Agent so requests, each Lender will
remit to Agent its Pro Rata Share of any Loan before Agent disburses same to
Borrower. If Agent elects to require that each Lender make funds available to
Agent, prior to a disbursement by Agent to Borrower, Agent shall advise each
Lender by telephone or telecopy of the amount of such Lender's Pro Rata Share of
the Loan requested by Borrower no later than 1:00 p.m. Chicago time on the
Funding Date applicable thereto, and each such Lender shall pay Agent such
Lender's Pro Rata Share of such requested Loan, in same day funds, by wire
transfer to Agent's account on such Funding Date. If any Lender fails to pay the
amount of its Pro Rata Share within one (1) Business Day after Agent's demand,
Agent shall promptly notify Borrower, and Borrower shall immediately repay such
amount to Agent. Any repayment required pursuant to this subsection 8.5 shall be
without premium or penalty. Nothing in this subsection 8.5 or
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elsewhere in this Agreement or the other Loan Documents, including without
limitation the provisions of subsection 8.6, shall be deemed to require Agent to
advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its commitments hereunder or to prejudice any rights that
Agent or Borrower may have against any Lender as a result of any default by such
Lender hereunder.
8.6 Disbursements of Advances; Payment.
(A) Revolving Loan Advances, Payments and Settlements;
Interest and Fee Payments.
(1) The Revolving Loan balance may fluctuate from day to day
through Agent's disbursement of funds to, and receipt of funds from, Borrower.
In order to minimize the frequency of transfers of funds between Agent and each
Lender notwithstanding terms to the contrary set forth in Section 1 or
subsection 8.5, Revolving Loan advances and payments will be settled among Agent
and Lenders according to the procedures described in this subsection 8.6.
Notwithstanding these procedures, each Lender's obligation to fund its portion
of any advances made by Agent to Borrower will commence on the date such
advances are made by Agent. Such payments will be made by such Lender without
set-off, counterclaim or reduction of any kind.
(2) On the second (2nd) Business Day of each week, or more
frequently (including daily), if Agent so elects (each such day being a
"Settlement Date"), Agent will advise each Lender by telephone or telecopy of
the amount of each such Lender's Pro Rata Share of the Revolving Loan balance as
of the close of business of the (2nd) second Business Day immediately preceding
the Settlement Date. In the event that payments are necessary to adjust the
amount of such Lender's required Pro Rata Share of the Revolving Loan balance to
such Lender's actual Pro Rata Share of the Revolving Loan balance as of any
Settlement Date, the party from which such payment is due will pay the other, in
same day funds, by wire transfer to the other's account not later than 3:00 p.m.
Chicago time on the Business Day following the Settlement Date.
(3) For purposes of this subsection 8.6(A), the following
terms and conditions will have the meanings indicated:
(a) "Daily Loan Balance" means an amount calculated as of
the end of each calendar day by subtracting (i) the cumulative principal amount
paid by Agent to a Lender on a Loan from the Closing Date through and including
such calendar day, from (ii) the cumulative principal amount on a Loan advanced
by such Lender to Agent on that Loan from the Closing Date through and including
such calendar day.
(b) "Daily Interest Rate" means an amount calculated by
dividing the interest rate payable to a Lender on a Loan (as set forth in
subsection 1.2) as of each calendar day by 365 or 366 (as applicable for any
given calendar year) in the case of Base Rate Loans
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and 360 in the case of all LIBOR Loans, in each case in a manner consistent with
the provisions of subsection 1.2(D) hereof.
(c) "Daily Interest Amount" means an amount calculated by
multiplying the Daily Loan Balance of a Loan by the associated Daily Interest
Rate on that Loan.
(d) "Interest Ratio" means a number calculated by dividing
the total amount of the interest on a Loan received by Agent with respect to the
immediately preceding month by the total amount of interest on that Loan due
from Borrower during the immediately preceding month.
On the first (1st) Business Day of each month ("Interest Settlement Date"),
Agent will advise each Lender by telephone or telecopy of the amount of such
Lender's share of interest and fees on each of the Loans as of the end of the
last day of the immediately preceding month. Provided that such Lender has made
all payments required to be made by it under this Agreement, Agent will pay to
such Lender, by wire transfer to such Lender's account (as specified by such
Lender on the signature page of this Agreement or the applicable Assignment and
Acceptance Agreement, as amended by such Lender from time to time after the date
hereof pursuant to the notice provisions contained herein or in the applicable
Assignment and Acceptance Agreement) not later than 3:00 p.m. Chicago time on
the next Business Day following the Interest Settlement Date, such Lender's
share of interest and fees on each of the Loans. Such Lender's share of interest
on each Loan will be calculated for that Loan by adding together the Daily
Interest Amounts for each calendar day of the prior month for that Loan and
multiplying the total thereof by the Interest Ratio for that Loan. Each Lender's
share of the commitment fee described in subsection 1.2(B) shall be an amount
equal to (1)(a) such Lender's Revolving Loan Commitment less (b) the sum of (i)
such Lender's average Daily Loan Balance of the Revolving Loans plus (ii) such
Lender's Pro Rata Share of the average daily aggregate amount of Letter of
Credit Liability, in each case for the preceding month, multiplied by (2) the
percentage required by subsection 1.2(B). To the extent Agent does not receive
the total amount of the commitment fee owing by Borrower, the commitment fee
payable to each Lender shall be reduced on a pro rata basis. Any funds disbursed
or received by Agent pursuant to subsection 8.5 or 8.6(A)(1), prior to the
Settlement Date for such disbursement or payment shall be deemed advances or
remittances by Agent, in its capacity as a Lender, for purposes of calculating
interest and fees pursuant to this subsection 8.6(A).
(B) Term Loan Principal Payments. Payments of principal of
the Term Loans will be settled on the date of receipt if received by Agent on
the last Business Day of a calendar quarter or on the Business Day immediately
following the date of receipt if received on any day other than the first
Business Day of a month.
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(C) Availability of Lender's Pro Rata Share.
(1) Unless Agent shall have received written notice from a
Lender prior to a Funding Date that such Lender will not make available its Pro
Rata Share of a Loan requested by Borrower, Agent may assume that such Lender
has made such amount available to Agent on the Business Day following the next
Settlement Date. If a Lender has not in fact made its Pro Rata Share available
to the Agent on such date (any such Lender a "Defaulting Lender"), then the
Defaulting Lender and Borrower severally agree to pay to Agent forthwith on
demand such amount without set-off, counterclaim or deduction of any kind,
together with interest thereon, for each day from and including the date such
amount is made available to Agent by Borrower or such Defaulting Lender to but
excluding the date of payment to Agent, at (a) in the case of the Defaulting
Lender, the greater of the Federal Funds Effective Rate and a rate determined by
Agent in accordance with banking industry rules on interbank compensation or (b)
in the case of Borrower, the interest rate applicable under this Agreement with
respect to such Loan.
(2) Agent shall not be obligated to transfer to a Defaulting
Lender any payment made by Borrower to Agent or any amount otherwise received by
Agent for application to the Obligations nor shall Defaulting Lender be entitled
to the sharing of any interest, fees or other payments hereunder until full
payment is made to Agent in the manner described above.
(3) For purposes of voting or consenting to matters with
respect to the Loan Documents, a Defaulting Lender shall be deemed not to be a
"Lender" and such Defaulting Lender's Commitments and outstanding Loans shall be
deemed to be zero until full payment is made to Agent in the manner described
above.
(4) Without limiting the generality of the foregoing, each
Lender shall be obligated to fund its Pro Rata Share of any Revolving Loan made
after any Event of Default or acceleration of the Obligations with respect to
any draw on a Letter of Credit.
(D) Return of Payments.
(1) If Agent pays an amount to a Lender under this Agreement
in the belief or expectation that a related payment has been or will be received
by Agent from Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender without set-off,
counterclaim or deduction of any kind together with interest thereon, for each
day from and including the date such amount is made available by Agent to such
Lender to but excluding the date of repayment to Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by Agent in accordance with
banking industry rules on interbank compensation.
(2) If Agent determines at any time that any amount received
by Agent under this Agreement must be returned to Borrower or paid to any other
person pursuant to
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any requirement of law, court order or otherwise, then, notwithstanding any
other term or condition of this Agreement, Agent will not be required to
distribute any portion thereof to any Lender. In addition, each Lender will
repay to Agent on demand any portion of such amount that Agent has distributed
to such Lender, together with interest at such rate, if any, as Agent is
required to pay to Borrower or such other Person, without set-off, counterclaim
or deduction of any kind.
8.7 Co-Agents.
The Co-Agents, in their capacity as such, shall have no rights,
powers, duties or responsibilities hereunder or under any other Loan Document
and no implied rights, powers, duties or responsibilities shall be read into
this Agreement or any other Loan Document or otherwise exist on behalf of or
against any such Co-Agent in its capacity as such. If any Co-Agent resigns as
such, no successor shall be appointed.
SECTION 9
MISCELLANEOUS
9.1 Indemnities.
Borrower agrees to indemnify, pay, and hold Agent, each Lender
(individually and in their capacity as Issuing Lenders) and their respective
officers, directors, employees, agents, and attorneys (the "Indemnitees")
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs and expenses (including all
reasonable fees and expenses of counsel to such Indemnitees) of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against the
Indemnitee as a result of such Indemnitees being a party to this Agreement or
the transactions consummated pursuant to this Agreement or otherwise relating to
any of the Related Transactions; provided that Borrower shall have no obligation
to an Indemnitee hereunder with respect to liabilities to the extent resulting
from the gross negligence or willful misconduct of that Indemnitee as determined
by a court of competent jurisdiction. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, Borrower agrees to make the
maximum contribution to the payment and satisfaction thereof which is
permissible under applicable law. This subsection and other indemnification
provisions contained within the Loan Documents shall survive the termination of
this Agreement.
9.2 Amendments and Waivers.
Except as otherwise provided herein, no amendment, modification,
termination or waiver of any provision of this Agreement, the Notes or any of
the other Loan Documents, or consent to any departure by any Loan Party
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Requisite Lenders (or Agent, if expressly set forth herein, in any
Note or in any other Loan Document) and the applicable Loan Party; provided,
that except to the extent permitted by the applicable Assignment and Acceptance
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Agreement, no amendment, modification, termination or waiver shall, unless in
writing and signed by all Lenders, do any of the following: (a) increase the
Revolving Loan Commitment of any Lender without the prior written consent of
such Lender or increase any Lender's Pro Rata Share of the Revolving Loan
Commitment without the prior written consent of such Lender; (b) reduce the
principal of or the rate of interest on any Loan or the fees payable with
respect to any Loan or Letter of Credit or reduce the amount of any Scheduled
Installment; (c) extend the Commitment Termination Date, the date on which any
Scheduled Installment is to be paid or any date fixed for any payment of
interest or fees; (d) change the definition of the term Requisite Lenders or the
percentage of Lenders which shall be required for Lenders to take any action
hereunder; (e) release Collateral (except if the sale, disposition or release of
such Collateral is permitted under subsection 3.7 or 8.2 or any other Loan
Document) or any guarantor of the Obligations; (f) amend or waive this
subsection 9.2 or the definitions of the terms used in this subsection 9.2
insofar as the definitions affect the substance of this subsection 9.2; (g)
amend or waive subsection 9.10; (h) amend the 2.75 multiplier used to calculate
the Governor or amend any component of the Governor for purposes of calculating
the Governor; or (i) the final sentence of subsection 1.1(B)(2); and provided,
further, that no amendment, modification, termination or waiver affecting the
rights or duties of Agent under any Loan Document shall in any event be
effective, unless in writing and signed by Agent, in addition to all Lenders
required to take such action. Notwithstanding anything to the contrary in this
subsection 9.2, Agent and Borrower may execute amendments to this Agreement and
the other Loan Documents for the purpose of correcting typographical errors
without the consent of Lenders. Each amendment, modification, termination or
waiver shall be effective only in the specific instance and for the specific
purpose for which it was given. No amendment, modification, termination or
waiver shall be required for Agent to take additional Collateral pursuant to any
Loan Document. No notice to or demand on Borrower or any other Loan Party in any
case shall entitle Borrower or any other Loan Party to any other or further
notice or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this subsection 9.2
shall be binding upon each holder of the Notes at the time outstanding, each
future holder of the Notes and, if signed by a Loan Party, on such Loan Party.
9.3 Notices.
Any notice or other communication required shall be in writing
addressed to the respective party as set forth below and may be personally
served, telecopied, sent by overnight courier service or U.S. mail and shall be
deemed to have been given: (a) if delivered in person, when delivered; (b) if
delivered by telecopy, on the date of transmission if transmitted on a Business
Day before 4:00 p.m. Chicago time; (c) if delivered by overnight courier, one
(1) Business Day after delivery to the courier properly addressed; or (d) if
delivered by U.S. mail, four (4) Business Days after deposit with postage
prepaid and properly addressed.
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Notices shall be addressed as follows:
If to Borrower: THE HILLMAN GROUP, INC.
10590 Hamilton Avenue
Cincinnati, Ohio 45231
ATTN: James P. Waters
Telecopy: (513) 595-8297
With copies to: SUNSOURCE, INC.
One Logan Square
Suite 3000
Philadelphia, Pennsylvania 19103
ATTN: Joseph M. Corvino
Telecopy: (215) 282-1309
and
ALLIED CAPITAL CORPORATION
919 Pennsylvania Avenue, NW
Washington, D.C. 20006
ATTN: Daniel L. Russell
Telecopy: (202) 659-2053
If to Agent or Heller: HELLER FINANCIAL, INC.
500 West Monroe Street
Chicago, Illinois 60661
ATTN: Account Manager
Corporate Finance
Telecopy: (312) 441-7367
With a copy to: HELLER FINANCIAL, INC.
500 West Monroe Street
Chicago, Illinois 60661
ATTN: Legal Services
Corporate Finance
Telecopy: (312) 441-6876
If to a Lender: To the address set forth on the signature page
hereto or in the applicable Assignment and
Acceptance Agreement
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9.4 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Agent or any Lender to
exercise, nor any partial exercise of, any power, right or privilege hereunder
or under any other Loan Documents shall impair such power, right, or privilege
or be construed to be a waiver of any Default or Event of Default. All rights
and remedies existing hereunder or under any other Loan Document are cumulative
to and not exclusive of any rights or remedies otherwise available.
9.5 Marshaling; Payments Set Aside.
Neither Agent nor any Lender shall be under any obligation to
marshal any assets in payment of any or all of the Obligations. To the extent
that Borrower makes payment(s) or Agent enforces its Liens or Agent or any
Lender exercises its right of set-off, and such payment(s) or the proceeds of
such enforcement or set-off is subsequently invalidated, declared to be
fraudulent or preferential, set aside, or required to be repaid by anyone, then
to the extent of such recovery, the Obligations or part thereof originally
intended to be satisfied, and all Liens, rights and remedies therefore, shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or set-off had not occurred.
9.6 Severability.
The invalidity, illegality, or unenforceability in any
jurisdiction of any provision under the Loan Documents shall not affect or
impair the remaining provisions in the Loan Documents.
9.7 Lenders' Obligations Several; Independent Nature of
Lenders' Rights.
The obligation of each Lender hereunder is several and not joint
and no Lender shall be responsible for the obligation or commitment of any other
Lender hereunder. In the event that any Lender at any time should fail to make a
Loan as herein provided, the Lenders, or any of them, at their sole option, may
make the Loan that was to have been made by the Lender so failing to make such
Loan. Nothing contained in any Loan Document and no action taken by Agent or any
Lender pursuant hereto or thereto shall be deemed to constitute Lenders to be a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt.
9.8 Headings.
Section and subsection headings are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purposes or be given substantive effect.
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9.9 Applicable Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES.
9.10 Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns except that
Borrower may not assign, delegate or transfer any of its rights or obligations
hereunder without the written consent of all Lenders.
9.11 No Fiduciary Relationship; Limited Liability.
No provision in the Loan Documents and no course of dealing
between the parties shall be deemed to create any fiduciary duty owing to
Borrower by Agent or any Lender. Borrower agrees that neither Agent nor any
Lender shall have liability to Borrower (whether sounding in tort, contract or
otherwise) for losses suffered by Borrower in connection with, arising out of,
or in any way related to the transactions contemplated and the relationship
established by the Loan Documents, or any act, omission or event occurring in
connection therewith, unless and to the extent that it is determined that such
losses resulted from the gross negligence or willful misconduct of the party
from which recovery is sought as determined by a court of competent
jurisdiction. Neither Agent nor any Lender shall have any liability with respect
to, and Borrower hereby waives, releases and agrees not to sue for, any special,
indirect or consequential damages suffered by Borrower in connection with,
arising out of, or in any way related to the Loan Documents or the transactions
contemplated thereby.
9.12 Construction.
Agent, each Lender and Borrower acknowledge that each of them
has had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review the Loan Documents with its legal counsel and that the
Loan Documents shall be construed as if jointly drafted by Agent, each Lender
and Borrower.
9.13 Confidentiality.
Agent and each Lender agree to exercise their best efforts to
keep confidential any non-public information delivered pursuant to the Loan
Documents and identified as such by Borrower and not to disclose such
information to Persons other than to potential assignees or participants or to
Persons employed by or engaged by Agent a Lender or a Lender's assignees or
participants including, without limitation, attorneys, auditors, professional
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consultants, rating agencies and portfolio management services. The
confidentiality provisions contained in this subsection shall not apply to
disclosures (i) required to be made by Agent or any Lender to any regulatory or
governmental agency or pursuant to legal process or (ii) consisting of general
portfolio information that does not identify Borrower. The obligations of Agent
and Lenders under this subsection 9.13 shall supersede and replace the
obligations of Agent and Lenders under any confidentiality agreement in respect
of this financing executed and delivered by Agent or any Lender prior to the
date hereof.
9.14 CONSENT TO JURISDICTION.
BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS AND
IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S ELECTION, ALL ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL
BE LITIGATED IN SUCH COURTS. BORROWER EXPRESSLY SUBMITS AND CONSENTS TO THE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS. BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND
AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON BORROWER BY CERTIFIED
OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWER, AT THE
ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN
(10) DAYS AFTER THE SAME HAS BEEN POSTED. IN ANY LITIGATION, TRIAL, ARBITRATION
OR OTHER DISPUTE RESOLUTION PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS, ALL DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS OF BORROWER
OR OF ITS AFFILIATES SHALL BE DEEMED TO BE EMPLOYEES OR MANAGING AGENTS OF
BORROWER FOR PURPOSES OF ALL APPLICABLE LAW OR COURT RULES REGARDING THE
PRODUCTION OF WITNESSES BY NOTICE FOR TESTIMONY (WHETHER IN A DEPOSITION, AT
TRIAL OR OTHERWISE). BORROWER AGREES THAT AGENT'S OR ANY LENDER'S COUNSEL IN ANY
SUCH DISPUTE RESOLUTION PROCEEDING MAY EXAMINE ANY OF THESE INDIVIDUALS AS IF
UNDER CROSS-EXAMINATION AND THAT ANY DISCOVERY DEPOSITION OF ANY OF THEM MAY BE
USED IN THAT PROCEEDING AS IF IT WERE AN EVIDENCE DEPOSITION. BORROWER IN ANY
EVENT WILL USE ALL COMMERCIALLY REASONABLE EFFORTS TO PRODUCE IN ANY SUCH
DISPUTE RESOLUTION PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED BY AGENT
OR ANY LENDER, ALL PERSONS, DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC OR OTHER
FORM) OR OTHER THINGS UNDER ITS CONTROL AND RELATING TO THE DISPUTE.
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9.15 WAIVER OF JURY TRIAL.
BORROWER, AGENT AND EACH LENDER HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. BORROWER, AGENT AND EACH LENDER
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER
IN THEIR RELATED FUTURE DEALINGS. BORROWER, AGENT AND EACH LENDER WARRANT AND
REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH
LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS.
9.16 Survival of Warranties and Certain Agreements.
All agreements, representations and warranties made herein shall
survive the execution and delivery of this Agreement, the making of the Loans,
issuances of Letters of Credit and the execution and delivery of the Notes.
Notwithstanding anything in this Agreement or implied by law to the contrary,
the agreements of Borrower set forth in subsections 1.3(E), 1.8, 1.9 and 9.1
shall survive the repayment of the Obligations and the termination of this
Agreement.
9.17 Entire Agreement.
This Agreement, the Notes and the other Loan Documents embody
the entire agreement among the parties hereto and supersede all prior
commitments, agreements, representations, and understandings, whether oral or
written, relating to the subject matter hereof, and may not be contradicted or
varied by evidence of prior, contemporaneous, or subsequent oral agreements or
discussions of the parties hereto.
9.18 Counterparts; Effectiveness.
This Agreement and any amendments, waivers, consents or
supplements may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all of which counterparts together
shall constitute but one in the same instrument. This Agreement shall become
effective upon the execution of a counterpart hereof by each of the parties
hereto.
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9.19 Press Releases.
Borrower consents to the publication by Agent of a tombstone or
similar advertising material relating to the financing transactions contemplated
by this Agreement; provided, that Agent shall provide a draft of any such
tombstone or similar advertising material to Borrower for review prior to the
publication thereof. Agent and Lenders reserve the right to provide to industry
trade organizations information necessary and customary for inclusion in league
table measurements.
SECTION 10
DEFINITIONS
10.1 Certain Defined Terms.
The terms defined below are used in this Agreement as so
defined. Terms defined in the preamble and recitals to this Agreement are used
in this Agreement as so defined.
"Affiliate" means with respect to any Person (a) each Person
that is directly or indirectly controlling, controlled by, or under common
control with such Person; (b) each Person that, directly or indirectly owns or
holds five percent (5%) or more of any equity interest in such Person; or (c)
five percent (5%) or more of whose voting stock or other equity interest is
directly or indirectly owned or held by such Person. For purposes of this
definition, "control" (including with correlative meanings, the terms
"controlling", "controlled by" and "under common control with") means the
possession directly or indirectly of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of
voting securities or by contract or otherwise. Notwithstanding the foregoing,
none of Agent, any Lender nor any of their respective Affiliates shall be
considered an Affiliate of Borrower or any of its Subsidiaries.
"Agent" means Heller in its capacity as agent for the Lenders
under this Agreement and each of the other Loan Documents, any successor in such
capacity appointed pursuant to subsection 8.2 and any other successor by
operation of law.
"Agreement" means this Credit Agreement (including all
schedules, subschedules and exhibits hereto), as the same may from time to time
be amended, supplemented or otherwise modified.
"Allied Subordinated Loan Documents" means the First Amended and
Restated Investment Agreement of even date herewith among Borrower, First Tier
Holdings, Second Tier Holdings and Allied and the other "Loan Documents" (as
defined therein), in each case as amended in conformity with the provisions of
this Agreement.
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"Asset Disposition" means the disposition whether by sale,
lease, transfer, loss, damage, destruction, casualty, condemnation or otherwise
of any of the following: (a) any of the capital stock or other equity or
ownership interest of any of Borrower's Subsidiaries (other than the Excluded
Subsidiaries) or (b) any or all of the assets of Borrower or any of its
Subsidiaries (other than the Excluded Subsidiaries) other than sales of
inventory in the ordinary course of business.
"Assignment and Acceptance Agreement" means an agreement among
Agent, a Lender and such Lender's assignee regarding their respective rights and
obligations with respect to assignments of the Loans, the Revolving Loan
Commitment and other interests under this Agreement and the other Loan
Documents.
"Bankruptcy Code" means Title 11 of the United States Code
entitled "Bankruptcy", as amended from time to time or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect and all
rules and regulations promulgated thereunder.
"Business Day" means (a) for all purposes other than as covered
by clause (b) below, any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of Illinois or the Commonwealth of
Pennsylvania, or is a day on which banking institutions located in any such
states are closed and (b) with respect to all notices, determinations, fundings
and payments in connection with Loans bearing interest at the LIBOR, any day
that is a Business Day described in clause (a) above and that is also a day for
trading by and between banks in Dollar deposits in the applicable interbank
LIBOR market.
"Capitalization/Acquisition Documents" means, collectively: (a)
any or all of the stock certificates, notes, debentures (including the
Debentures) or other instruments representing securities bought, sold or issued,
or loans made, to facilitate the consummation of the Related Transactions; (b)
the indentures (including the Indenture) or other documents pursuant to which
such stock, notes, debentures or other instruments are issued or to be issued;
(c) each document governing the issuance of, or setting forth the terms of, such
stock, notes, debentures or other instruments; (d) any stockholders,
registration or intercreditor agreement among or between the holders of such
stock, notes, debentures or other instruments; (e) the Allied Subordinated Loan
Documents; (f) the Indenture, the Debentures and the related "Guarantee
Agreement"; and (g) the Merger Agreement and all other instruments, documents
and agreements executed in connection with the Acquisition; but excluding all
Loan Documents.
"Closing Date" means September 28, 2001.
"Collateral" means, collectively: (a) all equity securities and
other property pledged pursuant to the Security Documents; (b) all "Collateral"
as defined in the Security
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Documents; (c) all real property mortgaged pursuant to the Security Documents;
and (d) any property or interest provided in addition to or in substitution for
any of the foregoing.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with
Borrower, are treated as a single employer under Section 414 of the IRC or
Section 4001 of ERISA.
"Debentures" means the 11.6% Junior Subordinated Debentures
issued by First Tier Holdings pursuant to the Indenture.
"Default" means a condition or event that, after notice or lapse
of time or both, would constitute an Event of Default if that condition or event
were not cured or removed within any applicable grace or cure period.
"ERISA" means the Employee Retirement Income Security Act of
1974 (or any successor legislation thereto), as amended from time to time and
any regulations promulgated thereunder.
"ERISA Event" means, as to Borrower and each member of the
Controlled Group, (i) a Reportable Event, (ii) the withdrawal of Borrower or any
member of the Controlled Group from a Pension Plan in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA or was deemed
to be a "substantial employer" under Section 4062(e) of ERISA, (iii) the
termination of a Pension Plan, the filing of notice of intent to terminate a
Pension Plan or the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA, (iv) the institution of proceedings to terminate a
Pension Plan by the PBGC, (v) the partial or complete withdrawal from a
Multiemployer Plan by Borrower or any member of the Controlled Group, (vi) the
imposition of a Lien on any property of Borrower or any member of the Controlled
Group, pursuant to IRC Section 412 or Section 302 of ERISA, (vi) any event or
condition which results in the reorganization or insolvency of a Multiemployer
Plan, and (vii) any event or condition which results in the termination of a
Multiemployer Plan, or the institution by the PBGC of proceedings to terminate a
Multiemployer Plan.
"Excluded Subsidiaries" means, collectively, SunSub C, a
Delaware corporation and its Subsidiaries, and SunSource Technology Services,
LLC, a Delaware limited liability company and its Subsidiaries.
"Existing Letters of Credit" means the letters of credit issued
for the account of any Loan Party which are outstanding as of the Closing Date
and listed on Schedule 10.1(D).
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100th of 1%) of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds
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brokers, as published on the next succeeding Business Day by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is a
Business Day, the average (rounded upwards, if necessary, to the next 1/100th of
1%) of the quotations for such day for such transactions received by Agent from
three Federal funds brokers of recognized standing selected by it.
"GAAP" means generally accepted accounting principles as set
forth in statements from Auditing Standards No. 69 entitled "The Meaning of
'Present Fairly in Conformance with Generally Accepted Accounting Principles in
the Independent Auditors Reports'" issued by the Auditing Standards Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are applicable
to the circumstances as of the date of determination.
"Indebtedness" as applied to any Person, means: (a) all
indebtedness for borrowed money; (b) that portion of obligations with respect to
capital leases that is properly classified as a liability on a balance sheet in
conformity with GAAP; (c) any obligation under any lease (a "synthetic lease")
treated as an operating lease under GAAP and as a loan or financing for United
States income tax purposes or creditors rights purposes; (d) notes payable and
drafts accepted representing extensions of credit whether or not representing
obligations for borrowed money; (e) any obligation owed for all or any part of
the deferred purchase price of property or services if the purchase price is due
more than six (6) months from the date the obligation is incurred or is
evidenced by a note or similar written instrument; (f) "earnouts" and similar
payment obligations; and (g) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person.
"Indenture" the Indenture dated as of September 5, 1997 between
First Tier Holdings and The Bank of New York, as trustee.
"IRC" means the Internal Revenue Code of 1986, as amended from
time to time and all rules and regulations promulgated thereunder.
"Issuing Lender" means Heller, or any other Lender designated
from time to time by Borrower, and consented to by Agent (which consent will not
be unreasonably withheld), in such Lender's capacity as an issuer of Letters of
Credit hereunder and Heller as the representative party for the Lenders under
risk participation agreements with banks supporting the issuance of Letters of
Credit hereunder. Notwithstanding the foregoing, during the continuance of any
Default or Event of Default, Borrower shall not have the right to designate the
Issuing Lender and the Issuing Lender shall be designated solely by Agent.
"Lender" or "Lenders" means Heller and each other financial
institution listed on the signature pages hereof in its individual capacity and
in its capacity as an Issuing
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Lender hereunder, together with its their successors and permitted assigns
pursuant to subsection 8.1.
"Letter of Credit Liability" means, as to each Letter of Credit,
all reimbursement obligations of Borrower to the issuer of the Letter of Credit
consisting of (a) the amount available to be drawn or which may become available
to be drawn; (b) all amounts which have been paid and made available by the
issuing bank to the extent not reimbursed by Borrower, whether by the making of
a Revolving Loan or otherwise; and (c) all accrued and unpaid interest, fees and
expenses with respect thereto. In any case where Heller, as an Issuing Lender,
has permitted Borrower to obtain Letters of Credit from a bank with which Heller
has entered into a risk participation agreement, the maximum aggregate amount of
Letters of Credit that may be requested by Borrower from such bank for which
Heller may have liability under the risk participation agreement will be
considered outstanding for purposes of determining Letter of Credit Liability
unless the bank which is the beneficiary under the risk participation agreement
reports daily activity to Heller showing actual outstanding Letters of Credit
issued for Borrower, in which event the outstanding amount of Letter of Credit
Liability shall be the amount of such actual outstanding Letters of Credit from
time to time.
"Lien" means any lien, mortgage, pledge, security interest,
charge, encumbrance or governmental levy or assessment of any kind, whether
voluntary or involuntary (including any conditional sale or other title
retention agreement and any lease in the nature thereof), and any agreement to
give any lien, mortgage, pledge, security interest, charge or encumbrance.
"Loan" or "Loans" means an advance or advances under the
Revolving Loan Commitment or the Term Loans.
"Loan Documents" means this Agreement, the Notes, the Security
Documents and all other instruments, documents and agreements executed by or on
behalf of any Loan Party and delivered concurrently herewith or at any time
hereafter to or for the benefit of Agent or any Lender in connection with the
Loans and other transactions contemplated by this Agreement, all as amended,
supplemented or modified from time to time.
"Loan Party" means, collectively, First Tier Holdings, Second
Tier Holdings, Borrower and each Subsidiary of Borrower which is or becomes a
party to any Loan Document.
"Material Adverse Effect" means (a) a material adverse effect
upon the business, operations, properties, assets or financial condition of
First Tier Holdings, Second Tier Holdings, Borrower and the other Loan Parties
considered in the aggregate or (b) a material adverse effect upon the ability of
the Loan Parties considered in the aggregate to perform their obligations under
the Loan Documents or of Agent or any Lender to enforce any Loan Document or
collect any of the Obligations. In determining whether any individual
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event would result in a Material Adverse Effect, notwithstanding that such event
does not of itself have such effect, a Material Adverse Effect shall be deemed
to have occurred if the cumulative effect of such event and all other then
existing events would result in a Material Adverse Effect.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, with respect to which Borrower or any member of the
Controlled Group may have any liability.
"Net Proceeds" means cash proceeds received by Borrower or any
of its Subsidiaries from any Asset Disposition (including insurance proceeds,
awards of condemnation, and payments under notes or other debt securities
received in connection with any Asset Disposition), net of (a) the costs of such
sale, lease, transfer or other disposition (including taxes attributable to such
sale, lease or transfer) and (b) amounts applied to repayment of Indebtedness
(other than the Obligations) secured by a Lien on the asset or property
disposed.
"Note" or "Notes" means one or more of the promissory notes of
Borrower substantially in the form of Exhibit 10.1(A), or any combination
thereof.
"Obligations" means all obligations, liabilities and
indebtedness of every nature of each Loan Party from time to time owed to Agent,
any Issuing Lender or any Lender under the Loan Documents and Interest Rate
Agreements, including the principal amount of all debts, claims and
indebtedness, accrued and unpaid interest and all fees, costs and expenses,
whether primary, secondary, direct, contingent, fixed or otherwise, heretofore,
now and/or from time to time hereafter owing, due or payable whether before or
after the filing of a proceeding under the Bankruptcy Code by or against
Borrower, any of its Subsidiaries or any other Loan Party.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Pension Plan" means a pension plan, as defined in Section 3(2)
of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer
Plan), and with respect to which Borrower or any member of the Controlled Group
may have any liability, including (but not limited to) any liability by reason
of having been a substantial employer within the meaning of Section 4063 of
ERISA, or by reason of being deemed to be a contributing sponsor under Section
4069 of ERISA.
"Permitted Acquisition EBITDA" means, with respect to each
Permitted Acquisition consummated during the one (1) year period preceding the
date of determination, EBITDA (calculated in the same manner as EBITDA is
calculated on Exhibit 4.8(C)), for a number of months immediately preceding the
consummation of the applicable Permitted Acquisition, which number equals twelve
(12) minus the number of months following the
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consummation of the applicable Permitted Acquisition for which financial
statements of First Tier Holdings and its Subsidiaries have been delivered to
Agent pursuant to subsection 4.8(A).
"Person" means and includes natural persons, corporations,
limited liability companies, limited partnerships, limited liability
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof and their respective permitted
successors and assigns (or in the case of a governmental person, the successor
functional equivalent of such Person).
"Plan" means an employee benefit plan, as such term is defined
in Section 3(3) of ERISA (other than a Multiemployer Plan), with respect to
which Borrower or any member of the Controlled Group may have any liability.
"Pro Forma" means the unaudited consolidated and consolidating
balance sheets of First Tier Holdings and its Subsidiaries (other than the
Excluded Subsidiaries) prepared in accordance with GAAP as of the Closing Date
after giving effect to the Related Transactions. The Pro Forma is annexed hereto
as Schedule 10.1(A).
"Pro Forma Cost Reduction" means, with respect to any Permitted
Acquisition, if requested by Borrower pursuant to the succeeding sentence, the
estimated amount of cost savings attributable to operational efficiencies
expected to be created by Borrower with respect to such business, as calculated
by Borrower and acceptable to Agent in its discretion, for the number of months
which have not elapsed during the period (i) commencing on the last day of the
month preceding the consummation of such Permitted Acquisition for which
financial statements were available and (ii) ending on the first anniversary of
the date determined pursuant to clause (i). If Borrower wishes to have, with
respect to any proposed Permitted Acquisition, the estimated amount of cost
savings attributable to operational efficiencies expected to be created by
Borrower with respect to such Permitted Acquisition, treated as part of the term
Pro Forma Cost Reduction, then Borrower will so notify Agent, in writing, and
Agent will endeavor, within five (5) Business Days after the receipt of any such
notice, to advise Borrower of the amount of the cost savings which Agent is
willing to consider as Pro Forma Cost Reductions.
"Pro Rata Share" means (a) with respect to a Lender's obligation
to lend a portion of Term Loan A and such Lender's right to receive payments of
principal with respect thereto, the percentage obtained by dividing (i) the Term
Loan A Exposure of such Lender by (ii) the aggregate Term Loan A Exposure of all
Lenders, (b) with respect to a Lender's obligation to lend a portion of Term
Loan B and such Lender's right to receive payments of principal with respect
thereto, the percentage obtained by dividing (i) the Term Loan B Exposure of
such Lender by (ii) the aggregate Term Loan B Exposure of all Lenders, (c) with
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respect to a Lender's obligation to make Revolving Loans and such Lender's right
to receive payments of principal with respect thereto and with respect to a
Lender's obligation to share in Letter of Credit Liability and to receive the
related Letter of Credit fee described in subsection 1.2(C), the percentage
obtained by dividing (i) the Revolving Credit Exposure of such Lender by (ii)
the aggregate Revolving Credit Exposure of all Lenders and (d) for all other
purposes (including without limitation the indemnification obligations arising
under subsection 8.2(E)) with respect to any Lender, the percentage obtained by
dividing (i) the sum of the Term Loan A Exposure of that Lender plus the Term
Loan B Exposure of that Lender plus the Revolving Credit Exposure of that Lender
by (ii) the sum of the aggregate Term Loan A Exposure of all Lenders, the
aggregate Term Loan B Exposure of all Lenders and the aggregate Revolving Credit
Exposure of all Lenders, in each case as the applicable percentages may be
adjusted by assignments permitted pursuant to subsection 8.1. The Pro Rata
Shares of each Lender and their respective commitment amounts, as of the Closing
Date, are set forth on Schedule 10.1(C) hereto.
"Projections" means First Tier Holdings' and its Subsidiaries
forecasted consolidated and consolidating: (a) balance sheets; (b) profit and
loss statements; (c) cash flow statements; and (d) capitalization statements,
all prepared on a division by division and Subsidiary by Subsidiary basis on a
consistent basis with Borrower's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Related Transactions" means: the Acquisition, the execution and
delivery of the Related Transactions Documents, the funding of all Loans on the
Closing Date, the funding on the Closing Date of the Indebtedness evidenced by
the Allied Subordinated Loan Documents, the repayment of the Indebtedness
identified on Schedule 10.1(B) which is to be paid in full on the Closing Date,
and the payment of all fees, costs and expenses associated with all of the
foregoing.
"Related Transactions Documents" means the Loan Documents, the
Capitalization/Acquisition Documents and all other agreements, instruments and
documents executed or delivered in connection with the Related Transactions.
"Reportable Event" means a reportable event as defined in
Section 4043 of ERISA other than a reportable event for which the requirement to
provide notice to the PBGC has been waived by regulation.
"Requisite Lenders" means Lenders (other than Defaulting
Lenders) having (a) sixty percent (60%) or more of the sum of the Revolving Loan
Commitment and the outstanding principal balance of the Term Loans of all
Lenders that are not Defaulting Lenders or (b) if the Revolving Loan Commitment
has been terminated, sixty percent (60%) or more of the aggregate outstanding
principal balance of the Loans of all Lenders that are not Defaulting Lenders.
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"Revolving Credit Exposure" means, with respect to any Lender as
of any date of determination, (a) prior to the termination of the Revolving Loan
Commitment, such Lender's Revolving Loan Commitment and (b) after termination of
the Revolving Loan Commitment, the sum of (i) the aggregate outstanding
principal amount of the Revolving Loans of such Lender plus (ii) the aggregate
amount of all participations purchased by such Lender in the outstanding Letter
of Credit Liability.
"Security Documents" means all instruments, documents and
agreements executed by or on behalf of any Person to guaranty or provide
collateral security with respect to the Obligations including, without
limitation, any security agreement or pledge agreement, any guaranty of the
Obligations, any mortgage or deed of trust, and all instruments, documents and
agreements executed pursuant to the terms of the foregoing.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association or other business entity of
which more than fifty percent (50%) of the total voting power of shares of stock
(or equivalent ownership or controlling interest) entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof.
"SunSource Mexico" means, SunSource Integrated Services de
Mexico, S.A. de C.V.
"Term Loan A Exposure" means, with respect to any Lender, as of
any date of determination, the outstanding principal amount of Term Loan A of
such Lender; provided, however, that at any time prior to the making of Term
Loan A, the Term Loan A Exposure of any Lender shall be equal to the commitment
amount of such Lender with respect to Term Loan A set forth on Schedule 10.1(C).
"Term Loan B Exposure" means, with respect to any Lender, as of
any date of determination, the outstanding principal amount of Term Loan B of
such Lender; provided, however, that at any time prior to the making of Term
Loan B, the Term Loan B Exposure of any Lender shall be equal to the commitment
amount of such Lender with respect to Term Loan B set forth on Schedule 10.1(C).
10.2 Other Definitional Provisions.
References to "Sections", "subsections", "Exhibits," "Schedules"
and "subschedules" shall be to Sections, subsections, Exhibits, Schedules and
subschedules, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 10.1 may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference. References to an agreement shall include all amendments,
restatements, modifications and supplements to such agreement, subject to such
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consents or approvals of Agent or any Lenders as may be required by the terms of
this Agreement. In this Agreement, "hereof," "herein," "hereto," "hereunder" and
the like mean and refer to this Agreement as a whole and not merely to the
specific section, paragraph or clause in which the respective word appears;
words importing any gender include the other gender; references to "writing"
include printing, typing, lithography and other means of reproducing words in a
tangible visible form; the words "including," "includes" and "include" shall be
deemed to be followed by the words "without limitation"; references to
agreements and other contractual instruments shall be deemed to include
subsequent amendments, assignments, and other modifications thereto, but only to
the extent such amendments, assignments and other modifications are not
prohibited by the terms of this Agreement or any other Loan Document; references
to Persons include their respective permitted successors and assigns or, in the
case of governmental Persons, Persons succeeding to the relevant functions of
such Persons; and all references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.
[SIGNATURE PAGES FOLLOW]
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Witness the due execution hereof by the respective duly
authorized officers of the undersigned as of the date first written above.
THE HILLMAN GROUP, INC.
/S/ James P. Waters
By: James P. Waters
Title: Vice President-Finance
HELLER FINANCIAL, INC., as Agent, an
Issuing Lender and a Lender
By: /S/ Jacqueline Lynch
Title: Vice President
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ANTARES CAPITAL CORPORATION
By: /S/ Daniel B. Glickman
Title: Director
Address:
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Attn:
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Telecopy: ( ) -
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ABA No.:
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Account No.:
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Bank:
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Bank Address:
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MADISON CAPITAL FUNDING LLC
By: /S/ K. Thomas Klimmeck
Title: Managing Director
Address:
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Attn:
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Telecopy: ( ) -
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ABA No.:
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Account No.:
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Bank:
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Bank Address:
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GENERAL ELECTRIC CAPITAL CORPORATION
By: /S/ Michael J. Reilly
Title: Duly Authorized Signatory
Address:
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Attn:
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Telecopy: ( ) -
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ABA No.:
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Account No.:
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Bank:
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Bank Address:
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PNC BANK, NATIONAL ASSOCIATION
By: /S/ John B. Siegrist
Title: Vice President
Address:
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Attn:
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ABA No.:
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Account No.:
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Bank:
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Bank Address:
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FIFTH THIRD BANK
By: /S/ Keith E. Goodpaster
Title: Vice President
Address:
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Attn:
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Telecopy: ( ) -
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ABA No.:
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Account No.:
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Bank:
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Bank Address:
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JOHN HANCOCK LIFE INSURANCE COMPANY
By: /S/ Lorn C. Davis
Title: Director
Address:
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Attn:
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Telecopy: ( ) -
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ABA No.:
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Account No.:
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Bank:
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Bank Address:
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JOHN HANCOCK VARIABLE LIFE INSURANCE
COMPANY
By: /S/ Lorn C. Davis
Title: Authorized Signatory
Address:
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Attn:
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Telecopy: ( ) -
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ABA No.:
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Account No.:
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Bank:
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Bank Address:
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INVESTORS PARTNER LIFE INSURANCE COMPANY
By: /S/ Lorn C. Davis
Title: Authorized Signatory
Address:
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Attn:
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Telecopy: ( ) -
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ABA No.:
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Account No.:
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Bank:
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Bank Address:
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Agreed to, solely as to provisions
expressly applicable to SunSource Inc.
or SunSource Investment Company, Inc.
SUNSOURCE INC.
/S/ Joseph M. Corvino
By: Joseph M. Corvino
Title: Senior Vice President
SUNSOURCE INVESTMENT COMPANY, INC.
/S/ Joseph M. Corvino
By: Joseph M. Corvino
Title: Vice President
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