UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 18, 2014
LYDALL, INC.
(Exact name of registrant as specified in its charter )
Commission file number: 1-7665
Delaware | 06-0865505 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
One Colonial Road, Manchester, Connecticut | 06042 |
(Address of principal executive offices) | (zip code) |
Registrant’s telephone number, including area code: (860) 646-1233
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 2 – Financial Information
Item 2.01 Completion of Acquisition or Disposition of Assets
On February 20, 2014, Lydall, Inc. (the “Company”) completed an acquisition of certain industrial filtration businesses of Andrew Industries Limited (“Seller”), a United Kingdom based corporation, for $83 million in cash, subject to certain customary post-closing adjustments (the “Acquisition”). The Acquisition was consummated pursuant to the terms of a Sale and Purchase Agreement (the “Purchase Agreement”) dated February 20, 2014, by and among the Seller, the Company and Lydall UK Ltd, an indirect subsidiary of the Company (together, with the Company, the “Buyers”). The signing of the Purchase Agreement and the closing of the Acquisition occurred simultaneously.
Pursuant to the terms of the Purchase Agreement, the Buyers acquired all of the issued and outstanding shares of capital stock of Andrew Webron Limited, Andrew Webron Filtration Limited, Andrew Industries (Hong Kong) Limited and Southern Felt Company, Inc. (collectively, with their subsidiaries, the “Industrial Filtration Businesses”). The Industrial Filtration Businesses have operations in the United States, the United Kingdom and China serving a global customer base in the manufacture of non-woven filter felt media and filter bags used primarily in industrial air filtration applications.
The Company used borrowings under its Amended and Restated Credit Agreement, as discussed below in Item 2.03 of this Current Report on Form 8-K, in addition to cash on hand to fund the acquisition.
The foregoing description of the Purchase Agreement is qualified in its entirety by reference to the full text of the Sale and Purchase Agreement, a copy of which is filed herewith as Exhibit 10.1 and is hereby incorporated by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off−Balance Sheet Arrangement of a Registrant.
(a) Creation of a Direct Financial Obligation.
Amended and Restated Credit Agreement
On February 18, 2014, the Company, as borrower, amended and restated its $35 million senior secured revolving credit agreement (the “Amended Credit Agreement”) with Bank of America, N.A. (“Bank of America”). The Amended Credit Agreement with Bank of America, as Agent for the Lenders, increased the available borrowing from $35 million to $100 million. The Amended Credit Agreement has a maturity date of February 18, 2019.
Under the terms of the Amended Credit Agreement, Bank of America and the other lenders (collectively, the “Lenders”) are providing a $100 million revolving credit facility (the “Facility”) to the Company, under which the Lenders may make revolving loans and issue letters of credit to or for the benefit of the Company and its subsidiaries. The Facility may be increased by an aggregate amount not to exceed $50 million through an accordion feature in the Amended Credit Agreement, subject to specified conditions.
Domestic subsidiaries of the Company, Lydall Thermal/Acoustical, Inc., Lydall Filtration/Separation, Inc. and Lydall International, Inc. (collectively, the “Guarantors”), have unconditionally guaranteed the Company’s payment and other obligations under the Amended Credit Agreement, pursuant to Guaranty Agreements by and between each Guarantor and Lenders (the “Guaranties”). Also, Southern Felt Company, Inc., a domestic subsidiary of the Company acquired in the transaction disclosed in Item 2.01 of this Current Report on Form 8-K, will become a guarantor of the Amended Credit Facility (the “Additional Guarantor”). The Company’s obligations under the Amended Credit Agreement are secured by substantially all of the assets of the Company and the Guarantors and will also be secured by substantially all of the assets of the Additional Guarantor.
The terms of the Amended Credit Agreement include the following:
1) A $100 million five-year revolving credit facility, including a $30 million sublimit for letters of credit and a $40 million sublimit for alternative currency borrowings.
2) Interest is charged on borrowings at the Company’s option of either: (i) Base Rate plus the Applicable Rate, or (ii) the Eurodollar Rate plus the Applicable Rate. The Base Rate is a fluctuating rate equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate as set by Bank of America, and (c) the Eurocurrency Rate plus 1.00%. The Eurocurrency Rate means (i) if denominated in LIBOR quoted currency, a fluctuating LIBOR per annum rate equal to the London Interbank Offered Rate; (ii) if denominated in Canadian Dollars, the rate per annum equal to the Canadian Dealer Offered Rate; or (iii) the rate per annum as designated with respect to such alternative currency at the time such alternative currency is approved by the Lenders. The Applicable Rate is determined based on the Company’s Consolidated Leverage Ratio (as defined in the Amended Credit Agreement). The Applicable Rate added to the Base Rate Committed Loans ranges from 0.15% to 1.00%, and the Applicable Rate added to Eurocurrency Rate Committed Loans and Letters of Credit ranges from 0.75% to 1.75%. The Company pays a quarterly fee ranging from 0.20% to 0.30% on the unused portion of the $100 million available under the Amended Credit Agreement.
3) Prepayment: the Company is permitted to prepay borrowings in whole or in part at any time without premium or penalty, subject to certain minimum payment requirements, and the Company is generally permitted to irrevocably cancel unutilized portions of the commitments under the Amended Credit Agreement.
4) Company Covenants: The Amended Credit Agreement contains covenants required of the Company and its subsidiaries, including various affirmative and negative financial and operational covenants. The Company is required to meet certain quarterly financial covenants calculated from the four fiscal quarters most recently ended, including: (i) a minimum consolidated interest coverage ratio, which requires that at the end of each fiscal quarter the ratio of consolidated EBIT to consolidated interest charges, as defined in the Amended Credit Agreement, may not be lower than 2.0 to 1.0; (ii) a consolidated leverage ratio, which requires that at the end of each fiscal quarter the ratio of consolidated funded indebtedness to consolidated EBITDA, as defined in the Amended Credit Agreement, may not be greater than 3.0 to 1.0; and (c) the Company must also meet a minimum consolidated EBITDA amount for the preceding 12 month period of $30.0 million.
5) Events of Default: The Facility may be accelerated upon the occurrence of an event of default under the Amended Credit Agreement, which includes customary events of default, including payment defaults, the inaccuracy of representations or warranties, the failure to comply with covenants, ERISA defaults, judgment defaults, and bankruptcy and insolvency defaults.
The foregoing description of the Amended Credit Agreement is qualified in its entirety by reference to the full text of the Amended Credit Agreement, a copy of which is filed herewith as Exhibit 10.2 and is hereby incorporated by reference.
Security Agreements
The Company and each of the Guarantors entered into separate Security Agreements with Bank of America, as Agent for the Lenders (collectively, the “Security Agreements”) to secure the performance of all payment and other obligations of the Company and the Guarantors under the Amended Credit Agreement, the Guaranty and the other loan documents related to the Amended Credit Agreement. Under the Security Agreements, the Company and each of the Guarantors have granted to the Agent a lien upon, first priority security interest in (subject to certain liens permitted by the Amended Credit Agreement), and pledge and assignment of, substantially all of the assets and property of the Company and each of the Guarantors, now owned or hereafter acquired, wherever located, other than real estate (collectively, the “Collateral”), subject to certain specific limitations. The Additional Guarantor will enter into a similar Security Agreement granting the Agent the same interest in, and pledge and assignment of, substantially all of the assets and property of the Additional Guarantor.
The Collateral also includes: (i) all equity interests held by the Company and each Guarantor in their respective domestic subsidiaries; (ii) 65% of the equity interests held by the Company and each Guarantor in their respective first-tier foreign subsidiaries, and (iii) patents, patent rights and trademarks, service marks and trademark and service mark rights and copyrights owned by the Company and the Guarantors.
The Security Agreements terminate upon satisfaction in full of all payment and other obligations under the Amended Credit Agreement, the Guaranty and the other loan documents related to the Amended Credit Agreement.
The foregoing description of the Security Agreements is qualified in its entirety by reference to the full text of each Security Agreement, copies of which are filed herewith as Exhibits 10.3 through 10.7 and are hereby incorporated by reference.
Item 3.03. Material Modification to Rights of Security Holders.
The Amended Credit Agreement contains a covenant that, among other things, restricts the Company’s ability to pay dividends or distributions or redeem or repurchase capital stock if the Company is in default, or an event of default shall have occurred, under the Credit Agreement. Information concerning the Company’s Amended Credit Agreement is set forth in Item 2.03 above, which information is incorporated herein by reference.
Section 7 – Regulation FD
Item 7.01. Regulation FD Disclosure
As previously announced, the Company scheduled a conference call and simultaneous webcast for 9:00 a.m. Eastern Time on Friday, February 21, 2014 to discuss these transactions. A recording of the call is available from 11:00 a.m. ET on February 21, 2014 through 9:00 a.m. ET on March 3, 2014 at (877) 344-7529 or (412) 317-0088, passcode 10040444. The investor slides to be presented during the conference call are furnished herewith as Exhibit 99.1.
The information in this Item 7.01 (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Section 9 - Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits
(a) | Financial Statements of business acquired. |
As permitted by Item 9.01(a)(4) of Form 8-K, the financial statements required by Item 9.01(a) of Form 8-K will be filed by amendment no later than 71 calendar days after the date the initial Current Report on Form 8-K reporting the Acquisition was required to be filed.
(b) | Pro Forma financial information. |
As permitted by Item 9.01(b)(2) of Form 8-K, the pro-forma financial information required by Item 9.01(b) of Form 8-K will be filed by amendment no later than 71 calendar days after the date the initial Current Report on Form 8-K reporting the Acquisition was required to be filed.
(c) | Exhibits. |
The following exhibits are included with this report, as set forth below:
Exhibit | Exhibit |
Number | Description |
10.1 | Sale and Purchase Agreement, dated February 20, 2014, by and among the Andrews Industries Limited, Lydall, Inc. and Lydall UK Ltd. |
10.2 | Amended and Restated Credit Agreement, dated February 18, 2014, by and between Lydall, Inc., as borrower, and Bank of America, N.A., as Agent for the Lenders. |
10.3 | Amended and Restated Guaranty Agreement, dated February 18, 2014, by and among Lydall Thermal/Acoustical, Inc., Lydall Filtration/Separation, Inc., Lydall International, Inc., and Bank of America, N.A. |
10.4 | Amended and Restated Security Agreement, dated February 18, 2014 by and between Lydall, Inc., and Bank of America, N.A. |
10.5 | Amended and Restated Security Agreement, dated February 18, 2014 by and between Lydall Thermal/Acoustical, Inc., and Bank of America, N.A. |
10.6 | Amended and Restated Security Agreement, dated February 18, 2014 by and between Lydall Filtration/Separation, Inc., and Bank of America, N.A. |
10.7 | Amended and Restated Security Agreement, dated February 18, 2014 by and between Lydall International, Inc., and Bank of America, N.A. |
99.1 | Investor Presentation, dated February 21, 2014 (Furnished not filed; see Item 7.01). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
LYDALL, INC. | |||
February 24, 2014 | By: | /s/ Chad A. McDaniel | |
Chad A. McDaniel Vice President, General Counsel and Secretary |
EXHIBIT INDEX
Exhibit
Number |
Exhibit Description | |
10.1 | Sale and Purchase Agreement, dated February 20, 2014, by and among the Andrews Industries Limited, Lydall, Inc. and Lydall UK Ltd. | |
10.2 | Credit Agreement, dated February 18, 2014, by and between Lydall, Inc., as borrower, and Bank of America, N.A., as Agent for the Lenders. | |
10.3 | Guaranty Agreement, dated February 18, 2014, by and among Lydall Thermal/Acoustical, Inc., Lydall Filtration/Separation, Inc., Lydall International, Inc., and Bank of America, N.A. | |
10.4 | Security Agreement, dated February 18, 2014 by and between Lydall, Inc., and Bank of America, N.A. | |
10.5 | Security Agreement, dated February 18, 2014 by and between Lydall Thermal/Acoustical, Inc., and Bank of America, N.A. | |
10.6 | Security Agreement, dated February 18, 2014 by and between Lydall Filtration/Separation, Inc., and Bank of America, N.A. | |
10.7 | Security Agreement, dated February 18, 2014 by and between Lydall International, Inc., and Bank of America, N.A. | |
99.1 | Investor Presentation dated February 21, 2014 (Furnished not filed; see Item 7.01) |
Exhibit 10.1
Execution Version
Dated 20 February, 2014
Lydall UK Ltd,
Lydall, Inc.
and
Andrew Industries Limited
SALE AND PURCHASE AGREEMENT
relating to the purchase and sale
of each of
Andrew Webron Limited,
Andrew Webron Filtration Limited,
Andrew Industries (Hong Kong) Limited
and
Southern Felt Company, Inc.
TABLE OF CONTENTS
Page | ||
SECTION 1 | ||
Definitions | ||
Clause 1.01. | Definitions | 4 |
Clause 1.02. | Other Definitional and Interpretive Provisions | 19 |
Clause 1.03. | Currencies | 20 |
SECTION 2 | ||
Purchase and Sale | ||
Clause 2.01. | Purchase and Sale | 20 |
Clause 2.02. | Covenants For Title | 20 |
Clause 2.03. | Waiver of Pre-Emption | 20 |
Clause 2.04. | Purchase Price; Allocation of Purchase Price | 20 |
Clause 2.05. | Closing | 21 |
Clause 2.06. | Closing Statement. | 21 |
Clause 2.07. | Adjustment of Purchase Price. | 22 |
Clause 2.08. | Delivery of Management Accounts | 23 |
SECTION 3 | ||
Warranties of Seller | ||
Clause 3.01. | Warranties of Seller | 24 |
Clause 3.02. | Disclosure Schedule References | 24 |
SECTION 4 | ||
Warranties of Buyers | ||
Clause 4.01. | Warranties of Buyers | 24 |
SECTION 5 | ||
Covenants of Seller and Buyers | ||
Clause 5.01. | Access to Information. | 24 |
Clause 5.02. | Protection of Buyers’ Interests. | 25 |
Clause 5.03. | Confidentiality | 29 |
Clause 5.04. | Press Releases and Announcements | 29 |
Clause 5.05. | Reasonable Commercial Efforts; Further Assurances | 29 |
Clause 5.06. | Intercompany Accounts . | 30 |
Clause 5.07. | China Intercompany Indebtedness | 31 |
Clause 5.08. | China Cash | 32 |
Clause 5.09. | Release of Intercompany Guarantees . | 32 |
Clause 5.10. | Trademarks; Tradenames. | 33 |
Clause 5.11. | UK Leases | 34 |
Clause 5.12. | Amendment of 401(k) Plan | 34 |
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Clause 5.13. | Transaction Bonuses | 34 |
Clause 5.14. | Right of First Refusal on a Triggering Transaction. | 35 |
Clause 5.15. | Right of First Refusal on a Joint Venture Transaction | 36 |
Clause 5.16. | No sale of AI India to certain Persons | 38 |
Clause 5.17. | India Financials | 38 |
Clause 5.18. | Supply arrangements with Seller’s Hydro-finishing Business | 38 |
Clause 5.19. | Supply agreements with Linflon | 38 |
SECTION 6 | ||
Tax Matters | ||
Clause 6.01. | Tax Covenant | 38 |
Clause 6.02. | Deductions from payments. | 39 |
Clause 6.03. | VAT | 39 |
SECTION 7 | ||
Survival; Indemnification | ||
Clause 7.01. | Period for Claims | 40 |
Clause 7.02. | Indemnification. | 40 |
Clause 7.03. | Third Party Claim Procedures. | 41 |
Clause 7.04. | Direct Claim Procedures | 42 |
Clause 7.05. | Escrow Procedures. | 43 |
Clause 7.06. | Treatment of Payments | 43 |
Clause 7.07. | Payments to Buyers | 43 |
SECTION 8 | ||
Buyer Guarantee | ||
Clause 8.01. | Guarantee. | 44 |
SECTION 9 | ||
Miscellaneous | ||
Clause 9.01. | Notices | 45 |
Clause 9.02. | Amendments and Waivers. | 47 |
Clause 9.03. | Expenses | 47 |
Clause 9.04. | Successors and Assigns | 47 |
Clause 9.05. | Counterparts; Effectiveness; Third Party Rights | 48 |
Clause 9.06. | Entire Agreement | 48 |
Clause 9.07. | Severability | 48 |
Clause 9.08. | Specific Performance | 48 |
Clause 9.09. | Governing Law | 48 |
Clause 9.10. | Arbitration . | 49 |
Clause 9.11. | Agent for service of process | 50 |
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Schedule 2.04 | Allocation of Purchase Price |
Schedule 2.05(b) | Buyer Closing Deliverables |
Schedule 2.05(c) | Seller Closing Deliverables |
Schedule 2.05(d) | Encumbrances to be released |
Schedule 2.06 | Closing Statement |
Schedule 3 | Warranties of Seller |
Schedule 4 | Warranties of Buyer |
Schedule 5.09(b) | Retained Group Guarantees |
Schedule 6.01 | Tax Covenant |
Schedule 7.02(a)(iii) | Specific Indemnities |
Schedule 7.02 | Seller Limitations |
Annex 1 | Properties |
Annex 2 | Seller Disclosure Schedule |
Annex 3 | Information Relating to Target Group |
Annex 4 | Exchange Rates |
Exhibit A | Escrow Agreements |
Exhibit B | UK Leases |
Exhibit C | Licensing Agreement |
Exhibit D | Transitional Services Agreement |
Exhibit E | Supply Agreements |
Exhibit F | Pension Agreement |
Exhibit G | Inter-Company Account Statement |
Exhibit H | Assignment Agreement |
iii |
SALE AND PURCHASE AGREEMENT
This SALE AND PURCHASE AGREEMENT (this “ Agreement ”) dated as of 20 February 2014 among Lydall UK Ltd, a limited liability company organized and existing under the laws of England and Wales with number 8850713 (“ UK Buyer ”), Lydall, Inc., a corporation organized and existing under the laws of the State of Delaware, United States of America (“ US Buyer ” and, collectively, with UK Buyer, the “ Buyers ”), and Andrew Industries Limited, a limited liability company organized and existing under the laws of England and Wales with number 188896 (“ Seller ”).
WITNESSETH:
WHEREAS, Seller is the legal and beneficial owner of all of the Target Shares (as defined herein); and
WHEREAS, Seller desires to sell the Non-US Target Shares to UK Buyer, and UK Buyer desires to purchase the Non-US Target Shares from Seller, and Seller desires to sell the US Target Shares to US Buyer, and US Buyer desires to purchase the US Target Shares from Seller, upon the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1
Definitions
Clause 1.01. Definitions. The following terms, as used herein, have the following meanings:
“ 1934 Act ” means the Securities Exchange Act of 1934.
“ Adjustment Date ” has the meaning set forth in Clause 2.07(d).
“ Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person from time to time. For purposes of this definition, “ control ” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “ controlling ” and “ controlled ” have correlative meanings (but, for the avoidance of doubt, in the case of Seller or any other member of the Retained Group, Linflon shall not be an Affiliate based on the current shareholdings of the Seller in such company).
“ agreed form ” means, in relation to a document, the form approved and for identification purposes signed or initialed by (or on behalf of) the Buyers and Seller.
“ Agreement ” has the meaning set forth in the Preamble.
“ AI India ” means Andrew Industries (India) PVT Limited, a company registered in the State of Tamil Nadu, India with registered number U29268TN2009FTC072995.
“ AIL Pension Scheme ” means the Andrew Industries Limited Pension and Life Assurance Scheme established by a resolution dated 31 January 1972 and presently governed by a declaration of trust and rules dated 12 October 1995 (as amended).
“ ALP Documents ” means (i) the Board minutes of Seller held on 9 December 2013, (ii) the unanimous consent of the Board of Directors of SFC dated 13 December 2013, (iii) the Assignment (separate from certificate) of American Laundry Products, Inc shares from SFC to Seller dated 13 December 2013 and (iv) the Purchase and Sale Agreement between SFC and the Seller for 65,000 shares of $1.00 each being the common stock of American Laundry Products, Inc dated 13 December 2013.
“ Ancillary Agreements ” means the Escrow Agreement, the UK Leases, the Licensing Agreement, the Transitional Services Agreement and the Supply Agreements.
“ Applicable Law ” means, with respect to any Person, any transnational, domestic or foreign federal, state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement enacted, adopted or applied by a Governmental Authority that is binding upon to such Person, as amended unless expressly specified otherwise.
“ Assignment Agreement ” means the intangibles assignment for the assignment by the Seller of certain intangible assets to the US Buyer, in the form attached hereto as Exhibit H.
“ Balance Sheet ” means the audited balance sheet of the Target Group as of the Balance Sheet Date.
“ Balance Sheet Date ” means March 31, 2013.
“ Base Purchase Price ” means $83,000,000.
“ Benefit Arrangement ” means “employee pension benefit plan” (as defined in Section 3(2) of ERISA), any “employee welfare benefit plan” (as defined in Section 3(1) of ERISA), and any other written or oral plan, agreement or arrangement (other than the Disclosed Schemes) involving direct or indirect compensation, including insurance coverage, cafeteria plan benefits, severance benefits, disability benefits, deferred compensation, bonuses, options, stock purchase, phantom stock, stock appreciation or other forms of incentive compensation or post-retirement compensation.
“ Bury Property ” means the premises at Walshaw Lane, Bury, Greater Manchester BL8 1NG (Title Number GM 545388).
5 |
“ Business Day ” means a day, other than a Saturday or Sunday, on which commercial banks in New York, New York and London, United Kingdom are open for general business, but reference to “ day ” shall mean any calendar day.
“ Buyer Fees ” has the meaning set forth in Clause 9.03.
“ Buyer Indemnified Person ” has the meaning set forth in Clause 7.02(a).
“ Buyers ” has the meaning set forth in the Preamble.
“ Buyers’ Account ” means [REDACTED].
“ CERCLA ” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980.
“ China Intercompany Indebtedness ” means $5,777,832.40, being the aggregate of the principal amounts owing (including in respect of interest accrued on all such amounts to 30 May 2014) from (i) Andrew Industrial Textile Manufacturing Company (Shanghai) Limited to the Seller under the Offshore Loan, (ii) from Andrew Industrial Textile Manufacturing Company (Shanghai) Limited to BMP Asia Industries (Shenzhen) Company Limited under a loan agreement dated 20 June 2013; (iii) from Andrew Industrial Textile Manufacturing Company (Wuxi) Limited to BMP Asia Industries (Shenzhen) Company Limited under a loan agreement dated 27 September 2013; and (iv) from Andrew Industrial Textile Manufacturing Company (Wuxi) Limited to BMP Asia Industries (Shanghai) Company Limited under a loan agreement dated 15 April 2013.
“ China Intercompany Indebtedness Escrow Agreement ” means the agreement to be entered into among Buyers, Seller and Escrow Agent at the Closing in the form of Exhibit A hereto relating to the operation of the China Intercompany Indebtedness Escrow Fund.
“ China Intercompany Indebtedness Escrow Fund ” has the meaning set forth in Clause 5.07(a).
“ China Subsidiaries ” means each of Andrew Industrial Textile Manufacturing Company (Shanghai) Limited, Andrew Industrial Textile Manufacturing (Wuxi) Company Limited and Andrew Industrial Textile Trading Company (Shanghai) Limited
“ Claim for Tax ” has the meaning ascribed to it in Part A of the Tax Covenant.
“ Closing ” has the meaning set forth in Clause 2.05.
“ Closing Cash ” means the aggregate amount of all cash and cash equivalents (including marketable securities, the benefit of bills of exchange, short term investments and bank notes) of the members of the Target Group as of 5 p.m. Eastern Standard Time on the Closing Date, calculated by reference to the cash books of the Target Group at Closing (and, for the avoidance of doubt, Closing Cash shall be calculated so as to:
6 |
(a) exclude the cash book entries in respect of the payments of the amount of cash paid to the relevant employees by each member of the Target Group (except SFC) on or prior to the Closing Date in respect of the Transaction Bonuses;
(b) exclude the cash book entries in respect of the receipt of any cash (whether in transit or otherwise) remitted by Seller to any member of the Target Group as reimbursement for the cash paid or to be paid by any member of the Target Group in respect of the Transaction Bonuses (including all employer and employee payroll taxes payable by reference to such Transaction Bonuses); and
(c) include the cash book entries in respect of any payment made by SFC with respect to the Transaction Bonuses (including all related employer and employee payroll taxes paid by reference to such Transaction Bonuses).
“ Closing Cash Consideration ” means (i) the Base Purchase Price, minus (ii) the Closing Indebtedness, plus (iii) the Closing Cash, plus (iv) the Closing Working Capital Adjustment (which, for the avoidance of doubt, may be a negative number).
“ Closing Date ” means the date of the Closing.
“ Closing Indebtedness ” means the Indebtedness as of 5 p.m. Eastern Standard Time on the Closing Date.
“ Closing Statement ” has the meaning set forth in Clause 2.06(a).
“ Closing Working Capital ” means (i) the current assets of the members of the Target Group minus (ii) the current liabilities of the members of the Target Group, in each case as of the Closing Date as at 5 p.m. Eastern Standard Time and as calculated in accordance with Schedule 2.06 ( provided that, for the avoidance of doubt, “Closing Working Capital” shall not include any amounts with respect to or included in Closing Cash or Closing Indebtedness (and vice versa)).
“ Closing Working Capital Adjustment ” means the amount by which Target Working Capital differs from Closing Working Capital, as calculated in accordance with Schedule 2.06.
“ Code ” means the Internal Revenue Code of 1986 of the United States of America, as amended.
“ Company Securities ” has the meaning set forth in Paragraph 3.05(b) of Schedule 3.
“ Contribution Notice ” has the meaning set forth in the Pensions Act 2004.
“ Corporate Income Tax ” means any Tax on income, profits or gains.
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“ Damages ” has the meaning set forth in Clause 7.02(a).
“ Disclosed ” means fairly disclosed (with sufficient details to identify the nature and scope of the matter disclosed) in the Seller Disclosure Schedule in accordance with the terms thereof.
“ Disclosed DB Scheme ” means the AIL Pension Scheme.
“ Disclosed DC Schemes ” means:
(i) | the Andrew Webron Limited Group Personal Pension Plan; |
(ii) | Stanplan A, offered to employees of Andrew Webron Filtration Limited and administered by Standard Life; |
(iii) | the Norwich Union Stakeholder Pension Scheme (as designated by Heath Filtration Limited for its employees); and |
(iv) | the Heath Filtration Ltd RBS 2000. |
“ Disclosed Schemes ” means the Disclosed DB Scheme, the Disclosed DC Schemes and the Life Assurance Plan.
“ Disputed Matters ” has the meaning set forth in Clause 2.06(c).
“ Employee ” means an employee of any member of the Target Group.
“ Encumbrance ” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, assignment, hypothecation, encumbrance, title, retention, any right to acquire, option or right of pre-emption or any other security agreement or arrangement in respect of such property or asset, or any agreement, arrangement or obligation to create any of the same. For the purposes of this Agreement, a Person shall be deemed to own subject to an Encumbrance any property or asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement or other title retention agreement relating to such property or asset.
“ Environmental Claim ” means a claim in respect of the Specific Indemnity set out in Paragraph 1 of Schedule 7.02(a)(iii) or with respect to the breach of any of the Environmental Warranties.
“ Environmental Laws ” means any Applicable Law relating to human health and safety, the environment or Hazardous Substances.
“ Environmental Permits ” means all permits, licenses, certificates, approvals and other similar authorizations of Governmental Authorities required by any member of the Target Group in connection with the assets or business of the Target Group under Environmental Laws.
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“ Environmental Third Party Claim ” means the service or filing of any suit, action or proceeding by any third party or where such suit, action or proceeding has been expressly threatened in writing by any third party.
“ Environmental Warranties ” has the meaning set forth in Clause 7.01.
“ Environmental Warranty Claim ” means any claim for breach of any Environmental Warranty, whether under Clause 7 or otherwise.
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.
“ ERISA Affiliate ” shall mean any Person which is, or at any applicable time was, a member of (1) a controlled group of corporations (as defined in Section 414(b) of the Code), (2) a group of trades or businesses under common control (as defined in Section 414(c) of the Code), or (3) an affiliated service group (as defined under Section 414(m) of the Code or the regulations under Section 414(o) of the Code), any of which includes or included any member of the Target Group.
“ Escrow Agent ” means DLA Piper UK LLP of 101 Barbirolli Square, Manchester M2 3DL, United Kingdom (Ref JPW).
“ Escrow Agreements ” means the China Intercompany Indebtedness Escrow Agreement and the Indemnity Escrow Fund Agreement.
“ Estimated Closing Cash ” means $3,650,540.33, being Seller’s good faith estimate of the Closing Cash.
“ Estimated Closing Cash Consideration ” means $62,216,694.82, being (i) the Base Purchase Price, minus (ii) the Estimated Closing Indebtedness, plus (iii) the Estimated Closing Cash.
“ Estimated Closing Indebtedness ” means $24,433,845.51, being Seller’s good faith estimate of the Closing Indebtedness.
“ Existing SFC/AIL Indebtedness ” means the sum of $5,323.538.27 owing by Seller to SFC, pursuant to the SFC/AIL Notes and other receivables other than Trading Balances.
“ Final Closing Cash Consideration ” has the meaning set forth in Clause 2.07(c).
“ Final Release Date ” has the meaning set forth in Clause 7.01.
“ Financial Support Direction ” has the meaning set forth in the Pensions Act 2004.
“ Fundamental Warranties ” has the meaning set forth in Clause 7.01.
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“ Fundamental Warranty Claim ” means a claim for the breach of any Fundamental Warranties, whether under Section 7 or otherwise.
“ GAAP ” means, in relation to a member of the Target Group, the generally accepted accounting principles applicable in the relevant jurisdiction of incorporation of that member, consistently applied.
“ General Warranty Claim ” means a Warranty Claim, other than a Fundamental Warranty Claim, Environmental Claim or claim under the Tax Warranties.
“ government official ” has the meaning set forth in Paragraph 3.15 of Schedule 3.
“ Governmental Authority ” means any transnational, domestic or foreign federal, state or local governmental, regulatory or administrative authority, department, court, agency or official, including any political subdivision thereof.
“ Guaranteed Obligations ” has the meaning set forth in Clause 8.01(a).
“ Hazardous Substances ” means any pollutant, contaminant, waste or chemical or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous substance, waste or material, or any substance, waste or material having any constituent elements displaying any of the foregoing characteristics, including petroleum, its derivatives, by-products and other hydrocarbons, and any substance, waste or material regulated under any environmental laws.
“ Heath Deed of Novation ” means the deed of novation entered into on or about the date hereof between (1) the Seller (2) Andrew Webron Filtration Limited and (3) the Heath Vendors.
“ Heath SPA ” means the share purchase agreement between the Heath Vendors, Andrew Webron Filtration Limited and the Seller dated 28 February 2013.
“ Heath Vendors” means Nigel Robert Stanley, Robert Seaman Heath, Norma Grace Heath and Celia Stanley.
“ HFL Matters ” has the meaning set forth in Paragraph 4.07 of Schedule 4.
“ HSBC Guarantees ” means (i) the s tate of California, USA governed guarantee agreement dated 5 April 2011 given for the benefit of HSBC Bank PLC by SFC; and (ii) the composite guarantee dated 5 April 2011 given by, (amongst others) Andrew Webron Limited, Andrew Webron Filtration Limited and Southern Felt Inc. for the benefit of HSBC Bank PLC.
“ Hydro-finishing Business ” means: (i) the application of pressurized jets of water to needle felt; and (ii) the finishing of rolled goods needle felt, and the marketing, sale, distribution or other supply of the resultant products produced by such application or finishing.
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“ Indebtedness ” means, without duplication, the aggregate amount of (including the principal amount thereof; the amount of accrued and unpaid interest, fees or penalties thereon; and any prepayment premiums, termination fees, breakage or maintenance costs or similar payments that are payable due to the applicable underlying agreement being terminated as of the Closing): (i) all indebtedness of any member of the Target Group, whether or not represented by bonds, debentures, letters of credit, notes or other securities, for the repayment of borrowed money, (ii) all obligations of any member of the Target Group to pay rent or other payment amounts under a lease of personal property which constitute a capital lease under GAAP, (iii) any outstanding reimbursement obligation of any member of the Target Group with respect to letters of credit, sureties, bankers’ acceptances or similar facilities issued for the account of any member of the Target Group pursuant to which the applicable bank or similar entity has paid thereunder obligations for which any member of the Target Group thereof is required to repay, (iv) any outstanding payment obligation of any member of the Target Group under any interest rate or currency swap agreement, forward rate agreement, interest rate cap or collar agreement or other financial agreement or arrangement entered into for the purpose of limiting or managing interest rate risks, (v) any “earn-out” and other obligations of the Target Group for the deferred purchase price of property, goods or services and (vi) unpaid Corporate Income Taxes including estimated Corporate Income Taxes relating to income, profits and gains for the period up to and including Closing in each case net of any sums repayable in respect of Corporate Income Taxes overpaid ( provided that, for the avoidance of doubt, “Indebtedness” shall not include (a) trade payables or accruals incurred in the ordinary course of business or (b) any amounts payable to the Heath Vendors under the Heath SPA where the obligations to make the relevant payment have been novated to the Seller under the Heath Deed of Novation).
“ Indemnified Party ” has the meaning set forth in Clause 7.03(a).
“ Indemnifying Party ” has the meaning set forth in Clause 7.03(a).
“ Indemnity Escrow Fund ” has the meaning set forth in Clause 2.05(a)(i).
“ Indemnity Escrow Fund Agreement ” means the agreement to be entered into among Buyers, Seller and Escrow Agent at the Closing in the form of Exhibit A hereto relating to the operation of the Indemnity Escrow Fund.
“ Indemnity Claim ” means any claim in relation to any Specific Indemnity.
“ Independent Accountants ” has the meaning set forth in Clause 2.06(c).
“ Individual Shareholders ” means each of Ted Andrew, Clifford Andrew, Mark Andrew, Simon Andrew and Kathryn Mitchell.
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“ Intellectual Property Rights ” means (i) inventions, whether or not patentable, reduced to practice or made the subject of one or more pending patent applications, (ii) national and multinational statutory invention registrations, patents and patent applications (including all reissues, divisions, continuations, continuations-in-part, extensions and reexaminations thereof) registered or applied for in all nations throughout the world, all improvements to the inventions disclosed in each such registration, patent or patent application, (iii) trademarks, service marks, logos, domain names and trade names including all variations, derivations, combinations, registrations and applications for registration of the foregoing and all goodwill associated therewith, (iv) copyrights (whether or not registered) and registrations and applications for registration thereof in all nations throughout the world, including all derivative works, moral rights, renewals, extensions, reversions or restorations associated with such copyrights regardless of the medium of fixation or means of expression, (v) trade secrets and, whether or not confidential, business information (including pricing and cost information, business and marketing plans and customer and supplier lists) and know-how (including manufacturing and production processes and techniques and research and development information), (vi) industrial designs (whether or not registered), (vii) databases and data collections, (viii) copies and tangible embodiments of any of the foregoing, in whatever form or medium, (ix) all rights to obtain and rights to apply for patents, and to register trademarks and copyrights and (x) all rights in all of the foregoing provided by treaties, conventions and common law.
“ Inter-Company Account Statement ” has the meaning set forth in Clause 5.06.
“ IRS ” means the Internal Revenue Service of the United States of America.
“ Joint Venture Transaction ” shall mean (i) any Transfer, in a single transaction or a series of transactions of 25% or more but less than 50% of the shares of AI India; or (ii) any issue of new shares to a third party (not being the Seller or an Affiliate of the Seller) which would confer upon such third party the right to exercise 25% or more but less than 50% of the voting rights exercisable at meetings of the board of directors of AI India on all, or substantially all matters.
“ Key Employee ” means those Employees (including directors and officers) set forth in Schedule 3.26(c) of the Seller Disclosure Schedule.
“ knowledge ” or “awareness” means (i) in the case of Seller or any member of the Target Group (other than in the case of clause 5.02(g)(i)), the actual knowledge and awareness of Edward Andrew, Ian Lord and Ian Kenyon having made reasonable enquiry of (A) (in matters relating to the business of the Target Group) Paul Bamber and Lee Blunstone (in relation to Lee Blunstone, in respect of financial matters only) (B) (in matters relating solely to Andrew Webron Limited) Iain Dixon, Ian Cropper, David Kirby, Neil Dugdale and Klaus Rupp, (C) (in matters relating solely to Andrew Webron Filtration Limited) Iain Dixon, Ian Cropper, Robert Heath, Nigel Stanley and David Kirby, (D) (in matters relating solely to SFC) John Lewis, Steve Fransoso, Brian Fields, Eric Winters and Mike Konesky, (E) (in matters relating solely to Andrew Industrial Textile Manufacturing Company (Shanghai) Limited) Kathleen Chen, Eric Qin, Peter Wang, William Wang and Leon Liang, (F) (in matters relating solely to Andrew Industrial Textile Manufacturing (Wuxi) Company Limited) Kathleen Chen, Eric Qin, Peter Wang, William Wang, Bill Chi and Leon Liang (G) (in matters relating solely to Andrew Industrial Textile Trading Company (Shanghai) Limited) Kathleen Chen, Eric Qin, Peter Wang and Leon Liang, and (ii) in the case of any other Person (other than in the case of clause 5.02(g)(i)), the actual knowledge and awareness of such Person’s directors and officers.
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“ Leasehold Properties ” means those properties listed in Section 2: of Annex 1 (which include the UK Leased Property).
“ Licensed Intellectual Property Rights ” means all Intellectual Property Rights owned by a third party and licensed or sublicensed to any member of the Target Group including the Seller’s Intellectual Property Rights licensed pursuant to the Licensing Agreement.
“ Licensing Agreement ” means the licensing agreement to be entered into between the Seller and the Buyers at the Closing in the form attached hereto as Exhibit C.
“ Life Assurance Plan ” means the Andrew Industries Limited Group Life Assurance Plan established by a deed of declaration of trust dated 1 April 2008, under which benefits are insured with Legal and General (Group Policy No. 73137).
“ Linflon ” means Shanghai Linflon New Material Technology Co Ltd, a company registered in the People’s Republic of China.
“ Material Contract ” has the meaning set forth in Paragraph 3.12(a) of Schedule 3.
“ Non-US Target Shares ” means (i) all of the issued shares in the capital of Andrew Webron Limited, (ii) all the issued shares in the capital of Andrew Webron Filtration Limited and (iii) all of the issued shares in the capital of Andrew Industries (Hong Kong) Limited.
“ Offshore Loan ” means the loan, with registered number 200531000042142001 from the Seller to Andrew Industrial Textile Manufacturing Company (Shanghai) Limited subject to a loan agreement dated 2 December 2005 (as subsequently amended by supplementary agreement dated 10 March 2013).
“ Owned Intellectual Property Rights ” means all Intellectual Property Rights owned by any member of the Target Group.
“ Pending Claims Amount ” means, as of any specified date, (i) the aggregate of the amounts of the claims made by the Buyers under Clause 7.02 which have been notified to Seller in accordance with Clause 7.01 and (ii) in relation to which the Buyer has provided its good faith reasonable estimate of the Seller’s liability under such claim (having regard to the documents and other information available to the Buyer Group at that time) but, for the avoidance of doubt, not including any Settled Claims.
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“ Pension Agreement ” means the flexible apportionment arrangement under which Andrew Webron Limited will cease to participate in the AIL Pension Scheme and all liabilities attributable to Andrew Webron Limited in respect of the AIL Pension Scheme will be apportioned to Seller, in the form attached hereto as Exhibit F.
“ Pensions Law ” means any Applicable Law in the United Kingdom, the United States of America or China relating to pensions.
“ Pensions Regulator ” means the statutory body of that name established under the Pensions Act 2004.
“ Permits ” has the meaning set forth in Paragraph 3.20 of Schedule 3.
“ Permitted Transfer ” means either (a) the entrance into a binding agreement with respect to a Joint Venture Transaction or a Triggering Transaction by the Seller and an Affiliate of the Seller where such agreement provides that: (i) if such Affiliate ceases to be an Affiliate of the Seller, the Affiliate shall, within five Business Days of so ceasing, transfer the asset which is subject of the Joint Venture Transaction or Triggering Transaction held by such Affiliate to the Seller or another Affiliate of the Seller; (ii) such Affiliate shall enter into obligations with US Buyer which are equivalent to those set out in Clause 5.14 and Clause 5.15 of this Agreement, (b) any transfer of assets to Seller or an Affiliate of Seller in connection with a voluntary solvent liquidation of AI India and close down by Seller or an Affiliate of the Seller of the operations of AI India or (c) any transfer of the assets or shares in AI India in connection with any liquidation, receivership or administrative proceedings.
“ Person ” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a Governmental Authority.
“ Properties ” means those properties (including the Leasehold Properties) listed in Sections 1 and 2 of Annex 1.
“ Purchase Price ” has the meaning set forth in Clause 2.04.
“ Released ” has the meaning set forth in Paragraph 3.28(a)(iv) of Schedule 3.
“Remedial Works” means investigation, monitoring, treatment, clean-up, containment, remediation, removal, mitigation or restoration of or other response action with respect to any Hazardous Substances in the ground, soil, subsurface strata, surface water, sediment or groundwater before closing at any Specific Environmental Indemnity Site.
“ Representatives ” has the meaning set forth in Clause 5.03.
“ Restoration Order ” has the meaning set forth in the Pensions Act 2004.
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“ Retained Group ” means the Seller and its Affiliates ( provided that, for the avoidance of doubt, “Retained Group” shall not include any member of the Target Group), and a “ member of the Retained Group ” shall be construed accordingly.
“ Revised Repayment Date ” has the meaning set forth in Clause 5.07(b).
“ Seller ” has the meaning set forth in the Preamble.
“ Seller Disclosure Schedule ” means the schedules delivered to Buyers on the date hereof, as set out in Annex 2.
“ Seller Indemnified Person ” has the meaning set forth in Clause 7.02(b).
“ Seller Trademarks and Tradenames ” has the meaning set forth in Clause 5.10(a).
“ Seller Warranties ” means the warranties set forth in Schedule 3 given by the Seller pursuant to Clause 3.01.
“ Seller’s Account ” means [REDACTED].
“ Seller’s Operating Affiliates ” shall mean Severnside Fabrics Limited, BMP Europe Limited, BMP America Inc., Bondex Inc., American Laundry Products Inc., European Laundry Products SARL, BMP Asia Industries (Shenzhen) Company Limited, BMP Asia Industries (Shanghai) Company Limited, Andrew Laundry Products Manufacturing Company (Shanghai) Limited, AI India, Andrew Industries Australia Pty Limited and BMP Malaysia SDN BHD ( provided that, for the avoidance of doubt, “Seller’s Operating Affiliates” shall not include Linflon).
“ Settled Claims ” means any claim by Buyers under Clause 7.02 or otherwise under this agreement in relation to which either (a) Seller and either Buyer have agreed the amount payable by Seller to Buyers in relation to such claim (and such amount has been paid by Seller to Buyers by way of deduction from the Indemnity Fund Escrow Fund or otherwise) (b) an arbitrator or arbitral tribunal has determined the amount payable in respect of such claim in accordance with the provisions of Clause 9.10 (and the amounts determined as being due from Seller to Buyers have been paid by Seller to Buyers by way of deduction from the Indemnity Fund Escrow Fund or otherwise) or (c) Buyers have agreed in writing that no amount is payable by Seller to Buyers.
“ SFC ” means Southern Felt Company, Inc.
" SFC/AIL Notes " means the notes owing by the Seller to SFC;
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“ SFC Dividend Documents ” means the unanimous written consent of the board of directors of SFC authorizing the declaration and payment of a dividend in specie of the Existing SFC/AIL Indebtedness.
“ Small Claim ” means an individual General Warranty Claim (or series of General Warranty Claims with respect to the same or substantially the same facts or circumstances) in relation to which the liability of the Seller does not exceed US$40,000.
“ Specific Environmental Indemnity Sites ” has the meaning given to it in Schedule 7.02(a)(iii).
“ Specific Indemnities ” means those specific matters listed in Schedule 7.02(a)(iii) and references to “ Specific Indemnity ” shall be construed accordingly.
“ Stockton on Tees Property ” means the land and buildings to be demised to Andrew Webron Filtration Limited out of Title Numbers CE156636, CE59238 and TE534507.
“ Subsidiary Securities ” has the meaning set forth in Paragraph 3.07(b) of Schedule 3.
“ Substantial Customer ” means those customers of the Target Group set forth in Schedule 3.12(c) of the Seller Disclosure Schedule.
“ Substantial Supplier ” means those trade and raw material suppliers of the Target Group set forth in Schedule 3.12(c) of the Seller Disclosure Schedule.
“ Supply Agreements ” mean each of the supply agreements to be entered into at the Closing in the forms attached hereto as Exhibits E1 to E8.
“ Target Companies ” mean each of Andrew Webron Limited, Andrew Webron Filtration Limited, Andrew Industries (Hong Kong) Limited and SFC.
“ Target Entity Plan ” means any Benefit Arrangement sponsored or maintained by SFC.
“ Target Group ” means each of Target Companies and the Target Subsidiaries, and a “ member of the Target Group ” shall be construed accordingly.
“ Target Group Information ” has the meaning set forth in Clause 5.03.
“ Target Shares ” means (i) all of the issued shares in the capital of Andrew Webron Limited, (ii) all the issued shares in the capital of Andrew Webron Filtration Limited, (iii) all of the issued shares in the capital of Andrew Industries (Hong Kong) Limited; and (iv) all of the outstanding shares of capital stock of SFC.
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“ Target Subsidiaries ” means each of Andrew Industrial Textile Manufacturing Company (Shanghai) Limited, Andrew Industrial Textile Manufacturing (Wuxi) Company Limited, Andrew Industrial Textile Trading Company (Shanghai) Limited and Heath Filtration Limited.
“ Target Working Capital ” means the amount calculated in accordance with Part C of Schedule 2.06.
“ Tax ” or “ Taxation ” means:
(a) any form of tax, levy, impost, duty, contribution, customs and other import duties, liabilities and charges in the nature of taxation and all related withholdings or deductions of any kind (including, for the avoidance of doubt, any national insurance contribution liabilities in the United Kingdom and any similar obligations with respect to any other Tax Authority) wherever and whenever payable; and
(b) all fines, penalties, charges, costs and interest included in or relating to any of the above or to any obligation in respect of any of the above,
whether or not directly or primarily chargeable against or attributable to a member of the Target Group and regardless of whether a member of the Target Group has, or may have, any right of reimbursement or recovery against any other person.
“ Tax Authority ” means any government, state or municipality or any local, state, federal or other fiscal, revenue, customs or excise authority, body or official competent to impose, administer, levy, assess or collect Tax in the United Kingdom or elsewhere.
“ Tax Covenant ” means the covenant and related provisions set forth in Schedule 6.01.
“ Tax Warranties ” has the meaning ascribed to it in Part A of the Tax Covenant.
“ Third Party Claim ” has the meaning set forth in Clause 7.03(b).
“ Trading Balances ” has the meaning set forth in Clause 5.06(a).
“ Transaction Bonus ” means each of the bonuses the gross amounts of which are listed in Annex 1 document 84 of the documents forming part of the Seller Disclosure Schedules and which amounts, for the avoidance of doubt, include any income tax and primary national insurance contributions (or equivalent social security contributions in a jurisdiction other than the UK) for which the relevant member of the Target Group may be required to account in respect of the payment of such bonuses.
“ Transaction Bonus Relief ” has the meaning set forth in Clause 5.13(c).
“ Transfer ” means to assign, contract to assign, sell, contract to sell, sell any option to purchase, sell any contract to purchase, purchase any option to sell, purchase any contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of, directly or indirectly other than a Permitted Transfer.
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“ Transitional Services Agreement ” means the transitional services agreement to be entered into among the Seller and the Buyers at the Closing in the form attached hereto as Exhibit D.
“ Triggering Transaction ” shall mean each of the following: (i) any Transfer, in a single transaction or a series of transactions, of 50% or more of the shares of AI India; (ii) any Transfer of a majority of the assets of AI India (excluding any sale of any real property (including fixtures and fittings) owned by AI India); or (iii) any Transfer in a single transaction or a series of transactions whereby the Seller or an Affiliate of the Seller: (a) ceases to own or control (directly or indirectly) shares or other interests in AI India carrying 50% or more of the votes exercisable at general meetings of AI India on all, or substantially all, matters or (b) ceases to have the right to appoint or remove directors of AI India having a majority of the voting rights exercisable at meetings of the board of directors of AI India on all, or substantially all, matters; in either case regardless of whether such Transfer is to be implemented by way of merger, consolidation, recapitalization or other form of disposal or business combination or a solvent arrangement instigated or commenced by the member(s) of AI India with creditors or shareholders (other than members of the Retained Group).
“ TUPE ” has the meaning set forth in Paragraph 3.26(m) of Schedule 3.
“ UK Buyer ” has the meaning set forth in the Preamble.
“ UK Debt Repayment ” means an aggregate amount of $1,956,197.34, which is to be paid by US Buyer to pay and settle in full amounts outstanding under the First HSBC hire purchase agreement reference 226050, the Second HSBC hire purchase agreement reference 226410 and the Lombard lease purchase agreement reference AY79000280.
“ UK Leased Properties ” means the following properties to be demised by the UK Leases: (i) the Stockton-on-Tees Property; and (ii) the Bury Property.
“ UK Leases ” means the separate leases relating to each of the UK Leased Properties to be entered into between, in the case of the Bury Property, Andrew Textile Industries Limited, Andrew Webron Limited and Lydall UK Ltd and, in the case of the Stockton-on-Tees Property, Andrew Textile Industries Limited and Andrew Webron Filtration Limited, in each case at the Closing, in the form attached hereto as Exhibits B1 and B2.
“ UK Property Carve out ” means the transfer by Andrew Webron Filtration Limited to Andrew Textile Industries Limited of the land and buildings on the South Side of Blue House Pont Road, Stockton-on-Tees with Title Numbers CE59238, TE53407, CE156636.
“ US Buyer ” has the meaning set forth in the Preamble.
“ US Dollars ” has the meaning set forth in Clause 1.03.
“ US GAAP ” means generally accepted accounting principles in the United States.
“ US Target Shares ” means all of the outstanding shares of capital stock of SFC
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“ VAT ” means value added tax or any similar sales or turnover tax in any jurisdiction.
“ Warranty Breach ” has the meaning set forth in Clause 7.02(a).
“ Warranty Claim ” means any claim, whether in contract or otherwise, in relation to any Warranty Breach.
“ WF Payoff Amounts ” means the aggregate amount of $3,268,977.99 with respect to the Wells Fargo loans, number 0264407411-141, 0010333336700, 0264407411-83, 0264407411-133 and 0264407411-117.
Clause 1.02. Other Definitional and Interpretive Provisions . The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Sections, Clauses, Exhibits, Paragraphs, Schedules and Annexes are to Sections, Clauses, Exhibits, Paragraphs, Schedules and Annexes of this Agreement unless otherwise specified. All Schedules, Annexes and Exhibits annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof; provided that with respect to any agreement or contract listed on any schedules hereto, all such amendments, modifications or supplements must also be listed in the appropriate schedule. References to any Person include the successors and permitted assigns of that Person. References to any time of day or date is to that time or date in the United Kingdom. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. References to “law”, “laws” or to a particular statute or law shall be deemed also to include any and all Applicable Law.
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Clause 1.03. Currencies . All references to dollar amounts contained in this Agreement shall mean United States dollars (“ US Dollars ”), and any calculations which include foreign currency shall be converted to U.S. Dollars (i) with respect to any amounts used in connection with the preliminary or final calculation of the Purchase Price (and any constituent elements thereof), using the exchange rates set forth on Annex 4, or (ii) with respect to all other amounts, at the conversion rate existing in the United States (as reported in The Wall Street Journal, US Edition ) on the last Business Day immediately preceding the date of calculation. If The Wall Street Journal, US Edition ceases to be published, then the rate of exchange to be used shall be that reported in such business publication of national circulation in the United States as the parties reasonably agree.
SECTION 2
Purchase and Sale
Clause 2.01. Purchase and Sale . Upon the terms and subject to the conditions of this Agreement, Seller:
(a) agrees to sell to the UK Buyer, and the UK Buyer agrees to purchase from Seller, the Non-US Target Shares at the Closing;
(b) agrees to sell to the US Buyer, and the US Buyer agrees to purchase from Seller, the US Target s hares at the Closing; and
(c) agrees to sell to the US Buyer and the US Buyer agrees to purchase from Seller, the intangible assets as provided for in the Assignment Agreement.
The Target Shares are sold with all rights that attach (or may in the future attach) to them, including without limitation the right to receive all dividends and distributions declared, made or paid on or after the Closing Date.
Clause 2.02. Covenants For Title . The Seller has the right to transfer legal and beneficial title to the Target Shares to Buyers on the terms set out in this Agreement. The Target Shares shall be transferred by the Seller free from any Encumbrance.
Clause 2.03. Waiver of Pre-Emption . The Seller shall procure that on or prior to the Closing any and all rights of pre-emption over the Target Shares are irrevocably waived by any Persons (including without limitation the Seller) entitled thereto.
Clause 2.04. Purchase Price; Allocation of Purchase Price . The total consideration for the sale of the Target Shares and the intangible assets purchased pursuant to the Assignment Agreement is an amount equal to the Final Closing Cash Consideration as calculated in accordance with the terms of this Agreement (the “ Purchase Price ”). The Purchase Price shall be paid in accordance with Clause 2.05 and Clause 2.07. The parties agree to allocate the Purchase Price among the Target Shares and the intangible assets purchased pursuant to the Assignment Agreement in accordance with the amounts set forth on Schedule 2.04 and as adjusted in accordance with Clause 2.07.
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Clause 2.05. Closing . The closing of the purchase and sale of the Target Shares hereunder (the “ Closing ”) shall take place concurrently with the execution of this Agreement by the parties hereto, or as promptly as practicable thereafter, at the offices of DLA Piper UK LLP, 101 Barbirolli Square, Manchester M2 3DL, or such other place or method as Buyers and Seller may agree. For accounting purposes, the Closing shall be deemed to be effective in all jurisdictions at 5 p.m. Eastern Standard Time on the Closing Date. At the Closing:
(a) Buyers shall pay an aggregate amount in cash equal to the Estimated Closing Cash Consideration, allocated as follows:
(i) to the Escrow Agent, $4,150,000 in immediately available funds by wire transfer, which amount shall be deposited into an escrow fund (the “ Indemnity Escrow Fund ”) available to compensate the Buyer Indemnified Persons for any amounts due to them under the indemnification provisions of Section 7 and the provisions of the Tax Covenant, on the terms and subject to the conditions set forth in this Agreement and the Indemnity Escrow Fund Agreement; and
(ii) to Seller, an amount equal to the portion of the Estimated Closing Cash Consideration remaining after the payments provided for by the foregoing sub-clause (i) of this Clause 2.05(a) and by Clause 5.07(a) in immediately available funds by wire transfer to Seller’s Account;
(b) Buyers shall deliver to Seller, or the Escrow Agent, as applicable, those items set forth on Schedule 2.05(b);
(c) Seller shall deliver to Buyers, or the Escrow Agent, as applicable, those items set forth on Schedule 2.05(c); and
(d) at the Closing, the parties shall perform their respective obligations set out in this Clause 2.05 and Schedules 2.05(b) and 2.05(c), as applicable, but Buyers will not be obliged to do anything under this Clause 2.05 and such Schedules unless Seller has first fully complied with its obligations hereunder and thereunder. The Buyers shall not be obliged to complete the purchase of any of the Target Shares unless the purchase of all the Target Shares is completed simultaneously.
Clause 2.06. Closing Statement.
(a) As promptly as practicable, but no later than ninety (90) days, after the Closing Date, Buyers will cause to be prepared and delivered to Seller a statement (the “ Closing Statement ”), prepared on the basis set out in Schedule 2.06, setting forth Buyers’ calculation of the Closing Working Capital, Closing Working Capital Adjustment, Closing Indebtedness, Closing Cash and the resulting Closing Cash Consideration, together with copies of such documents, underlying source data, trial balances and other information used by Buyers in either (I) their preparation of the Closing Statement and/or (II) their calculation of such amounts, as are reasonably necessary for Seller to review and verify such preparation and amounts.
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(b) If Seller disagrees with the Closing Statements or Buyers’ calculation of the Closing Cash Consideration, as delivered pursuant to Clause 2.06(a) and calculated in accordance with Schedule 2.06, Seller may, within forty-five (45) days after delivery of the documents referred to in Clause 2.06(a), deliver a notice to Buyers disagreeing with the Closing Statements and/or such calculation and setting forth Seller’s calculation of such amount. Any such notice of disagreement shall specify those items or amounts as to which Seller disagrees, and Seller shall be deemed to have agreed with all other items and amounts contained in the Closing Statement as delivered pursuant to Clause 2.06(a).
(c) If a notice of disagreement is delivered pursuant to Clause 2.06(b), Buyers and Seller shall, during the fifteen (15) Business Days following such delivery, use their commercially reasonable efforts to reach agreement on the disputed items or amounts in order to determine the Closing Cash Consideration. If, during such period, Buyers and Seller are unable to reach such agreement, they shall promptly thereafter: (i) cause Deloitte LLP; or (ii) if a material conflict exists, such other firm of independent accountants of internationally recognized standing (who shall not have any material relationship with Buyers or Seller) that is reasonably satisfactory to Buyers and Seller or, in default of agreement, within ten (10) Business Days of the date of either the Buyers or the Seller serving on the other details of its suggested independent accountants, such independent accountants as nominated by the President for the time being of the Institute of Chartered Accountants in England and Wales upon the application of either the Buyers or the Seller (the “ Independent Accountants ”), to promptly review the disputed items or amounts and the relevant sections of this Agreement relating to the calculation of the disputed items or amounts for the purpose of calculating the disputed items or amounts (the “ Disputed Matters ”). In making such calculation, the Independent Accountants shall: (X) consider only the Disputed Matters; and (Y) shall act as experts and not as arbitrators. The Independent Accountants’ determination shall, in the absence of manifest error, be final and binding on the parties. The Independent Accountants shall deliver to Buyers and Seller, as promptly as practicable, a report setting forth their calculation of the Closing Cash Consideration. The cost of such review and report shall be borne between Buyers and Seller in such proportions as the Independent Accountants may direct taking into account the relative amount by which the calculations by Buyers or Seller, as the case may be, differ from the final amounts of any Disputed Matter decided by the Independent Accountants or, in the absence of any such direction, fifty percent by the Buyers and fifty percent by the Seller.
(d) Buyers and Seller agree that they will, and will use reasonable endeavours to cause their respective accountants to, and Buyers agree to cause the members of the Target Group to, cooperate and assist in the preparation of the Closing Statement and the calculation of Closing Cash Consideration and in the conduct of the reviews referred to in this Clause 2.06, including the making available to the extent reasonably necessary of books, records, work papers and personnel.
Clause 2.07. Adjustment of Purchase Price.
(a) If Final Closing Cash Consideration is less than Estimated Closing Cash Consideration, then the aggregate amount of such difference shall be paid by Seller to Buyers in immediately available funds by wire transfer to Buyers’ Account.
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(b) If Final Closing Cash Consideration is greater than Estimated Closing Cash Consideration, then the aggregate amount of such difference shall be paid by Buyers to Seller in immediately available funds by wire transfer to Seller’s Account.
(c) “ Final Closing Cash Consideration ” means the Closing Cash Consideration (i) as shown in Buyers’ calculation thereof set forth on the Closing Statement delivered pursuant to Clause 2.06(a), if Seller does not deliver any notice of disagreement with respect thereto pursuant to Clause 2.06(b); or (ii) if Seller does deliver such a notice of disagreement, (A) as agreed by Buyers and Seller pursuant to Clause 2.06(c) or (B) in the absence of such agreement, as determined by the Independent Accountants pursuant to Clause 2.06(c), provided that in no event shall Final Closing Cash Consideration be more than the Seller’s calculation of Closing Cash Consideration delivered pursuant to Clause 2.06(b) or less than Buyers’ calculation of Closing Cash Consideration delivered pursuant to Clause 2.06(a).
(d) “ Adjustment Date ” means the date on which the Final Closing Cash Consideration is agreed or determined pursuant to Clause 2.06(c).
(e) Any payment pursuant to this Clause 2.07 shall be made within five Business Days after the Adjustment Date. The amount of any payment to be made pursuant to this Clause 2.07 shall bear interest from and including the Closing Date to but excluding the date of payment, at a simple rate per annum equal to 1.5%. Such interest shall be payable at the same time as the payment to which it relates and shall be calculated daily on the basis of a year of 365 days and the actual number of days elapsed.
(f) The parties agree that any adjustment to the Purchase Price, whether pursuant to Clause 2.07 or Section 7 or to a payment having been made under the Tax Covenant, with respect to matters relating to the US Shares, shall be treated as an adjustment to the consideration paid by US Buyer for the US Shares, and with respect to matters relating to the Non-US Shares, shall be treated as an adjustment to the consideration paid by the UK Buyer for the Non-US Shares
Clause 2.08. Delivery of Management Accounts .
(a) US Buyer will by March 31 2014 deliver to Seller, management accounts of each member of the Target Group for the period from February 1 2014 to the Closing Date, such management accounts to be prepared on a consistent basis with the management accounts of the Target Group for the previous 12 months. Seller recognizes that the content of such management accounts may not be consistent with the contents of the Closing Statement delivered by Buyers to Seller and the Closing Statement will be prepared and agreed, deemed agreed or determined in accordance with Clause 2.07 without regard to such management accounts prepared by US Buyer, and US Buyer makes no representation, warranty, and has no liability (other than in respect to any breach of this Clause 2.08) with respect to, the preparation or accuracy of such accounts.
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(b) Following Closing, Seller shall engage a suitably qualified third party selected by the Seller to prepare the necessary documentation reasonably required to substantiate the historic royalty rate used to determine the royalties charged between SFC and Seller in accordance with the requirements under Internal Revenue Code Section 482 and the related U.S. Treasury regulations. The report shall be delivered by Seller to US Buyer no later than 31 March 2014. All costs and expenses incurred by the Seller in the preparation and delivery of the report shall be borne by Seller.
SECTION 3
Warranties of Seller
Clause 3.01. Warranties of Seller . Seller warrants to Buyers that, except as Disclosed, each of the Seller Warranties is accurate in all respects on the date of this Agreement. Each of the Seller Warranties is separate and, unless otherwise specifically provided, shall not be limited by reference to any other Seller Warranty.
Clause 3.02. Disclosure Schedule References . The parties hereto agree that any reference in a particular Section of the Seller Disclosure Schedule shall only be deemed to be an exception to (or, as applicable, a matter which is Disclosed for purposes of) (a) the Seller Warranties that are contained in the corresponding Paragraphs of Schedule 3 of this Agreement and (b) such other Seller Warranties in Schedule 3 of this Agreement to the extent it constitutes a matter which is Disclosed in respect of such other Seller Warranty.
SECTION 4
Warranties of Buyers
Clause 4.01. Warranties of Buyers . UK Buyer warrants to Seller that, in respect of the UK Buyer, each of the warranties set forth in Schedule 4, Paragraphs 4.01(a) and 4.02 through 4.05, is accurate in all respects on the date of this Agreement. US Buyer warrants to Seller that, in respect of the US Buyer, each of the warranties set forth in Schedule 4, Paragraphs 4.01(b) and 4.02 through 4.07 , is accurate in all respects on the date of this Agreement.
SECTION 5
Covenants of Seller and Buyers
Clause 5.01. Access to Information.
(a) For a period of six years from the Closing Date, Seller will maintain, and on reasonable advance notice being given, afford promptly to Buyers and their agents reasonable access to its books of account, financial, Taxation and other records and employees, in each case to the extent relating to the Target Group, to the extent necessary or useful for Buyers in connection with any audit, investigation, dispute, Taxation, litigation or other legal or regulatory purpose relating to the business of any member of the Target Group; provided that any such access by Buyers shall not unreasonably interfere with the conduct of the business of Seller or any of its Affiliates. The Seller will allow the Buyers to take copies (at the Buyers’ expense) of any of such books, records and documents reasonably required by the Buyers.
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(b) For a period of six years from the Closing Date, Buyers will cause each member of the Target Group to maintain, and on reasonable advance notice being given, afford promptly to Seller and its agents reasonable access to their properties, books of account, financial, Taxation and other records and employees, in each case to the extent relating to the Target Group, to the extent necessary to permit Seller to determine any matter relating to its rights and obligations hereunder or to any period ending on or before the Closing Date or to the extent necessary or useful for the Seller in connection with any audit, investigation, dispute, Taxation, litigation or other legal or regulatory purpose relating to the business of the Target Group prior to the Closing Date; provided that any such access by Seller shall not unreasonably interfere with the conduct of the business of Buyers, any of its Affiliates or any member of the Target Group. The Buyers will allow the Seller to take copies (at the Seller’s expense) of any of such books, records and documents reasonably required by the Seller.
Clause 5.02. Protection of Buyers’ Interests.
(a) Definitions. In this Clause 5.02, each of the following words and expressions shall have the following meanings:
(i) “ Competing Business ” means any business carried on within England and/or Wales and/or Scotland and/or Northern Ireland and/or the United States of America and/or China and/or any other country in which any Target Company and/or any Target Subsidiary carries on business at Closing, which competes with any business carried on at the Closing by any Target Company and/or any Target Subsidiary;
(ii) “ Restricted Goods or Services ” means goods or services of the same type as, or substantially similar to, any goods or services supplied by any Target Company and/or any Target Subsidiary at the Closing;
(iii) “Restricted Parties” means Seller and each of Seller’s Operating Affiliates; and
(iv) references to acting directly or indirectly include (without prejudice to the generality of that expression) acting alone or on behalf of any other person or jointly with or through or by means of any other person.
(b) Competition : The Seller covenants with Buyers and for the benefit of each of their Affiliates that until the expiration of thirty-six (36) months from the Closing, it shall not, and it shall procure that the Seller’s Operating Affiliates shall not, directly or indirectly, carry on or be engaged or interested in a Competing Business except that it may hold for investment up to 5% of any class of securities of a Competing Business.
(c) Employees : The Seller covenants with Buyers and for the benefit of each of their Affiliates that until the expiration of thirty-six (36) months from the Closing, it shall not, and it shall procure that the Seller’s Operating Affiliates shall not, directly or indirectly:
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(i) solicit or entice away or endeavor to solicit or entice away or cause to be solicited or enticed away from any Target Company and/or any Target Subsidiary, any person who is, and was at the Closing Date, employed by any Target Company and/or any Target Subsidiary in an executive, sales, marketing, research or technical capacity or whose departure from any Target Company and/or any Target Subsidiary would have a material adverse effect on the business of such company, with a view to inducing that person to leave such employment (whether or not such person would commit a breach of his contract of employment by reason of leaving);
(ii) solicit or endeavor to solicit or cause to be solicited any person who was at any time during the twelve (12) months up to and including the Closing Date employed or engaged by any Target Company and/or any Target Subsidiary who, by reason of their employment or engagement, possesses any trade secrets or a material amount of confidential information concerning the business or affairs of any Target Company and/or any Target Subsidiary or is likely to be able to solicit away from any Target Company and/or any Target Subsidiary the custom of any person to whom any Target Company and/or any Target Subsidiary supplies goods or services, with a view to inducing that person to act in the same or a materially similar capacity in relation to the same or a materially similar field of work for another person carrying on business in competition with any Target Company and/or any Target Subsidiary (whether or not such person would commit a breach of his contract of employment or engagement by reason of so acting); provided that this Clause 5.02(c)(ii) shall not apply to the engagement of any professional advisors by the Seller or any of the Seller’s Operating Affiliates.
(d) Customers :
(i) The Seller covenants with Buyers and for the benefit of each of their Affiliates that until the expiration of thirty-six (36) months from the Closing, it shall not, and it shall procure that the Seller’s Operating Affiliates shall not, directly or indirectly accept orders for or supply or cause orders to be accepted for or cause to be supplied Restricted Goods or Services to any person: (A) who, to his knowledge, was provided with goods or services by any Target Company and/or any Target Subsidiary at any time during the twelve (12) months up to and including the Closing Date; or (B) who, to his knowledge, was negotiating with any Target Company and/or any Target Subsidiary in relation to orders for, or the supply of, goods or services at any time during the twelve (12) months up to and including the Closing Date.
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(ii) The Seller covenants with Buyers and for the benefit of each of their Affiliates that until the expiration of thirty-six (36) months from the Closing Date, it shall not, and it shall procure that the Seller’s Operating Affiliates shall not, directly or indirectly solicit, canvass or approach or endeavor to solicit, canvass or approach or cause to be solicited, canvassed or approached any person: (A) who, to his knowledge, was provided with goods or services by any Target Company and/or any Target Subsidiary at any time during the twelve (12) months up to and including the Closing Date; or (B) who, to his knowledge, was negotiating with any Target Company and/or any Target Subsidiary in relation to orders for or the supply of goods or services at any time during the twelve (12) months up to and including the Closing Date, in each case for the purpose of offering to that person Restricted Goods or Services
(e) Suppliers : The Seller covenants with Buyers and for the benefit of each of their Affiliates that until the expiration of thirty-six (36) months from the Closing, it shall not, and it shall procure that the Seller’s Operating Affiliates shall not, as part of a Competing Business, directly or indirectly solicit, canvass or approach or endeavor to solicit, canvass or approach or cause to be solicited, canvassed or approached for the purpose of obtaining the supply of goods or services of the same type as or similar to any goods or services supplied to any Target Company and/or any Target Subsidiary at the Closing Date, any person who, to his knowledge, supplied any Target Company and/or any Target Subsidiary with any such goods or services at any time during the twelve (12) months up to and including the Closing Date, where it is reasonably likely that such soliciting, canvassing or approaching would, if successful, materially prejudice the ability of any Target Company and/or any Target Subsidiary to procure or the terms on which it is able to procure the supply of such goods or services.
(f) Each of the restrictions set out in Clause 5.02(b), (c)(i), (c)(ii), (d)(i)(A), (d)(i)(B), (d)(ii)(A), (d)(ii)(B) and (e) of this Agreement is separate and severable and, in the event of any such restriction (including the defined expressions in Clause 5.02(a)(i) through (iv)) being determined as unenforceable in whole or in part for any reason, such unenforceability shall not affect the enforceability of the remaining restrictions or, in the case of part of a restriction being unenforceable, the remainder of that restriction. The restrictions in Clause 5.02(b) shall be deemed to be separate and severable in relation to each of the countries set out in Clause 5.02(a)(i). It is the intention of the parties that if any of the restrictions or covenants contained herein is held to cover a geographic area or to be for a length of time which is not permitted by Applicable Law, or in any way construed to be too broad or to any extent invalid, such provision shall not be construed to be null, void and of no effect, but to the extent such provision would be valid or enforceable under Applicable Law, a court of competent jurisdiction shall construe and interpret or reform this Section to provide for a covenant having the maximum enforceable geographic area, time period and other provisions (not greater than those contained herein) as shall be valid and enforceable under such Applicable Law. Seller acknowledges that Buyers may be irreparably harmed by any breach of this Clause and that there may be no adequate remedy at law or in damages to compensate Buyers for any such breach. Seller agrees that Buyers may be entitled to injunctive relief requiring specific performance by Seller of this Clause, regardless of the availability of any other remedy under the terms of this Agreement.
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(g) Notwithstanding the foregoing, the following exceptions to the restrictions set out in Clause 5.02 shall apply:
(i) the restrictions set out in Clause 5.02(b), (d)(i), (d)(ii) and (e) shall not apply to the activities of AI India, if and only if, the relevant supply of goods or services or the carrying on of the relevant Competing Business, is (A) carried on within India; (B) is to a customer located in India and, to the actual knowledge of Seller at the time of acceptance of the relevant order from the relevant customer, is for use in India (the actual knowledge of the Seller for this purpose being the actual knowledge of each of Ted Andrew, Ian Lord, Ian Kenyon Paul Bamber and the Finance Director, Sales Director and General Manager (if any, at the relevant time) of AI India); and (C) does not involve the export by or on behalf of AI India of any goods or services from India;
(ii) the restrictions set out in Clause 5.02(b) shall not apply to the marketing, sale, distribution or other supply by any of the Restricted Parties or any of their respective Affiliates, of rolled goods needle felt (whether in its unmodified form or having applied any form of process or having converted or adopted it in any way) solely (in terms of the purposes for which such products are intended to be sold by the relevant Restricted Party or their Affiliates) for laundry applications and the restrictions set out in Clause 5.02(d)(i) and (d)(ii) shall not apply to the sale of any such products for laundry applications to the Pax Kent International LLC or any of its Affiliates;
(iii) the restrictions set out in Clause 5.02(b) shall not apply to the marketing, sale, distribution or other supply by any of the Restricted Parties or any of their respective Affiliates of either (i) rolled goods needle felt (whether in its unmodified form or having applied any form of process or having converted or adopted it in any way) solely (in terms of the purposes for which such products are intended to be sold by the relevant Restricted Party or their Affiliates) for automotive transmission filters or (ii) automotive transmission filters;
(iv) the restrictions set out in Clause 5.02(b), (d)(i) and (d)(ii) shall not apply to the conversion of rolled goods needle felt into pleated filters and/or the marketing, sale, distribution or other supply, whether direct to customers or otherwise, by any of the Restricted Parties or any of their respective Affiliates, of pleated filters;
(v) the restrictions set out in Clause 5.02(b), (d)(i) and (d)(ii) shall not apply to the carrying on by any of the Restricted Parties or any of their respective Affiliates of the Hydro-finishing Business; and
(vi) the restrictions set out in Clause 5.02(e) shall not apply to the purchase of fiber supplies solely by Bondex, Inc.;
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Clause 5.03. Confidentiality . From the Closing Seller and Buyers will hold, and will use their reasonable efforts to cause their respective Affiliates and their respective officers, directors, employees, accountants, counsel, consultants, advisors and agents (together, “ Representatives ”) to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, or by the reasonable request of a Tax Authority or competition authority, having used their reasonable endeavors to mitigate such requirement and having given notice, so far as lawful, in writing prior to making any such disclosure to Buyers (in the case of Seller) or to Seller (in the case of Buyers) or as part of any litigation or arbitration in connection with this agreement or any of the Ancillary Agreements, (i) all confidential documents and information concerning Seller or Buyers furnished to Buyers or Seller in connection with the transactions contemplated by this Agreement, (ii) with respect to Seller, all confidential documents and information concerning the business of any member of the Target Group (the “ Target Group Information ”) and (iii) with respect to Buyers all confidential documents concerning the business of the Seller or any Affiliate of Seller (except to the extent such information constitutes Target Group Information), in each case except to the extent that such information can be shown to have been (A) previously known on a non-confidential basis by Seller or Buyers (except with respect to Target Group Information), (B) in the public domain through no fault of Seller or Buyers or (C) later lawfully acquired by Seller or Buyers from sources other than Seller or Buyers. The obligation of Seller and Buyers to hold any such information in confidence shall be satisfied if they exercise the same care with respect to such information as they would take to preserve the confidentiality of their own similar information. Notwithstanding the foregoing but subject to Clause 5.04 below, nothing in this Clause 5.03 shall prevent any press release and public statement required to be made by the Buyers under Applicable Law or any listing agreement with any national securities exchange. All references to “ Seller ” and “ Buyers ” in this Section of the Agreement shall be deemed to include their respective Affiliates and their respective Representatives.
Clause 5.04. Press Releases and Announcements . No Party shall issue (and each Party shall cause its Affiliates not to issue) any press release or public disclosure relating to the subject matter of this Agreement without the prior written approval of the other Party; provided, however, that any Party may make any public disclosure it believes in good faith is required by law, regulation or stock exchange rule (in which case the disclosing Party shall advise the other Party and the other Party shall, if practicable, have the right to review such press release or announcement prior to its publication).
Clause 5.05. Reasonable Commercial Efforts; Further Assurances . Subject to the terms and conditions of this Agreement, Buyers and Seller will, at their own respective costs, use their reasonable commercial efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary under Applicable Law to consummate the transactions contemplated by this Agreement. Seller and Buyers agree, and Buyers, after the Closing, agree to cause the members of the Target Group, to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be reasonably necessary under Applicable Law in order to consummate or implement, reasonably expeditiously, the transactions contemplated by this Agreement.
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Clause 5.06. Intercompany Accounts .
(a) All (i) intercompany accounts and balances (other than Trading Balances), (ii) intercompany trade balances (“ Trading Balances ”) and (iii) any other Indebtedness, to the extent not within (i) or (ii), owing between Seller or its Affiliates, on the one hand, and any member of the Target Group, on the other hand, as of the Closing (except the China Intercompany Indebtedness, in respect of which the provisions of Clause 5.07 shall apply), shall be settled in the manner provided in this Clause 5.06 and are set out at Exhibit G (the “ Inter-Company Account Statement ”), based upon (I) in the case of the amounts referred to in sub-clauses (i) and (iii), the latest available financial information as of the Business Day immediately prior to the Closing Date and (II) in the case of the Trading Balances, as at 31 January 2014.
(b) To the extent requested by Buyers, the Seller shall provide Buyers with reasonable supporting documentation to verify the underlying intercompany charges and transactions relating to the Inter-Company Account Statement. All the amounts set forth on the Inter-Company Account Statement, except for the Trading Balances, shall form part of the Estimated Closing Indebtedness.
(c) Effective as of the Closing:
(i) the Buyers shall procure the settlement of all amounts set out on the Inter-Company Account Statement (other than the Trading Balances) owing from a member of the Target Group to a member of the Retained Group (regardless of the terms of payment of such intercompany accounts);
(ii) the Seller shall procure the settlement of all amounts set out on the Inter-Company Account Statement (other than the Trading Balances) owing from a member of the Retained Group to a member of the Target Group, if any, (regardless of the terms of payment of such intercompany accounts); and
(iii) all agreements between Seller or their Affiliates, on the one hand, and any member of the Target Group, on the other hand, other than any entered into in accordance with or pursuant to this Agreement, shall be terminated without further liability or obligation (contingent or otherwise) of any party thereunder (other than (i) the Trading Balances (ii) the underlying contracts or other agreements under which the Trading Balances arose and (iii) the indebtedness the subject of the Intra-Company Account Statement and the agreements under which those balances arose to the extent not settled at Closing in accordance with this Clause 5.06).
(iv) Following the agreement, deemed agreement or determination of the Closing Statements, (a) Buyers shall procure that any further amounts falling within Clauses 5.06(i) or (iii) owing by the Target Group to Seller or its Affiliates and (b) Sellers shall procure that any further amounts falling within Clauses 5.06(i) or (iii) owing by Seller or its Affiliates to the Target Group, which have not been settled in accordance with Clause 5.06(c)(i) or (ii) are settled within five (5) Business Days of the date on which the Closing Statements are agreed, deemed agreed or determined and the settlements made pursuant to Clause 5.06(c)(i) and Clause 5.06(c)(ii) above and this Clause 5.06(c)(iv), shall be deemed to be full and final settlement of all such balances owing between the members of the Target Group and members of the Retained Group, other than the Trading Balances.
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(d) The Seller and the Buyers shall procure that, following the Closing, all Trading Balances will be settled in accordance with the existing terms thereof, except that any Trading Balances without a fixed or specified payment date, or a payment date greater than 45 days, shall be paid within 45 days of the date on which such Trading Balance was incurred.
(e) Any settlement in accordance with Clause 5.06(c) shall be in immediately available funds by wire transfer to Seller’s Account or Buyer’s Account (as applicable).
(f) Immediately prior to Closing, Seller shall procure that SFC declares and pays a dividend in specie to the Seller equal to the Existing SFC/AIL Indebtedness on the terms of the SFC Dividend Documents .
Clause 5.07. China Intercompany Indebtedness
. The China Intercompany Indebtedness shall be settled as follows:
(a) at the Closing, Buyers shall pay to the Escrow Agent $5,777,832.40 (being an amount equal to the China Intercompany Indebtedness) in immediately available funds by wire transfer, which amount shall be deposited into an escrow fund (the “ China Intercompany Indebtedness Escrow Fund ”) as security for the obligations of the Buyers under Clause 5.07(b), such amount to be held on the terms and subject to the conditions set forth in this Agreement and the China Intercompany Indebtedness Escrow Agreement; and
(b) the parties shall seek the approval as soon as reasonably practicable from the State Administration of Foreign Exchange (Shanghai Branch) (“ SAFE ”) for the amendment of the terms of the Offshore Loan (“ SAFE Approval ”) such that the Offshore Loan shall be repayable on 21 May 2014 (the “ Revised Repayment Date ”).
(c) If the SAFE Approval is obtained prior to the current repayment date of the Offshore Loan, Buyers shall procure that the Offshore Loan is repaid in full on the Revised Repayment Date. If the SAFE Approval is not obtained prior to the current repayment date of the Offshore Loan, the Seller hereby agrees to not to enforce its rights to repayment of the Offshore Loan, or otherwise seek to recover repayment of the Offshore Loan, until the Revised Repayment Date.
(d) Buyers and Seller shall on the day prior to the Revised Repayment Date, deliver to the Escrow Agent irrevocable instructions to release an amount equal to the China Intercompany Indebtedness out of the China Intercompany Escrow Account to Buyer by way of transfer to the Buyer Account on the Revised Repayment Date.
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(e) The Buyer shall procure that:
(i) the funds released to it in accordance with Clause 5.07(b) are transferred within 2 Business Days of receipt, by way of loan to the members of the Target Group who are the borrowers of the China Intercompany Indebtedness to Seller; and
(ii) within 3 Business Days of such transfer, the members of the Target Group who are the borrowers of the China Intercompany Indebtedness repay the China Intercompany Indebtedness in full by wire transfer to the Seller’s Account or such other account as Seller may notify to US Buyer
(f) In the event that the China Intercompany Indebtedness has not been received by Seller by 120 days from Closing, US Buyer will procure that a sum equal to the China Intercompany Indebtedness is paid to Seller on behalf of Andrew Industrial Textile Manufacturing Company (Shanghai) Limited and that the China Intercompany Indebtedness is waived in consideration for such payment.
Clause 5.08. China Cash. Seller covenants with Buyer that, as of the Closing Date, the aggregate amount of all cash and cash equivalents (including marketable securities, the benefit of bills of exchange, short term investments and bank notes, but excluding any cash at bank representing payment, whether electronic or by cheque, that have been made but have not cleared as at Closing) held by Andrew Industrial Textile Manufacturing Company (Shanghai) Limited, Andrew Industrial Textile Manufacturing (Wuxi) Company Limited and Andrew Industrial Textile Trading Company (Shanghai) Limited of the members of the Target Group shall not (in aggregate) be less than RMB 7,000,000.
Clause 5.09. Release of Intercompany Guarantees .
(a) The Seller shall use all reasonable endeavors to procure the absolute and unconditional release and discharge in full at Closing (or, other than in respect of the HSBC Guarantees, as soon as reasonably practicable thereafter) of each guarantee, indemnity, assurance, undertaking, commitment or other security obligation granted or entered into by any member of the Target Group in relation to any obligation or liability of the Seller or any member of the Retained Group (each a “ Target Group Guarantee ”) at the cost of the Seller and, prior to such release and discharge, the Seller undertakes:
(i) to pay any Buyer an amount equal to, and otherwise indemnify Buyers from and against, any losses suffered and all liabilities, costs and expenses incurred by the relevant Buyer or any member of the Target Group arising under any Target Group Guarantee; and
(ii) not to enter into any variation of any agreement which has the effect of varying any Target Group Guarantee without the prior written consent of the Buyers.
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(b) The Buyers shall use all reasonable endeavours to procure the absolute and unconditional release and discharge in full at Closing (or as soon as reasonably practicable thereafter) of each guarantee, indemnity, assurance, undertaking, commitment or other security obligation granted or entered into by the Seller or any member of the Retained Group in relation to any obligation or liability of any member of the Target Group and of which particulars are listed in Schedule 5.09(b) (each a “ Retained Group Guarantee ”) with any associated third party costs (other than the costs of any advisers to the members of the Buyer Group) being borne fifty percent by Buyers and fifty percent by Seller and, prior to such release and discharge, the Buyers jointly and severally undertake:
(i) to pay Seller an amount equal to, and otherwise indemnify Seller from and against, any losses suffered and all liabilities, costs and expenses incurred by the Seller or any member of the Retained Group arising under any Retained Group Guarantee; and;
(ii) not to enter into any variation of any agreement which has the effect of varying any Retained Group Guarantee without the prior written consent of the Seller.
The obligations of the Buyers to use all reasonable endeavours in this Clause 5.09(b) shall include an obligation to offer and enter into a replacement guarantee in place of the relevant member of the Retained Group, which in the case of any Retained Group Guarantees entered into by Seller, shall be offered by US Buyer.
Clause 5.10. Trademarks; Tradenames.
(a) After the Closing, Buyers shall not use, and shall procure that no member of the Target Group uses, any of the marks or names of the Seller or any member of the Retained Group (the “ Seller Trademarks and Tradenames ”), other than, in the case of the members of the Target Group (a) as set forth in the other subsections of this Clause 5.10 and (b) for the Trade Marks (as defined in the Licensing Agreement) in accordance with the terms of the Licensing Agreement..
(b) Seller and Buyers shall enter into the Licensing Agreement at Closing. Except as set out in the Licensing Agreement, within twelve (12) months following Closing, Buyers shall procure the removal of all references to the Seller Trademarks and Tradenames from the business interests, property and assets of the Target Group and shall change the corporate names of each member of the Target Group accordingly.
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(c) After the Closing and without prejudice to Clause 5.10(b), each member of the Target Group shall have the right to sell existing inventory and to use existing packaging, labeling, containers, supplies, advertising materials, technical data sheets and any similar materials bearing any Seller Trademarks and Tradenames until the earlier of (i) the date falling twelve (12) months from the Closing Date and (ii) the date existing stocks are exhausted. Each member of the Target Group shall have the right to use Seller Trademarks and Tradenames in advertising that cannot be changed by them using reasonable efforts for a period not to exceed twelve (12) months after the Closing Date. Buyers shall cause the members of the Target Group to comply with all Applicable Laws in any use of Seller Trademarks and Tradenames. With effect from Closing, each Buyer hereby indemnifies Seller against and agrees to hold Seller harmless from any and all Damages (as defined in Clause 7.01) to the extent incurred or suffered by Seller arising out of the failure by either of the Buyers, the Target Companies, the Target Subsidiaries, their Affiliates or any of their respective directors, officers, employees or agents to comply with all Applicable Laws in any use of Seller Trademarks and Tradenames pursuant to this Clause 5.10 (including any failure to comply with applicable law and regulations with respect to packaging or labeling).
Clause 5.11. UK Leases . In respect of the UK Leased Properties, Seller shall grant to the relevant members of the Target Group the UK Leases on Closing.
Clause 5.12. Amendment of 401(k) Plan. Effective as of no later than the day immediately preceding the Closing Date, Seller shall procure that Andrew Industries, Inc. amends the Andrew Industries, Inc. 401(k) Plan (the “ 401(k) Plan ”) to remove SFC as an adopting employer thereunder and confirm that the account balances of affected Employees, who are employed in or provide services in the United States of America (“ Target U.S. Participants ”) shall be fully vested in their 401(k) Plan accounts as of Closing (the “ 401(k) Plan Amendment ”). As a result of the 401(k) Plan Amendment, Target U.S. Participants may elect a plan distribution from the 401(k) Plan. Buyers shall procure that (a) a 401(k) plan sponsored or maintained by the US Buyer or one of its Affiliates (the “ Buyer’s 401(k) Plan ”) will accept rollovers of such distributions, (b) the Target U.S. Participants will be eligible to participate in the Buyers’ 401(k) Plan within sixty (60) days (or sooner, if administratively practicable) after the Closing Date (provided they satisfy the definition of “eligible employee” in Buyer’s 401(k) Plan) and (c) the Buyers’ 401(k) Plan will provide the Target U.S. Participants with credit for all pre-Closing service with SFC, its Affiliates, and their predecessors for purposes of eligibility and vesting under the Buyer’s 401(k) Plan.
Clause 5.13. Transaction Bonuses.
(a) The Seller shall procure that the Transaction Bonuses (net of applicable PAYE, national insurance contributions and other applicable payroll taxes) are paid by the relevant members of the Target Group on or before Closing. Within two (2) Business Days after the Closing Date, Seller shall deliver to US Buyer written confirmation that (i) an amount equal to the Transaction Bonuses and (ii) an amount equal to any secondary National Insurance Contributions (or any equivalent social security contributions in any jurisdiction other than the UK) for which the relevant member of the Target Group is required to account in respect of the payment of such Transaction Bonuses, have been, except in relation to payments by SFC, wired in immediately available funds to the bank accounts of the relevant members of the Target Group and in the case of SFC that sufficient cash was available at SFC to make such payments.
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(b) Following receipt by the US Buyer of the written confirmations referred to in Clause 5.13(a), US Buyer covenants that it shall procure that the relevant members of the Target Group discharge, on or before the date falling 60 days after the Closing Date (or when otherwise due in accordance with applicable law), all tax and social security payments for which the Target Group is liable in relation to or arising from any Transaction Bonus.
(c) If any Relief (as defined in Schedule 6.01) arises to any member of the Target Group as a result of the paying of the Transaction Bonuses in accordance with Clause 5.13(a) (a " Transaction Bonus Relief "), then to the extent that such Transaction Bonus Relief is utilised by a Buyer or a member of the Target Group to reduce the amount of Tax due and payable by such person, Buyers shall pay to Seller an amount equal to the amount of Tax saved through the utilisation of such Transaction Bonus Relief, but only to the extent that such amount exceeds the aggregate value of any Tax liabilities which arise in the Target Group as a result of the payment by Seller referred to in Clause 5.13(a).
Clause 5.14. Right of First Refusal on a Triggering Transaction.
(a) Subject to Clause 5.15, prior to entering into of a definitive agreement implementing a Triggering Transaction (other than entering into a Permitted Transfer), Seller shall give a notice in writing (a “ Transfer Notice ”) to US Buyer informing it of: (i) the assets which are to be the subject of the Triggering Transaction; (ii) the amount, type and mechanism(s) for payment of consideration; (iii) the terms and conditions of any adjustment mechanism applicable in respect of the consideration payable on closing of the Triggering Transaction; (iv) any proposed holdback or escrow arrangement on any consideration payable; and (v) any conditions to closing (together, the “ Offer Terms ”).
(b) Once given, a Transfer Notice may not be withdrawn or revoked.
(c) Simultaneous with providing a Transfer Notice, Seller shall provide to US Buyer any due diligence information that has been made available in written form to the party to whom it proposes to enter into a Triggering Transaction. The Seller shall also give US Buyer the same opportunities to conduct site visits and receive management presentations as are afforded to such party, with such access to be granted within 5 Business Days of providing such access to such party (which, for the avoidance of doubt, may be prior to the giving of a Transfer Notice).
(d) Following receipt of the Transfer Notice, US Buyer shall notify Seller, within a period of fifteen (15) Business Days from receipt of the Transfer Notice (the “ ROFR Period ”), whether: (i) it wishes to exercise its right of first refusal in respect of the Triggering Transaction on the Offer Terms (the “ US Buyer ROFR Offer ”); or (ii) it does not wish to exercise its right of first refusal in respect of the Triggering Transaction. Seller shall provide to US Buyer a copy of any information provided to the third party during the ROFR Period.
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(e) If US Buyer: (i) notifies Seller that it does not wish to exercise its right of first refusal in respect of the Triggering Transaction; (ii) does not respond to a Transfer Notice within the ROFR Period; or (iii) fails to complete the US Buyer ROFR Offer during the ROFR Closing Period, then Seller shall be free to complete a Triggering Transaction with any third party provided Seller confirms to US Buyer in writing immediately prior to closing the Triggering Transaction with a third party that: (A) the consideration of such Triggering Transaction is at least as high (prior to the application of any closing adjustment mechanism set out in the Transfer Notice) as the total consideration originally set out in the relevant Transfer Notice; and (B) the terms and conditions of such Triggering Transaction (in relation to matters (i) to (v) of the Offer Terms) are substantially similar to (and in no event, in Seller’s good faith opinion, less favorable in any material respect to Seller than) the Offer Terms.
(f) If US Buyer exercises its right of first refusal in respect of a Triggering Transaction, then within thirty (30) days of the exercise of such right (the “ ROFR Closing Period ”), US Buyer and Seller shall enter into definitive documentation on terms to be agreed between the parties with respect to, and complete, the Triggering Transaction, provided that if the closing of such Triggering Transaction is subject to any prior regulatory approval or other customary conditions to closing, the Closing Period shall be extended until the expiration of five days after all such approvals shall have been received or conditions shall have been satisfied but in no event shall such period be extended for more than an additional 60 days without the consent of Seller.
(g) The provisions of this Clause 5.14 shall immediately expire on the date falling on the earlier of: (i) the entry into of a binding agreement with respect to a Triggering Transaction or Joint Venture Transaction by Seller with any third party, provided that Seller had complied with its obligations in Clause 5.14 or Clause 5.15 with respect to such Triggering Transaction or Joint Venture Transaction; or (ii) the third anniversary of the Closing Date.
(h) In the event that US Buyer exercises its right of first refusal in respect of a Triggering Transaction and then fails to complete the US Buyer ROFR Offer, other than a result of the failure of a condition to closing which is required by law for the sale and purchase to close, the satisfaction of which was the responsibility of the Seller, in accordance with the time period specified in Clause 5.14(f), all rights under Clause 5.14 and Clause 5.15 shall terminate.
Clause 5.15. Right of First Refusal on a Joint Venture Transaction
(a) Prior to entering into of a definitive investment or shareholders’ agreement implementing a Joint Venture Transaction, Seller shall give a notice in writing (a “ Joint Venture Notice ”) to US Buyer informing it of the proposed structure and the material (in Seller’s good faith opinion) terms and conditions of the Joint Venture Transaction, including without limitation: (i) the percentage shareholding in AI India which the Seller proposes to Transfer; (ii) the amount, type and mechanism(s) for payment of consideration by the third party with whom the Seller proposes to enter into the relevant Joint Venture Transaction; (iii) the terms of any put option, call option, right of first offer or refusal, pre-emptive rights or rights to acquire further shares in AI India, and (iv) any conditions to closing (the “ Joint Venture Terms ”).
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(b) Once given, a Joint Venture Notice may not be withdrawn or revoked.
(c) Simultaneously with providing a Joint Venture Notice, Seller shall provide to US Buyer any due diligence information that has been made available in written form to the party to whom it proposes to enter into a Joint Venture Transaction. The Seller shall also give US Buyer the same opportunities to conduct site visits and receive management presentations as are afforded to such party, with such access to be granted within five (5) Business Days of providing such access to such party (which, for the avoidance of doubt, may be prior to the giving of a Joint Venture Notice).
(d) Following receipt of the Joint Venture Notice, US Buyer shall notify Seller, within a period of fifteen (15) Business Days from receipt of the Joint Venture Notice (the “ ROJV Period ”), whether: (i) it wishes to exercise its right of first refusal in respect of the Joint Venture Transaction on the Joint Venture Terms ( “US Buyer ROJV Offer” ); or (ii) it does not wish to exercise its right of first refusal in respect of the Joint Venture Transaction. Seller shall provide to US Buyer a copy of any information provided to the any third party during the ROJV Period.
(e) If US Buyer: (i) notifies Seller that it does not wish to exercise its right of first refusal in respect of the Joint Venture Transaction; (ii) does not respond to a Joint Venture Notice within the ROJV Period; or (iii) fails to complete the US Buyer ROJV Offer during the JV Closing Period, then Seller shall be free to complete a Joint Venture Transaction with any third party, provided Seller confirms to US Buyer in writing immediately prior to closing the Joint Venture Transaction with a third party that: (A) the consideration payable in respect of the percentage shareholding in AI India which is subject of such Joint Venture Transaction is at least as high (calculated on a $ per share basis) as the amount set out in the relevant Joint Venture Notice; and (B) the terms and conditions of such Joint Venture Transaction are (in relation to the matters (i) to (iv) of the Joint Venture Terms) substantially similar to (and in no event, in Seller’s good faith opinion, less favorable in any material respect to Seller than) the Joint Venture Terms.
(f) If US Buyer exercises its right of first refusal in respect of a Joint Venture Transaction, then within thirty (30) days of the exercise of such right (the “ JV Closing Period ”), US Buyer and Seller shall enter into definitive documentation on terms to be agreed between the parties with respect to, and complete, the Joint Venture Transaction, provided that if the closing of such Joint Venture Transaction is subject to any prior regulatory approval or other customary conditions to closing, the JV Closing Period shall be extended until the expiration of five days after all such approvals shall have been received or conditions shall have been satisfied but in no event shall such period be extended for more than an additional 60 days without the consent of the Seller.
(g) The provisions of this Clause 5.15 shall immediately expire on the date falling on the earlier of: (i) the entry into a binding agreement with respect to a Triggering Transaction or Joint Venture Transaction by Seller with any third party, provided that Seller had complied with its obligations in Clause 5.14 or Clause 5.15 with respect to such Triggering Transaction or Joint Venture Transaction; or (ii) the third anniversary of the Closing Date.
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(h) In the event that US Buyer exercises its right of first refusal in respect of a Joint Venture Transaction and then fails to complete the US Buyer ROJV Offer, other than a result of the failure of a condition to closing which is required by law for the sale and purchase to close, the satisfaction of which was the responsibility of the Seller, in accordance with the time period specified in Clause 5.15(f), all rights under Clause 5.14 and Clause 5.15 shall terminate.
Clause 5.16. No sale of AI India to certain Persons. Notwithstanding any other provision in this Agreement or the Ancillary Agreements, Seller covenants with Buyers that it will not, for a period of 36 months after the Closing Date: (a) Transfer or issue any shares of AI India to BWF Tec GmbH & Co KG or MGF Gutsche GmbH & Co KG or any of their respective Affiliates; or (b) cause substantially all of AI India’s assets to be Transferred to BWF Tec GmbH & Co KG or MGF Gutsche GmbH & Co KG or any of their respective Affiliates.
Clause 5.17. India Financials . If the Seller or AI India enters into discussions with any third party in connection with a Triggering Transaction or a Joint Venture Transaction, the Seller shall within five (5) Business Days provide US Buyer with the latest unaudited quarterly financial statements (comprising the balance sheet, profit and loss accounts, and cashflow statement) of AI India.
Clause 5.18. Supply arrangements with Seller’s Hydro-finishing Business. The parties shall endeavor to agree on the terms of, and enter into, supply arrangements between the Buyers or any of their Affiliates (which, for the avoidance of doubt, shall include the Target Group after the Closing Date) and the Seller or any member of the Retained Group, pursuant to which Buyers or any of their Affiliates would supply the rolled goods needle felt used by Seller or any of Seller’s Operating Affiliates in carrying on the Hydro-finishing Business.
Clause 5.19. Supply agreements with Linflon . From and after the Closing, the Seller shall use its reasonable endeavours as a shareholder, and through its appointed directors to the board of directors of Linflon, to procure that Linflon agrees and enters into supply arrangements with the relevant members of the Target Group, pursuant to which Linflon would supply ePTFE fibre, membrane, sewing thread and yarn to the Target Group on terms, conditions and pricing no less favorable than those extended to the members of the Retained Group.
SECTION 6
Tax Matters
Clause 6.01. Tax Covenant . The provisions of Schedule 6.01 shall have effect from the Closing.
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Clause 6.02. Deductions from payments.
(a) All sums payable by either the Seller or the Buyers under this Agreement shall be paid without any rights of counterclaim and set-off and free and clear of all deductions or withholdings of any kind, save only as may be required by law.
(b) Should any party be required by law to make a deduction or withholding from any payment made pursuant to this Agreement (other than a payment by a Buyer of, or in respect of, the Purchase Price), the relevant party shall provide such evidence of the relevant withholding as the other party may reasonably require and shall pay such sum as will, after the deduction or withholding has been made and, after taking into account any credit or relief which the other party may receive in consequence of such deduction or withholding, leave that party with the same amount as the party would have received had no deduction or withholding been made.
(c) If any sum paid by the Seller under this Agreement is subject to Tax in the hands of a Buyer (including where any Relief (as defined in Schedule 6.01) covers such Tax), the Seller shall pay such additional amount as shall ensure that the aggregate amount paid less the Tax payable in respect of such amount (or which would be payable but for such Relief) shall be the amount that the Seller would have paid if the payment had not been subject to Tax provided that this Clause 6.02(c) shall not operate to increase the Seller’s liability to the extent that the Tax in question would not have arisen but for
(i) any assignment by a Buyer of the benefit of this Agreement, or
(ii) either of the Buyers becoming resident for tax purposes in a jurisdiction other than its jurisdiction of incorporation.
Clause 6.03. VAT . All sums payable under or pursuant to this Agreement (other than a payment by a Buyer of, or in respect of, the Purchase Price) are exclusive of any VAT. Accordingly, the recipient of the supply for VAT purposes shall, subject to receipt of a valid VAT invoice, pay to the supplier such amount as equals the VAT on such supply.
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SECTION 7
Survival; Indemnification
Clause 7.01. Period for Claims . The warranties made by the parties in Clause 3.01 and Clause 4.01 of this Agreement shall survive the Closing, and remain in full force and effect notwithstanding Closing, until the second (2 nd ) anniversary of the Closing Date (the “ Final Release Date ”); provided that the warranties in Paragraphs 3.01, 3.02, 3.03, 3.04, 3.05, 3.06 and 3.07 of Schedule 3 (the “ Fundamental Warranties ”) and the Tax Warranties shall survive until the sixth anniversary of the Closing Date and provided further that warranties in Paragraph 3.28 of Schedule 3 (the “ Environmental Warranties ”) shall survive until the fourth anniversary of the Closing Date. The obligations of the Seller under Clause 7.02(a) in respect of the Specific Indemnities: (A) set out in Paragraph 1 of Schedule 7.02(a)(iii) shall survive until the fourth anniversary of the Closing Date; and (B) set out in Paragraphs 2 to 10 of Schedule 7.02(a)(iii) shall survive until the Final Release Date. The other covenants and agreements of the parties hereto contained in this Agreement (except for the Tax Covenant, to which for these purposes the provisions of Paragraph 3 of Part B of Schedule 6.01 will apply) shall survive the Closing, and remain in full force and effect notwithstanding Closing, for such period explicitly specified therein or otherwise until the latest date permitted by law. Notwithstanding the preceding sentences, any breach of warranty, covenant or agreement or other claim in respect of which indemnity may be sought under this Agreement (except for the Tax Covenant, to which for these purposes the provisions of Paragraph 3 of Part B of Schedule 6.01 will apply) shall survive the time at which it would otherwise terminate pursuant to the preceding sentences, if notice of the inaccuracy or breach thereof giving rise to such right of indemnity shall have been given to the party against whom such indemnity may be sought setting out reasonable details of the inaccuracy or breach as are available at such time and the good faith estimate of the amount claimed (to the extent possible at such time) prior to such time. In the event that legal proceedings or formal written notice of arbitration are not issued and validly served within twelve months of service of such written notice, the liability of the Seller in respect of such matter shall terminate.
Clause 7.02. Indemnification.
(a) Effective at and after the Closing, Seller hereby indemnifies Buyers, the Target Companies, the Target Subsidiaries and each of their Affiliates, directors, officers, employees and their respective successors and permitted assignees (each a “ Buyer Indemnified Person ”) against and agrees to hold each of them harmless from:
(i) any and all damage, loss, liability and expense (including reasonable third party expenses of investigation and reasonable attorneys’ fees and expenses incurred by any Buyer Indemnified Person) in connection with any action, suit or proceeding whether involving a third party claim or a claim solely between the parties hereto (“ Damages ”), incurred or suffered by any Buyer Indemnified Person arising out of (I) any breach of Seller Warranty (determined without regard to any qualification or exception contained therein relating to materiality or any similar qualification or standard, including specified dollar thresholds) (each such breach of Seller Warranty a “ Warranty Breach ”), (II) an intentional breach of Clause 5.02, or (III) the Specific Indemnities set forth in paragraphs 1 and 7 of Schedule 7.02(a)(iii);
(ii) any loss, damage, liability and/or expense (as applicable), the subject of each of the Specific Indemnities set forth in paragraphs 2 to 6 (inclusive) and 8 to 10 (inclusive), together with third party costs and expenses (including reasonable third party expenses of investigation and reasonable attorney’s fees and expenses), incurred by any Buyer Indemnified Person in connection with any such matter,
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regardless of whether such Damages arise as a result of the negligence, strict liability or any other liability under any theory of law or equity provided that the liability of Seller under or in respect of any claim for indemnification pursuant to Clause 7.02(a)(i)(I), Clause 7.02(a)(i)(III) or Clause 7.02(a)(ii) shall be subject to the applicable limitations and provisions set forth in the remainder of this Section 7 and in Schedule 7.02.
(b) Effective at and after the Closing, each Buyer hereby indemnifies Seller, its Affiliates, directors, officers, employees and their respective successors and assignees (each a “ Seller Indemnified Person ”) against and agrees to hold each of them harmless from any and all Damages incurred or suffered by any Seller Indemnified Person arising out of any breach of any warranty given by Buyers pursuant to Clause 4.01 regardless of whether such Damages arise as a result of the negligence, strict liability or any other liability under any theory of law or equity. The aggregate liability of Buyers in respect of all claims (including interests and costs) under or arising in respect of this Agreement shall not exceed an amount equal to the Base Purchase Price.
Clause 7.03. Third Party Claim Procedures.
(a) The provisions of this Clause 7.03 do not apply to a Claim for Tax.
(b) The party seeking indemnification under Clause 7.02 (the “ Indemnified Party ”) agrees to give prompt notice in writing to the party against whom indemnity is to be sought (the “ Indemnifying Party ”) of the assertion of any claim or the commencement of any suit, action or proceeding by any third party (excluding a Tax Claim) (“ Third Party Claim ”) in respect of which indemnity may be sought. Such notice shall set forth in reasonable detail such Third Party Claim and the basis for indemnification (taking into account the information then available to the Indemnified Party). The failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder, except to the extent such failure shall have materially and adversely prejudiced the Indemnifying Party.
(c) The Indemnifying Party shall be entitled to participate in the defense of any Third Party Claim and, subject to the limitations set forth in this Section, shall be entitled to control and appoint lead counsel for such defense, in each case at its own expense provided that prior to assuming control of such defense, the Indemnifying Party must acknowledge that it would have, to the extent provided under this Section 7, an indemnity obligation for the Damages resulting from such Third Party Claim (without prejudice to the agreement or determination of the damages or other remedies available in relation to such obligation).
(d) The Indemnifying Party shall not be entitled to assume or maintain control of the defense of any Third Party Claim and shall pay the reasonable fees and expenses of counsel retained by the Indemnified Party if (i) the Indemnifying Party does not deliver the acknowledgment referred to in Clause 7.03(b) within 30 days of receipt of notice of the Third Party Claim pursuant to Clause 7.03(b) (ii) the Third Party Claim relates to or arises in connection with any criminal proceeding, action, indictment, allegation or investigation, (iii) the Indemnified Party reasonably believes an adverse determination with respect to the Third Party Claim would be materially detrimental to the reputation or future business prospects of the Indemnified Party or any of its Affiliates, (iv) the Third Party Claim seeks an injunction or equitable relief against the Indemnified Party or any of its Affiliates.
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(e) If the Indemnifying Party shall assume the control of the defense of any Third Party Claim in accordance with the provisions of this Clause 7.03, the Indemnifying Party shall obtain the prior written consent of the Indemnified Party (which shall not be unreasonably withheld) before entering into any settlement of such Third Party Claim in circumstances where the settlement does not expressly and unconditionally release the Indemnified Party and its Affiliates from all liabilities and obligations with respect to such Third Party Claim or the settlement imposes injunctive or other equitable relief against the Indemnified Party or any of its Affiliates.
(f) Each party shall cooperate, and cause their respective Affiliates to cooperate, in the defense or pursuit of any Third Party Claim and shall furnish or cause to be furnished such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals, as may be reasonably requested in connection therewith (other than any such records or information as may be legally privileged).
(g) If the Indemnifying Party does not assume the control of the defense of any Third Party Claim in accordance with the provisions of this Clause 7.03, subject to the Indemnifying Party indemnifying the Indemnified Party with respect to any Damages incurred by the Indemnified Party as a result of any such action requested in accordance with this sub-clause (g), the Indemnified Party shall (and shall procure that the members of the Target Group or Retained Group, as applicable, shall) take all such actions as the Indemnifying Party may reasonably request in writing, to negotiate, dispute or defend any actual or threatened Third Party Claim and not admit liability in relation to, nor settle or compromise, any actual or threatened Third Party Claim without the prior written approval of the Indemnifying Party (such approval not to be unreasonably withheld or delayed); provided that nothing in this Clause 7.03(g), shall oblige an Indemnified Party to take any action which, in the reasonable opinion of the Indemnified Party, such action would be materially prejudicial to the business interests of such Indemnified Party.
Clause 7.04. Direct Claim Procedures . The provisions of this Clause 7.04 do not apply to a Claim for Tax. In the event an Indemnified Party has a claim for indemnity under Clause 7.02 against an Indemnifying Party that does not involve a Third Party Claim, the Indemnified Party agrees to give prompt notice in writing of such claim to the Indemnifying Party. Such notice shall set forth in reasonable detail such claim and the basis for indemnification (taking into account the information then available to the Indemnified Party). The failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder, except to the extent such failure shall have materially and adversely prejudiced the Indemnifying Party.
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Clause 7.05. Escrow Procedures.
(a) The parties hereto agree that (i) their respective rights and obligations with respect to the Indemnity Escrow Fund and the China Intercompany Indebtedness Escrow Fund, the procedure for the making of claims against the amounts in the Indemnity Escrow Fund or the China Intercompany Indebtedness Escrow Fund, and the release of such amounts from the Indemnity Escrow Fund and the China Intercompany Indebtedness Escrow Fund, shall be governed by, and subject to the terms and provisions of, this Agreement, the Indemnity Escrow Agreement and the China Intercompany Indebtedness Escrow Agreement (as applicable) and (ii) within 2 Business Days after the determination hereunder of any amounts due from or with respect to the Indemnity Escrow Fund or the China Intercompany Indebtedness Escrow Fund, they shall deliver to the Escrow Agent irrevocable instructions giving effect to the release of such amounts in accordance with the terms and provisions of this Agreement and the Indemnity Escrow Agreement or the China Intercompany Indebtedness Escrow Fund (as applicable).
(b) Amounts shall be released from the Indemnity Escrow Fund as follows:
(i) on the date that is the first anniversary of the Closing Date, the amount (if any) remaining in the Indemnity Escrow Fund in excess of the sum of (I) $2,075,000 and (II) the Pending Claims Amount as of such date, shall be released and distributed to Seller in accordance with the Indemnity Escrow Agreement; and
(ii) on the Final Release Date, the excess (if any) of the cash balance which remains in the Indemnity Escrow Fund as of the Final Release Date over the Pending Claims Amount as of the Final Release Date, shall be released and distributed to Seller in accordance with the Indemnity Escrow Agreement; and
(iii) after the Final Release Date, the excess of the amount in the Indemnity Escrow Fund over the Pending Claims Amount at the relevant date of calculation.
(c) Notwithstanding anything to the contrary in the Indemnity Escrow Agreement and the China Intercompany Indebtedness Escrow Agreement, any interest accruing on amounts in the Indemnity Escrow Fund and the China Intercompany Indebtedness Escrow Fund shall be for the account of Seller, and shall be paid to Seller on closing of the relevant account and such interest shall not become part of the principal amounts in such respective funds.
Clause 7.06. Treatment of Payments . To the extent permitted by Applicable Law, any amount paid under this Section 7 shall be treated as an adjustment to the consideration paid hereunder for the Target Shares.
Clause 7.07. Payments to Buyers . Where a Buyer directs Seller to make any payment with respect to a payment obligation of Seller pursuant to the terms of this Agreement to US Buyer or UK Buyer, as applicable, to the extent that payment is made by or on behalf of Seller to such Buyer, receipt of such sum by that Buyer shall be a full and effective discharge of Sellers obligation to pay such sum (or a proportion of such sum) to either Buyer and Seller shall not be concerned to see to the application of it.
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SECTION 8
Buyer Guarantee
Clause 8.01. Guarantee.
(a) In consideration of Seller entering into this Agreement and other goods and valuable consideration (the receipt and adequacy of which is hereby acknowledged by the Buyers), US Buyer irrevocably and unconditionally (i) guarantees to Seller the due and punctual performance and observance by UK Buyer of the Guaranteed Obligations, (ii) undertakes to Seller that, if and whenever UK Buyer defaults for any reason in the performance of any Guaranteed Obligations, US Buyer shall perform (or procure the performance of) and satisfy (or procure the satisfaction of) such Guaranteed Obligation in the manner set out (as applicable) in this Agreement as if it were the principal obligor, and so that the same benefits shall be conferred on Seller as would have been conferred on it had such Guaranteed Obligation been duly performed and satisfied by UK Buyer and (iii) agrees, as an independent and primary obligation, to indemnify Seller and hold Seller harmless against all direct or indirect losses (of whatever nature), costs, claims, demands, expenses and other liabilities which it incurs or suffers from time to time arising out of or in connection with any failure of UK Buyer to comply with any Guaranteed Obligation, including all payments, legal and other costs and expenses reasonably incurred as a consequence of or which would not have arisen but for any such failure or circumstance. In this Clause 8.01(a), “ Guaranteed Obligations ” means all commitments, undertakings, warranties, indemnities, covenants and liabilities and other obligations of or given by UK Buyer to Seller under this Agreement.
(b) The guarantee and indemnity contained in Clause 8.01(a) is a continuing guarantee and shall extend to all of the Guaranteed Obligations regardless of any intermediate payment or discharge in part, until all such Guaranteed Obligations are satisfied in full, and is in addition to, and is not in substitution for and shall not merge with or be prejudiced by, any other rights, remedies or security which Seller may at any time hold in respect of the Guaranteed Obligations.
(c) The obligations of US Buyer under Clause 8.01(a) shall not be affected by any act, omission, matter or thing which, would otherwise reduce, release or prejudice any such obligations including and whether or not known to UK Buyer or Seller (i) any termination, amendment, variation, novation or supplement of or to this Agreement and/or the Guaranteed Obligations, (ii) any failure or delay in seeking performance of any Guaranteed Obligation or any granting of time or other indulgence for such performance, (iii) any illegality, invalidity or unenforceability of any obligation or liability of any person under this Agreement, (iv) any incapacity or lack of power, authority or legal personality of or dissolution of UK Buyer or any other person, (v) any change in the constitution, status or control of UK Buyer, (vi) any insolvency, liquidation, administration or other equivalent or similar proceedings, (vii) the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of UK Buyer or any other person, or (viii) any non-presentation or non-observance of any formality or other requirement in respect of any instrument.
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(d) For the avoidance of doubt, the guarantee and indemnity contained in Clause 8.01(a) shall not be affected by any permitted assignment of any of the rights of Seller under this Agreement, and shall remain in full force and effect notwithstanding any such assignment.
(e) Notwithstanding any other provision of this Agreement but without prejudice to Clause 8.01(c) which shall take precedence, US Buyer’s obligation to perform under the guarantee and indemnity contained in Clause 8.01(a) shall be subject to: (i) any defenses which the UK Buyer would have under this Agreement or in law or equity in respect of the Guaranteed Obligations; and/or (ii) any elimination under the terms of this Agreement or in law or equity of the Guaranteed Obligations, except, in each case, for defenses relating to the incapacity or lack of power, capacity, authority or legal personality or dissolution of UK Buyer or arising as a result of the insolvency, liquidation or administration or other equivalent or similar proceedings with respect to UK Buyer.
SECTION 9
Miscellaneous
Clause 9.01. Notices . Subject to Clause 9.11, all notices, requests and other communications to any party hereunder shall be in writing (including electronic mail (“ e-mail ”) transmission, so long as a receipt of such e-mail is requested and received and such e-mailed is followed by a notice by post or hand given in accordance with this Section 9) and shall be given,
if to Buyers, to:
Lydall, Inc.
One Colonial Road
PO Box 151
Manchester, CT 06045-0151
Attention: Chad A. McDaniel
Vice President & General Counsel
cmcdaniel@lydall.com
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with a copy to:
Davis Polk &
Wardwell LLP
450 Lexington Avenue
New York, New York 10017
United States of America
Attention: Leonard Kreynin / Will Pearce
leonard.kreynin@davispolk.com
will.pearce@davispolk.com
if to Seller, to:
Andrew Industries
Limited
Walton House
Syke Side Drive
Altham Business Park
Altham,
BB5 5YE
Attention: Finance Director
ibl@andrew-group.com/iflk@andrew-group.com
with a copy to (but so that the provision of such a copy notice to DLA Piper UK LLP shall not constitute service on Seller or any acceptance of a right to serve proceedings on DLA Piper UK LLP):
DLA Piper UK LLP
101 Barbirolli Square
Bridgewater
Manchester M2 3DL
United Kingdom
Attention: Jonathan Watkins/Louise Barber
jonathan.watkins@dlapiper.com
louise.barber@dlapiper.com
or such other address as such party may hereafter specify for the purpose by notice to the other parties hereto. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt. Any notice sent by e-mail shall be deemed received on the date of receipt of such e-mail.
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Clause 9.02. Amendments and Waivers.
(a) Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective.
(b) Save as provided in Clause 7.01 and Schedule 7.02, no failure or delay by any party in exercising any right, power or privilege hereunder shall affect that right, power or privilege or operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
Clause 9.03. Expenses . Except as otherwise provided herein (and, in particular, without prejudice to the provisions of the Tax Covenant), all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. Notwithstanding the foregoing, US Buyer agrees to pay the amount of $215,573.62 in respect of (i) McGladrey’s fees (such fee including amounts owed to Grant Thornton UK LLP for assisting with the preparation of financial statements for McGladrey’s audit or review or for the purpose of SEC filings) incurred by Seller in connection with the preparation, review or audit of the US GAAP combined financial statements of the Target Group of which the US Buyer is paying $250,000 (ii) an amount of $5,573.62 paid by US Buyer to Seller in respect of property surveys at the UK Leased Properties and (iii) $40,000 being paid by Seller to US Buyer in respect of part of the costs of installation or upgrades to the fire suppression systems at the properties occupied by the Retained Group within the premises in the relevant China Subsidiaries (the “ Buyer Fees ”), with any remaining balance due and payable to McGladrey or Grant Thornton UK LLP or the property surveyor (as the case may be) to be borne by Seller. On the Closing Date, Seller shall deliver US Buyer an invoice in the total amount of $215,573.62 with respect to the Buyer Fees, and US Buyer shall pay to Seller such invoice on the Closing Date in immediately available funds by wire transfer to Seller’s Account.
Clause 9.04. Successors and Assigns . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of each other party hereto. Notwithstanding the foregoing, either party may transfer or assign their rights under this Agreement, in whole or from time to time in part, to one or more of their Affiliates at any time provided that if such Affiliate ceases to be an Affiliate of either the Seller or the Buyers (as applicable), the Affiliate shall transfer or assign such rights back to the Seller or the Buyers (as applicable) or to another Affiliate of the Seller or the Buyers (as applicable) prior to it ceasing to be, an Affiliate.
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Clause 9.05. Counterparts; Effectiveness; Third Party Rights . This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by all of the other parties hereto. Until and unless each party has received a counterpart hereof signed by the other party hereto, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication). With the exception of the rights of the Buyers’ Affiliates to enforce the terms of Clause 5.02, no provision of this Agreement is intended to confer (whether under the Contracts (Rights of Third Parties Act) 1999 or otherwise), any rights, benefits, remedies, obligations, or liabilities hereunder upon any Person other than the parties hereto and their respective successors and assigns.
Clause 9.06. Entire Agreement . This Agreement and the Ancillary Agreements constitutes the entire agreement between, and understanding of, the parties with respect to the subject matter of this Agreement and supersedes and extinguishes all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement (including, for the avoidance of doubt, the confidentiality agreement dated 4 September 2013 and the non-binding letter of intent to purchase dated 4 September 2013 (as amended thereafter), each signed by the Seller and the US Buyer).
Clause 9.07. Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other Governmental Authority to be invalid, void, illegal or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties, as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
Clause 9.08. Specific Performance . The parties hereto agree that irreparable damage may occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties may be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in the courts of England and Wales, in addition to any other remedy to which they are entitled at law or in equity.
Clause 9.09. Governing Law . This Agreement shall be governed by and construed in accordance with English Law and any matter, claim or dispute (whether contractual or non-contractual) arising out of or in connection with this Agreement is to be governed and determined in accordance with English law.
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Clause 9.10. Arbitration .
(a) Subject to Clause 9.08, any dispute, claim or controversy arising from, relating to, or in connection with this Agreement, whether contractual or non-contractual, including without limitation any question regarding its existence, validity, termination, or the performance or breach thereof (“ Dispute ”) shall be referred to and finally resolved and settled by arbitration administered by London Court of International Arbitration (the “ LCIA ”), in accordance with LCIA Rules of Arbitration in effect at the time of the arbitration (the “ Rules of Arbitration ”), except as they may be modified herein or by agreement of the parties.
(b) Each party’s agreement to this arbitration clause is voluntary and irrevocable. The place of arbitration shall be London, England. The language of the arbitration shall be English.
(c) The arbitral tribunal shall consist of one arbitrator or, at the request of either the Seller or the Buyers, by three arbitrators in the event that the quantum of any Dispute is reasonably estimated by the requesting party to be valued at or in excess of US$4,000,000 (“ Substantial Claim ”).
(d) In circumstances where one arbitrator is to be appointed, the parties shall appoint an arbitrator with sufficient professional experience that is reasonable satisfactory to Buyers and Seller or in default of agreement within ten (10) Business Days of either party requesting arbitration, such arbitrator shall instead be appointed by the LCIA within ten (10) Business Days of receiving such request in accordance with the Rules of Arbitration. In circumstances where three arbitrators are to be appointed, each party shall nominate one arbitrator, the party requesting arbitration concurrently with such request and the other party within ten (10) Business Days from receipt of the request for arbitration. In the event a party fails to nominate an arbitrator or deliver notification of such nomination to the other party and to the LCIA within this time period, upon request of either party, such arbitrator shall instead be appointed by the LCIA within ten (10) Business Days of receiving such request in accordance with the Rules of Arbitration. The two arbitrators appointed in accordance with the above provisions shall nominate the third arbitrator and notify the parties and the LCIA in writing of such nomination within ten (10) Business Days of their appointment. If the first two appointed arbitrators fail to nominate a third arbitrator or notify the parties and the LCIA of that nomination within this time period, then, upon request of either party, the third arbitrator shall be appointed by the LCIA within five (5) Business Days of receiving such request in accordance with the Rules of Arbitration. The third arbitrator shall serve as Chairman of the arbitral tribunal.
(e) No arbitrator appointed pursuant to Clause 9.10(d) shall be an employee, officer or director of Seller, US Buyer, UK Buyer or of any of their respective Affiliates, nor shall any arbitrator have any interest that would be affected in any material respect by the outcome of the dispute.
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(f) The arbitral tribunal shall permit and facilitate such discovery as it shall determine is appropriate in the circumstances, taking into account the desirability of making the arbitral proceedings expeditious and cost-effective.
(g) The decision of the arbitrator or (in the case of a Substantial Claim) a majority of the arbitrators shall be final and binding on the parties and their respective successors and assigns and the parties waive any form of challenge against it.
(h) The arbitral proceedings commenced hereunder shall proceed in accordance with the Rules of Arbitration; provided that the final decision of the arbitral tribunal shall be rendered within one hundred and twenty (120) days of appointment, with each of the parties taking commercially reasonable steps (without prejudice to its rights to pursue, raise or rebut any defence or other line of argument or any other issues it wishes to raise as part of or in connection with any such proceedings) to expedite any such arbitral proceedings and (save as aforesaid) avoid any action which would unreasonably (in the totality of the circumstances) delay resolution of such proceedings.
(i) The parties hereby agree that the arbitral tribunal shall have the power to award equitable remedies (including without limitation specific performance).
(j) Subject to Clause 9.08, each party hereby irrevocably waives its right to commence any proceedings in any court with respect to any matter subject to arbitration under this Agreement.
Clause 9.11. Agent for service of process. US Buyer irrevocably appoints UK Buyer as its agent to accept service on its behalf of any notice, request or other communication to be given or made to a party under this Agreement and any process in any legal action or proceedings arising under any jurisdiction relating to any matter, dispute or claim arising out of or in connection with this Agreement, its subject matter or formation (whether contractual or non-contractual). US Buyer irrevocably agrees that any notice, request or other communication to be given to it, is deemed to have been properly given if it is given to UK Buyer pursuant to the terms of Clause 9.01 of this Agreement (whether or not such notice is forwarded to or received by US Buyer) and any failure by UK Buyer to notify US Buyer of the process will not invalidate the legal action or proceedings concerned. If for any reason UK Buyer ceases to be able to act as an agent or no longer has a postal address in the United Kingdom, US Buyer shall immediately irrevocably appoint a substitute agent with a postal address in the United Kingdom and notify Seller of the name, relevant contact and address of the substitute agent. Such appointment and notice shall be effective on the date falling five (5) Business Days after the date on which the notice shall be deemed received under the terms of Clause 9.01 of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized person(s) as of the day and year first above written.
Lydall UK Ltd | ||
By: | /S/ Dale G. Barnhart | |
Name: Dale G. Barnhart | ||
Title: Director | ||
In the presence of: | ||
/S/ Chad A. McDaniel | ||
Name: | Chad A. McDaniel | |
Address: | One Colonial Road | |
Manchester, CT 06042 |
Lydall, Inc. | ||
By: | /S/ Dale G. Barnhart | |
Name: Dale G. Barnhart | ||
Title: President & Chief Executive Officer | ||
In the presence of: | ||
/S/ Chad A. McDaniel | ||
Name: | Chad A. McDaniel | |
Address: | One Colonial Road | |
Manchester, CT 06042 |
Andrew Industries Limited | ||
By: | /S/ Edward Andrew | |
Name: Edward Andrew | ||
Title: Executive Chairman | ||
In the presence of: | ||
/S/ J. Carruthers | ||
Name: | J. Carruthers | |
Address: | 22 St. Catherines Drive | |
Fulwood | ||
Preston PR2 3RL |
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Schedule 2.04 – Allocation of Purchase Price
Item | Purchase Price Allocation ($) | |||
Entire issued share capital of Andrew Webron Limited | $ | 4,377,243.15 | ||
Entire issued share capital of Andrew Webron Filtration Limited (including the amount allocated to the entire issued share capital of Heath Filtration Limited) | $ | 886,241.39 | ||
Entire issued share capital of Andrew Industries (Hong Kong) Limited (including the amount allocated to the entire issued share capital of each of: (i) Andrew Industrial Textile Manufacturing Company (Shanghai) Limited, (ii) Andrew Industrial Textile Manufacturing (Wuxi) Company Limited and (iii) Andrew Industrial Textile Trading Company (Shanghai) Limited) | $ | 9,900,188.27 | ||
Entire issued share capital of SFC | $ | 44,553,022.01 | ||
Intangible assets to be purchased pursuant to the Assignment Agreement | $ | 2,500,000.00 |
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Schedule 2.05(b) – Buyer Closing Deliverables
At Closing, Buyers shall deliver to the Seller:
1. | a counterpart of the UK Lease of the Bury Property, duly executed by UK Buyer as guarantor of that Lease; |
2. | a counterpart to the Transitional Services Agreement, duly executed by each of UK Buyer and US Buyer; |
3. | counterparts to the Escrow Agreements, duly executed by each of UK Buyer and US Buyer; |
4. | counterparts to the Licensing Agreement, duly executed by each of UK Buyer and US Buyer |
5 | counterpart to the Assignment Agreement, duly executed by the US Buyer; |
6. | deeds of restrictive covenant between each of the Individual Shareholders and the Buyers, duly executed by the Buyers; |
7. | an original of the UK Leases, duly executed by Andrew Textile Industries Limited and Andrew Webron Limited and Andrew Webron Filtration Limited (as applicable) (in each case by Buyers’ appointed directors); |
8. | a certified copy of the resolutions adopted at a duly held meeting of the board of directors (or a duly constituted committee of the board of directors) of the UK Buyer authorizing the execution of, and performance by the UK Buyer of its obligations under, this Agreement, the UK Leases, the Supply Agreement(s), the Transitional Services Agreement, the Escrow Agreements, the Licensing Agreement and the deeds of restrictive covenant between each of the Individual Shareholders and the Buyers; and |
9. | a certified copy of the resolutions adopted at a duly held meeting of the board of directors (or a duly constituted committee of the board of directors) of the US Buyer authorizing the execution of, and performance by the US Buyer of its obligations under, this Agreement, the Transitional Services Agreement, the Assignment Agreement, the Escrow Agreements deeds of restrictive covenant between each of the Individual Shareholders and the Buyers together with a duly signed officers certificate from an authorised officer of the US Buyer; |
At Closing, Buyers shall deliver to the Escrow Agent:
1. | counterparts to the Escrow Agreements, duly executed by each of UK Buyer and US Buyer. |
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At Closing, US Buyer shall:
1. | pay the WF Payoff Amounts to Wells Fargo on behalf of SFC and deliver to Seller written confirmation that such amounts have been wired to the relevant Wells Fargo accounts. |
2. | pay to Seller’s Account funds which include an amount with respect of the UK Debt Repayment and deliver to Seller written confirmation that such amounts have been wired to Seller’s Account, such funds to be used by the Seller for the UK Debt Repayment. |
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Schedule 2.05(c) – Seller Closing Deliverables
At Closing, Seller shall deliver to Buyers:
1. | certificates for the Target Shares (which, in the case of the US Target Shares, shall be duly endorsed or accompanied by stock powers duly endorsed in blank), or an indemnity in respect of any lost share certificate; |
2. | duly executed transfers, in agreed form, in favor of (in the case of the US Target Shares) the US Buyer, and (in the case of the Non-US Target Shares) the UK Buyer, in respect of the US Target Shares and the Non-US Target Shares, as applicable; |
3. | a counterpart to each of the Supply Agreements, duly executed by the relevant member of the Retained Group on the one hand and by the relevant member(s) of the Target Group (as provided for in the relevant Supply Agreement) on the other hand; |
4. | a counterpart to the Transitional Services Agreement, duly executed by Seller; |
5. | counterparts to the Escrow Agreements, duly executed by Seller; |
6. | duly executed powers of attorney in agreed form from Seller in favor of UK Buyer to enable it to exercise all rights attaching to all of the issued shares in the capital of Andrew Webron Filtration Limited and Andrew Webron Limited until UK Buyer becomes the registered holder of them; |
7. | counterparts to the Licensing Agreement, duly executed by Seller. |
8. | a certified copy of powers of attorney, in agreed form, under which any document to be delivered to either Buyer under this Schedule 2.05(c) has been executed; |
9. | a certified copy of the resolutions adopted at a duly held meeting of the board of directors (or a duly constituted committee of the board of directors) of the Seller or relevant member of the Retained Group which is a party to such documents) authorizing the execution of, and performance by the Seller of its obligations under, this Agreement, the UK Leases, the Supply Agreements, the Transitional Services Agreement, the Escrow Agreements, the Assignment Agreement and the Licensing Agreement; |
10. | the share certificates in respect of all the issued shares in the capital of each of the Target Subsidiaries; |
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11. | in relation to each member of the Target Group, (i) except in relation to the China Subsidiaries, the statutory registers and minute books (which shall be written up to but not including the Closing Date), the common seal (if any), certificate of incorporation and any certificates of incorporation on change of name, which in the case of each of Andrew Webron Limited, Andrew Webron Filtration Limited and Heath Filtration Limited will be available at the Closing location, and in the case of each of SFC and Andrew Industries (Hong Kong) Limited will be made available at each such entity’s place of business, (ii) the other books and records of the members of the Target Group, to the extent that such books and records are not located at one or more of the Properties and (iii) in relation only to the China Subsidiaries, the relevant business licenses will be made available at such entities place of business; |
12. | the written resignations, in agreed form, of all officers and directors of any member of the Target Group who will be officers, directors or employees of Seller or any of its Affiliates after the Closing Date, from their positions with any member of the Target Group; |
13. | a certified copy of the resolutions adopted at a duly held meeting of the board of directors of each member of the Target Group, in agreed form and certified as correct by the secretary or a director of the relevant company, at which meeting the following matters shall take place in respect of the relevant member of the Target Group: |
(a) in the case of each Target Company only, the approval of the registration of the transfer of the relevant Target Shares, subject only to each transfer being stamped (as applicable), and the US Buyer or the UK Buyer (as the case may be) being registered as the holder of the relevant Target Shares in the relevant register of members;
(b) approval of the appointment of the persons nominated by the US Buyer or the UK Buyer (as the case may be) as director and/or secretary with effect from the end of the relevant board meeting;
(c) all existing instructions and authorities to the banks shall be revoked and replaced with new instructions and authorities as the US Buyer or the UK Buyer requires;
(d) the accounting reference date shall be changed to such date as is required by the US Buyer or the UK Buyer;
(e) the address of the registered office shall be changed to such address as is required by the US Buyer or the UK Buyer; and
14. | payoff letters evidencing repayment in full of all obligations arising under, and owing in connection with, the Closing Indebtedness and termination of all commitments thereunder and deeds of release evidencing the release of all Encumbrances listed in Schedule 2.05(d) ; |
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15. | the Inter-Company Account Statement; |
16. | a certified copy of the Pension Agreement, duly executed by Seller, Andrew Webron Limited and the trustees of the AIL Pension Scheme; |
17. | the notice of cessation from Andrew Webron Limited to the trustees of the AIL Pension Scheme on the terms of the Pension Agreement and in accordance with Regulation 9(4) of the Occupational Pension Schemes (Employer Debt) Regulations 2005; |
18. | deeds of restrictive covenant between each of the Individual Shareholders and the Buyers duly executed by each of the Individual Shareholders; |
19. | the Heath Deed of Novation executed by each of the parties; |
20. | a certified copy of the resolutions of the board of directors of Andrew Industries, Inc. approving the 401(k) Plan Amendment; |
21. | the Assignment Agreement duly executed by Seller; |
22. | a certified copy of each of the ALP Transfer Documents; |
23. | Copies of the approval documents issued by the Shanghai Municipal Administration of Industry and Commerce Free Trade Pilot Zone Branch on 17 January 2014 relating to the approval of the transfer of Andrew Industrial Textile Trading Company (Shanghai) Limited by Andrew Industries Limited to Andrew Industries (Hong Kong) Limited comprising (1) a copy of the updated business license of Andrew Industrial Textile Trading Company (Shanghai) Limited and (2) a copy of the notice for approval of the change of shareholder together with the list of changes to the registered particulars of Andrew Industrial Textile Trading Company (Shanghai) Limited; |
24. | a certified copy of the Form TR1 entered into between (1) Andrew Webron Filtration Limited and (2) Andrew Textile Industries Limited executed by both parties relating to the transfer of the land and buildings on the South Side of Blue House Pont Road, Stockton-on-Tees (the “UK Property Carve out” ); |
25. | a letter from Seller to Buyers attaching copies of the certificates of incorporation, bylaws and other similar constituent documents of the Seller and Target Companies as currently in effect (as envisaged by Paragraph 3.01 of Schedule 3) |
26. | a letter from Seller to Buyers attaching the balance sheets, statements of income and cash flows and stockholders equity (or the equivalent in the relevant jurisdictions) referred to in Paragraph 3.08 of Schedule 3; |
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27. | the invoice from Seller to US Buyer with respect to the Buyer Fees in the total amount of $215,573.62; and |
28. | a certified copy of the deed of release providing for the full, absolute and unconditional release and discharge of each of the HSBC Guarantees. |
At Closing, Seller shall deliver to the Escrow Agent:
1. counterparts to the Escrow Agreements, duly executed by Seller.
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Schedule 2.06 – Closing Statement
Part A – Preliminary Matters
1. In preparing the Closing Statement:
(a) | the items and amounts to be included in the calculation of Closing Cash, Closing Indebtedness and Closing Working Capital for the purposes of the Closing Statement, shall be identified by applying the relevant definition in Clause 1.01 subject, where applicable, to the provisions of this Schedule; and |
(b) | in applying each such definition and the provisions of this Schedule and determining which items and amounts are to be included in the Closing Statement, if and to the extent that the treatment or characterisation of the relevant item or amount or type or category of item or amount: |
(i) | is dealt with in the specific accounting treatments set out in Part B below (the “ Specific Accounting Treatments” ), the relevant Specific Accounting Treatment(s) shall apply; and |
(ii) | is not dealt with in the Specific Accounting Treatments, the relevant GAAP shall apply as used by the relevant member of the Target Group in its audited accounts for the year ended 31 March 2013. |
2. | For the purposes of calculating Closing Cash, Closing Indebtedness and Closing Working Capital, any amounts which are to be included in any such calculation which are expressed in a currency other than US Dollars, shall be converted into US Dollars at the rate set out in Clause 1.03. |
3. | References in this Schedule to any “estimated” amount means that amount determined by Buyers in good faith, provided that such estimate shall not be binding on Seller except in accordance with the provisions of Clause 2.06. |
4. | Expressions which are defined in Schedule 6.01 have the same meanings when used in this Schedule. |
5. | Other than in respect of the calculation of Closing Cash (as set out in that definition), the Closing Statement (and the constituent elements thereof) shall not take into account any matters with respect to the Transaction Bonuses or payments contemplated by Clause 5.13. |
Part B – Specific Accounting Treatments
1. | The following Specific Accounting Treatments shall apply in the preparation of the Closing Statement: |
(a) | Inventory |
Inventory will be valued in a physical inventory by the Buyers with participation and observation by the Seller (or its designated representatives, which representatives shall not be any employee of any member of the Target Group), carried out within five (5) Business Days of the date of this Agreement. Inventory will be valued at the lower of cost and net realisable value. Net realisable value is (a) the estimated selling price in the ordinary course of business (taking into account inventory days and obsolescence) less (b) the estimated costs of completion and direct selling expenses. Work in progress and finished goods cost is taken as production cost, which includes an appropriate proportion of attributable overheads.
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(b) | Accounts Receivable |
Trade debtors are stated at sales invoice price less adjustments for doubtful debts. Doubtful debt provisions are established based upon the difference between the receivable value and the estimated net collectible amount.
(c) | Taxation |
Subject to paragraph 5 of Part A above:
(i) | Closing Indebtedness shall include full provision for Corporate Income Tax in respect of income, profits or gains accruing or arising on or before Closing and in respect of transactions effected or events occurring on or before Closing (net of any sums repayable in respect of Corporate Income Taxes overpaid), but not for any Tax which form part of Closing Working Capital. |
(ii) | Closing Working Capital shall include full provision for all operating Taxes (other than Corporate Income Tax) accruing or arising on or before Closing and in respect of transactions effected or events occurring on or before Closing. |
(iii) | To the extent that the Seller indicates an intention to allocate any amount paid under the GPA to the Corporate Income Tax liability of a member of the Target Group, the provision for Corporate Income Tax in respect of that member shall be reduced accordingly, and the calculation of Closing Indebtedness shall take into account a corresponding obligation on the part of that member to make a payment to the Seller in respect of that allocation equal to such amount. |
(iv) | The provision for Corporate Income Tax shall assume that any losses which are available for surrender from one member of the Target Group to another, or from any other member of the Seller’s Tax Group to a member of the Target Group shall be surrendered to the greatest extent possible in consideration of a payment equal to the amount of Corporate Income Tax saved as a result of such surrender; any liability to make such payment shall be provided for in full as a creditor, and any right to receive such a payment shall be recognised in full as a debtor. |
(v) | The Closing Statement shall not include any recognition of deferred tax assets or deferred tax liabilities. |
2. | The Closing Statement will reflect the Buyers’ best estimate of the position of the Target Group as at Closing. |
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Part C – Calculation of Target Working Capital
1. | Target Working Capital shall comprise: |
(a) | in respect of SFC, an amount calculated as the 12 month average working capital of SFC in US Dollars ( “US Target Working Capital” ); |
(b) | in respect of Andrew Webron Limited and Andrew Webron Filtration Limited, an amount calculated as the 12 month average working capital of Andrew Webron Limited and Andrew Webron Filtration Limited in UK Pounds Sterling ( “UK Target Working Capital” ); and |
(c) | in respect of Andrew Industrial Textile Manufacturing (Shanghai) Limited, Andrew Industrial Textile Manufacturing (Wuxi) Company Limited and Andrew Industrial Textile Trading Company (Shanghai) Limited, an amount be calculated as the 12 month average working capital of Andrew Industrial Textile Manufacturing (Shanghai) Limited, Andrew Industrial Textile Manufacturing (Wuxi) Company Limited and Andrew Industrial Textile Trading Company (Shanghai) Limited in RMB ( “China Target Working Capital” ). |
2. | The Seller and the Buyers have agreed the figures to be used for the 11 month period from February 2013 to December 2013 in the Target Working Capital calculation, as set out in Annex 1 to this Schedule. |
3. | As part of the preparation of the Closing Statement in accordance with Clause 2.06 and Part E of this Schedule, the Buyers will calculate the corresponding figures to be used for the month of January 2014 in the Target Working Capital calculation on a consistent basis, provided that in both this calculation (and, except with respect to paragraph (e) below) in the calculation of the Closing Working Capital): |
(a) | any inter-company loans and interest shall be excluded; |
(b) | any management charges or royalties payable to the Seller or any of the Seller’s Affiliates shall be excluded; |
(c) | any recharges to the Seller or any of the Seller’s Affiliates shall be excluded; |
(d) | any inter-company trading balances within the Target Group and the Retained Group are treated as working capital items; |
(e) | provisions are applied consistently to January 2014; |
(f) | any capital creditors are removed; and |
(g) | no provision shall be made (whether in respect of the Closing Working Capital or otherwise) in the Closing Statements in respect of any (i) cost of any upgrade, installation or replacement of the fire suppression systems at the any of the properties occupied by SFC or relevant China Subsidiaries (ii) inadequacy or non-compliance of the machine guarding at any of the properties occupied by SFC or relevant China Subsidiaries or (iii) any non-compliance by SFC with NFPA 70e. |
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4. | Buyers will then calculate each of the US Target Working Capital, the UK Target Working Capital and the China Target Working Capital. |
Part D – Calculation of Closing Working Capital Adjustment
1. | Closing Working Capital shall comprise: |
(a) | in respect of SFC, the Closing Working Capital of SFC in US Dollars ( “US Closing Working Capital” ); |
(b) | in respect of Andrew Webron Limited and Andrew Webron Filtration Limited, the Closing Working Capital of Andrew Webron Limited and Andrew Webron Filtration Limited in UK Pounds Sterling ( “UK Closing Working Capital” ); and |
(c) | in respect of Andrew Industrial Textile Manufacturing (Shanghai) Limited, Andrew Industrial Textile Manufacturing (Wuxi) Company Limited and Andrew Industrial Textile Trading Company (Shanghai) Limited, Closing Working Capital of Andrew Industrial Textile Manufacturing (Shanghai) Limited, Andrew Industrial Textile Manufacturing (Wuxi) Company Limited and Andrew Industrial Textile Trading Company (Shanghai) Limited in RMB ( “China Closing Working Capital” ). |
2. | Having calculated the Target Working Capital (in accordance with Part C) and the Closing Working Capital, the Buyers shall determine whether there is any Closing Working Capital Adjustment as follows: |
(a) | the Buyers will compare the US Target Working Capital with the US Closing Working Capital, the UK Target Working Capital with the UK Closing Working Capital and the China Target Working Capital with the China Closing Working Capital to determine any variances; |
(b) | to the extent that there is any variance between the UK Target Working Capital and the UK Closing Working Capital and/or the China Target Working Capital and the China Closing Working Capital, the amount of any variance shall be converted into US Dollars on the basis of the relevant US Dollar exchange rate as at Closing Date; |
(c) | the amount of all variances in US Dollars shall be aggregated; |
(d) | subject to sub-paragraphs (e) and (f) below: |
(i) | if the aggregate amount of the variances is positive, such that the Closing Working Capital is greater than the Target Working Capital, then the Buyers shall pay an amount equal to the difference to the Seller through any balancing payment to be made in accordance with Clause 2.07; |
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(ii) | if the aggregate amount of the variances is negative, such that the Target Working Capital is greater than the Closing Working Capital, then the Seller shall pay an amount equal to the difference to the Buyers through any balancing payment to be made in accordance with Clause 2.07; |
(e) | if the aggregate amount of the variances, whether positive or negative, is $100,000 or less, then no payment shall be required to be made by the Buyers to the Seller or vice versa; and |
(f) | any payment due from the Buyers to the Seller in respect of any Closing Working Capital Adjustment shall not exceed a total amount of $3,000,000. |
Part E – Preparation and delivery of the Closing Statement
1. | The Closing Statement shall be prepared in accordance with Clause 2.06. |
2. | The Closing Statement shall incorporate: |
(a) | in respect of the calculation of Target Working Capital, an updated form of the table and spreadsheet set out in Annex 1 to this Schedule; and |
(b) | in respect of the calculation of any Closing Working Capital Adjustment a statement in the form set out in Annex 2 to this Schedule. |
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Annex 1 – Target Working Capital
US | ||||
Agreed working capital position (USD) | ||||
Month | SFC | |||
February 2013 | 15,134,900 | |||
March 2013 | 16,067,000 | |||
April 2013 | 15,293,200 | |||
May 2013 | 15,801,400 | |||
June 2013 | 16,725,000 | |||
July 2013 | 16,410,800 | |||
August 2013 | 17,027,200 | |||
September 2013 | 17,527,000 | |||
October 2013 | 17,822,000 | |||
November 2013 | 18,118,100 | |||
December 2013 | 17,752,400 | |||
January 2014 | X |
The US Target Working Capital will be the average of the figures above
UK | ||||||||||||
Agreed working capital position (GBP) | ||||||||||||
Month | AWL | AWF | Total UK | |||||||||
February 2013 | 3,782,200 | 896,600 | 4,678,800 | |||||||||
March 2013 | 3,799,000 | 923,900 | 4,722,900 | |||||||||
April 2013 | 3,874,000 | 1,016,900 | 4,890,900 | |||||||||
May 2013 | 4,010,400 | 1,179,200 | 5,189,600 | |||||||||
June 2013 | 4,025,300 | 1,289,400 | 5,314,700 | |||||||||
July 2013 | 4,105,400 | 1,389,900 | 5,495,300 | |||||||||
August 2013 | 4,241,600 | 1,294,600 | 5,536,200 | |||||||||
September 2013 | 3,927,200 | 1,569,200 | 5,496,400 | |||||||||
October 2013 | 4,160,300 | 1,225,500 | 5,385,800 | |||||||||
November 2013 | 4,253,400 | 1,020,700 | 5,274,100 | |||||||||
December 2013 | 4,093,500 | 1,116,600 | 5,210,100 | |||||||||
January 2014 | X | X | X |
The UK Target Working Capital will be the average of the figures above
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China | ||||||||||||||||
Agreed working capital position (RMB) | ||||||||||||||||
Month | CFC | AWC | CTC | Total | ||||||||||||
February 2013 | 64,005,100 | 7,906,700 | 2,264,200 | 74,176,000 | ||||||||||||
March 2013 | 63,509,500 | 8,525,500 | 1,913,200 | 73,948,200 | ||||||||||||
April 2013 | 68,003,700 | 8,354,800 | 1,972,400 | 78,330,900 | ||||||||||||
May 2013 | 67,944,900 | 8,036,900 | 1,336,900 | 77,318,700 | ||||||||||||
June 2013 | 66,792,700 | 9,065,100 | 1,927,600 | 77,785,400 | ||||||||||||
July 2013 | 73,638,200 | 8,465,800 | 1,704,300 | 83,808,300 | ||||||||||||
August 2013 | 76,208,600 | 8,017,100 | 1,972,200 | 86,197,900 | ||||||||||||
September 2013 | 77,888,600 | 8,551,400 | 1,620,100 | 88,060,100 | ||||||||||||
October 2013 | 80,963,100 | 10,046,500 | 1,077,200 | 92,086,800 | ||||||||||||
November 2013 | 79,537,200 | 10,307,800 | 1,958,800 | 91,803,800 | ||||||||||||
December 2013 | 79,994,800 | 10,613,900 | 328,400 | 90,937,100 | ||||||||||||
January 2014 | X | X | X | X |
The China Target Working Capital will be the average of the figures above
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Annex 2 – Form of Closing Statement
Base Purchase Price | $ | 83,000,000 | ||||
Minus | ||||||
Closing Indebtedness | $ | |||||
1. | Wells Fargo | $ | ||||
2. | Leases UK (HSBC/Lombard) | $ | ||||
3. | China Intercompany Indebtedness | $ | ||||
4. | UK / US/ HK intercompany indebtedness | $ | ||||
5. | Other Indebtedness (including Corporate Income Taxes) | $ | ||||
$ | ||||||
Plus | ||||||
6. | Closing Cash | $ | ||||
7. | Closing Working Capital Adjustment | $ | ||||
Closing Cash Consideration | $ | |||||
Closing Working Capital Adjustment Calculation | ||||||
Current Assets | $ | |||||
Minus: Current Liabilities | $ | |||||
Closing Working Capital | $ | |||||
Minus: Working Capital Target | $ | |||||
Closing Working Capital Adjustment | $ |
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Actual working capital for
February 2014 |
||||||||||||||||||||||||||||||||||||||||||||
Total | Total | Total | Total | Diamond | ||||||||||||||||||||||||||||||||||||||||
SFC | CFC | AWC | CTC |
CFC/AWC
/CTC |
CFC/AWC
/CTC |
AWL | AWF | AWL/AWF | AWL/AWF | Total | ||||||||||||||||||||||||||||||||||
Adjusted Working Capital | US$'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | US$'000 | GB£'000 | GB£'000 | GB£'000 | US$'000 | US$'000 | |||||||||||||||||||||||||||||||||
Inventory | ||||||||||||||||||||||||||||||||||||||||||||
External trade debtors | ||||||||||||||||||||||||||||||||||||||||||||
External trade creditors | ||||||||||||||||||||||||||||||||||||||||||||
Other external debtors | ||||||||||||||||||||||||||||||||||||||||||||
Other external creditors | ||||||||||||||||||||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||||||||||||||||||
Intercompany balance - Diamond trading | ||||||||||||||||||||||||||||||||||||||||||||
Intercompany balance - ICO trading | ||||||||||||||||||||||||||||||||||||||||||||
Monthly Total | ||||||||||||||||||||||||||||||||||||||||||||
Exchange rate applied | 1.00 |
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Schedule 3 — Warranties of Seller
Paragraph 3.01. Corporate Existence and Power . Seller and each of the Target Companies is duly incorporated or formed, validly existing and in good standing (to the extent such concept is applicable) under the Applicable Law of its jurisdiction of incorporation or formation in the relevant jurisdiction. Target Companies have all corporate powers and all governmental licenses, authorizations, permits, consents and approvals legally required to carry on its business as now conducted. The Target Companies are duly qualified to do business and are in good standing (to the extent such concept is applicable in the relevant jurisdiction) in each jurisdiction where the Target Companies do business and where qualification is necessary under the Applicable Law, except for those jurisdictions where failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business of the Target Group taken as a whole. Seller has heretofore delivered to Buyers true and complete copies of the certificates of incorporation, bylaws and other similar constituent documents of Seller and the Target Companies as currently in effect.
Paragraph 3.02. Corporate Authorization . The execution, delivery and performance by Seller of this Agreement and the consummation of the transactions contemplated hereby are within Seller’s corporate powers and have been duly authorized by all necessary corporate action on the part of Seller. This Agreement constitutes a valid and binding agreement of Seller enforceable against Seller in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other Applicable Law affecting creditors’ rights generally and general principles of equity).
Paragraph 3.03. Governmental Authorization . The execution, delivery and performance by Seller of this Agreement and the consummation by the Seller of the transactions contemplated hereby require no action by or in respect of, or filing with, any Governmental Authority pursuant to any Applicable Law.
Paragraph 3.04. Non-contravention . The execution, delivery and performance by Seller of this Agreement and the consummation by Seller of the transactions contemplated hereby do not and will not (i) violate the certificate of incorporation, bylaws or other similar constituent documents of Seller or any member of the Target Group, (ii) assuming compliance with the matters referred to in Paragraph 3.03, violate any Applicable Law, (iii) require any consent, approval, authorization or other action by any Person under, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, or give rise to any right of termination, cancellation or acceleration of any right or obligation of any member of the Target Group, or give rise contractually to a loss of any material benefit to which any member of the Target Group is entitled under any provision of any material agreement or other instrument binding upon any member of the Target Group or (iv) result in the creation or imposition of any Encumbrance on any asset of any member of the Target Group.
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Paragraph 3.05. Company Information ; Capitalization . (a) The information relating to the members of the Target Group Disclosed on Annex 3 to this Agreement is accurate in all respects.
(b) All outstanding shares of capital stock of the Target Companies have been duly authorized and validly issued and are fully paid and (in relation to the US Shares) non-assessable. Except as Disclosed on Schedule 3.05 of the Seller Disclosure Schedule, there are no outstanding (i) shares of capital stock or voting securities of the Target Companies, (ii) securities of the Target Companies convertible into or exchangeable for shares of capital stock or voting securities of the Target Companies or (iii) options or other rights to acquire from the Target Companies, or other obligation of the Target Companies to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Target Companies (the items in Paragraphs 3.05(b)(i), 3.05(b)(ii) and 3.05(b)(iii) being referred to collectively as the “ Company Securities ”). There are no outstanding obligations of any member of the Target Group to repurchase, redeem or otherwise acquire any Company Securities.
Paragraph 3.06. Ownership of Shares . Seller is the sole, legal and beneficial owner of the Target Shares, free and clear of any Encumbrance and any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of the Target Shares), and will transfer and deliver to Buyers at the Closing legal and beneficial title (subject to any necessary stamping) to the Target Shares free and clear of any Encumbrance and (subject to any necessary stamping) any such limitation or restriction.
Paragraph 3.07. Subsidiaries . (a) Each of the Target Subsidiaries is duly incorporated or formed, validly existing and in good standing (to extent such concept is applicable in the relevant jurisdiction) under the Applicable Laws of its jurisdiction of incorporation or formation, has all corporate powers and all governmental licenses, authorizations, permits, consents and approvals legally required to carry on its business as now conducted, is duly qualified to do business and is in good standing (to the extent such concept is applicable in the relevant jurisdiction) in each jurisdiction where the Target Subsidiaries do business and such qualification is necessary under the Applicable Law, except for those jurisdictions where failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business of the Target Group taken as a whole.
(b) All of the outstanding capital stock or other voting securities of each of the Target Subsidiaries is owned by a Target Company, directly or indirectly, free and clear of any Encumbrance and any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of the Target Shares). There are no outstanding (i) securities of the Target Companies or any of the Target Subsidiaries convertible into or exchangeable for shares of capital stock or voting securities of any of the Target Subsidiaries or (ii) options or other rights to acquire from the Target Companies or any of the Target Subsidiaries, or other obligation of the Target Companies or any of the Target Subsidiaries to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of any of the Target Subsidiaries (the items in Paragraphs 3.07(b)(i) and 3.07(b)(ii) being referred to collectively as the “ Subsidiary Securities ”). There are no outstanding obligations of the Target Companies or any of the Target Subsidiaries to repurchase, redeem or otherwise acquire any outstanding Subsidiary Securities.
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Paragraph 3.08. Financial Statements . The (a) audited combined balance sheet as of 31 March 2013 and the related audited combined statements of income, cash flows and stockholders’ equity for the year ended 31 March 2013, of the Target Group, (b) the unaudited interim combined balance sheet of 30 September 2013 and the related unaudited interim combined statements of income, cash flows and stockholders’ equity for the 6 months ended 30 September 2013, of the Target Group present, in conformity with US GAAP applied on a consistent basis (except as may be indicated in the notes thereto), the combined financial position of the Target Group as of the dates thereof and their consolidated results of operations, cash flows and stockholders’ equity for the periods then ended (subject to normal year-end or period end adjustments in the case of any unaudited interim financial statements). The statutory audited balance sheets as of 31 March 2012 and 2011 and the related statutory audited statements of income, cash flows and stockholders’ equity (in each case, or equivalent in each relevant jurisdiction) for each of the years ended 31 March 2012 and 2011 of each member of the Target Group present in accordance with GAAP the individual financial position of each member of the Target Group as of the dates thereof and their individual results of operations, cash flows and stockholders’ equity (in each case, or equivalent in each relevant jurisdiction) for the periods then ended. The unaudited management accounts consisting of balance sheets as of 31 December 2013 and the related monthly statements of income for the 9 months ending 31 December 2013 for each member of the Target Group present in accordance with GAAP the individual financial position of each member of the Target Group, subject to normal year-end audit adjustments.
Paragraph 3.09. Absence of Certain Changes . Except as Disclosed on Schedule 3.09 of the Seller Disclosure Schedule, since the Balance Sheet Date, the business of each member of the Target Group has been conducted in the ordinary course consistent with past practices and there has not been:
(a) any incurrence of any capital expenditures or any obligations or liabilities in respect thereof in an amount in excess of $100,000 in respect of one individual matter or item;
(b) any acquisition (by merger, consolidation, acquisition of stock or assets or otherwise) of any assets, securities, properties, interests or businesses, other than purchases made in the ordinary course of business;
(c) any sale, lease or other transfer, or creation or incurrence of any outstanding Encumbrance on, any member of the Target Group’s assets, securities, properties, interests or business, other than sales of assets, securities, properties or interests by each member of the Target Group in the ordinary course of business;
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(d) any (i) entry into by any member of the Target Group or any successors thereto (in jurisdictions where such concept exists) of any agreement or arrangement that expressly limits or otherwise expressly restricts in any material respect any member of the Target Group from engaging or competing in any line of business, in any location or with any Person or (ii) entry into, amendment or material modification or termination of any contract required to be disclosed by Paragraph 3.12 or other express waiver, release or assignment of any material rights, claims or benefits of any member of the Target Group;
(e) any (i) grant or increase of any severance or termination pay to any director, officer or employee of any member of the Target Group, (ii) increase in benefits payable under any existing severance or termination pay policies or employment agreements, (iii) entry into any employment, deferred compensation or other similar agreement (or amendment to any such existing agreement) with any director, officer or employee of any member of the Target Group, with any employee earning more than $50,000 per annum (iv) establishment or adoption of or amendment to (except as required by Applicable Law) any collective bargaining, bonus, profit-sharing, pension, retirement, deferred compensation, compensation, stock option, restricted stock or other benefit plan covering any director, officer or employee of any member of the Target Group or (v) increase in compensation, bonus or other benefits payable to any director, officer or employee of any member of the Target Group, other than salary increases in the ordinary course of business;
(f) any change in any member of the Target Group’s accounting policies, except as required by concurrent changes in GAAP, as agreed to by its auditors or independent public accountants;
(g) any settlement, or offer or proposal to settle, (i) any litigation, investigation, arbitration, proceeding or other material claim involving or against any member of the Target Group, (ii) any stockholder litigation or dispute against any member of the Target Group or any of their respective officers or directors or (iii) any litigation, arbitration, proceeding or dispute that relates directly to the transaction contemplated hereby; or
(h) any commitment, undertaking or agreement to do any of the foregoing.
Paragraph 3.10. No Undisclosed Material Liabilities Except (i) in respect of any matters which are subject of the Specific Indemnities, (ii) liabilities which are Disclosed, (iii) liabilities provided in the Balance Sheet, (iv) trading balances or other liabilities incurred in the ordinary course of business since the Balance Sheet Date, (v) liabilities reflected in the calculation of either Closing Working Capital or Closing Indebtedness, or (vi) Tax, there are no actual outstanding liabilities, owing by any member of the Target Group to any third party (other than another member of the Target Group) in excess of $40,000 (individually).
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Paragraph 3.11. Solvency of the Target Group .
(a) No order has been made, no meeting has been convened and no resolution has been passed by any member of the Target Group and, to the knowledge of the Seller, no petition has been presented, for the winding up of any member of the Target Group.
(b) No administration order has been made, no petition or application for such an order has been made, no administrator has been appointed and, to Seller’s knowledge, no step, legal proceeding or other procedure has been commenced with a view to the appointment of an administrator, whether out of court or otherwise, in respect of any member of the Target Group.
(c) No receiver (which expression shall include an administrative receiver) has been appointed in respect of any member of the Target Group or all or any of their respective assets, property and/or undertakings nor, to the knowledge of the Seller, has such order been made.
(d) No composition or similar arrangement with creditors has been proposed by any member of the Target Group nor has any step been taken by any member of the Target Group with a view to a suspension of payments or a moratorium of any indebtedness in respect of any member of the Target Group.
(e) No member of the Target Group is unable to pay its debts as they fall due and no member of the Target Group has stopped paying its debts as and when they fall due.
(f) No event analogous to those specified in Paragraphs 3.11(a) to 3.11(e) of this Schedule has occurred in relation to any member of the Target Group incorporated outside of England and Wales.
(g) No transfer of property is being made, and no obligation is being incurred, by Seller or any of its Affiliates in connection with the transactions contemplated by this Agreement, with the intent to hinder, delay or defraud either present or future creditors of Seller or any member of the Target Group.
Paragraph 3.12. Material Contracts . (a) Except as Disclosed on Schedule 3.12 of the Seller Disclosure Schedule, no member of the Target Group is a party to or bound by:
(i) any lease (whether of real or personal property) providing for annual rentals of $50,000 or more;
(ii) any agreement for the purchase of materials, supplies, goods, services, equipment or other assets providing for either (A) annual payments by any member of the Target Group of $250,000 or more or (B) aggregate payments by any member of the Target Group of $250,000 or more;
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(iii) any sales, distribution or other similar agreement providing for the sale by any member of the Target Group of materials, supplies, goods, services, equipment or other assets that provides for either (A) annual payments to any member of the Target Group of $500,000 or more or (B) aggregate payments to any member of the Target Group of $500,000 or more;
(iv) any partnership, joint venture or other similar agreement or arrangement;
(v) any agreement relating to the acquisition or disposition of any business (whether by merger, sale of stock, sale of assets or otherwise);
(vi) any option or license over any of its assets, or any franchise or similar agreement;
(vii) any agency, dealer, sales representative or other similar agreement;
(viii) any agreement that expressly limits the freedom of any member of the Target Group to compete in any line of business or with any Person or in any area;
(ix) any agreement with (A) Seller or any of its Affiliates, (B) any Person directly or indirectly owning, controlling or holding with power to vote, 5% or more of the outstanding voting securities of Seller or any of its Affiliates, (C) any Person 5% or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote by Seller or any of its Affiliates or (D) any director or officer of Seller or any of its Affiliates or any “associates” or members of the “immediate family” (as such terms are respectively defined in Rule 12b-2 and Rule 16a-1 of the 1934 Act) of any such director or officer; and
(x) any agreement with any director or officer of any member of the Target Group or with any “associate” or any member of the “immediate family” (as such terms are respectively defined in Rules 12b-2 and 16a-1 of the 1934 Act) of any such director or officer.
each a “ Material Contract ”.
(b) Each Material Contract is valid and binding on the parties thereto, and is in full force and effect, and no member of the Target Group or, to the knowledge of Seller, any other party thereto is in default or breach in any material respect under the terms of any such agreement, contract, plan, lease, arrangement or commitment, and, to the knowledge of Seller, no event or circumstance has occurred that would constitute any event of default thereunder. True and complete copies of each Material Contract have been delivered to Buyers.
(c) To the knowledge of Seller, in the period of twelve (12) months ending on the Closing Date, no Substantial Customer or Substantial Supplier has ceased, threatened to cease or indicated an intention to cease, trading with, or reduced or threatened to reduce to the Target Group in any material respect its trading with, any member of the Target Group.
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Paragraph 3.13. Litigation . There is no action, suit, proceeding or, to the knowledge of Seller investigation against, or to the knowledge of Seller, threatened or pending against any member of the Target Group before any Governmental Authority or arbitrator and as far as the Seller is aware there are no existing circumstances which are likely to give rise to any such action, suit, or proceeding or investigation which, individually or in the aggregate, if determined or resolved adversely in accordance with the plaintiff/claimant’s demands, could reasonably be expected to have a material adverse effect on the business of the Target Group taken as a whole, or which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transaction contemplated by this Agreement.
Paragraph 3.14. Compliance with Laws and Court Orders . No member of the Target Group is in violation of, and has not since 1 April 2010 violated, and to the knowledge of Seller is not under investigation with respect to and has not been threatened to be charged with or given notice of any violation of, any Applicable Law, except for violations that have not had and could not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business of the Target Group taken as a whole. There is no judgment, decree, injunction, rule or order of any arbitrator or Governmental Authority outstanding against any member of the Target Group that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business of the Target Group taken as a whole, or that in any manner seeks to prevent, enjoin, alter or materially delay the consummation of the transactions contemplated by this Agreement.
Paragraph 3.15. Foreign Corrupt Practices Act; UK Bribery Act. Except as Disclosed on Schedule 3.15 of the Seller Disclosure Schedule, no member of the Target Group, nor any director, officer, employee, agent or representative thereof acting in their capacity as such, has taken any action in breach of Applicable Law in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value to (i) any “government official” (including any officer or employee of a government or government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office) in order to influence official action, (ii) any person (whether or not a government official) to induce that person to act in breach of a duty of good faith or trust (“acting improperly”) or to reward the person for acting improperly, or (iii) any person while knowing or having reason to know that all or any portion of the money or other thing of value will be offered, promised or given to a government official in order to influence or reward official action or to any person to induce such person to act improperly or reward the person for doing so. Each member of the Target Group has conducted its businesses in compliance with all applicable anti-corruption laws, including, without limitation, the US Foreign Corrupt Practices Act and the UK Bribery Act, and has instituted and maintains policies and procedures designed to promote and achieve compliance with such laws.
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Paragraph 3.16. Properties .
(a) The Properties comprise all the land and buildings owned by the Target Group or used or occupied by the Target Group or in which the Target Group have any other interest, right or liability.
(b) In the case of each of the Properties, the relevant member of the Target Group is the sole legal and beneficial owner and has a good and marketable title and has in its possession or under its control free of any Encumbrance all relevant original title deeds and documents necessary to prove the title of the relevant member of the Target Group.
(c) The Target Group are in possession of, own, use and occupy the Properties free from any lease, covenant, restriction, stipulation, easement, licence, underlease, tenancy, right, limitation, option, right of pre-emption, customary or public right, local land charge, mining or mineral right, franchise, manorial right, exception or reservation or other right or interest in or over land or any other unregistered interest not referred to above.
(d) The Target Group do not by their use or occupation of the Properties contravene any requirement or restriction having the force of law in the jurisdiction in which the Properties are situate and the Target Group have complied with all covenants, conditions, restrictions, limitations and other matters binding on them, none of which is of an unusual or onerous nature or prejudicially affects the Target Group’s use, occupation or powers of disposal or development of the Properties or adversely affect their value.
(e) Where the title requires registration in the relevant jurisdiction where the respective Properties are situate, it has been duly registered and a member of the Target Group is the registered proprietor.
(f) Where title to the Properties does not require registration in the relevant jurisdiction where the respective Properties are situate, there is nothing preventing such registration in the event that the same may be required in the future and no event has occurred in consequence of which registration should have been effected.
(g) There are no mortgages, charges, legal or equitable, specific or floating or debentures, rent charges, liabilities to maintain roadways, liens (whether for costs or to an unpaid vendor or otherwise), annuities or trusts (whether for securing money or otherwise) affecting any of the Properties or the proceeds of sale of any of the Properties.
(h) There are no agreements for sale, estate contracts, options, rights of pre-emption or similar matters affecting any of the Properties to which any member of the Target Group are a party, the provisions of which remain to be observed or performed.
(i) There is no right, easement, wayleave, licence or informal arrangement, public or private, which is enjoyed or in course of being acquired by or against it.
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(j) There is no agreement, obligation, event, or other matter which is, although not registered, is capable of registration (by way of charge, caution, inhibition, restriction or notice or otherwise howsoever).
(k) The Target Group do not by their use or occupation contravene any requirement or restriction having the force of law in the jurisdiction in which the Properties are situate and the Target Group have complied with all covenants, conditions, restrictions, limitations and other matters binding on them, none of which is of an unusual or onerous nature or prejudicially affects the Target Group’s use, occupation or powers of disposal or development of it or adversely affects its value.
(l) Each point at which access is gained to it is over roads which have been taken over by the local or other highway authority and which are maintainable at the public expense and no means of access to it is shared with any other person nor subject to rights of determination by any other person.
(m) The main services of water, drainage, gas and electricity are enjoyed at each of the Properties.
(n) There is no circumstance which would entitle any third party to exercise a right or power of entry or to take possession, or which would in any other way affect or restrict the continued possession, enjoyment or use of each of the Properties by the Target Group.
(o) All fixtures, fittings, plant and equipment (other than tenants’ property and meters and other equipment belonging to suppliers of telephone, electricity, gas and water services) are the Target Group’s own absolute property free from encumbrances.
(p) Where necessary all title deeds have had paid on them any relevant taxes payable on them in the jurisdiction in which the Properties are situate and no application to defer the payment of such taxes on any contingent, uncertain or unascertained consideration has been made.
(q) No notice, order, proposal, application, request or schedule of dilapidations affecting or relating to any of the Properties has been served or made by any authority or other person or any member of the Target Group or by the Target Group.
(r) None of the Properties is subject to the payment of any outgoings other than rates or water rates or other sums payable in the jurisdiction in which the Properties are situate (and, in the case of leaseholds, sums reserved by the relevant lease) and all such outgoings have been duly paid to date and none is in dispute.
(s) No action, claim, proceeding, demand, dispute or liability in respect of any of the Properties is outstanding against any member of the Target Group.
(t) No dispute with any adjoining or neighboring owner with respect to boundary walls and fences or with respect to any easement, right or means of access to any of the Properties is existing to which any member of the Target Group is a party.
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(u) None of the members of the Target Group has had occasion to make any claim or complaint in relation to any neighboring property or its use or occupation.
(v) The existing use of each of the Properties as stated in Schedule 3.16(v) of the Seller Disclosure Schedule is the actual use to which each of the Properties is put and is a lawful use under the relevant laws of the jurisdiction in which the Properties are situate and such use of the Properties is for the purposes of the business carried on by the Target Group at the Properties.
(w) No development works or alterations at any of the Properties have been carried out in breach of any laws relating to such development works or alterations in the jurisdiction in which the Properties are situate.
(x) No formal or informal notice has been served, nor have any enforcement proceedings been commenced, on or against any member of the Target Group in respect of any of the Properties or the use of them, by any authority within the jurisdiction in which the Properties are situate.
(y) Any planning permissions required within the jurisdiction in which the Properties are situate and affecting the Properties are unconditional or subject only to conditions which have been satisfied so that nothing further remains to be done and no permission has been given subject to unusual or onerous conditions nor any condition making it temporary or personal to anyone.
(z) To the knowledge of Seller, no application has been submitted to any authority within the jurisdiction in which the Properties are situate affecting any of the Properties which awaits determination nor to the knowledge of Seller, is any decision or deemed refusal affecting any of the Properties subject to appeal or to any challenge as to its validity.
(aa) No permission affecting any of the Properties is suspended or remains unimplemented in whole or in part.
(bb) None of the Properties is subject to any agreement entered into pursuant to any laws of the jurisdiction in which the Properties are situate relating to infrastructure (including but not limited to roads, drainage or water services) to which any member of the Target Group is subject or any other agreement regulating use or development and there is no current requirement or any member of the Target Group to enter into any such agreement or obligation.
(cc) The Properties are in good and substantial repair and fit for the purposes for which they are presently used. There is no material defect in the construction or condition of any of the Properties and no mining operations have been or are contemplated under any of them.
(dd) None of the Properties is subject to any actual or contingent liability to repay the whole or any part of any compensation received or receivable under the laws of the jurisdiction in which the Properties are situate.
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(ee) None of the members of the Target Group is expecting to have to expend any substantial sum of money in respect of any of the Properties in the near future.
(ff) In respect of the Leasehold Properties: (i) the current rent is confirmed in Schedule 3.16(ff) of the Seller Disclosure Schedule and there are no rent reviews pending or currently under negotiation or the subject of a reference to an expert or arbitrator or the courts or any other independent person body authority; (ii) the relevant member of the Target Group has paid the rent and all other sums payable up to date and the last demand for rent was unqualified and each lease is valid and in full force; (iii) no notices have been served by the landlord in respect of the Leasehold Properties; (iv) where title to of the Leasehold Properties is not registered at the relevant authority for the jurisdiction in which the Properties are situate, the lease was not subject to compulsory registration when it was granted and any subsequent disposition of the leasehold interest was not subject to compulsory registration at the relevant time; (iv) the Target Group have not received any complaint regarding any alleged breach of any covenants and conditions; (v) where the grant of the lease or any event since the grant of the lease resulted in taxes being payable to any authority such taxes have been paid in full.
(gg) In respect of the UK Leased Properties, those written replies to enquiries provided by the Seller’s solicitors to the Buyers’ solicitors prior to the date hereof are true and accurate in all respects.
(hh) None of the members of the Target Group have at any time:
(i) had vested in it or them (whether as an original tenant or undertenant or as an assignee, transferee or otherwise) any freehold or leasehold property or otherwise, other than the Properties; and
(ii) given any covenant or entered into any agreement, deed or other document (whether as a tenant or undertenant or as an assignee, transferee, guarantor or otherwise) in respect of any freehold or leasehold property or otherwise,
in respect of which in either case any actual contingent or potential liability remains with the Target Group.
Paragraph 3.17. Products . Each of the products produced or sold by any member of the Target Group during the last 24 months is (i) is, and at all times up to and including the sale thereof has been, in compliance in all material respects with all Applicable Laws and (ii) to the knowledge of Seller is fit for the ordinary purposes for which it is intended to be used and conforms in all material respects to any promises or affirmations of fact made by the Target Group in connection with the sale of such products. There is, to the knowledge of Seller, no design defect with respect to any of such products and each of such products contains adequate warnings, in accordance with Applicable Laws, and current industry practice with respect to its contents and use.
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Paragraph 3.18. Intellectual Property. (a) Schedule 3.18 of the Seller Disclosure Schedule contains an accurate list of each of the registrations and applications for registrations included in the Owned Intellectual Property Rights (but for the avoidance of doubt, nothing in this paragraph 3.18(a) shall be construed as a warranty concerning the validity or subsistence of any such Intellectual Property Rights). Schedule 3.18(a) of the Seller Disclosure Schedule contains details of all material agreements (whether written or otherwise, including license agreements, research agreements, development agreements, distribution agreements, settlement agreements, consent to use agreements and covenants not to sue, but excluding licenses for personal computer software that are generally available on nondiscriminatory pricing terms and have an individual acquisition cost of $1,000 per seat or less) to which any member of the Target Group is a party or otherwise bound, granting or restricting any right to use, exploit or practice any material Intellectual Property Rights. Since 31 March 2012, no member of the Target Group has transferred (by assignment, license or otherwise) any of its Owned Intellectual Property Rights to Seller, any member of the Retained Group or a third party.
(b) The Licensed Intellectual Property Rights and the Owned Intellectual Property Rights together constitute all the Intellectual Property Rights used or held for use in, the conduct of the business of each member of the Target Group as conducted on the Closing Date and, to the knowledge of the Seller, as recently proposed to be conducted by any member of the Target Group to be conducted. To the knowledge of Seller, the consummation of the transactions contemplated by this Agreement will not alter, encumber, impair or extinguish any Owned Intellectual Property Rights or Licensed Intellectual Property Rights.
(c) Neither Seller nor any member of the Target Group has given to any Person an indemnity against the infringement of any Intellectual Property Right, other than indemnities (i) that, individually, or in the aggregate, could not result in liability to any member of the Target Group in excess of $250,000 or (ii) that arise under a standard form sale contract or under any agreement made in the ordinary course of business or (iii) that arise under any software licence agreement.
(d) To the knowledge of Seller, no member of the Target Group has infringed, misappropriated or otherwise violated any Intellectual Property Right of any third person. There is no claim, action, suit or proceeding, or to the knowledge of Seller, pending against, or threatened against any member of the Target Group or to the knowledge of the Seller any present officer, director or employee of any member of the Target Group (or any persons who was an officer, director of employee of any member of the Target Group within the previous 12 months) (i) based upon, or challenging or seeking to deny or restrict, the rights of any member of the Target Group in any of the Owned Intellectual Property Rights and the Licensed Intellectual Property Rights, (ii) alleging that the use of the Owned Intellectual Property Rights or the Licensed Intellectual Property Rights or any services provided, processes used or products manufactured, used, imported or sold by any member of the Target Group conflict with, misappropriate, infringe or otherwise violate any Intellectual Property Right of any third party or (iii) alleging that any member of the Target Group have infringed, misappropriated or otherwise violated any Intellectual Property Right of any third party.
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(e) None of the Owned Intellectual Property Rights or, to the knowledge of Seller, Licensed Intellectual Property Rights material to the operation of the business of any member of the Target Group, has been adjudged invalid or unenforceable in whole or part and to the knowledge of the Seller there are no grounds for any such judgment.
(f) The members of the Target Group hold all right, title and interest in and to all Owned Intellectual Property Rights and each of the members of the Target Groups’ licenses under the Licensed Intellectual Property Rights, free and clear of any Encumbrance (but for the avoidance of doubt, nothing in this paragraph 3.18(f) shall be construed as a warranty concerning the validity or subsistence of any such Intellectual Property Rights). In each case where a patent or patent application, trademark registration or trademark application, service mark registration or service mark application, or copyright registration or copyright application included in the Owned Intellectual Property is held by assignment, the assignment has been duly recorded with the Governmental Authority from which the patent or registration issued or before which the application or application for registration is pending. Each member of the Target Group has taken all reasonable actions which it considers necessary to maintain and protect the Owned Intellectual Property Rights and its rights in the Licensed Intellectual Property Rights, including payment of applicable maintenance fees and filing of applicable statements of use.
(g) To the knowledge of Seller, no Person has infringed, misappropriated or otherwise violated any Owned Intellectual Property Right or Licensed Intellectual Property Right. None of the Intellectual Property Rights of any member of the Target Group that is material to the business or operation of any member of the Target Group and the value of which to any member of the Target Group is contingent upon maintaining the confidentiality thereof, has been disclosed other than to employees, representatives and agents of the members of the Target Group who are bound by confidentiality.
(h) With respect to pending applications and applications for registration of the Owned Intellectual Property Rights that are material to the business or operation of any member of the Target Group, Seller is not aware of anything, in its reasonable opinion, that could reasonably be expected to prevent any such application or application for registration from being granted with coverage substantially equivalent to the latest amended version of the pending application or application for registration. None of the trademarks, service marks, applications for trademarks and applications for service marks included in the Owned Intellectual Property Rights that are material to the business or operation of any member of the Target Group has been the subject of a successful opposition or cancellation procedure. None of the patents and patent applications included in the Owned Intellectual Property Rights that are material to the business or operation of any member of the Target Group has, to the knowledge of Seller, been the subject of an interference, protest, public use proceeding or third party reexamination request.
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Paragraph 3.19. Insurance Coverage . Seller has given to Buyers a list of, and true and complete copies of, all insurance policies and fidelity bonds relating to the assets, businesses, operations, employees, officers or directors of each member of the Target Group. There is no claim by any member of the Target Group pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds or in respect of which such underwriters have reserved their rights. All premiums payable under all such policies or bonds have been timely paid and each member of the Target Group has otherwise complied fully with the terms and conditions of all such policies and bonds. Such policies of insurance and bonds (or other policies and bonds providing substantially similar insurance coverage) have been in effect since 1 April 2012 and remain in full force and effect. Seller does not know of any threatened termination of, premium increase with respect to, or material alteration of coverage under, any of such policies or bonds.
Paragraph 3.20. Licenses and Permits . Schedule 3.20 of the Seller Disclosure Schedule correctly describes each material license, permit, approval or other similar authorization (excluding those relating to Intellectual Property Rights) granted by any Government Authority relating to the assets or business of any member of the Target Group (the “ Permits ”) together with the name of the Governmental Authority issuing such Permit. Except as Disclosed on Schedule 3.20 of the Seller Disclosure Schedule, (i) the Permits are valid and in full force and effect, (ii) no member of the Target Group is in default under, and no condition exists that would constitute a default under, the Permits and (iii) none of the Permits will be terminated or become terminable, in whole or in part, as a result of the transactions contemplated hereby.
Paragraph 3.21. Inventories . The inventories set forth in the Balance Sheet were stated therein at the lesser of cost or fair market value determined in accordance with GAAP consistently applied by each member of the Target Group. Since the Balance Sheet Date, the inventories of each member of the Target Group have been maintained in the ordinary course of business. All such inventories are owned free and clear of all Encumbrances and at Closing are considered by the Seller to be both (a) reasonably sufficient for the purpose of the Target Group and (b) usable or saleable (as applicable) in the normal course of business. Except as Disclosed on Schedule 3.21 of the Seller Disclosure Schedule, none of the members of the Target Group is party to any current consignment or “bill and hold” arrangement.
Paragraph 3.22. Receivables. All accounts, notes receivable and other receivables reflected on the Balance Sheet (other than receivables collected since the Balance Sheet Date) are genuine and collectible, subject to normal and customary trade discounts or non-material disputes, less any provisions recorded on the Balance Sheet. All accounts, notes receivable and other receivables relating to the business of each member of the Target Group as of the Closing Date which are not reflected on the Balance Sheet will, to the knowledge of Seller, be genuine and collectible, subject to normal and customary trade discounts or non-material disputes. All accounts, notes receivable and other receivables arising out of or relating to such business of each member of the Target Group as of the Balance Sheet Date have been included in the Balance Sheet.
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Paragraph 3.23. Discharge of debts and collection of payments. Except as Disclosed on Schedule 3.23 of the Seller Disclosure Schedule, since the Balance Sheet Date, each member of the Target Group has discharged its debts and collected its payments in the ordinary course of business.
Paragraph 3.24. Finders’ Fees . Except for Grant Thornton UK LLP, whose fees and expenses will be paid by Seller, there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Seller or the Target Group who is entitled to any fee or commission in connection with the transactions contemplated by this Agreement.
Paragraph 3.25. No other bonuses. Except for the Transaction Bonuses, no Employee or any other person employed or engaged by any member of the Target Group is eligible for or entitled to, as a result the transaction contemplated by this Agreement (including as a consequence of Closing): (a) terminate his employment or engagement or cause such employment or engagement to be terminated, other than in accordance with the termination provisions of his employment contract (as disclosed to Buyers); (b) receive any remuneration, emolument, incentive, reward, or benefit of any kind; (c) receive any variation to his terms and conditions of employment or engagement; or (d) treat himself as being dismissed released from any obligation to any member of the Target Group, or to the knowledge of Seller.
Paragraph 3.26. Employees . Except as Disclosed on Schedule 3.26 of the Seller Disclosure Schedule:
(a) The following terms and conditions of employment of all the Employees have been disclosed in writing to Buyers, details of: name, role, age, all remuneration, emoluments, incentives and benefits (including underlying policy documents and any employee benefit plans), termination provisions, length of notice, hours and location of work (including jurisdiction), length of service any change of control provisions of each Employee and details of any payments or benefits to any Employee in connection with the Closing.
(b) Copies of all template contracts of employment, staff handbooks, policies and procedures applicable to the Employees are attached to the Seller Disclosure Schedule, together with details of any material variations from the terms of the template contracts.
(c) Copies of the contracts of employment (including details of any and all variations of current remuneration and benefits) of the Key Employees of any member of the Target Group have been disclosed in writing to Buyers.
(d) No Employee has given or been given notice of termination of his employment which remains outstanding at the date of this Agreement and no former employee of any member of the Target Group has ceased to be an Employee within the last six months.
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(e) There is no agreement, arrangement or practice imposing an obligation on any member of the Target Group to change emoluments or any other terms of employment at any future date.
(f) Each member of the Target Group has complied in all material respects with all Applicable Law (including but not limited to immigration laws) and all terms of employment contracts in relation to or in connection with each of the Employees or any former employees of the Target Group whose employment has ceased within the last six months, including in respect of any collective agreements in respect of employee representative bodies and no sums are outstanding in respect of any Employee or former employee of any member of the Target Group up to the Closing except for salaries and expenses for the month during which Closing occurs, which Seller shall be liable to pay in the ordinary course (subject to being properly accrued and apportioned in respect of the period before and after Closing).
(g) There are no agreements or other arrangements between any member of the Target Group and any trade union, work councils (domestic or European) or other representative body in relation to the Employees of any member of the Target Group and there are no actual or, to the knowledge of Seller, potential disputes or any on-going negotiations with any such body. There are no collective agreements applicable to the Employees.
(h) There are no existing claims or actual or, to the knowledge of Seller, threatened litigation against any member of the Target Group by or in respect of any Employee or individual engaged to provide services to any member of the Target Group or former employee of, or individual engaged to provide services to, any member of the Target Group in respect of his employment or engagement, or the termination of his employment or engagement or the provision of any benefits, or any disputes or industrial action for the purposes of collective industrial relations, and no such dispute has arisen or industrial action taken place within the last two years.
(i) There are no disciplinary or grievance proceedings in relation to any Employee or former employee of any member of the Target Group currently contemplated, anticipated or, to the knowledge of Seller, threatened or in the course of being followed by a member of the Target Group or which are the subject of appeal.
(j) No member of the Target Group has entered into and there is not in effect any contract of employment with any Employee which contains a notice period of more than six months or which entitles the Employee to compensation exceeding the value of six months’ remuneration if terminated without notice.
(k) No member of the Target Group has any agreement, arrangement or practice for the making of payments or the provision of benefits to any Employee on redundancy, severance, or other termination of employment of any Employee (other than the statutory minimum required by Applicable Law).
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(l) Details of all consultants, individual contractors, agency workers and any other persons engaged by any member of the Target Group and all terms and conditions applicable to their engagement have been disclosed in writing to Buyers and all members of the Target Group have complied in all material respects with all Applicable Law in relation to such persons. There are no secondment arrangements in place with any member of the Target Group involving companies which are not members of the Target Group.
(m) The Transfer of Undertakings (Protection of Employment) Regulations 2006 (“ TUPE ”) or any local equivalent legislation, has not applied in relation to any Employees or former employees of any member of the Target Group in the last two years.
(n) Complete and accurate details of any arrangements for the provision of medical, sickness, permanent health or similar coverage for or in respect of any Employees have been provided to Buyers, together with details of any former employees or officers of any member of the Target Group who are still claiming under any such insurance policies applicable during their employment with the relevant member of the Target Group, including complete and accurate details of those insurance policies to the extent not already provided to Buyers.
Paragraph 3.27. Employee Benefit Plans .
(a) Each Target Entity Plan has been administered, in all material respects, in accordance with its terms, and each member of the Target Group has met its obligations, in all material respects, with respect to each Target Entity Plan and has made all required contributions thereto in accordance with all Applicable Laws in all material respects. Each U.S.-based Target Entity Plan is in compliance, in all material respects, with the currently applicable provisions of ERISA and the Code and all applicable interpretations and regulations thereunder, as well as all other Applicable Laws. All material filings and reports as to each Target Entity Plan required to have been submitted to the appropriate Government Agency (i.e., U.S. Internal Revenue Service, the U.S. Department of Labor) have been duly submitted. No Target Entity Plan contains any securities issued by any member of the Target Group. The assets for each Target Entity Plan which is funded are reported at their fair market value on the books and records of such Target Entity Plan.
(b) There are no legal proceedings (except claims for benefits payable in the normal operation of the Target Entity Plans and proceedings with respect to qualified domestic relations orders) against or involving any Target Entity Plan or asserting any rights or claims to benefits under any Target Entity Plan that would reasonably be expected to result in any material liability to any member of the Target Group.
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(c) All Target Entity Plans that are intended to be qualified under Section 401(a) of the Code have received determination letters from the IRS to the effect that such Target Entity Plans are qualified and the plans and the trusts related thereto are exempt from United States federal income Taxes under Sections 401(a) and 501(a), respectively, of the Code or have been established under a prototype plan for which an IRS opinion letter has been obtained by the plan sponsor and is valid as to the adopting employer, no such determination or opinion letter has been revoked and, to the knowledge of Seller, revocation has not been threatened, and no such Target Entity Plan has been amended since the date of its most recent determination letter or application therefor in any respect, and no act or omission has occurred, that would reasonably be expected to adversely affect its qualification or materially increase its cost. Each Target Entity Plan has been timely amended to comply with all provisions of the Code which are applicable to such Target Entity Plan.
(d) No member of the Target Group has any liability with respect to any plan subject to the provisions of Section 412 of the Code or Title IV of ERISA.
(e) No member of the Target Group has any liability with respect to any “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA).
(f) Other than as Disclosed on Schedule 3.27(f) of the Seller Disclosure Schedule, there are no unfunded obligations under any Target Entity Plan providing benefits after termination of employment to any employee of any member of the Target Group (or to any beneficiary of any such employee), including but not limited to retiree health coverage and deferred compensation, but excluding continuation of health coverage required to be continued under Section 4980B of the Code or other applicable law and insurance conversion privileges under state law or severance arrangements that have been disclosed.
(g) No act or omission has occurred and no condition exists with respect to any Target Entity Plan that would reasonably be expected to subject any member of the Target Group to any material fine, penalty, tax or liability of any kind imposed under ERISA or the Code.
(h) No Target Entity Plan is funded by, associated with or related to a “voluntary employee’s beneficiary association” within the meaning of Section 501(c)(9) of the Code.
(i) Each Target Entity Plan, other than any individual contractual arrangement for which mutual consent to amend is required by its terms, is amendable and terminable unilaterally by any member of the Target Group at any time without liability or expense to the relevant member of the Target Group or such Target Entity Plan as a result thereof (other than for benefits accrued through the date of termination or amendment and reasonable administrative expenses related thereto), and no Target Entity Plan, plan documentation or agreement, summary plan description or other written communication distributed generally to employees by its terms prohibits any member of the Target Group from amending or terminating any such Target Entity Plan.
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(j) Schedule 3.27(j) of the Seller Disclosure Schedule discloses each: (i) Target Entity Plan the benefits of which are contingent, or the terms of which are altered, upon the occurrence of a transaction involving the relevant member of the Target Group of the nature of any of the transactions contemplated by this Agreement; and (ii) Target Entity Plan, any of the benefits of which will be increased, or the vesting of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement.
(k) With respect to each Target Entity Plan which is or could be subject to Section 409A of the Code, such plan has been maintained and administered, in all material respects, in a manner consistent with avoiding adverse tax consequences under Section 409A of the Code.
(l) Each Target Entity Plan which is a group health plan (within the meaning of Section 5000(b)(1) of the Code) complies and has complied in all material respects with the applicable requirements of (i) Part 6 of Title I of ERISA and the Consolidated Omnibus Budget Reconciliation of 1985 (“ COBRA ”), (ii) the Patient Protection and Affordable Care Act of 2010, and any rules or regulations promulgated thereunder, and (iii) the Health Insurance Portability and Accountability Act of 1996, as amended, and any rules or regulations promulgated thereunder (“ HIPAA ”).
(m) Except for the Disclosed Schemes and the Target Entity Plans, no member of the Target Group is under any legal liability to pay pensions or gratuities or any similar payment to or in respect of any employee or officer or former employee or officer on retirement (howsoever and whensoever arising) or death and, in respect of former employees and officers, on disability. Schedule 3.27(m) of the Seller Disclosure Schedule contains a complete and accurate list of all Target Entity Plans (by member of the Target Group). Complete and accurate copies of (i) all Target Entity Plans which have been reduced to writing, (ii) written summaries of all unwritten Target Entity Plans, (iii) all related trust agreements, insurance contracts and summary plan descriptions, and (iv) all annual reports for the last three plan years with respect to such Target Entity Plans filed on IRS Form 5500, if applicable, have been delivered to the Buyers.
(n) Except for the Disclosed Schemes and the Target Entity Plans, no member of the Target Group is party to any arrangement to which it contributes is bound to contribute or make any payment, either now or in the future under which benefits of any kind are payable to or in respect of any of employee or officer or former employee or officer on retirement (howsoever and whensoever arising) or death and, in respect of former employees and officers, on disability, nor has any proposal been announced (or any promise made) to establish any such arrangement and to the extent that any such arrangement existed in the past, no member of the Target Group has any subsisting liability in respect of it.
(o) Except for under the Target Entity Plans, no employee or officer or former employee or officer of any member of the Target Group has entitlement to benefits on retirement (howsoever and whensoever arising) or death and, in respect of former employees and officers, on disability, otherwise than in accordance with the governing documentation of the Disclosed Schemes and no announcement or communication has been made by any member of the Target Group that would be reasonably expected to give rise to such an entitlement.
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(p) The benefits provided under the Disclosed DC Schemes are “money purchase benefits”, within the meaning given in section 29 of the Pensions Act 2011; no guarantee or promise has been given by any member of the Target Group nor is there any understanding that any of the benefits provided under the Disclosed DC Schemes other than life assurance benefits (where applicable) shall be of a specified amount.
(q) Complete and accurate details of the rates at which contributions are payable by the members of the Target Group in respect of the Disclosed DC Schemes have been provided to Buyers.
(r) Except for under the Target Entity Plans, no member of the Target Group has at any time or in respect of any person provided or promised to provide ex gratia pensions or other benefits on retirement (howsoever and whensoever arising) or death and, in respect of former employees and officers, on disability.
(s) Each member of the Target Group has duly complied with its obligations under the Disclosed DC Schemes and the Life Assurance Plan in all material respects and all amounts, contributions and charges due to be paid by any member of the Target Group to the Disclosed DC Schemes and the Life Assurance Plan prior to the Closing have been paid by each member of the Target Group in full when due.
(t) To the knowledge of the Seller, the Disclosed DC Schemes have at all times been administered in accordance with all applicable legal and administrative requirements and in compliance with the provisions of their governing documents.
(u) No Employee has any rights to enhanced pension benefits on redundancy or early retirement as a result of a transfer of an undertaking or part of an undertaking to which either the Transfer of Undertakings (Protection of Employment) Regulations 1981 or the Transfer of Undertakings (Protection of Employment) Regulations 2006 applied.
(v) All death in service benefits payable prior to Closing in respect of the Employees under the Disclosed DC Schemes and the Life Assurance Plan are fully insured prior to Closing and, in relation to any death in service benefits payable under the Disclosed DC Schemes, all premiums by way of insurance and the rates at which they are payable and any special terms in respect of any individual members have been disclosed to Buyers.
(w) No claims actions or complaints (including without limitation any complaints made under any internal disputes procedure and any references or applications made to any regulatory authority but excluding claims for benefits in the ordinary course) have been made or, to the knowledge of Seller, are pending or threatened against any member of the Target Group in relation to the Disclosed Schemes. To the knowledge of Seller, there are no existing facts or circumstances that would reasonably be expected to give rise to any such claims, actions or complaints.
(x) No member of the Target Group has been a party to any act, or deliberate failure to act, which would reasonably be expected to result in a Contribution Notice being issued to any member of the Target Group by the Pensions Regulator.
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(y) No member of the Target Group has at any time prior to the Closing been “connected” with or an “associate” of any employer which is or has been participating in a pension scheme (other than the Disclosed DB Scheme) to which section 32, 43, 47 or 58 of the Pensions Act 2004 applies. For these purposes “connected” and “associate” have the meanings given to them in sections 435 and 249 of the Insolvency Act 1986 respectively.
(z) No Financial Support Direction, Contribution Notice or Restoration Order has been issued by the Pensions Regulator under sections 32, 43, 47 or 58 of the Pensions Act 2004 respectively against any member of the Target Group and so far as Seller is aware, there are no existing or past circumstances which would reasonably be expected to give rise to issue of a Financial Support Direction, Contribution Notice or Restoration Order against any member of the Target Group or any of its officers.
(aa) Each member of the Target Group has complied with its obligations under Pensions Law in relation to the Disclosed Schemes.
Paragraph 3.28. Environmental Matters . (a) (i) Since 1 April 2012, no written notice, notification, demand, request for information, citation, summons or order has been received by any member of the Target Group, to the knowledge of Seller no complaint has been filed, no penalty has been assessed and no action, claim, suit or proceeding is to Seller’s knowledge pending or threatened by any Governmental Authority or other Person against any member of the Target Group and relating to or arising out of any breach of Environmental Law.
(ii) There are no material liabilities of any member of the Target Group of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, relating to any breach of Environmental Law by any member of the Target Group.
(iii) To the knowledge of Seller, there are no polychlorinated biphenyls, radioactive material, lead, asbestos-containing material, incinerator, sump, surface impoundment, lagoon, landfill, septic, wastewater treatment or other disposal system or underground storage tank (active or inactive) present at, on or under any of the Properties.
(iv) (a) No Hazardous Substance has been discharged, disposed of, dumped, injected, pumped, deposited, spilled, leaked, emitted or released (collectively, “ Released ”) by SFC or any of its subsidiaries (collectively, the “US Entities”), or to Seller’s knowledge by any of their respective predecessors or any third party, into the soil, subsurface strata, surface water, sediment, ground or groundwater at, on, under or from any property or facility currently or formerly owned, leased, operated or used by any US Entity or any property or facility at which any US Entity arranged for Hazardous Substance disposal, which would reasonably result in a material liability to any member of the Target Group and (b) no Hazardous Substance has been Released by any member of the Target Group (other than a US Entity), or to Seller’s knowledge by any predecessor thereof or any third party, in breach of Environmental Law into the soil, subsurface strata, surface water, sediment, ground or groundwater at, on, under or from any property or facility currently or formerly owned, leased, operated or used by any member of the Target Group (other than a US Entity), which would reasonably result in a material liability to any such member of the Target Group.
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(v) To the knowledge of Seller, no property now or previously owned, leased or operated by any member of the Target Group or any property to which any member of the Target Group has, directly or indirectly transported or arranged for the transportation of any Hazardous Substances for disposal is listed or, to Seller’s knowledge, proposed for listing, on the National Priorities List promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or on any similar federal, state or foreign list of sites requiring investigation or clean-up.
(vi) Each member of the Target Group is in compliance in all material respects with all Environmental Laws and has obtained and is in compliance in all material respects with all Environmental Permits; such Environmental Permits are valid and in full force and effect and will not be terminated or impaired or become terminable, in whole or in part, as a result of the transactions contemplated hereby.
(vii) The warranties contained in this Paragraph 3.28(a)(ii) and (iv) shall not apply to the Specific Environmental Indemnity Sites, the Stockton on Tees Property and the Bury Property.
(b) There has been no material environmental investigation, study or audit conducted by any member of the Target Group in the two years prior to the date of this Agreement of which Seller has knowledge in relation to the current or prior business of any member of the Target Group or any property or facility now or previously owned, leased or operated by any member of the Target Group.
Paragraph 3.29. Tax Matters .
(a) Balance Sheet . All liabilities, whether actual, deferred, contingent or disputed, of each member of the Target Group for Tax measured by reference to income, profits or gains earned, accrued or received on or before the Balance Sheet Date or arising in respect of an event occurring or deemed to occur on or before the Balance Sheet Date are fully provided for or (as appropriate) disclosed in the Balance Sheet. All other warranties relating to specific Tax matters set out in this Schedule are made without prejudice to the generality of this Paragraph 3.29.
(b) Position since Balance Sheet Date. Since the Balance Sheet Date no member of the Target Group has been involved in any transaction which has given or may, to the knowledge of Seller, give rise to a liability to Tax on any member of the Target Group (or would have given or might give rise to such a liability but for the availability of any relief) other than Tax in respect of normal trading income or receipts of the member of the Target Group concerned arising from transactions entered into by it in the ordinary course of business.
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(c) Payment of Taxes . All Tax due and payable by any member of the Target Group prior to the date hereof has been paid in full. Each member of the Target Group has made all deductions and retentions of or on account of Tax as it was or is obliged to make and all such payments of or on account of Tax as should have been made to any Tax Authority in respect of such deductions or retentions.
(d) Returns . Each member of the Target Group has in the last six years duly, and within any appropriate time limits, made all returns, given all notices and supplied all other material information required to be supplied to all relevant Tax authorities and has maintained all records required to be maintained for Tax purposes; all such information was and remains accurate in all material respects and all such returns and notices do not reveal any transactions which may be the subject of any dispute with or any enquiry raised by, any Tax Authority.
(e) Disputes, investigations . No member of the Target Group is involved in any current dispute with any Tax Authority or is or has in the last six years been, the subject of any investigation, enquiry, audit or non-routine visit by any Tax Authority.
(f) Special arrangements . No Tax Authority has during the last six operated or agreed to operate any special arrangement (being an arrangement which is not based on relevant legislation or any published practice) in relation to any member of the Target Group’s affairs.
(g) Employees . All amounts payable to any Tax Authority in respect of any employee (including any Tax deductible from any amounts paid to an employee, and any social security, social fund or similar contributions required to be made in respect of employees) due and payable by any member of the Target Group during the last six years up to the date hereof have been duly paid.
(h) Residence/permanent establishment . Each member of the Target Group is and has at all times during the last six (6) years been resident for Tax purposes in its place of incorporation and is not and has not at any time during the last six years been treated as resident in any other jurisdiction for any Tax purpose (including any double Taxation arrangement). No member of the Target Group is subject to Tax in any jurisdiction other than its place of incorporation by virtue of having a permanent establishment or other place of business in that jurisdiction.
(i) Agency, permanent establishment . No member of the Target Group is liable for any Tax as the agent of any other person or business or constitutes a permanent establishment of any other person, business or enterprise for any Tax purpose.
(j) Transfer pricing . All transactions between any members of the Target Group, or between any member of the Target Group and any current or past member of any group for Tax purposes of which the Seller has been a member, to the knowledge of the Seller have been and are on fully arm’s length terms. There are no circumstances to the knowledge of the Seller which could cause any Tax Authority to make any adjustment for Tax purposes, or require any such adjustment to be made, to the terms on which any such transaction is treated as taking place, and no such adjustment has been made or attempted in fact in the last six years.
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(k) VAT. Each member of the Target Group has, in the last three years, complied in all material respects with the terms of all relevant enactments relating to VAT.
(l) Stamp duties . In respect of all documents which establish or are necessary to establish the title of any member of the Target Group to any asset, or by virtue of which any member of the Target Group has any right, all applicable stamp duties or registration charges or similar duties Taxes or charges have been duly paid.
Paragraph 3.30. Assets .
(a) A member of the Target Group is the full legal and beneficial owner of all the assets included in the Balance Sheet, and any assets acquired since the Balance Sheet Date, and all other assets used by any member of the Target Group, except for those disposed of since the Balance Sheet Date in the ordinary course of business.
(b) None of the assets shown in the Balance Sheet or acquired by any member of the Target Group since the Balance Sheet Date or used by any member of the Target Group, is the subject of any lease, lease hire agreement, hire purchase agreement or agreement for payment on deferred terms or is the subject of any licence or factoring arrangement.
(c) A member of the Target Group is in possession or control of all the assets included in the Balance Sheet, and those acquired since the Balance Sheet Date, except for those Disclosed on Schedule 3.30 of the Seller Disclosure Schedule as being in the possession of a third party or those disposed of since the Balance Sheet Date in the ordinary course of business.
(d) None of the assets, undertaking or goodwill of any member of the Target Group is subject to an Encumbrance, or to any agreement or commitment to create an Encumbrance, and no person has any outstanding claim to be entitled to create such an Encumbrance.
(e) The assets of each member of the Target Group comprise all the assets used in, and necessary for, carrying on its business as such business is carried on at the Closing Date.
Paragraph 3.31. Condition of Plant and Equipment . The material plant, machinery, equipment and vehicles used in connection with the business of the Target Group are in good working order (fair wear and tear excepted) and have been properly maintained.
Paragraph 3.32. Supply Agreements.
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(a) The terms and conditions set forth in clauses 7 (“Changes to Specifications”), 10 (Inspections, Testing and Returns”), 14 (“Price”) and 18 (“Product Recall”) of each of the Supply Agreements are materially consistent with the conduct of business between the parties to such Supply Agreement during the twelve (12) months prior to and as of the Closing Date.
(b) To the knowledge of the Seller, there are no existing circumstances which would mean that any of the members of the Target Group party to the Supply Agreements would be unable to perform in any material respect any of the obligations under the Supply Agreements.
(c) As of the Closing Date, all of the products supplied under the Supply Agreements are supplied only to the Retained Group.
(d) All of the cost items (including material costs and total manufacturing cost) in respect of each product set forth in Schedule 1 of each Supply Agreement was calculated using the Target Group’s standard costs as of 30 November 2013.
(e) The methodology for determination of total manufacturing cost set forth in Schedule 2 of each Supply Agreement has been applied in a manner which is consistent during the twelve (12) months prior to the Closing Date.
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Schedule 4 — Warranties of Buyers
Paragraph 4.01. Corporate Existence and Power . (a) UK Buyer is a limited liability company duly formed, validly existing and in good standing under the laws of England and Wales and has all corporate powers and all governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted. UK Buyer is not insolvent under the laws of England and Wales or unable to pay its debts as they fall due, no arrangement or compromise has been made with its creditors and no insolvency proceedings have been commenced or applied for, nor has a liquidator, receiver or similar officer been appointed in relation to it or any of its assets and no resolution has been passed or order made for its winding-up.
(b) US Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware and has all corporate powers and all governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted. US Buyer is not insolvent under the laws of Delaware or unable to pay its debts as they fall due, no arrangement or compromise has been made with its creditors and no insolvency proceedings have been commenced or applied for, nor has a liquidator, receiver or similar officer been appointed in relation to it or any of its assets and no resolution has been passed or order made for its winding-up.
Paragraph 4.02. Corporate Authorization . The execution, delivery and performance by Buyer of this Agreement and the consummation of the transactions contemplated hereby are within the corporate powers of Buyer and have been duly authorized by all necessary corporate action on the part of Buyer. This Agreement constitutes a valid and binding agreement of Buyer enforceable against Buyer in accordance with its terms.
Paragraph 4.03. Governmental Authorization . The execution, delivery and performance by Buyer of this Agreement and the consummation by the Buyer of the transactions contemplated hereby require no material action by or in respect of, or filing with, any Governmental Authority under any Applicable Law.
Paragraph 4.04. Non-contravention . The execution, delivery and performance by Buyer of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) violate the certificate of incorporation, bylaws or other similar constituent documents of Buyer, (ii) violate any agreement to which Buyer is bound, or (iii) assuming compliance with the matters referred to in Paragraph 4.03, violate any Applicable Law; or (iv) require any action by or in respect of the consent, approval or authorization of any Person.
Paragraph 4.05. Litigation . There is no action, suit, investigation or proceeding pending against, or, to the knowledge of Buyer, threatened against or affecting, Buyer before any arbitrator or any Governmental Authority which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this Agreement.
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Paragraph 4.06. Finders’ Fees . Except for C.W. Downer & Co. whose fees and expenses will be paid by US Buyer, there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of US Buyer who might be entitled to any fee or commission in connection with the transactions contemplated by this Agreement.
Paragraph 4.07. Awareness of US Buyer. As at the Closing Date, other than with respect to the constitution or accuracy of the statutory books of Heath Filtration Limited (“ HFL Matters ”), US Buyer is not actually aware (the actual awareness of US Buyer for this purpose being only the actual awareness of each of Chad A. McDaniel, Joseph Abbruzzi, Robert K. Julian, Dale G. Barnhart, David Glenn, David Williams and James V. Laughlan) of any matter which constitutes an actual breach of any of the Seller Warranties. For the avoidance of doubt, the exclusion of the HFL Matters from this confirmation from US Buyer, shall not be taken as constituting any form of admission by Seller that the HFL Matters constitute an actual breach of any of the Seller Warranties.
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Schedule 6.01 – Tax Covenant
PART A
Definitions and Interpretation . The definitions and rules of interpretation in this Part A of Schedule 6.01 apply to all Parts of this Schedule 6.01.
“ Accounts Relief ” means a Relief arising to a Group Company in respect of an event occurring or period ending on or before the Closing, the availability of which:
(a) | has been shown as an asset (including a right to repayment of Tax) or otherwise taken into account in the Closing Statement; or |
(b) | has been taken into account in computing (and so reducing or eliminating) any provision for deferred Tax in the Closing Statement (or which, but for such Relief, would have appeared in the Closing Statement); |
“ Buyers’ Relief ” means (a) any Accounts Relief; (b) any Post-Closing Relief; and (c) any Relief arising to any member of the Buyers’ Tax Group (other than a Group Company) at any time;
“ Buyers’ Tax Group ” means each of the Buyers, any company in the same group for any Tax purposes as a Buyer from time to time, and any company connected or associated with a Buyer for Tax purposes from time to time, and “ Seller’s Tax Group ” shall be construed accordingly mutatis mutandis;
“ Circular 698 ” has the meaning set forth in Paragraph 1.4 of this Schedule 6.01;
“ Claim for Tax ” means a claim under Paragraph 1 of Part B of this Schedule 6.01, or for breach of any Tax Warranty whether pursuant to Clause 7 or otherwise;
“ CTA 2009 ” means the Corporation Tax Act 2009;
“ CTA 2010 ” means the Corporation Tax Act 2010;
“ Group Companies ” means each of the Target Companies and the Target Subsidiaries, and Group Company means any of them;
“ Group Relief ” means group relief capable of being surrendered or claimed pursuant to Part 5 of CTA 2010; a tax refund capable of being surrendered or claimed pursuant to section 963 of CTA 2010; the notional transfer of an asset or reallocation of a gain or loss pursuant to section 171A of TCGA 1992; the notional reallocation of gain pursuant to section 792 of CTA 2009); any other Relief available to be allocated or reallocated between members of a group, consortium or other association for Tax purpose whether in the United Kingdom or any other jurisdiction; and “Surrender” and cognate terms shall be construed accordingly in the context of Group Relief.
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“ HMRC ” means HM Revenue & Customs;
“ Post-Closing Relief ” means a Relief which arises to a Group Company as a result of or in connection with: (a) any event occurring; (b) any income, profits or gains earned, accrued or received; after the Closing;
“ PRC ” means the People’s Republic of China;
“ Relief ” includes, unless the context otherwise requires, any relief, loss, allowance, credit, deduction, exemption or set-off in respect of any Tax or relevant to the computation of any income, profits or gains for the purposes of any Tax, or any right to a repayment of or saving of Tax (including any repayment supplement or interest in respect of Tax), and:
(a) | any reference to the use or set-off of a Relief shall be construed accordingly and shall include use or set-off in part; |
(b) | any reference to the loss of a Relief (including the loss of any Accounts Relief, Post-Closing Relief shall include the absence, failure to obtain, non-existence, non-availability, disallowance, withdrawal, clawback or cancellation of any such Relief, or its utilization or set-off by any person other than a member of the Buyers’ Tax Group and shall also include such Relief being available only in a reduced amount and ‘lost’ as it relates to a Relief shall be construed accordingly; |
“ Tax Claim ” means:
(a) | any assessment, self-assessment, notice, letter, determination, demand or other document issued or action taken by or on behalf of any Tax Authority (whether issued or taken before or after the date of this Agreement and whether satisfied or not at the date of this Agreement) including, for the avoidance of doubt, the imposition of any withholding of or on account of Tax; and |
(b) | the preparation or submission to a Tax Authority of any notice, return, amended return, computation, accounts or any other documents by a Buyer, a Group Company or another person, |
in each case from which it appears that there is, or is likely to be, a liability or increased liability in respect of which the Seller may be liable under this Schedule 6.01 or the Tax Warranties;
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“ Tax Liability ” means:
(a) | a liability to make an actual payment or increased payment of, or in respect of, or on account of, Tax (including making a payment in settlement of a liability to Tax) and whether or not presently payable and whether satisfied or unsatisfied at the Closing, in which case the amount of the Tax Liability shall be the amount of the actual payment or increased payment (an “ Actual Tax Liability ”); |
(b) | the loss (otherwise than by way of utilization or setting-off) of an Accounts Relief, in which case the amount of the Tax Liability shall be the amount of Tax which would have been saved but for such loss (assuming that the relevant Group Company had used the Relief in full and that, to the extent that there is an Actual Tax Liability as a result of the loss, the Tax would have been charged at the Tax rates applying to that period and, to the extent that there is no Actual Tax Liability, assuming that the Tax that would have been saved would have been charged at the Tax rates current at the Closing Date) or, where the Relief is a right to repayment of Tax, the amount of the repayment (a “ Deemed Tax Liability ”); and |
(c) | the use or setting off of any Buyers’ Relief in circumstances where, but for such use or setting off, a Group Company would have had an Actual Tax Liability in respect of which the Seller would have been liable under this Schedule 6.01, in which case the amount of the Tax Liability shall be the amount for which the Seller would have been liable under this Schedule 6.01 but for such setting off or utilization (a “ Deemed Tax Liability ”); |
“ Tax Warranty ” means any of the warranties in Paragraph 3.29 of Schedule 3; and
“ TCGA 1992 ” means the Taxation of Chargeable Gains Act 1992.
In this Schedule 6.01:
(a) | references to income , profits or gains earned, accrued or received (or to an event occurring) on or before a particular date (including the Closing Date) or in respect of a particular period shall include income, profits or gains which are deemed for the purposes of any Tax to have been earned, accrued or received (or, as the case may be, an event which is deemed to have occurred) on or before that date or in respect of that period as the case may be; |
(b) | references to any law of the United Kingdom shall, where the context permits, be read and construed as also meaning any law of any other jurisdiction that has an equivalent purpose or that most nearly approximates to the United Kingdom law; |
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(c) | references to a repayment of Tax include any repayment supplement or interest in respect of it; |
(d) | any stamp duty which would be payable on any document executed prior to the Closing (whether or not the document is presently within the United Kingdom), provided such document is either necessary to establish the title of a Group Company to any asset or is a document in the enforcement or production of which a Group Company is interested, and any interest, fine or penalty relating to any such stamp duty, will be deemed to be an Actual Tax Liability of that Group Company; and |
(e) | references to the due date for payment of any Tax shall be read and construed as a reference to the last day on which such Tax may by law be paid without incurring a penalty or liability for any interest, charge, surcharge, penalty, fine or other similar imposition accruing or without a surcharge liability notice being liable to be issued (after taking into account any postponement of such date which is obtained for such Tax). |
(f) | references to any amount, matter or liability being taken into account in, treated as an asset in, reflected in or provided for in the Closing Statement shall be construed as meaning that such amount, matter or liability has been taken into account as a liability or an asset (as the case may be) in the calculation of either Closing Working Capital, Closing Working Capital Adjustment, Closing Indebtedness, Closing Cash and/or the resulting Closing Cash Consideration in the Closing Statement, and references to a "provision" or "allowance" shall be interpreted accordingly. |
Part B – Tax Covenant
1. | Covenant |
Under a covenant on the terms set out in this Paragraph 1 and subject to Paragraph 2, the Seller shall pay to the relevant Buyer (as determined in accordance with Paragraph 9.2) an amount equal to:
1.1. | any Actual Tax Liability of a Group Company which arises: |
(a) | in consequence of, in respect of or by reference to an event which occurred on or before the Closing; |
(b) | in consequence of, in respect of or by reference to any income, profits or gains which were earned, accrued or received on or before the Closing; or |
(c) | in connection with the discharge or payment of the Transaction Bonuses; |
1.2. | any Deemed Tax Liability of a Group Company (whether falling within limbs (b) or (c) of the definition of Tax Liability); |
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1.3. | any Tax Liability which is the liability of the Seller or a member of the Seller’s Tax Group (the “ Primary Person ”) for which a Group Company, a Buyer or any other member of the Buyers’ Tax Group is liable in consequence of: |
(a) | the Primary Person failing to discharge such Tax Liability; or |
(b) | a Group Company at any time before the Closing: |
(i) | being a member of the same Tax Group as the Primary Person; or |
(ii) | being treated for the purpose of any Tax as having control of, being controlled by, or being otherwise connected with, the Primary Person or being controlled by or connected with the same person as the Primary Person for any Tax purpose; |
1.4. | any Tax Liability (including any Tax Liability arising as a result of an obligation to withhold or account for Tax) of a Group Company which arises in connection with the transactions contemplated by this Agreement (including, without limitation, any such Tax liability levied or imposed in connection with or by reference to the transactions contemplated by Clause 5.07; |
1.5. | any Tax Liability (including any Tax Liability arising as a result of an obligation to withhold or account for Tax) of a Group Company, a Buyer or any other member of the Buyers’ Tax Group which is levied or imposed in connection with or by reference to the proceeds of sale, income, profits or gains realized (or deemed to be realized) by the Seller or a member of the Seller’s Tax Group as a result of its disposal of any Group Company pursuant to this Agreement (including, without limitation, Taxes imposed by or on behalf of the PRC in connection with Circular 2009 No. 698 issued by the State Administration of Taxation of the PRC on December 10, 2009 (“ Circular 698 ”)); |
1.6. | any liability of a Group Company to make a payment, or to make a repayment of the whole or any part of any payment, to any person (other than to another Group Company) in respect of Group Relief, pursuant to any arrangement or agreement entered into by a Group Company on or before the Closing except to the extent that such payment or repayment is provided for in the Closing Statement; |
1.7. | the loss in whole or in part of the right of a Group Company to receive any payment (other than from another Group Company) for Group Relief pursuant to any arrangement or agreement entered into on or before the Closing where such payment was taken into account in the Closing Statement; |
1.8. | any liability of a Group Company to make a payment or repayment under any indemnity, covenant or warranty entered into or created by a Group Company on or before the Closing of a sum equivalent to or determined by reference to another person’s Tax liability; |
1.9. |
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(a) | any Tax Liability in respect of United Kingdom VAT arising to a Group Company, as a result of the failure of a Group Company, the Seller or any other member of the Seller’s Tax Group to maintain up to Closing documentation sufficient to demonstrate to the satisfaction of any relevant Tax Authority that supplies made by the Group Companies which have been treated as outside the scope of, exempt from, chargeable at a zero rate of, or otherwise not chargeable with, United Kingdom VAT, were correctly so treated; |
(b) | any Tax Liability in respect of United States Tax (including federal income tax and state taxes) arising to SFC in connection with the recharacterisation of, adjustment to, or disallowance of any deductions in relation to (in each case, for United States Tax purposes), any payments made on or before Closing: |
(i) | by SFC to Andrew Industries Limited under a royalty and technology licence agreement dated 1 April 1990 (as amended from time to time) or any other similar arrangements; and/or |
(ii) | by SFC to Andrew Industries Limited under a management services agreement dated 1 April 1992 (as amended from time to time) or any other similar arrangements. |
(c) | any Tax Liability arising in connection with or by reference to Andrew Industries (Hong Kong) Limited not being resident for Tax purposes solely in the United Kingdom at any time on or before Closing and/or being at any time on or before Closing a company to which section 404 of the Income and Corporation Taxes Act 1988 or section 109(1) CTA 2010 applies; and |
(d) | any Tax Liability arising in connection with or by reference to Andrew Webron Limited, Andrew Webron Filtration Limited or Andrew Industries (Hong Kong) Limited having had at any time on or before Closing a permanent establishment or other taxable establishment for the purposes of any Tax in a jurisdiction other than the United Kingdom; and |
1.10. | any reasonable third party costs and expenses properly incurred by a Buyer or a Group Company or any member of the Buyers’ Tax Group in connection with: (a) any Tax Claim; or (b) successfully taking or defending any action under this Schedule 6.01. |
2. | Exclusion |
2.1. | The Seller shall not be liable under Paragraph 1 or for breach of any Tax Warranty in respect of any liability of a Group Company to the extent that: |
(a) | provision or reserve in respect of such liability was made in the Closing Statement |
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(b) | the liability is increased as a result of any increase in rates of Tax which is announced after the Closing Date or of any change in law which is announced after the Closing Date; |
(c) | the liability would not have arisen but for a voluntary act, omission or transaction of a Group Company after the Closing Date or of a Buyer or any member of the Buyers’ Tax Group except where such act, omission or transaction is: (i) carried out or effected pursuant to an obligation entered into on or before the Closing Date or (ii) required by law or any regulatory requirement; or (iii) carried out with the written consent of the Seller; or (iv) in the ordinary course of business of the Group Company; or (v) the preparation or submission of any Tax return or computation or other information to a Tax Authority; or (vi) one that the Buyer or the party in question could not foresee or could not reasonably have foreseen would give rise to that liability; |
(d) | recovery (less costs and expenses of recovery) has already been made by a Buyer under the warranties set forth in Schedule 3 or the Specific Indemnities or any provision of this Schedule 6.01; |
(e) | the liability has been discharged before Closing and the discharge thereof has been taken into account in the Closing Statement; |
(f) | the liability would not have arisen or would have been reduced or eliminated but for a failure or omission after Closing, on the part of a Group Company or a Buyer, to make any claim, election, surrender or disclaimer or to give any notice or consent or to do any other thing under any enactment or regulation relating to Tax the making, giving or doing of which was taken into account in computing the provision for Tax in the Closing Statement; |
(g) | the liability relates to interest or penalties which arise or are increased as a result of the Buyer’s failure to comply with its obligations under this Schedule 6.01; |
(h) | the liability arises or is increased as a result of any change after Closing in the bases, methods or policies of accounting of a Group Company or a Buyer except where such change is made to comply with a generally accepted accounting practice, the published practice of any Tax Authority, law or rule of any regulatory authority or body in force at the Closing Date; |
(i) | the liability is SDLT arising in respect of the grant of the lease of the Bury Property; |
(j) | the liability arises as a result of any waiver of the China Intercompany Indebtedness; |
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(k) | the liability arises in respect of any matter which is the subject of any of the Specific Indemnities contained in Schedule 7.02(a)(iii); |
(l) | the liability arises in respect of income tax, primary National Insurance Contributions, or secondary National Insurance Contributions (or, in each case, any equivalent social security contributions in any jurisdiction other than the UK) for which a Group Company is required to account in respect of the payment of the Transaction Bonuses, provided that this paragraph (l) shall only apply to the extent that: |
(i) | (in the case of a liability in respect of income tax or primary National Insurance Contributions, or their equivalents in any jurisdiction other than the UK) the Seller has made a payment corresponding to the Transaction Bonuses in respect of which that liability fell due under Clause 5.13(a), or |
(ii) | (in the case of a liability in respect of secondary national insurance contributions or their equivalents in any jurisdiction other than the UK) the Seller has made a payment corresponding to the liability in question pursuant to its obligations under Clause 5.13(a); or |
(iii) | (in the case of a liability of SFC), an amount was included in Closing Cash in accordance with subparagraph (c) of the definition thereof. |
(m) | such liability arises in respect of Corporate Income Tax arising to the relevant member of the Target Group on any payment made to it by the Seller under Clause 5.13(a), provided that this paragraph (m) shall not apply to the extent that the liability exceeds the amount of Tax which may be saved by utilization of any Relief arising from the circumstances in respect of which the relevant payment by the Seller was made; |
(n) | such liability arises as a result of: |
(i) | any voluntary disclaimer by a Group Company after Closing of the whole or part of any capital allowances claimed before Closing or the entitlement to which was taken into account in preparing the Closing Statement; or |
(ii) | the revocation or revision by a Group Company after Closing of any Relief claimed or the entitlement to which was taken into account in preparation of the Closing Statement. |
2.2. | The provisions of Paragraph 2.1 do not apply to any claim by a Buyer against the Sellers which arises or is delayed as a result of fraud, dishonesty, willful misconduct or willful concealment by the Seller. |
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3. | Limitations |
3.1. | The liability of the Seller under this Schedule will terminate on the sixth anniversary of the Closing Date except in respect of any claim under this Schedule of which notice in writing is given to the Seller before that date containing, to the extent reasonably practicable, a description of such claim and the estimated total amount of the claim. |
3.2. | If the Seller is liable to make any payment to a Buyer under this Schedule, and such liability arises in relation to a Tax Liability of a Group Company which is capable of being mitigated or eliminated by the Surrender of Group Relief (and where such Group Relief is not a Buyers’ Relief), the Seller shall be entitled to or to procure the Surrender of Group Relief to that Group Company. Such Surrender shall be made for no consideration and shall, to the extent such Group Relief is effectively used to mitigate or eliminate such Tax Liability and is not challenged by a Tax Authority, discharge the relevant liability of the Seller under this Schedule. |
3.3. | The Buyer shall, at the Seller’s expense, procure that all relevant claims, elections and surrenders and all other actions are taken as are required to effect the Surrender and utilization of the Group Relief referred to in Paragraph 3.2. |
4. | Over-provisions and corresponding benefit |
4.1. | If: |
(a) | any provision for Tax in the Closing Statement proves to be an over provision; |
(b) | the amount by which any right to repayment of Tax which has been treated (or, in accordance with generally accepted accounting principles, could have been treated) as an asset in the Closing Statement proves to have been under-stated; or |
(c) | a payment by the Seller in respect of any Tax Liability or the matter giving rise to the Tax Liability in question results in a Group Company or the Buyer receiving or becoming entitled to any Relief (other than an Accounts Relief) which it utilizes (including by way of repayment of Tax) (“ Corresponding Relief ”), |
then an amount equal to such over-provision, under-stated right to repayment of Tax, or the Tax saved by the Corresponding Relief at the date such Corresponding Relief is utilized (“ Relevant Amount ”), shall be dealt with in accordance with Paragraph 4.2.
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4.2. | The Relevant Amount: |
(a) | shall first be set off against any payment then due from the Seller in respect of any Claim for Tax; |
(b) | to the extent there is an excess of the Relevant Amount after any application thereof under Paragraph 4.2(a), a refund shall be made to the Seller of any previous payment or payments made by the Seller under a Claim for Tax and not previously refunded under this Paragraph 4.2(b) up to the amount of such excess; and |
(c) | to the extent that the excess referred to in Paragraph 4.2(b) is not exhausted under that Paragraph, the remainder of that excess shall be carried forward and set off against any future payment or payments which become due from the Seller under a Claim for Tax. |
4.3. | If the Buyer or a Group Company becomes aware of the existence of a Relevant Amount, the Buyer shall or shall procure that a Group Company shall as soon as reasonably practicable give written notice thereof to the Seller. |
5. | Recovery from third parties |
5.1. | Where a payment has been made by the Seller under a Claim for Tax in full discharge of a liability under that Paragraph and a Group Company or any other member of the Buyers’ Tax Group subsequently receives from any person (other than a Buyer, a Group Company or any member of the Buyers’ Tax Group or any employee or director of any of them, but including a Tax Authority) any sum (other than by reason of the use or setting off of a Buyers’ Relief) or receives a Relief in respect of the Tax Liability in question, the relevant Buyer shall at the written request of the Seller (and shall procure that the Group Company or the relevant member of the Buyers’ Tax Group shall) account to the Seller for the lesser of: |
(a) | any amount recovered and actually received by the Group Company or the member of the Buyers’ Tax Group as applicable or (as the case may be) the amount of Tax (in respect of which Paragraph 1 does not provide for a liability of the Seller to a Buyer) that the Group Company or the member of the Buyers’ Tax Group as applicable actually saves by virtue of the receipt and use of the Relief, less any Tax on such amounts (and less any Tax that would have been payable but for the use or setting off of any Buyers’ Relief); and |
(b) | the amount paid by the Seller under the Claim for Tax in respect of that Tax Liability (less any Tax payable in respect of that amount). |
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5.2. | Any payment by a Buyer to the Seller under this Paragraph 5 shall be reduced by the amount of any losses, damages, liabilities, costs and expenses suffered or incurred by the relevant Buyer, Group Company or member of the Buyers’ Tax Group in recovering any amount from any third party or utilizing the relevant Relief, and shall be further reduced by any amount of the payment by the Seller referred to in Paragraph 5.1 which has previously been paid to the Seller. |
5.3. | If a Group Company or the Buyer becomes entitled to recover from another person or a Tax Authority a sum in respect of which a payment might be made under paragraph 5.1 the Buyer shall as soon as reasonably practicable give written notice thereof to the Seller and if the Seller indemnifies the Buyer or, as appropriate, a Group Company (to the Buyer’s reasonable satisfaction) against the reasonable costs of the Buyer or, as appropriate, a Group Company in connection with taking such action, the Buyer shall, or shall procure that a Group Company shall, take such action reasonably requested by the Seller to enforce recovery against that person or Tax Authority. |
6. | CONDUCT OF CLAIMS |
6.1. | If a Buyer or a Group Company becomes aware of a Tax Claim, the Buyer shall or shall procure that the relevant Group Company shall within a reasonable time give notice to the Seller of the Tax Claim, provided always that the giving of such notice shall not be a condition precedent to the liability of the Seller under this Schedule. |
6.2. | If the Seller becomes aware of a Tax Claim, the Seller shall notify the Buyers in writing as soon as reasonably practicable and the Buyers shall be deemed to have given the Seller notice of the Tax Claim on receipt of such notification for the purpose of this Paragraph 6.2. |
6.3. | Subject to the following provisions of this Paragraph 6.3, the Buyers shall (and where relevant, shall procure that the relevant Group Companies shall) take such action as the Seller may reasonably request by notice in writing to avoid, dispute, defend, resist, appeal or compromise any Tax Claim (a “ Disputed Tax Claim ”) or any matter relating to the Disputed Tax Claim but only provided that the Seller shall first (to the Buyers’ reasonable satisfaction) indemnify the Buyers and/or the Group Companies (as required by the Buyers) against any losses, damages, costs or expenses which it may suffer or incur as a result of taking such action (including any additional liability to Tax). |
6.4. | Without prejudice to the liability of the Seller under this Schedule, the Buyers shall not be obliged to take or procure the taking of any action under Paragraph 6.3 in respect of any Tax Claim: |
(a) | to the extent that it would involve a Group Company contesting any Disputed Tax Claim before any court or other appellate body, unless in the written opinion of tax counsel of appropriate relevant experience appointed by agreement between the Seller and the Buyers or in default of agreement appointed by the President for the time being of the Institute of Chartered Accountants in England and Wales upon the application of either the Buyer or the Seller an appeal is a reasonable course of action given all the circumstances including the likelihood of success; or |
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(b) | where the Tax Claim or action derives from or arises out of or is in connection with any dishonest or fraudulent act or omission or willful default by or of the Seller at any time or by or of a Group Company prior to the Closing; or |
(c) | should the Seller, following receipt of written notice of the Tax Claim from a Buyer in accordance with Paragraph 6.1: |
(i) | fail within fifteen (15) Business Days to serve notice on the Buyers under Paragraph 6.3; or |
(ii) | fail within fifteen (15) Business Days to notify the Buyers in writing of any further action to be taken by a Buyer or a Group Company under Paragraph 6.3 where a Buyer at any time seeks instructions from the Seller; or |
(d) | if, in the Buyers’ reasonable opinion, the action requested by the Seller pursuant to Paragraph 6.3 is likely to affect materially and adversely the liability of a Buyer or a Group Company to Tax or the business or financial interests of any of them; or |
(e) | if a Group Company would be required to appeal against any assessment or demand for Tax where it is a requirement for such an appeal that the Taxation be paid, unless payment has previously been made by the Seller to a Buyer of an amount equal to such Taxation and in respect of it; or |
(f) | that requires a Group Company to take any action against any person who is at the time in question either an employee or director of any member of the Buyers’ Tax Group, or any company that is at the time in question a member of the Buyers’ Tax Group. |
6.5. | If Paragraph 6.3 does not apply by virtue of any provision in Paragraph 6.4, the relevant Buyer or Group Company (as the case may be) may satisfy or settle the Tax Liability on such terms as it may in its absolute discretion think fit without prejudice to any of the Buyers’ rights under this Schedule. |
7. | Date of payment |
7.1. | Payment by the Seller in respect of any liability under Paragraph 1 shall be made in cleared and immediately available funds on the following days: |
(a) | in the case of a liability under Paragraph 1.1 and Paragraph 1.3, the later of ten (10) Business Days before the due date for payment of the Tax and ten (10) Business Days after the date the Buyer serves notice on the Seller requesting payment; |
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(b) | in the case of a liability under Paragraph 1.4, Paragraph 1.5, Paragraph 1.6, Paragraph 1.7 Paragraph 1.8 and Paragraph 1.9, ten (10) Business Days following the date the relevant Buyer serves notice on the Seller requesting payment; |
(c) | in the case of a liability under Paragraph 1.2, the later of ten (10) Business Days after the date the relevant Buyer serves notice on the Sellers requesting payment and: |
(i) | the due date for payment of the Tax that would have been relieved in the case of the loss of an Accounts Relief that is not a right to repayment of Tax; |
(ii) | the date on which the Tax would otherwise have been repaid in the case of the loss of an Accounts Relief that is a right to repayment of Tax; or |
(iii) | the due date for payment of the Tax which the Group Company in question would have had to pay but for the use or setting off of a Buyers’ Relief; and |
(d) | in the case of a liability under Paragraph 1.10, ten (10) Business Days after the date the relevant Buyer serves notice on the Seller requesting payment. |
8. | Corporation tax group payment arrangements |
8.1. | In this Paragraph 8: |
“GPA” means the arrangement entered into under section 59F of the Taxes Management Act 1970 pursuant to which the Nominated Company has discharged or will discharge the liability to pay corporation tax of certain other companies including the GPA Member Companies;
“GPA Member Companies” means Andrew Webron Limited, Andrew Webron Filtration Limited and Andrew Industries (Hong Kong) Limited, being three of the Target Companies; and
“Nominated Company” means the Seller.
8.2. | Subject to Paragraph 8.3, the Buyer shall procure that each GPA Member Company pays to the Nominated Company an amount equal to any corporation tax, as certified by the Nominated Company, which has been discharged on its behalf by the Nominated Company pursuant to the GPA. The due date for payment shall be the later of: |
(a) | the fifth Business Day after the Buyer receives a demand for payment from the Seller; and |
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(b) | the fifth Business Day before the last date on which the Nominated Company is required to make payment to HMRC in order to avoid any related interest or penalty. |
8.3. | No payment shall be required under Paragraph 8.2 to the extent that: |
(a) | such GPA Member Company made such payment to the Nominated Company before or on Closing or had otherwise previously satisfied its obligations under the GPA; |
(b) | discharge by such GPA Member Company is other than pursuant to a GPA in respect of a group of companies of which such GPA Member Company was a member immediately before Closing; or |
(c) | the payment, or the corporation tax giving rise to the payment, was not reflected in the Closing Statement; or |
(d) | the Buyer would otherwise be able to make a valid Claim for Tax in respect of the corporation tax giving rise to that payment (ignoring the application of Schedule 7.02 ). |
8.4. | The Seller shall: |
(a) | procure that the Nominated Company pays to HMRC promptly following receipt or, if later, when the relevant amount is due and payable to HMRC, an amount equal to any amount paid to the Nominated Company pursuant to Paragraph 8.2; |
(b) | subject to Paragraph 8.4(c), procure that the Nominated Company promptly apportions to the relevant GPA Member Companies the amount paid pursuant to Paragraph 8.2, such apportionment to be made by reference to the instalment or instalments of corporation tax in respect of which the payment was made; |
(c) | not, without having consulted with the Buyer and taken into account its reasonable comments, reapportion any amount previously apportioned to each GPA Member Company pursuant to the GPA; and |
(d) | promptly pay, or procure that there is paid, to each GPA Member Company an amount equal to any excess of any amount paid to the Nominated Company pursuant to Paragraph 8.2 in respect of any instalment of corporation tax over the amount of corporation tax finally apportioned to such GPA Member Company in respect of that instalment and interest on such excess at the HMRC rate applicable from time to time on overdue corporation tax for the period from the date of payment by the GPA Member Company to the date of payment pursuant to this Paragraph 8.4(d). |
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9. | Miscellaneous |
9.1. | To the extent permitted by Applicable Law, any amount paid under Paragraph 1 shall be treated as an adjustment to the consideration paid hereunder for the Target Shares, in accordance with the provisions of Section 2. |
9.2. | Payment under Paragraph 1 shall be made to the US Buyer to the extent the liability relates to the US Shares, to the UK Buyer to the extent the liability relates to the Non-US Shares, and otherwise to whom the Buyers may direct; and references herein to “the Buyer” or “the relevant Buyer” shall be construed accordingly (except where the context requires otherwise). |
9.3. | References in this Part B of Schedule 6.01 to Paragraphs shall mean, except where the context otherwise requires or as specified otherwise, Paragraphs of this Part B of Schedule 6.01. |
10. | Covenant by Buyers |
10.1. | The Buyers covenant with the Seller to pay to the Seller an amount equal to any of the following: |
(a) | any liability or increased liability to Tax of the Seller or any member of the Seller’s Tax Group which arises in respect of any reduction or disallowance of Group Relief that would otherwise have been available to the relevant member of the Seller’s Tax Group where and to the extent that such reduction or disallowance would not have arisen but for: |
(i) | any total or partial withdrawal of a valid claim for Group Relief by a Group Company after Closing where such Group Relief was Surrendered or agreed to be surrendered on or before Closing in respect of an accounting period ended on or before Closing and any such Surrender or agreement to Surrender is as reflected in the Closing Statement; or |
(ii) | any total or partial disclaimer of capital allowances by a Group Company after Closing where such capital allowances were available to a Group Company in respect of any accounting period ended on or before Closing; |
(b) | any liability or increased liability to Tax of the Seller or any member of the Seller’s Tax Group arising by virtue of the non-payment of Tax by a Group Company, except that this Paragraph 10.1(a) shall not apply in respect of any Tax for which the Seller is liable to make (but has not yet made) payment to the Buyers under this Schedule; |
(c) | the reasonable costs and expenses of the Seller or any member of the Seller Group in connection with any liability referred to or in successfully taking any action under this Paragraph 10. |
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10.2. | For the purposes of this Paragraph 10, any reference to a liability to Tax shall include any liability to make a payment of Tax which would have arisen but for the utilisation of any Relief (other than, for the avoidance of doubt, a Buyers’ Relief). |
10.3. | For the avoidance of doubt, this Paragraph 10 is without prejudice to the provisions of Paragraphs 1.6, 1.7 or 1.9. |
11. | Group Relief |
11.1. | If the Seller becomes liable to make any payment to a Buyer in respect of a Claim for Tax, the Buyers shall, at the written direction of the Seller, procure that each Group Company allows the Seller to Surrender, or procure the Surrender by any member of the Seller’s Tax Group of, Group Relief to any Group Company to the extent permitted by Law but without any consideration being given for such Surrender, and the Seller’s liability in respect of a Tax Claim shall be reduced to the extent that the Tax Liability giving rise to the Tax Claim is reduced by such Surrender. |
11.2. | The Buyer shall procure that all relevant claims, elections and surrenders and all other actions are taken as are required to effect the Surrender and utilisation of the Group Relief referred to in this paragraph 11. |
12. | Taxation Affairs |
12.1. | In this Paragraph 12: |
“Current Period” means the periods for the Corporate Income Tax purposes of the Group Companies current at the Closing Date;
“Past Period” means all periods for the Corporate Income Tax purposes of the Group Companies ended on or before the Closing Date;
“Relevant Information” means any Tax Computation, document or correspondence, and details of any information or proposal relating to the Tax affairs of the Group Companies; and
“Tax Computations” means the Corporate Income Tax computations and returns of the Group Companies.
12.2. | The Seller or its duly authorised agents or advisers shall, at the cost of the Seller, prepare, submit and deal with the Tax Computations for the Past Period (to the extent this has not already been done), whereas the Group Companies shall, at the cost of the Group Companies, prepare, submit and deal with the Tax Computations for the Current Period. |
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12.3. | The Seller shall deliver to the relevant Buyer for comments any Relevant Information which relates to the Past Period prior to its submission to the relevant Tax Authority and the Seller shall take account of the reasonable comments of the Buyer and make such amendments to that Relevant Information as the Buyer may reasonably require in writing within thirty (30) days of the date of delivery of the Relevant Information prior to its submission to any Tax Authority. |
12.4. | The Seller shall ensure that all Relevant Information to be submitted to any Tax Authority is true, accurate and lawful in all respects and is not in any way fraudulent or misleading. The Seller shall not, and shall procure that no other person shall, submit to any Tax Authority any Relevant Information or agree any matter with a Tax Authority where a Buyer has notified the Seller in writing that such Relevant Information or matter is not true, accurate and lawful in all respects. |
12.5. | Subject to Paragraphs 12.3 and 12.4, the Buyer shall procure that: |
12.5.1 | the Group Companies properly authorise and sign the Tax Computations for the Past Periods and make, sign or otherwise enter into all such elections, surrenders, claims or disclaimers, gives such notices and signs such other documents as the Seller shall reasonably require in relation to the Past Periods (provided that the Buyer shall not be obliged to procure that any Group Company takes any action in accordance with this Paragraph 12.5.1 which is any way untrue, inaccurate, unlawful, fraudulent or misleading); and |
12.5.2 | each Group Company provides to the Seller such information and assistance (including, without limitation, access to the Group Company’s books, accounts and records) which may reasonably be required by the Seller or its duly authorised agents or advisers for the purpose of preparing, submitting, negotiating and agreeing the Tax Computations for the Past Periods; and |
12.5.3 | any correspondence which materially relates to the Tax Computations for the Past Periods shall, if received by the Buyer or a Group Company, be copied to the Seller. |
12.6. | Each Group Company shall deliver to the Seller for comments any Relevant Information relating to the Current Period prior to its submission to any Tax Authority and such Group Company shall take account of the reasonable comments of the Seller and make such amendments to that Relevant Information as the Seller may reasonably require in writing within thirty (30) days of the date of delivery of that Relevant Information prior to its submission to any Tax Authority. |
12.7. | Each of the Buyers and the Seller shall: |
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12.7.1 | use all reasonable endeavours to finalise, submit and (where relevant) agree those Tax Computations for which it is responsible as soon as reasonably practicable and shall deal with all such matters promptly and diligently and within applicable time limits; and |
12.7.2 | deliver to the other copies of any material correspondence sent to, or received from, any Tax Authority relating to the Tax Computations for the Past Period and Current Period and shall keep the other informed of its actions under this Paragraph 12.7. |
13. | Circular 698 Tax Matters |
13.1. | Within the period required by Circular 698, the Seller and any relevant member of the Seller’s Tax Group shall timely file, or cause to be timely filed, all information and Tax returns that are due under PRC law (including, without limitation, pursuant to Circular 698) in connection with the transactions hereunder, or which are otherwise required in connection with any internal restructuring done by Seller or a member of the Seller’s Tax Group prior to Closing (the “ Circular 698 Returns ”), and such Circular 698 Returns shall be true, accurate and complete in all respects. Within ten days of filing the Circular 698 Returns, the Seller shall provide the Buyers with final, accurate copies of all such Circular 698 Returns that were filed, and, upon receipt by the Seller, an acknowledgment of receipt of the same by the relevant PRC Tax Authorities. |
13.2. | Where applicable the Seller shall provide the Buyers with accurate copies of any official assessments of the PRC Tax Authorities with respect to its Circular 698 Returns within ten days of receipt thereof, and the Seller shall pay, or cause to be timely paid, all Taxes due and payable with respect to such official assessments. |
13.3. | The Seller shall notify the Buyers within ten days upon receipt by it or any of its affiliates of notice of any pending or threatened PRC Tax audit, assessment or other review affecting the Circular 698 Returns (a “ Seller C698 Claim ”), and it shall (i) keep the Buyers informed on the status of any such Seller C698 Claim, and (ii) provide the Buyers with copies of all written correspondence with respect to such Seller C698 Claim. |
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Schedule 7.02(a)(iii) – Specific Indemnities
Seller shall indemnify Buyers in accordance with Clause 7.02(a) in respect of:
1 . | Hazardous Substances present prior to Closing (including the migration and vapor intrusion thereof at any time) in the ground, soil, subsurface strata, surface water, sediment or groundwater at or of any (i) freehold properties or facilities owned at the time of the Closing by any member of the Target Group; and (ii) the property and facilities leased by SFC located in Bethune, South Carolina ((i) and (ii) collectively, the “ Specific Environmental Indemnity Sites ”); |
2 . | any debt due and payable following Closing by any member of the Target Group under section 75 or 75A of the Pensions Act 1995 to the AIL Pension Scheme or to the trustees of the AIL Pension Scheme, arising in connection with the participation of any member of the Target Group in the AIL Pension Scheme where such participation commenced prior to Closing; |
3. | the payment of any monies or provision of any financial support required by any member of the Target Group under sections 38, 43 or 47 of the Pensions Act 2004 in respect of the AIL Pension Scheme arising as a result of or in connection with the exercise by The Pensions Regulator of his powers under the foregoing provisions of the Pensions Act 2004 and any and all liabilities, costs (including, without limitation, legal costs) and expenses incurred by any member of the Target Group arising as a result of or in connection with such exercise in relation to the AIL Pension Scheme and any costs (including without limitation, legal costs) and expenses incurred by any member of the Target Group as a result of or in connection with the potential exercise by the Pensions Regulator of his powers under the foregoing provisions of the Pensions Act 2004 in relation to the AIL Pension Scheme; |
4. | any liabilities or expenses incurred by any member of the Target Group following Closing as a result of or in connection with the participation of any member of the Target Group in the AIL Pension Scheme (including but not limited to the obligation to pay ordinary or deficit contributions to the AIL Pension Scheme or to the trustees of the AIL Pension Scheme); |
5. | any liabilities incurred by SFC as a result of the sale by SFC of American Laundry Products Inc. (“ ALP ”) to Seller and the business, assets and liabilities of ALP whether relating to the period prior to or on and after the Closing; |
6. | any liabilities (including, for the avoidance of doubt, liabilities in respect of Tax), expense, penalties or costs incurred or suffered by Buyers or any member of the Target Group as a result of Seller’s transfer of Andrew Industrial Textile Company (Shanghai) Limited to Andrew Industries (Hong Kong) Limited; |
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7. | any consideration which Andrew Webron Filtration Limited is liable to make to Nigel Stanley, Robert Heath, Norma Heath and Celia Stanley (the “ Heath Vendors ”), and any amount to be repaid by Andrew Webron Limited in respect of any Indebtedness of Andrew Webron Filtration Limited, under the share purchase agreement between the Heath Vendors, Andrew Webron Limited and the Seller dated 28 February 2013; |
8. | any claims, liabilities, damages, penalties, costs, losses or expenses suffered or incurred by any member of the Target Group in connection with Paul Bamber’s employment and/or office (including any transfer to Seller) and/or the termination of Paul Bamber’s employment and/or office at any time by any member of the Target Group or by the Seller whether before or after Closing in circumstances where Paul Bamber is found or alleged to be employed by any member of the Target Group, save that this indemnity shall not apply to any liability arising from any member of the Target Group entering into an employment contract with Paul Bamber after Closing; |
9. | any liabilities (including, for the avoidance of doubt, liabilities of or in respect of Tax) incurred by Andrew Webron Limited as a result of the UK Property Carve out; and |
10. | any penalties or fines, costs and expenses incurred by any member of the Target Group in connection with any breach by any of Andrew Industries (Hong Kong) Limited, Andrew Industrial Textile Manufacturing Company (Shanghai) Limited, Andrew Industrial Textile Manufacturing (Wuxi) Company Limited or Andrew Industrial Textile Trading Company (Shanghai) Limited prior to Closing of any applicable anti-corruption laws. |
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Schedule 7.02 – Seller Limitations
In addition to any limitation set forth in Section 7 of this Agreement, any claim in respect of this Agreement shall be limited, as applicable, as set out in this Schedule 7.02.
Monetary limits
1. | The aggregate liability of Seller in respect of all claims (including interest and costs) under or arising in respect of this Agreement, other than the covenants in Clause 5.02, shall not exceed an amount equal to the Base Purchase Price. |
2. | Subject to Paragraph 1 (which shall take precedence), the aggregate liability of Seller in respect of: |
2.1. | all Fundamental Warranty Claims shall not exceed an amount equal to the Base Purchase Price; |
2.2. | all General Warranty Claims shall not exceed an amount equal to 15% of the Base Purchase Price; |
2.3. | all Environmental Claims shall not exceed an amount equal to 25% of the Base Purchase Price; |
2.4. | all Claims for Tax shall not exceed an amount equal to the Base Purchase Price; and |
2.5. | any claims in respect of any of the Specific Indemnities listed at Paragraphs 2 to 10 of Schedule 7.02(a)(iii) shall not exceed an amount equal to 15% of the Base Purchase Price. |
De minimis and baskets
3. | Seller shall not be liable for any Small Claim. |
4. | Seller shall not be liable for any Claim for Tax (other than a Claim for Tax under Paragraph 1.1(c) of Part B of Schedule 6.01) unless and until the aggregate liability of the Seller in respect of all Claims for Tax exceeds $100,000, in which case the Seller shall (subject to Paragraph 2 above) be liable for both the initial $100,000 and the excess. |
5. | Seller shall not be liable for any General Warranty Claim or any Environmental Warranty Claim unless and until the aggregate liability of the Seller in respect of all General Warranty Claims and Environmental Warranty Claims exceeds $750,000, in which case the Seller shall (subject to Paragraphs 3 and 4 above) be liable for both the initial $750,000 and the excess (and, for the avoidance of doubt, any Claim for Tax made under the Tax Warranties or series of such Claims for Tax with respect to related facts or circumstances for which the Seller is not liable under the terms of Paragraph 4 above, shall count towards the $750,000 referred to in this Paragraph 5). |
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Disclosure, information and knowledge
6. | Seller shall have no liability in respect of any Warranty Claim, to the extent that the matter or thing giving rise to the Warranty Claim: |
a. | is Disclosed; or |
b. | would be reasonably apparent from undertaking inspections or searches (only to the extent available online) of: |
i. | Companies House in England and Wales in relation to the Seller and each member of the Target Group that is a UK registered company and only with respect to matters filed within the twenty-four (24) months prior to the date of this Agreement; and |
ii. | the UK Land Registry (including the Land Charges Department), Local Land Charges Registers and relevant statutory and local authorities in relation to the Properties, |
in each case on 14 February 2014. |
Other exclusions and limitations:
7. | Seller shall not be liable for any Warranty Claim (excluding a claim under the Tax Warranties, to which the relevant provisions of Schedule 6.01 apply) to the extent that: |
7.1. | provision, reserve or allowance in respect of the matter or thing giving rise to the Warranty Claim has been made in the Balance Sheet or included as a liability in the calculation of either Closing Working Capital or Closing Indebtedness in the Closing Statement (but only to the extent of such provision, reserve, allowance or inclusion) or the discharge thereof has been taken into account in the Closing Statement or the Balance Sheet; |
7.2. | such liability arises or is increased as a result of: |
7.2.1. | any legislation not in force at the date of this Agreement which takes effect retrospectively; |
7.2.2. | any act required to be taken by this Agreement or any of the Ancillary Documents; |
7.2.3. | any voluntary act or transaction carried out by or on behalf of any member of the Target Group on or after Closing, otherwise than (a) in the ordinary course of the business of the Target Group or (b) pursuant to a legally binding commitment created on or before Closing; or (c) required to be taken by any member of the Target Group under Applicable Law; |
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7.2.4. | the Damages to which the Warranty Claim relates has been recovered by Buyer from any third party (including any insurer); or |
7.2.5. | the Warranty Claim or the matter or thing giving rise to the Warranty Claim, has been or is made good or is otherwise compensated for. |
Recovery Claims:
8. | Subject to Paragraph 9 of this Schedule 7.02, where the Buyers are entitled to recover from any person any sum in respect of any matter or event which gives rise to a Warranty Claim (excluding a claim under the Tax Warranties to which the relevant provisions of Schedule 6.01 apply), the Buyers shall, and shall procure that each member of the Target Group shall, use its reasonable endeavours to recover that sum and shall keep the Seller informed of the conduct of such recovery. The Buyers shall not be restricted from pursuing that or any other Warranty Claim in relation to the same subject matter against the Seller. Any sum recovered by the Buyers before settlement or final determination of the Warranty Claim to which this paragraph applies (less any costs and expenses incurred by the Buyers and each member of the Target Group in recovering the sum and any Tax attributable to or suffered in respect of the sum recovered) will reduce the amount of the Warranty Claim by an equivalent amount. If recovery is delayed until after the Warranty Claim has been satisfied by the Seller, the Buyers shall (subject to the remaining provisions of this Paragraph 8) repay to the Seller the amount so recovered (less any costs and expenses incurred by the Buyers and each member of the Target Group in recovering the sum and any Tax attributable to or suffered in respect of the sum recovered). If the amount so recovered exceeds the amount of the Warranty Claim satisfied by the Sellers, the Buyers shall be entitled to retain the excess. |
9. | Notwithstanding any of foregoing, nothing in this Schedule 7.02, shall oblige the Buyers to take any action to recover any sum from any person in respect of any matter or event which gives rise to a Warranty Claim if, in the reasonable opinion of the Buyers, such action would be materially prejudicial to the business interests of the Target Group. |
No double recovery
10. | Seller shall not be liable to pay damages or other compensation or reimbursement more than once in respect of the same loss pursuant to any Warranty Claims or claims in respect of a Specific Indemnity. |
11. | An Indemnifying Party shall not be liable under Clause 7.02(a) or Clause 7.02(b), as applicable, for any Damages relating to any matter to the extent that (i) the Indemnified Party has otherwise been compensated for such Damages pursuant to the Purchase Price adjustment under Clause 2.07, (ii) the Indemnified Party has recovered in respect of such Damages under another provision of this Agreement or (iii) the Indemnified Party is US Buyer, and UK Buyer has already recovered in respect of such Damages suffered by US Buyer pursuant to the terms of this Agreement or the Indemnified Party is UK Buyer, and US Buyer has already recovered in respect of such Damages suffered by UK Buyer under the terms of this Agreement. |
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Mitigation
12. | The Buyers shall take all such actions as may be reasonably necessary or as the Seller may reasonably request in writing, to comply with its duty at common law to mitigate any damages or loss suffered by it in respect of which a Warranty Claim could be made, but, for the avoidance of doubt, this paragraph shall not operate to impose any obligation on the parties, or to reduce any amount recoverable, in relation to a claim made under the Tax Covenant. |
Environmental Matters
13. | Seller shall not be liable for any Damages arising under the Specific Indemnity at Paragraph 1 of Schedule 7.02(a)(iii) (“ Environmental Indemnity Matters ”) to the extent such Damages (i) result from or are increased by (A) any sampling, testing or intrusive investigation by or on behalf of any Buyer Indemnified Person or any of their agents or contractors after the Closing Date of the ground, surface water, soil, subsurface strata, sediments or groundwater of any Specific Environmental Indemnity Sites or (B) any disclosure to a Governmental Authority or other third party by or on behalf of any Buyer Indemnified Person or any of their agents or contractors, in the case of each of (A) and (B), unless such sampling, testing, investigation or disclosure is required by an Applicable Law or a relevant Governmental Authority acting in accordance with Applicable Law or is reasonably necessary to address an imminent and substantial harm to human health or safety or the environment or to respond to an Environmental Third Party Claim against any Buyer Indemnified Person or (C) any change in legislation or any new legislation which comes into force after the Closing Date or (D) any material change of use, redevelopment, cessation of operations or closure of any Specific Environmental Indemnity Site by or on behalf of any Buyer Indemnified Person after the Closing Date or (ii) exceed those Damages that satisfy, in a reasonable cost-effective manner, the requirements of applicable Environmental Law or of a relevant Governmental Authority acting in accordance with Environmental Law, and using, where acceptable, risk-based standards, engineering or institutional controls for industrial property use. |
14. | The Seller shall be liable for Damages relating to any claim under the Specific Indemnity at Paragraph 1 of Schedule 7.02(a)(iii) only to the extent that such Damages arise out of an Environmental Third Party Claim against a Buyer Indemnified Person. |
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15. | The Buyers (or the relevant Buyer Indemnified Person) shall have control of any Environmental Third Party Claim in respect of which indemnification may be sought in relation to an Environmental Indemnity Matter subject to such Buyer Indemnified Person ensuring that: |
15.1. | it gives prompt notice in writing to the Seller of the Environmental Third Party Claim; |
15.2. | it cooperates with and shall cause its Affiliates to cooperate with the Seller and its Affiliates in the defense or pursuit of any Environmental Third Party Claim |
15.3. | it furnishes or causes the Seller to be furnished with such records, information, testimony, reports and other documents relating to the Environmental Third Party Claim (including in relation to any proposed or actual Remedial Works) as may reasonably be requested by the Seller; |
15.4. | it informs the Seller of and allows the Seller (and its legal and technical advisors) to attend any conferences, discovery proceedings, hearings, trials, appeals, and in relation to any proposed or actual Remedial Works, any site visits and meetings with third parties and to attend and inspect the carrying out of any Remedial Works and any investigations undertaken prior to any Remedial Works and shall at the request of the Seller provide the Seller with split samples in each case at the Seller's sole cost and expense; and |
15.5. | subject to the Seller indemnifying the relevant Buyer Indemnified Person with respect to any Damages incurred by such Buyer Indemnified Person as a result of any such action requested in accordance with this paragraph 15.5 the Buyer shall (and shall procure any other relevant Buyer Indemnified Person shall) (i) take all such actions as the Seller may reasonably request in writing to negotiate, dispute or defend any Environmental Third Party Claim; (ii) not admit liability in relation to nor settle or compromise any Environmental Third Party Claim without the prior written consent of the Seller (such approval not to be unreasonably withheld or delayed) and (iii) in relation to any proposal to undertake any Remedial Works shall reasonably consult with the Seller and shall comply with any reasonable request of the Seller including without limitation in relation to the carrying out of and the scope of any Remedial Works and any investigations undertaken prior to any Remedial Works, it being acknowledged that in relation to such Remedial Works and investigations, such Buyer Indemnified Person will be responsible for the physical carrying out of such on the Specific Environmental Indemnity Sites. |
16. | In the event that the Seller and the Buyers are unable to agree: |
16.1. | the standard of Remedial Works which are necessary; and/or |
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16.2. | any other factual or technical issue relating to an actual or potential Environmental Indemnity Matter (but not any legal matter relating to the interpretation of this Schedule or Schedule 7.02(a)(iii)) |
( “Unresolved Issue” ) within 20 Business Days after receipt by either party of notice from the other that the relevant issue is in dispute and that the party giving such notice requires expert determination (unless it is resolved to the satisfaction of that party during that period) then either party shall have the right thereafter to refer the Unresolved Issue for binding determination to an independent expert ( “Expert” ). If the parties fail to appoint an expert within 15 Business Days of referral then that Expert will be appointed by the President for the time being of the Institute of Civil Engineers in the United Kingdom or its U.S. or Hong Kong equivalent, as the case may be. The Expert shall, subject to Paragraph 16.5 below, publish his determination within 20 Business Days after his appointment of the Unresolved Issue in a private and confidential report to the two parties.
16.3. | The costs and expenses of the Expert shall be share equally by the parties, unless the Expert agrees entirely for one party, in which case the other party shall pay such Expert fees. |
16.4. | The Expert shall be an independent consultant and shall be required to have at least 10 years’ experience in relation to matters of the same general description and jurisdiction as the relevant Unresolved Issue. |
16.5. | The Expert shall be instructed to reach his determination within 20 Business Days of his appointment of the Unresolved Issue on the basis of the information provided by the parties, unless the Expert bona fide believes that such information is so incomplete, unrepresentative, unreliable or inconclusive that it would be unreasonable for an expert to reach such a determination of the Unresolved Issue on that basis in which case the Expert shall require such further information as is appropriate to make its determination. |
16.6. | The Expert shall act as an expert and not as an arbitrator and the determination of the Expert shall be final and binding on the parties and shall be conclusive in any proceedings between the parties, save in the case of manifest error. |
17. | In the event of any conflict between Paragraphs 13 to 16 of this Schedule 7.02 and any other provisions contained herein or in the Agreement, Paragraphs 13 through 16 shall prevail. |
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Exhibit 10.2
Published CUSIP Number: 550819106
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of February 18, 2014
Among
LYDALL, INC.,
as the Borrower,
BANK OF AMERICA, N.A.,
as Administrative Agent, Swing Line Lender
and
L/C Issuer,
and
The Other Lenders Party Hereto
BANK OF AMERICA MERRILL LYNCH,
as Sole Lead Arranger and Sole Book Manager
TABLE OF CONTENTS
Section | Page | |
ARTICLE I. | DEFINITIONS AND ACCOUNTING TERMS | 1 |
1.01 | Defined Terms | 1 |
1.02 | Other Interpretive Provisions | 27 |
1.03 | Accounting Terms | 27 |
1.04 | Rounding | 28 |
1.05 | Exchange Rates; Currency Equivalents | 28 |
1.06 | Additional Alternative Currencies | 29 |
1.07 | Change of Currency | 29 |
1.08 | Times of Day | 30 |
1.09 | Letter of Credit Amounts | 30 |
ARTICLE II. | the COMMITMENTS and Credit Extensions | 31 |
2.01 | Committed Loans | 31 |
2.02 | Borrowings, Conversions and Continuations of Committed Loans | 31 |
2.03 | [Intentionally Omitted] | 33 |
2.04 | Letters of Credit | 33 |
2.05 | Swing Line Loans | 43 |
2.06 | Prepayments | 46 |
2.07 | Termination or Reduction of Commitments | 47 |
2.08 | Repayment of Loans | 47 |
2.09 | Interest | 47 |
2.10 | Fees | 48 |
2.11 | Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate | 49 |
2.12 | Evidence of Debt | 50 |
2.13 | Payments Generally; Administrative Agent’s Clawback | 50 |
2.14 | Sharing of Payments by Lenders | 53 |
2.15 | [Intentionally Omitted] | 53 |
2.16 | Increase in Commitments | 53 |
2.17 | Cash Collateral | 55 |
2.18 | Defaulting Lenders | 56 |
2.19 | [Intentionally Omitted] | 57 |
ARTICLE III. | TAXES, YIELD PROTECTION AND ILLEGALITY | 57 |
3.01 | Taxes | 58 |
3.02 | Illegality | 62 |
3.03 | Inability to Determine Rates | 63 |
3.04 | Increased Costs; Reserves on Eurocurrency Rate Committed Loans | 63 |
3.05 | Compensation for Losses | 65 |
3.06 | Mitigation Obligations; Replacement of Lenders | 66 |
3.07 | Survival | 66 |
ARTICLE IV. | CONDITIONS PRECEDENT TO Credit Extensions | 66 |
i |
4.01 | Conditions of Initial Credit Extension | 66 |
4.02 | Conditions to all Credit Extensions | 69 |
ARTICLE V. | REPRESENTATIONS AND WARRANTIES | 70 |
5.01 | Existence, Qualification and Power | 70 |
5.02 | Authorization; No Contravention | 70 |
5.03 | Governmental Authorization; Other Consents | 70 |
5.04 | Binding Effect | 71 |
5.05 | Financial Statements; No Material Adverse Effect | 71 |
5.06 | Litigation | 71 |
5.07 | No Default | 72 |
5.08 | Ownership of Property; Liens | 72 |
5.09 | Environmental Compliance | 72 |
5.10 | Insurance | 72 |
5.11 | Taxes | 72 |
5.12 | ERISA Compliance | 72 |
5.13 | Subsidiaries; Equity Interests | 73 |
5.14 | Margin Regulations; Investment Company Act | 73 |
5.15 | Disclosure | 73 |
5.16 | Compliance with Laws | 74 |
5.17 | Taxpayer Identification Number | 74 |
5.18 | Collateral Documents | 74 |
5.19 | Intellectual Property; Licenses, Etc | 75 |
5.20 | Solvency | 75 |
5.21 | Rights in Collateral; Priority of Liens | 75 |
5.22 | Sanctions Concerns | 75 |
ARTICLE VI. | AFFIRMATIVE COVENANTS | 76 |
6.01 | Financial Statements | 76 |
6.02 | Certificates; Other Information | 77 |
6.03 | Notices | 78 |
6.04 | Payment of Obligations | 79 |
6.05 | Preservation of Existence, Etc | 79 |
6.06 | Maintenance of Properties | 79 |
6.07 | Maintenance of Insurance | 80 |
6.08 | Compliance with Laws | 80 |
6.09 | Books and Records | 80 |
6.10 | Inspection Rights | 80 |
6.11 | Use of Proceeds | 80 |
6.12 | Additional Guarantors | 80 |
6.13 | Collateral Records | 81 |
6.14 | Further Assurances | 81 |
6.15 | Operating Accounts | 8 |
ARTICLE VII. | NEGATIVE COVENANTS | 82 |
7.01 | Liens | 82 |
ii |
7.02 | Investments | 83 |
7.03 | Indebtedness | 84 |
7.04 | Fundamental Changes | 85 |
7.05 | Dispositions | 85 |
7.06 | Restricted Payments | 86 |
7.07 | Change in Nature of Business | 86 |
7.08 | Transactions with Affiliates | 86 |
7.09 | Burdensome Agreements | 86 |
7.10 | Use of Proceeds | 87 |
7.11 | Bank Accounts | 87 |
7.12 | Inconsistent Agreements; Charter Amendments | 87 |
7.13 | Accounting Changes | 87 |
7.14 | Amendment, Etc. of Indebtedness | 87 |
7.15 | Financial Covenants | 87 |
7.15 | Sanctions | 88 |
ARTICLE VIII. | EVENTS OF DEFAULT AND REMEDIES | 88 |
8.01 | Events of Default | 88 |
8.02 | Remedies Upon Event of Default | 90 |
8.03 | Application of Funds | 90 |
ARTICLE IX. | ADMINISTRATIVE AGENT | 92 |
9.01 | Appointment and Authority | 92 |
9.02 | Rights as a Lender | 93 |
9.03 | Exculpatory Provisions | 93 |
9.04 | Reliance by Administrative Agent | 94 |
9.05 | Delegation of Duties | 95 |
9.06 | Resignation of Administrative Agent | 95 |
9.07 | Non-Reliance on Administrative Agent and Other Lenders | 96 |
9.08 | No Other Duties, Etc | 96 |
9.09 | Administrative Agent May File Proofs of Claim | 96 |
9.10 | Collateral and Guaranty Matters | 98 |
ARTICLE X. | MISCELLANEOUS | 98 |
10.01 | Amendments, Etc | 98 |
10.02 | Notices; Effectiveness; Electronic Communication | 100 |
10.03 | No Waiver; Cumulative Remedies; Enforcement | 102 |
10.04 | Expenses; Indemnity; Damage Waiver | 103 |
10.05 | Payments Set Aside | 105 |
10.06 | Successors and Assigns | 106 |
10.07 | Treatment of Certain Information; Confidentiality | 110 |
10.08 | Right of Setoff | 111 |
10.09 | Interest Rate Limitation | 111 |
10.10 | Counterparts; Integration; Effectiveness | 112 |
10.11 | Survival of Representations and Warranties | 112 |
10.12 | Severability | 112 |
iii |
10.13 | Replacement of Lenders | 112 |
10.14 | Governing Law; Jurisdiction; Etc | 113 |
10.15 | Waiver of Jury Trial | 114 |
10.16 | No Advisory or Fiduciary Responsibility | 114 |
10.17 | Electronic Execution of Assignments and Certain Other Documents | 115 |
10.18 | USA PATRIOT Act | 115 |
10.19 | Judgment Currency | 115 |
10.20 | Prejudgment Remedy Waiver | 116 |
SIGNATURES | S-1 |
SCHEDULES
1.01 | Mandatory Cost Formulae | |
2.01 | Commitments and Applicable Percentages | |
4.01(b) | Schedule of Responsible Officers for the Loan Parties | |
5.12(c) | ERISA Related Disclosure | |
5.12(d) | Schedule of Pension Plans | |
5.13 | Subsidiaries; Other Equity Investments | |
5.19 | Intellectual Property Matters | |
6.14(b) | Landlord and Warehousemen Waivers | |
7.01 | Existing Liens | |
7.03 | Existing Indebtedness | |
7.09 | Burdensome Agreements | |
7.11 | Schedule of Bank Accounts | |
10.02 | Administrative Agent’s Office; Certain Addresses for Notices |
EXHIBITS
Form of | ||
A | Committed Loan Notice | |
B | [Intentionally Omitted] | |
C | Swing Line Loan Notice | |
D | Note | |
E | Compliance Certificate | |
F-1 | Assignment and Assumption | |
F-2 | Administrative Questionnaire | |
G | Guaranty | |
H | Anticipated Acquisition | |
I | Joinder |
iv |
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT (“ Agreement ”) is entered into as of February 18, 2014 among LYDALL, INC., a Delaware corporation (the “ Borrower ”), each lender from time to time party hereto (collectively, the “ Lenders ” and individually, a “ Lender ”), and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.
The Borrower has requested that the Lenders provide a revolving credit facility, and the Lenders are willing to do so on the terms and conditions set forth herein.
In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS
1.01 Defined Terms . As used in this Agreement, the following terms shall have the meanings set forth below:
“ Administrative Agent ” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.
“ Administrative Agent’s Office ” means, with respect to any currency, the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02 with respect to such currency, or such other address or account with respect to such currency as the Administrative Agent may from time to time notify to the Borrower and the Lenders.
“ Administrative Questionnaire ” means an Administrative Questionnaire in substantially the form of Exhibit F-2 or any other form approved by the Administrative Agent.
“ Affiliate ” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
“ Aggregate Commitments ” means the Commitments of all the Lenders.
“ Agreement ” means this Credit Agreement.
“ Alternative Currency ” means each of Euro, Sterling, Canadian Dollar and each other currency (other than Dollars) that is approved in accordance with Section 1.06 .
“ Alternative Currency Equivalent ” means, at any time, with respect to any amount denominated in Dollars, the equivalent amount thereof in the applicable Alternative Currency as determined by the Administrative Agent or the L/C Issuer, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of such Alternative Currency with Dollars.
1 |
“ Alternative Currency Sublimit ” means an amount equal to the lesser of the Aggregate Commitments and $40,000,000. The Alternative Currency Sublimit is part of, and not in addition to, the Aggregate Commitments.
“ Anticipated Acquisition ” means the Investment described on Exhibit H hereto.
“ Applicable Percentage ” means with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender’s Commitment at such time, subject to adjustment as provided in Section 2.18 . If the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02 or if the Aggregate Commitments have expired, then the Applicable Percentage of each Lender shall be determined based on the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments. The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.
“ Applicable Rate ” means the following percentages per annum, based upon the Consolidated Leverage Ratio as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.02(b) :
Applicable Rate | |||||||||
Pricing
Level |
Consolidated
Leverage Ratio |
Unused
Commitment Fee |
For
Eurocurrency Rate Committed Loans and Letters of Credit |
For Base
Rate Committed Loans |
|||||
1 | <0.50:1 | 20 bps | 75 bps | 15 bps | |||||
2 | ≥0.50:1 but <1.00:1 | 20 bps | 100 bps | 25 bps | |||||
3 | ≥1.00:1 but <1.75:1 | 25 bps | 125 bps | 50 bps | |||||
4 | ≥1.75:1 but <2.50:1 | 25 bps | 150 bps | 75 bps | |||||
5 | ≥2.50:1 | 30 bps | 175 bps | 100 bps |
Any increase or decrease in the Applicable Rate resulting from a change in the Consolidated Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(b) ; provided , however , that if a Compliance Certificate is not delivered when due in accordance with such Section, then upon the election of the Required Lenders, Pricing Level 5 shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered and shall remain in effect until the date on which such Compliance Certificate is delivered. The Applicable Rate in effect from the Closing Date through March 31, 2014 shall be determined based upon Pricing Level 3. Notwithstanding anything to the contrary contained in this definition, the determination of the Applicable Rate for any period shall be subject to the provisions of Section 2.11(b) .
2 |
“ Applicable Time ” means, with respect to any borrowings and payments in any Alternative Currency, the local time in the place of settlement for such Alternative Currency as may be determined by the Administrative Agent or the L/C Issuer, as the case may be, to be necessary for timely settlement on the relevant date in accordance with normal banking procedures in the place of payment.
“ Approved Fund ” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“ Assignee Group ” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.
“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.06(b) ), and accepted by the Administrative Agent, in substantially the form of Exhibit F-1 or any other form approved by the Administrative Agent.
“ Attributable Indebtedness ” means, on any date, (a) in respect of any Capital Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a Capital Lease.
“ Audited Financial Statements ” means the audited Consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2012 , and the related Consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.
“ Availability Period ” means the period from and including the Closing Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Commitments pursuant to Section 2.07 , and (c) the date of termination of the commitment of each Lender to make Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02 .
“ Bank of America ” means Bank of America, N.A. and its successors.
“ Base Rate ” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 0.50%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (c) the Eurocurrency Rate plus 1.00%. The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such prime rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.
3 |
“ Base Rate Committed Loan ” means a Committed Loan that bears interest based on the Base Rate. All Base Rate Committed Loans shall be denominated in Dollars.
“ Borrower ” has the meaning specified in the introductory paragraph hereto.
“ Borrower Materials ” has the meaning specified in Section 6.02 .
“ Borrowing ” means a Committed Borrowing or a Swing Line Borrowing, as the context may require.
“ Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office with respect to Obligations denominated in Dollars is located and:
(a) if such day relates to any interest rate settings as to a Eurocurrency Rate Committed Loan denominated in Dollars, any fundings, disbursements, settlements and payments in Dollars in respect of any such Eurocurrency Rate Committed Loan, or any other dealings in Dollars to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Committed Loan, means any such day that is also a London Banking Day;
(b) if such day relates to any interest rate settings as to a Eurocurrency Rate Committed Loan denominated in Euro, any fundings, disbursements, settlements and payments in Euro in respect of any such Eurocurrency Rate Committed Loan, or any other dealings in Euro to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Committed Loan, means a TARGET Day;
(c) if such day relates to any interest rate settings as to a Eurocurrency Rate Committed Loan denominated in a currency other than Dollars or Euro, means any such day on which dealings in deposits in the relevant currency are conducted by and between banks in the London or other applicable offshore interbank market for such currency; and
(d) if such day relates to any fundings, disbursements, settlements and payments in a currency other than Dollars or Euro in respect of a Eurocurrency Rate Committed Loan denominated in a currency other than Dollars or Euro, or any other dealings in any currency other than Dollars or Euro to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Committed Loan (other than any interest rate settings), means any such day on which banks are open for foreign exchange business in the principal financial center of the country of such currency.
“ Canadian Dollar ” and “ CAD ” means the lawful currency of Canada .
“ Capital Assets ” means fixed assets, both tangible (such as land, buildings, fixtures, machinery and equipment) and intangible (such as patents, copyrights, trademarks, franchises and goodwill); provided that Capital Assets shall not include any item customarily charged directly to expense or depreciated over a useful life of twelve (12) months or less in accordance with generally accepted accounting principles.
4 |
“ Capitalized Lease ” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.
“ Cash Collateralize ” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Administrative Agent, L/C Issuer or Swing Line Lender (as applicable) and the Lenders, as collateral for L/C Obligations, Obligations in respect of Swing Line Loans, or obligations of Lenders to fund participations in respect of either thereof (as the context may require), cash or deposit account balances or, if the L/C Issuer or Swing Line Lender benefiting from such collateral shall agree in its sole discretion, other credit support, in each case, in an amount equal to 105% of the applicable obligations secured thereby and pursuant to documentation in form and substance satisfactory to (a) the Administrative Agent and (b) the L/C Issuer or the Swing Line Lender (as applicable). “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.
“ Cash Equivalents ” means any of the following types of Investments, to the extent owned by the Borrower or any of its Subsidiaries free and clear of all Liens (other than Liens permitted by this Agreement or the other Loan Documents):
(a) readily marketable obligations issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof having maturities of not more than three hundred sixty days (360) days from the date of acquisition thereof; provided that the full faith and credit of the United States is pledged in support thereof;
(b) time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is a Lender or (B) is organized under the laws of the United States, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (c) of this definition and (iii) has combined capital and surplus of at least $1,000,000,000, in each case with maturities of not more than ninety (90) days from the date of acquisition thereof;
(c) commercial paper issued by any Person organized under the laws of any state of the United States and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case with maturities of not more than one hundred eighty (180) days from the date of acquisition thereof; and
(d) Investments, classified in accordance with GAAP as current assets of the Borrower or any of its Subsidiaries, in money market investment programs registered under the Investment Company Act of 1940, which are administered by financial institutions that have the highest rating obtainable from either Moody’s or S&P, and the portfolios of which are limited solely to Investments of the character, quality and maturity described in clauses (a), (b) and (c) of this definition.
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“ CDOR ” has the meaning specified in the definition of Eurocurrency Rate.
“ CDOR Rate ” has the meaning specified in the definition of Eurocurrency Rate.
“ Change in Law ” means the occurrence, after the Closing Date, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.
“ Change of Control ” means an event or series of events by which:
(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “ option right ”)), directly or indirectly, of 25% or more of the equity securities of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right); or
(b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors).
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“ Closing Date ” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 10.01 .
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Collateral ” means all of the “Collateral” referred to in the Collateral Documents and all of the other property that is or is intended under the terms of the Collateral Documents to be subject to Liens in favor of the Administrative Agent for the benefit of the Secured Parties; provided that there shall be excluded from the Collateral (a) any account, instrument, chattel paper or other obligation or property of any kind due from, owed by, or belonging to a Sanctioned Person or (b) any lease in which the lessee is a Sanctioned Person.
“ Collateral Documents ” means, collectively, the Security Agreements, the Intellectual Property Security Agreement, the Stock Pledge Agreement, each of the collateral assignments, security agreements, pledge agreements or other similar agreements now or hereafter delivered to the Administrative Agent, and each of the other agreements, instruments or documents that creates or purports to create a Lien in favor of the Administrative Agent for the benefit of the Secured Parties.
“ Commitment ” means, as to each Lender, its obligation to (a) make Committed Loans to the Borrower pursuant to Section 2.01 , (b) purchase participations in L/C Obligations and (c) purchase participations in Swing Line Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.
“ Committed Borrowing ” means a borrowing consisting of simultaneous Committed Loans of the same Type, in the same currency and, in the case of Eurocurrency Rate Committed Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.01 .
“ Committed Loan ” has the meaning specified in Section 2.01 .
“ Committed Loan Notice ” means a notice of (a) a Committed Borrowing, (b) a conversion of Committed Loans from one Type to the other, or (c) a continuation of Eurocurrency Rate Committed Loans, pursuant to Section 2.02(a) , which, if in writing, shall be substantially in the form of Exhibit A .
“ Compliance Certificate ” means a certificate substantially in the form of Exhibit E .
“ Consolidated ” means, when used with reference to financial statements or financial statement items of the Borrower and its Subsidiaries or any other Person, such statements or items on a Consolidated basis in accordance with the consolidation principles of GAAP.
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“ Consolidated Capital Expenditures ” means amounts paid or Indebtedness incurred by Borrower or any of its Subsidiaries, on a Consolidated basis, whether paid in cash or financed through Indebtedness incurred under the Loan Documents or otherwise, in connection with (a) the purchase or lease by Borrower or any of its Subsidiaries of Capital Assets that would be required to be capitalized and shown on the balance sheet of such Person in accordance with GAAP or (b) the lease of any assets by Borrower or any of its Subsidiaries as lessee under any Synthetic Lease to the extent that such assets would have been Capital Assets had the Synthetic Lease been treated for accounting purposes as a Capitalized Lease, in each case net of the proceeds of the sale or trade of similar assets in connection with such purchase or sale or otherwise within 90 days after the date thereof.
“ Consolidated EBIT ” means, for any period, for the Borrower and its Subsidiaries on a Consolidated basis, an amount equal to Consolidated Net Income for such period plus (a) the following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Charges for such period, (ii) the provision for federal, state, local and foreign income taxes payable by the Borrower and its Subsidiaries for such period and (iii) other non-recurring expenses of the Borrower and its Subsidiaries reducing such Consolidated Net Income which do not represent a cash item in such period or any future period, plus (b) loss from discontinued operations and extraordinary items, plus (c) non-cash stock based compensation, minus (d) income from discontinued operations and extraordinary items, and minus (e) the following to the extent included in calculating such Consolidated Net Income: (i) federal, state, local and foreign income tax credits of the Borrower and its Subsidiaries for such period and (ii) other non-recurring income of the Borrower and its Subsidiaries increasing such Consolidated Net Income which does not represent a cash item in such period or any future period.
“ Consolidated EBITDA ” means, for any period, for the Borrower and its Subsidiaries on a Consolidated basis, an amount equal to Consolidated Net Income for such period plus (a) the following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Charges for such period, (ii) the provision for federal, state, local and foreign income taxes payable by the Borrower and its Subsidiaries for such period, (iii) depreciation and amortization expense and (iv) other non-recurring expenses of the Borrower and its Subsidiaries reducing such Consolidated Net Income which do not represent a cash item in such period or any future period, plus (b) loss from discontinued operations and extraordinary items, plus (c) non-cash stock based compensation, minus (d) income from discontinued operations and extraordinary items, and minus (e) the following to the extent included in calculating such Consolidated Net Income: (i) federal, state, local and foreign income tax credits of the Borrower and its Subsidiaries for such period and (ii) other non-recurring income of the Borrower and its Subsidiaries increasing such Consolidated Net Income which does not represent a cash item in such period or any future period.
“ Consolidated Funded Indebtedness ” means, as of any date of determination, for the Borrower and its Subsidiaries on a Consolidated basis, the sum of (a) the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including Obligations hereunder) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments, (b) all purchase money Indebtedness, (c) all direct obligations arising under standby letters of credit, bankers’ acceptances, bank guaranties, surety bonds and similar instruments, (d) all obligations in respect of the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business), (e) Attributable Indebtedness in respect of Capital Leases and Synthetic Lease Obligations, (f) without duplication, all Guarantees with respect to outstanding Indebtedness of the types specified in clauses (a) through (e) above of Persons other than the Borrower or any Subsidiary, and (g) all Indebtedness of the types referred to in clauses (a) through (f) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which the Borrower or a Subsidiary is a general partner or joint venturer, unless such Indebtedness is expressly made non-recourse to the Borrower or such Subsidiary.
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“ Consolidated Interest Charges ” means, for any period, for the Borrower and its Subsidiaries on a Consolidated basis, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses of the Borrower and its Subsidiaries in connection with borrowed money (including cash paid for interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, and (b) the portion of rent expense of the Borrower and its Subsidiaries with respect to such period under Capital Leases that is treated as interest in accordance with GAAP.
“ Consolidated Interest Coverage Ratio ” means, as of any date of determination, the ratio of (a) Consolidated EBIT for the period of the four fiscal quarters most recently ended to (b) Consolidated Interest Charges for the period of the four fiscal quarters most recently ended.
“ Consolidated Leverage Ratio ” means, as of any date of determination, the ratio of (a) Consolidated Funded Indebtedness as of such date to (b) Consolidated EBITDA for the period of the four fiscal quarters most recently ended.
“ Consolidated Net Income ” means, for any period, for the Borrower and its Subsidiaries on a Consolidated basis, the net income of the Borrower and its Subsidiaries (excluding extraordinary gains and extraordinary losses in accordance with GAAP) for that period.
“ Contractual Obligation ” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.
“ Credit Extension ” means each of the following: (a) a Committed Borrowing and (b) an L/C Credit Extension.
“ Debtor Relief Laws ” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
“ Default ” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
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“ Default Rate ” means (a) when used with respect to Obligations other than Letter of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate, if any, applicable to Base Rate Committed Loans plus (iii) 2% per annum; provided , however , that with respect to a Eurocurrency Rate Committed Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate and any Mandatory Cost) otherwise applicable to such Loan plus 2% per annum, and (b) when used with respect to Letter of Credit Fees, a rate equal to the Applicable Rate plus 2% per annum.
“ Defaulting Lender ” means, subject to Section 2.18(b) , any Lender that, as determined by the Administrative Agent, (a) has failed to perform any of its funding obligations hereunder, including in respect of its Loans or participations in respect of Letters of Credit or Swing Line Loans, within three Business Days of the date required to be funded by it hereunder, (b) has notified the Borrower, or the Administrative Agent that it does not intend to comply with its funding obligations or has made a public statement to that effect with respect to its funding obligations hereunder or under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by the Administrative Agent, to confirm in a manner satisfactory to the Administrative Agent that it will comply with its funding obligations, or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, or (iii) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority.
“ Designated Jurisdiction ” means any country or territory to the extent that such country or territory is the subject of any Sanction.
“ Disposition ” or “ Dispose ” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.
“ Dollar ” and “ $ ” mean lawful money of the United States.
“ Dollar Equivalent ” means, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in any Alternative Currency, the equivalent amount thereof in Dollars as determined by the Administrative Agent or the L/C Issuer, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of Dollars with such Alternative Currency.
“ Domestic Subsidiary ” means any Subsidiary that is organized under the laws of any political subdivision of the United States.
“ Eligible Assignee ” means any Person that meets the requirements to be an assignee under Section 10.06(b)(iii) , and (v) (subject to such consents, if any, as may be required under Section 10.06(b)(iii) ).
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“ EMU ” means the economic and monetary union in accordance with the Treaty of Rome 1957, as amended by the Single European Act 1986, the Maastricht Treaty of 1992 and the Amsterdam Treaty of 1998.
“ EMU Legislation ” means the legislative measures of the European Council for the introduction of, changeover to or operation of a single or unified European currency.
“ Environmental Laws ” means any and all federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.
“ Environmental Liability ” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“ Equity Interests ” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.
“ ERISA Affiliate ” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).
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“ ERISA Event ” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate or the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA and any liability under Title IV of ERISA described in (a) - (g) above, upon the Borrower or any ERISA Affiliate.
“ Euro ” and “ € ” mean the single currency of the Participating Member States introduced in accordance with the EMU Legislation.
“ Eurocurrency Rate ” means:
(a) with respect to any Credit Extension for any Interest Period:
(i) denominated in a LIBOR Quoted Currency, the rate per annum equal to the London Interbank Offered Rate (“ LIBOR ”), or a comparable or successor rate which rate is approved by the Administrative Agent, as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) (in such case, the “ LIBOR Rate ”) at or about 11:00 a.m. (London time) on the Rate Determination Date, for deposits in the relevant currency, with a term equivalent to such Interest Period;
(ii) denominated in Canadian Dollars, the rate per annum equal to the Canadian Dealer Offered Rate (“ CDOR ”), or a comparable or successor rate which rate is approved by the Administrative Agent, as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) (in such case, the “ CDOR Rate ”) at or about 10:00a.m. (Toronto, Ontario time) on the Rate Determination Date with a term equivalent to such Interest Period;
(iii) with respect to any Credit Extension denominated in any other Non-LIBOR Quoted Currency, the rate per annum as designated with respect to such Alternative Currency at the time such Alternative Currency is approved by the Administrative Agent and the relevant Lenders pursuant to Section 1.09(a); and
(b) for any interest rate calculation with respect to a Base Rate Committed Loan on any date, the rate per annum equal to the LIBOR Rate, at or about 11:00 a.m. (London time) determined two (2) Business Days prior to such date for Dollar deposits being delivered in the London interbank market for deposits in Dollars with a term of one (1) month commencing that day;
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provided that to the extent a comparable or successor rate is approved by the Administrative Agent in connection with any rate set forth in this definition, the approved rate shall be applied in a manner consistent with market practice; provided , further that to the extent such market practice is not administratively feasible for the Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent.
“ Eurocurrency Rate Committed Loan ” means a Committed Loan that bears interest at a rate based on clause (a) of the definition of “Eurocurrency Rate.” Eurocurrency Rate Committed Loans may be denominated in Dollars or in an Alternative Currency. All Committed Loans denominated in an Alternative Currency must be Eurocurrency Rate Committed Loans.
“ Event of Default ” has the meaning specified in Section 8.01 .
“ Excluded Taxes ” means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 10.13) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 3.01(a)(ii), (a)(iii) or (c), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (c) Taxes attributable to such Recipient’s failure to comply with Section 3.01(e) and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.
“ FASB ASC ” means the Accounting Standards Codification of the Financial Accounting Standards Board.
“ FATCA ” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.
“ Federal Funds Rate ” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.
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“ Fee Letter ” means the letter agreement, dated as of the Closing Date, between the Borrower and the Administrative Agent.
“ Foreign Lender ” means a Lender that is not a U.S. Person. For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
“ Foreign Obligation Provider ” shall have the meaning set forth in the definition of Foreign Subsidiary Secured Obligations.
“ Foreign Obligation Loan Documents ” means all legal documentation entered into between the applicable Foreign Subsidiary and the Foreign Obligation Provider in connection with the Foreign Subsidiary Secured Obligations.
“ Foreign Subsidiary ” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States, a State thereof or the District of Columbia.
“ Foreign Subsidiary Secured Obligations ” means all unpaid principal of, accrued and unpaid interest and fees and reimbursement obligations, and all expenses, reimbursements, indemnities and other obligations under or with respect to, any loans, letters of credit, acceptances, guarantees, overdraft facilities, other credit extensions or accommodations or similar obligations owing by any Foreign Subsidiary to Bank of America or any other Lender or any office, branch or Affiliate of Bank of America or such other Lender (each a “ Foreign Obligation Provider ”) excluding, however, any of the foregoing owed to a Lender or any Affiliate of a Lender after an assignment of the same to such Lender or Affiliate of such Lender by another Person who is not a Lender or an Affiliate of a Lender and without the consent of the Borrower, which consent shall not be unreasonably conditioned or delayed.
“ FRB ” means the Board of Governors of the Federal Reserve System of the United States.
“ Fronting Exposure ” means, at any time there is a Defaulting Lender, (a) with respect to the L/C Issuer, such Defaulting Lender’s Applicable Percentage of the outstanding L/C Obligations other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof and (b) with respect to the Swing Line Lender, such Defaulting Lender’s Applicable Percentage of Swing Line Loans other than Swing Line Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.
“ Fund ” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.
“ GAAP ” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.
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“ Governmental Authority ” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
“ Guarantee ” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.
“ Guarantors ” means, collectively, Lydall Thermal/Acoustical, Inc., Lydall Filtration/Separation, Inc. and Lydall International, Inc. and, upon the consummation of the Anticipated Acquisition, Southern Felt Company, Inc.
“ Guaranty ” means the Amended and Restated Guaranty made by the Guarantors in favor of the Administrative Agent and the Lenders, substantially in the form of Exhibit G .
“ Hazardous Materials ” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
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“ IFRS ” means international accounting standards within the meaning of IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements delivered under or referred to herein.
“ Indebtedness ” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:
(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;
(b) all direct or contingent obligations of such Person arising under letters of credit, bankers’ acceptances, bank guaranties, surety bonds and similar instruments;
(c) net obligations of such Person under any Swap Contract;
(d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and, in each case, not past due for more than 60 days after the date on which such trade account payable was created);
(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;
(f) Capital Leases and Synthetic Lease Obligations;
(g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and
(h) without duplication, all Guarantees of such Person in respect of any of the foregoing.
For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of any Capital Lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.
“ Indemnified Taxes ” means Taxes other than Excluded Taxes.
“ Indemnitees ” has the meaning specified in Section 10.04(b) .
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“ Information ” has the meaning specified in Section 10.07 .
“ Intellectual Property Security Agreement ” means that certain intellectual property security agreement from Borrower granting a security interest to Administrative Agent in IP Rights as may be required by Administrative Agent and Lenders in connection with this Agreement.
“ Interest Payment Date ” means, (a) as to any Loan other than a Base Rate Committed Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided , however , that if any Interest Period for a Eurocurrency Rate Committed Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Committed Loan (including a Swing Line Loan), the last Business Day of each calendar month.
“ Interest Period ” means as to each Eurocurrency Rate Committed Loan, the period commencing on the date such Eurocurrency Rate Committed Loan is disbursed or (in the case of any Eurocurrency Rate Committed Loan) converted to or continued as a Eurocurrency Rate Committed Loan and ending on the date one, two, three or six months thereafter, as selected by the Borrower in its Committed Loan Notice; provided that:
(i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless, in the case of a Eurocurrency Rate Committed Loan, such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;
(ii) any Interest Period pertaining to a Eurocurrency Rate Committed Loan 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 the calendar month at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Maturity Date.
“ Investment ” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor Guarantees Indebtedness of such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.
“ IP Rights ” has the meaning specified in Section 5.19 .
“ IRS ” means the United States Internal Revenue Service.
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“ ISP ” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).
“ Issuer Documents ” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the L/C Issuer and the Borrower (or any Subsidiary) or in favor of the L/C Issuer and, in each case, relating to such Letter of Credit.
“ Judgment Currency ” has the meaning specified in Section 10.19.
“ Knowledge ” means, with respect to the Borrower, any Loan Party or any ERISA Affiliate, the actual knowledge of the chief executive officer, chief financial officer, chief operating officer (if any), chief legal officer or chief accounting officer of the Borrower, such Loan Party or such ERISA Affiliate, as applicable.
“ Laws ” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.
“ L/C Advance ” means, with respect to each Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Applicable Percentage. All L/C Advances shall be denominated in Dollars.
“ L/C Borrowing ” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Committed Borrowing. All L/C Borrowings shall be denominated in Dollars or in an Alternative Currency, as applicable.
“ L/C Credit Extension ” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.
“ L/C Issuer ” means Bank of America in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.
“ L/C Obligations ” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06 . For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.
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“ Lender ” has the meaning specified in the introductory paragraph hereto and, as the context requires, includes the Swing Line Lender.
“ Lending Office ” means, as to any Lender and with respect to any currency, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.
“ Letter of Credit ” means any standby letter of credit issued hereunder. Letters of Credit may be issued in Dollars or in an Alternative Currency.
“ Letter of Credit Application ” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.
“ Letter of Credit Expiration Date ” means the day that is seven days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).
“ Letter of Credit Fee ” has the meaning specified in Section 2.04(h) .
“ Letter of Credit Sublimit ” means an amount equal to $30,000,000. The Letter of Credit Sublimit is part of, and not in addition to, the Aggregate Commitments. The Letter of Credit Sublimit shall include the aggregate outstanding amount of any bank guarantees or performance guarantees.
“ LIBOR ” has the meaning specified in the definition of Eurocurrency Rate.
“ LIBOR Quoted Currency ” means Dollars, Euro and Sterling, in each case as long as there is a published LIBOR rate with respect thereto.
“ Lien ” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).
“ Loan ” means an extension of credit by a Lender to the Borrower under Article II in the form of a Committed Loan or a Swing Line Loan.
“ Loan Documents ” means this Agreement, each Note, each Issuer Document, any agreement creating or perfecting rights in Cash Collateral pursuant to the provisions of Section 2.17 of this Agreement, the Collateral Documents, and the Guaranty.
“ Loan Parties ” means, collectively, the Borrower and each Guarantor.
“ London Banking Day ” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.
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“ Mandatory Cost ” means, with respect to any period, the percentage rate per annum determined in accordance with Schedule 1.01 .
“ Material Adverse Effect ” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise) of the Borrower or the Borrower and the other Loan Parties, taken as a whole; (b) a material impairment of the ability of the Borrower or the Borrower and the other Loan Parties, taken as a whole, to perform their obligations under the Loan Documents; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Borrower or the Borrower and the other Loan Parties, taken as a whole, of the Documents.
“ Maturity Date ” means January 31, 2019; provided , however , that if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.
“ Multiemployer Plan ” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.
“ Multiple Employer Plan ” means a Pension Plan which has two or more contributing sponsors (including the Borrower or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.
“ Non-LIBOR Quoted Currency ” means any currency other than a LIBOR Quoted Currency.
“ Note ” means a promissory note made by the Borrower in favor of a Lender evidencing Loans made by such Lender, substantially in the form of Exhibit D .
“ Obligations ” means (i) all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit, Swap Contract or treasury obligation with any Lender or an Affiliate of any Lender and (ii) all Foreign Subsidiary Secured Obligations, in each case whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.
“ OFAC ” means the Office of Foreign Assets Control of the United States Department of the Treasury.
“ Organization Documents ” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
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“ Other Connection Taxes ” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“ Other Taxes ” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.
“ Outstanding Amount ” means (i) with respect to Committed Loans and Swing Line Loans on any date, the Dollar Equivalent amount of the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Committed Loans and Swing Line Loans, as the case may be, occurring on such date; and (ii) with respect to any L/C Obligations on any date, the Dollar Equivalent amount of the aggregate outstanding amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by the Borrower of Unreimbursed Amounts.
“ Overnight Rate ” means, for any day, (a) with respect to any amount denominated in Dollars, the greater of (i) the Federal Funds Rate and (ii) an overnight rate determined by the Administrative Agent, the L/C Issuer, or the Swing Line Lender, as the case may be, in accordance with banking industry rules on interbank compensation, and (b) with respect to any amount denominated in an Alternative Currency, the greater of (i) an overnight rate determined by the Administrative Agent or the L/C Issuer, as the case may be, in accordance with banking industry rules on interbank compensation and (ii) the rate of interest per annum at which overnight deposits in the applicable Alternative Currency, in an amount approximately equal to the amount with respect to which such rate is being determined, would be offered for such day by a branch or Affiliate of Bank of America in the applicable offshore interbank market for such currency to major banks in such interbank market.
“ Participant ” has the meaning specified in Section 10.06(d) .
“ Participant Register ” has the meaning specified in Section 10.06(d) .
“ Participating Member State ” means each state so described in any EMU Legislation.
“ PBGC ” means the Pension Benefit Guaranty Corporation.
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“ Pension Funding Rules ” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.
“ Pension Plan ” means any employee pension benefit plan (including a Multiple Employer Plan but not including a Multiemployer Plan) that is maintained or is contributed to by the Borrower and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.
“ Permitted Acquisition ” means (a) the Anticipated Acquisition and (b) an Investment (under subsection (a) or (c) of the definition of Investment) that satisfies each of the following conditions: (i) prior to and after giving effect to consummating such Investment the Loan Parties shall be (A) in strict compliance with all financial covenants and reporting requirements set forth in the Loan Documents and (B) in material compliance with all other covenants set forth in the Loan Documents, and if such Investment is in an amount in excess of $25,000,000, Borrower shall deliver to Administrative Agent a Compliance Certificate confirming pro forma compliance with all such covenants, (ii) the Investment must be approved by the board of directors of the Borrower and the board of directors, or comparable governing body, of the Person subject to the investment, and (iii) after giving effect to the Investment (A) the Consolidated Leverage Ratio shall be less than 2.50:1.0 and (B) Borrower shall have Liquidity in an amount greater than or equal to $10,000,000. For the purposes of the definition of Permitted Acquisition the term “Liquidity” shall mean an amount equal to the sum of (x) all cash, Cash Equivalents and marketable securities held by Borrower and (y) the amount by which Aggregate Commitments exceed the sum of the Outstanding Amounts of Committed Loans and L/C Obligations (subject to adjustment as provided in Section 2.18 ).
“ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
“ Plan ” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan), maintained for employees of the Borrower or any ERISA Affiliate or any such Plan to which the Borrower or any ERISA Affiliate is required to contribute on behalf of any of its employees.
“ Platform ” has the meaning specified in Section 6.02 .
“ Public Lender ” has the meaning specified in Section 6.02 .
“ Register ” has the meaning specified in Section 10.06(c) .
“ Rate Determination Date ” means two (2) Business Days prior to the commencement of such Interest Period (or such other day as is generally treated as the rate fixing day by market practice in such interbank market, as determined by the Administrative Agent; provided that to the extent such market practice is not administratively feasible for the Administrative Agent, then “Rate Determination Date” means such other day as otherwise reasonably determined by the Administrative Agent).
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“ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers and advisors and representatives of such Person and of such Person’s Affiliates.
“ Reportable Event ” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the applicable notice period has been waived.
“ Request for Credit Extension ” means (a) with respect to a Committed Borrowing, conversion or continuation of Committed Loans, a Committed Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit Application and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice.
“ Required Lenders ” means, as of any date of determination, Lenders having more than 60% of the Aggregate Commitments (but in no event fewer than two (2) Lenders) or, if the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02 , Lenders holding in the aggregate more than 60% of the Total Outstandings (but in no event fewer than two (2) Lenders) (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations and Swing Line Loans being deemed “held” by such Lender for purposes of this definition); provided that the Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.
“ Responsible Officer ” means the chief executive officer, president, chief financial officer, chief accounting officer, treasurer, assistant treasurer or controller of a Loan Party and solely for purposes of the delivery of incumbency certificates pursuant to Section 4.01 , the secretary or any assistant secretary of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
“ Restricted Payment ” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on account of any return of capital to the Borrower’s stockholders, partners or members (or the equivalent Person thereof).
“ Revaluation Date ” means (a) with respect to any Committed Loan, each of the following: (i) each date of a Borrowing of a Eurocurrency Rate Committed Loan denominated in an Alternative Currency, (ii) each date of a continuation of a Eurocurrency Rate Committed Loan denominated in an Alternative Currency pursuant to Section 2.02 , and (iii) such additional dates as the Administrative Agent shall determine or the Required Lenders shall require; and (b) with respect to any Letter of Credit, each of the following: (i) each date of issuance, amendment and/or extension of a Letter of Credit denominated in an Alternative Currency, (ii) each date of any payment by the L/C Issuer under any Letter of Credit denominated in an Alternative Currency, and (iii) such additional dates as the Administrative Agent or the L/C Issuer shall determine or the Required Lenders shall require.
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“ Same Day Funds ” means (a) with respect to disbursements and payments in Dollars, immediately available funds, and (b) with respect to disbursements and payments in an Alternative Currency, same day or other funds as may be determined by the Administrative Agent or the L/C Issuer, as the case may be, to be customary in the place of disbursement or payment for the settlement of international banking transactions in the relevant Alternative Currency.
“ Sanction(s) ” means any international economic sanction administered or enforced by the United States Government (including, without limitation, OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority.
“ Sanctioned Country ” means a country subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx , or as otherwise published from time to time.
“ Sanctioned Person ” means (a) a Person named on the list of “Specially Designated Nationals and Blocked Persons” maintained by OFAC available at http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx , or as otherwise published from time to time, or (b) (i) an agency of the government of a Sanctioned Country, (ii) an organization controlled by a Sanctioned Country, or (iii) a person resident in a Sanctioned Country, to the extent subject to a sanctions program administered by OFAC.
“ SEC ” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
“ Secured Parties ” means, collectively, the Administrative Agent, the Lenders, the L/C Issuer, Foreign Obligation Providers, each co-agent or sub-agent appointed by the Administrative Agent from time to time pursuant to this Agreement, and the other Persons the Obligations owing to which are or are purported to be secured by the Collateral under the terms of the Collateral Documents.
“ Security Agreements ” means those security agreements executed by Borrower and the Guarantors granting a security interest to Administrative Agent in the Collateral covered thereby and such other security agreements (including intellectual property collateral assignments) as may be required by Administrative Agent and Required Lenders in connection with this Agreement.
“ Special Notice Currency ” means at any time an Alternative Currency, other than the currency of a country that is a member of the Organization for Economic Cooperation and Development at such time located in North America or Europe.
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“ Spot Rate ” for a currency means the rate determined by the Administrative Agent or the L/C Issuer, as applicable, to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two (2) Business Days prior to the date as of which the foreign exchange computation is made; provided that the Administrative Agent or the L/C Issuer may obtain such spot rate from another financial institution designated by the Administrative Agent or the L/C Issuer if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency; and provided further that the L/C Issuer may use such spot rate quoted on the date as of which the foreign exchange computation is made in the case of any Letter of Credit denominated in an Alternative Currency.
“ Sterling ” and “ £ ” means the lawful currency of the United Kingdom.
“ Stock Pledge Agreement ” means, collectively, that certain stock pledge executed by Borrower granting a security interest to Administrative Agent in 65% of the Equity Interests of the Borrower’s Foreign Subsidiaries.
“ Subsidiary ” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.
“ Swap Contract ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “ Master Agreement ”), including any such obligations or liabilities under any Master Agreement.
“ Swap Termination Value ” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).
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“ Swing Line Borrowing ” means a borrowing of a Swing Line Loan pursuant to Section 2.05 .
“ Swing Line Lender ” means Bank of America in its capacity as provider of Swing Line Loans, or any successor swing line lender hereunder.
“ Swing Line Loan ” has the meaning specified in Section 2.05(a) .
“ Swing Line Loan Notice ” means a notice of a Swing Line Borrowing pursuant to Section 2.05(b) , which, if in writing, shall be substantially in the form of Exhibit C .
“ Swing Line Sublimit ” means an amount equal to the lesser of (a) $10,000,000 and (b) the Aggregate Commitments. The Swing Line Sublimit is part of, and not in addition to, the Aggregate Commitments.
“ Synthetic Lease ” means (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property.
“ Synthetic Lease Obligation ” means the monetary obligation of a Person under Synthetic Lease creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).
“ TARGET2 ” means the Trans-European Automated Real-time Gross Settlement Express Transfer payment system which utilizes a single shared platform and which was launched on November 19, 2007.
“ TARGET Day ” means any day on which TARGET2 (or, if such payment system ceases to be operative, such other payment system, if any, determined by the Administrative Agent to be a suitable replacement) is open for the settlement of payments in Euro.
“ Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“ Threshold Amount ” means $5,000,000.
“ Total Outstandings ” means the aggregate Outstanding Amount of all Loans and all L/C Obligations.
“ Type ” means, with respect to a Committed Loan, its character as a Base Rate Committed Loan or a Eurocurrency Rate Committed Loan.
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“ UCC ” means the Uniform Commercial Code as in effect in the State of Connecticut; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of Connecticut, “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.
“ UCP ” means, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce (“ ICC ”) Publication No. 600 (or such later version thereof as may be in effect at the time of issuance).
“ United States ” and “ U.S. ” mean the United States of America.
“ Unreimbursed Amount ” has the meaning specified in Section 2.04(c)(i) .
1.02 Other Interpretive Provisions . With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:
(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “ include ,” “ includes ” and “ including ” shall be deemed to be followed by the phrase “without limitation.” The word “ will ” shall be construed to have the same meaning and effect as the word “ shall .” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “ hereto ,” “ herein ,” “ hereof ” and “ hereunder ,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “ asset ” and “ property ” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
(b) In the computation of periods of time from a specified date to a later specified date, the word “ from ” means “ from and including ;” the words “ to ” and “ until ” each mean “ to but excluding ;” and the word “ through ” means “ to and including .”
(c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.
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1.03 Accounting Terms .
(a) Generally . All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Borrower and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded.
(b) Changes in GAAP . If at any time any change in GAAP (including the adoption of IFRS) would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that , until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.
(c) Consolidation of Variable Interest Entities . All references herein to Consolidated financial statements of the Borrower and its Subsidiaries or to the determination of any amount for the Borrower and its Subsidiaries on a Consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that the Borrower is required to consolidate pursuant to FASB ASC 810 as if such variable interest entity were a Subsidiary as defined herein.
1.04 Rounding . Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
1.05 Exchange Rates; Currency Equivalents .
(a) The Administrative Agent or the L/C Issuer, as applicable, shall determine the Spot Rates as of each Revaluation Date to be used for calculating Dollar Equivalent amounts of Credit Extensions and Outstanding Amounts denominated in Alternative Currencies. Such Spot Rates shall become effective as of such Revaluation Date and shall be the Spot Rates employed in converting any amounts between the applicable currencies until the next Revaluation Date to occur. Except for purposes of financial statements delivered by Loan Parties hereunder or calculating financial covenants hereunder or except as otherwise provided herein, the applicable amount of any currency (other than Dollars) for purposes of the Loan Documents shall be such Dollar Equivalent amount as so determined by the Administrative Agent or the L/C Issuer, as applicable.
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(b) Wherever in this Agreement in connection with a Committed Borrowing, conversion, continuation or prepayment of a Eurocurrency Rate Committed Loan or the issuance, amendment or extension of a Letter of Credit, an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such Committed Borrowing, Eurocurrency Rate Committed Loan or Letter of Credit is denominated in an Alternative Currency, such amount shall be the relevant Alternative Currency Equivalent of such Dollar amount (rounded to the nearest unit of such Alternative Currency, with 0.5 of a unit being rounded upward), as determined by the Administrative Agent or the L/C Issuer, as the case may be.
1.06 Additional Alternative Currencies .
(a) Borrower may from time to time request that Eurocurrency Rate Committed Loans be made and/or Letters of Credit be issued in a currency other than those specifically listed in the definition of “Alternative Currency;” provided that such requested currency is a lawful currency (other than Dollars) that is readily available and freely transferable and convertible into Dollars. In the case of any such request with respect to the making of Eurocurrency Rate Committed Loans, such request shall be subject to the approval of the Administrative Agent and the Lenders; and in the case of any such request with respect to the issuance of Letters of Credit, such request shall be subject to the approval of the Administrative Agent and the L/C Issuer.
(b) Any such request shall be made to the Administrative Agent not later than 11:00 a.m., ten (10) Business Days prior to the date of the desired Credit Extension (or such other time or date as may be agreed by the Administrative Agent and, in the case of any such request pertaining to Letters of Credit, the L/C Issuer, in its or their sole discretion). In the case of any such request pertaining to Eurocurrency Rate Committed Loans, the Administrative Agent shall promptly notify each Lender thereof; and in the case of any such request pertaining to Letters of Credit, the Administrative Agent shall promptly notify the L/C Issuer thereof. Each Lender (in the case of any such request pertaining to Eurocurrency Rate Committed Loans) or the L/C Issuer (in the case of a request pertaining to Letters of Credit) shall notify the Administrative Agent, not later than 11:00 a.m., ten Business Days after receipt of such request whether it consents, in its sole discretion, to the making of Eurocurrency Rate Committed Loans or the issuance of Letters of Credit, as the case may be, in such requested currency.
(c) Any failure by a Lender or the L/C Issuer, as the case may be, to respond to such request within the time period specified in the preceding sentence shall be deemed to be a refusal by such Lender or the L/C Issuer, as the case may be, to permit Eurocurrency Rate Committed Loans to be made or Letters of Credit to be issued in such requested currency. If the Administrative Agent and all the Lenders consent to making Eurocurrency Rate Committed Loans in such requested currency, the Administrative Agent shall so notify Borrower and such currency shall thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Committed Borrowings of Eurocurrency Rate Committed Loans; and if the Administrative Agent and the L/C Issuer consent to the issuance of Letters of Credit in such requested currency, the Administrative Agent shall so notify Borrower and such currency shall thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Letter of Credit issuances. If the Administrative Agent shall fail to obtain consent to any request for an additional currency under this Section 1.06 , the Administrative Agent shall promptly so notify Borrower.
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1.07 Change of Currency .
(a) Each obligation of the Borrower to make a payment denominated in the national currency unit of any member state of the European Union that adopts the Euro as its lawful currency after the date hereof shall be redenominated into Euro at the time of such adoption (in accordance with the EMU Legislation). If, in relation to the currency of any such member state, the basis of accrual of interest expressed in this Agreement in respect of that currency shall be inconsistent with any convention or practice in the London interbank market for the basis of accrual of interest in respect of the Euro, such expressed basis shall be replaced by such convention or practice with effect from the date on which such member state adopts the Euro as its lawful currency; provided that if any Committed Borrowing in the currency of such member state is outstanding immediately prior to such date, such replacement shall take effect, with respect to such Committed Borrowing, at the end of the then current Interest Period.
(b) Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify to be appropriate to reflect the adoption of the Euro by any member state of the European Union and any relevant market conventions or practices relating to the Euro.
(c) Each provision of this Agreement also shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify to be appropriate to reflect a change in currency of any other country and any relevant market conventions or practices relating to the change in currency.
1.08 Times of Day . Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).
1.09 Letter of Credit Amounts . Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the Dollar Equivalent amount of the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the Dollar Equivalent amount of the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.
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ARTICLE II. the COMMITMENTS and Credit Extensions
2.01 Committed Loans . Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a “ Committed Loan ”) to the Borrower in Dollars or in one or more Alternative Currencies from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Commitment; provided , however , that after giving effect to any Committed Borrowing, (i) the Total Outstandings shall not exceed the Aggregate Commitments, (ii) the aggregate Outstanding Amount of the Committed Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Commitment, (iii) the aggregate Outstanding Amount of all Committed Loans denominated in Alternative Currencies shall not exceed the Alternative Currency Sublimit. Within the limits of each Lender’s Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.01 , prepay under Section 2.06 , and reborrow under this Section 2.01 . Committed Loans may be Base Rate Committed Loans or Eurocurrency Rate Committed Loans, as further provided herein.
2.02 Borrowings, Conversions and Continuations of Committed Loans .
(a) Each Committed Borrowing, each conversion of Committed Loans from one Type to the other, and each continuation of Eurocurrency Rate Committed Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent, which may be given by telephone. Each such notice must be received by the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurocurrency Rate Committed Loans denominated in Dollars or of any conversion of Eurocurrency Rate Committed Loans denominated in Dollars to Base Rate Committed Loans, (ii) four Business Days (or five Business Days in the case of a Special Notice Currency) prior to the requested date of any Borrowing or continuation of Eurocurrency Rate Committed Loans denominated in Alternative Currencies, and (iii) on the requested date of any Borrowing of Base Rate Committed Loans. Each telephonic notice by the Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Committed Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Each Committed Borrowing of, conversion to or continuation of Eurocurrency Rate Committed Loans shall be in a principal amount of $250,000 or a whole multiple of $100,000 in excess thereof. Except as provided in Sections 2.04(c) and 2.05(c) , each Borrowing of or conversion to Base Rate Committed Loans shall be in a principal amount of $250,000 or a whole multiple of $100,000 in excess thereof. Each Committed Loan Notice (whether telephonic or written) shall specify (i) whether the Borrower is requesting a Committed Borrowing, a conversion of Committed Loans from one Type to the other, or a continuation of Eurocurrency Rate Committed Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Committed Loans to be borrowed, converted or continued, (iv) the Type of Committed Loans to be borrowed or to which existing Committed Loans are to be converted, (v) if applicable, the duration of the Interest Period with respect thereto and (v) the currency of the Committed Loan to be borrowed. If the Borrower fails to specify a currency in a Committed Loan Notice requesting Borrowing, then the Committed Loans so requested shall be made as Dollars, or converted to, Base Rate Committed Loans. If the Borrower fails to specify a Type of Committed Loan in a Committed Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Committed Loans shall be made as, or converted to, Base Rate Committed Loans; provided , however , that in the case of a failure to timely request a continuation of Committed Loans denominated in an Alternative Currency, such Loans shall be continued as Eurocurrency Rate Committed Loans in their original currency with an Interest Period of one month. Any such automatic conversion to Base Rate Committed Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurocurrency Rate Committed Loans. If the Borrower requests a Borrowing of, conversion to, or continuation of Eurocurrency Rate Committed Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. No Committed Loan may be converted into or continued as a Committed Loan denominated in a different currency, but instead must be prepaid in the original currency of such Committed Loan and reborrowed in the other currency.
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(b) Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount (and currency) of its Applicable Percentage of the applicable Committed Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Committed Loans or continuation of Committed Loans denominated in a currency other than Dollars, in each case as described in the preceding subsection. In the case of a Committed Borrowing, each Lender shall make the amount of its Committed Loan available to the Administrative Agent in Same Day Funds at the Administrative Agent’s Office not later than 1:00 p.m., in the case of any Committed Loan denominated in Dollars, and not later than the Applicable Time specified by the Administrative Agent in the case of any Committed Loan in an Alternative Currency, in each case, on the Business Day specified in the applicable Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01 ), the Administrative Agent shall make funds in an amount equal to the Committed Loan available to the Borrower either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower; provided , however , that if, on the date the Committed Loan Notice with respect to such Borrowing denominated in Dollars is given by the Borrower, there are L/C Borrowings outstanding, then the proceeds of such Borrowing, first , shall be applied to the payment in full of any such L/C Borrowings, and second , shall be made available to the Borrower as provided above.
(c) Except as otherwise provided herein, a Eurocurrency Rate Committed Loan may be continued or converted only on the last day of an Interest Period for such Eurocurrency Rate Committed Loan. During the existence of a Default, no Loans may be requested as, converted to or continued as Eurocurrency Rate Committed Loans (whether in Dollars or any Alternative Currency) without the consent of the Required Lenders, and the Required Lenders may demand that any or all of the then outstanding Eurocurrency Rate Committed Loans denominated in an Alternative Currency be converted immediately to Base Rate Committed Loans, prepaid, or redenominated into Dollars in the amount of the Dollar Equivalent thereof, on the last day of the then current Interest Period with respect thereto.
(d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for Eurocurrency Rate Committed Loans upon determination of such interest rate. At any time that Base Rate Committed Loans are outstanding, the Administrative Agent shall notify the Borrower and the Lenders of any change in Bank of America’s prime rate used in determining the Base Rate promptly following the public announcement of such change.
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(e) After giving effect to all Committed Borrowings, all conversions of Committed Loans from one Type to the other, and all continuations of Committed Loans as the same Type, there shall not be more than five (5) Interest Periods in effect with respect to Committed Loans.
2.03 [Intentionally Omitted]
2.04 Letters of Credit .
(a) The Letter of Credit Commitment .
(i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the Lenders set forth in this Section 2.04 , (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit denominated in Dollars or in one or more Alternative Currencies for the account of the Borrower or its Subsidiaries, and to amend or extend Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drawings under the Letters of Credit; and (B) the Lenders severally agree to participate in Letters of Credit issued for the account of the Borrower or its Subsidiaries and any drawings thereunder; provided that after giving effect to any L/C Credit Extension with respect to any Letter of Credit, (x) the Total Outstandings shall not exceed the Aggregate Commitments, (y) the aggregate Outstanding Amount of the Committed Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Commitment, and (z) the Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit. Each request by the Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by the Borrower that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.
(ii) The L/C Issuer shall not issue any Letter of Credit, if:
(A) subject to Section 2.04(b)(iii), the expiry date of the requested Letter of Credit would occur more than twelve months after the date of issuance or last extension, unless the Required Lenders have approved such expiry date; or
(B) the expiry date of the requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the Lenders have approved such expiry date.
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(iii) The L/C Issuer shall not be under any obligation to issue any Letter of Credit if:
(A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;
(B) the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer applicable to letters of credit generally;
(C) except as otherwise agreed by the Administrative Agent and the L/C Issuer, such Letter of Credit is in an initial stated amount less than $250,000 in the case of a standby Letter of Credit;
(D) except as otherwise agreed by the Administrative Agent and the L/C Issuer, such Letter of Credit is to be denominated in a currency other than Dollars or an Alternative Currency;
(E) the L/C Issuer does not as of the issuance date of such requested Letter of Credit issue Letters of Credit in the requested currency; or
(F) any Lender is at that time a Defaulting Lender, unless the L/C Issuer has entered into arrangements, including the delivery of Cash Collateral, satisfactory to the L/C Issuer (in its sole discretion) with the Borrower or such Lender to eliminate the L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section 2.18(a)(iv )) with respect to the Defaulting Lender arising from either such Letter of Credit then proposed to be issued or such Letter of Credit and all other L/C Obligations as to which the L/C Issuer has actual or potential Fronting Exposure, as it may elect in its sole discretion.
(iv) The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be permitted at such time to issue the Letter of Credit in its amended form under the terms hereof.
(v) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.
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(vi) The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article IX included the L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuer.
(b) Procedures for Issuance and Amendment of Letters of Credit ; Auto-Extension Letters of Credit .
(i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Borrower. Such Letter of Credit Application may be sent by facsimile, by United States mail, by overnight courier, by electronic transmission using the system provided by the L/C Issuer, by personal delivery or by any other means acceptable to the L/C Issuer. Such Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least two Business Days (or such later date and time as the Administrative Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount and currency thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) the purpose and nature of the requested Letter of Credit; and (H) such other matters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require. Additionally, the Borrower shall furnish to the L/C Issuer and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the L/C Issuer or the Administrative Agent may require.
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(ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, the L/C Issuer will provide the Administrative Agent with a copy thereof. Unless the L/C Issuer has received written notice from any Lender, the Administrative Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article IV shall not then be satisfied, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower (or the applicable Subsidiary) or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Letter of Credit.
(iii) If the Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “ Auto-Extension Letter of Credit ”); provided that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “ Non-Extension Notice Date ”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Borrower shall not be required to make a specific request to the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided , however , that the L/C Issuer shall not permit any such extension if (A) the L/C Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of Section 2.04(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven (7) Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such extension or (2) from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing the L/C Issuer not to permit such extension.
(iv) If the Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole discretion, agree to issue a Letter of Credit that permits the automatic reinstatement of all or a portion of the stated amount thereof after any drawing thereunder (each, an “ Auto-Reinstatement Letter of Credit ”). Unless otherwise directed by the L/C Issuer, the Borrower shall not be required to make a specific request to the L/C Issuer to permit such reinstatement. Once an Auto-Reinstatement Letter of Credit has been issued, except as provided in the following sentence, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to reinstate all or a portion of the stated amount thereof in accordance with the provisions of such Letter of Credit. Notwithstanding the foregoing, if such Auto-Reinstatement Letter of Credit permits the L/C Issuer to decline to reinstate all or any portion of the stated amount thereof after a drawing thereunder by giving notice of such non-reinstatement within a specified number of days after such drawing (the “ Non-Reinstatement Deadline ”), the L/C Issuer shall not permit such reinstatement if it has received a notice (which may be by telephone or in writing) on or before the day that is seven (7) Business Days before the Non-Reinstatement Deadline (A) from the Administrative Agent that the Required Lenders have elected not to permit such reinstatement or (B) from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied (treating such reinstatement as an L/C Credit Extension for purposes of this clause) and, in each case, directing the L/C Issuer not to permit such reinstatement.
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(v) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.
(c) Drawings and Reimbursements; Funding of Participations .
(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall notify the Borrower and the Administrative Agent thereof. In the case of a Letter of Credit denominated in an Alternative Currency, the Borrower shall reimburse the L/C Issuer in such Alternative Currency, unless (A) the L/C Issuer (at its option) shall have specified in such notice that it will require reimbursement in Dollars, or (B) in the absence of any such requirement for reimbursement in Dollars, the Borrower shall have notified the L/C Issuer promptly following receipt of the notice of drawing that Borrower will reimburse the L/C Issuer in Dollars. In the case of any such reimbursement in Dollars of a drawing under a Letter of Credit denominated in an Alternative Currency, the L/C Issuer shall notify Borrower of the Dollar Equivalent of the amount of the drawing promptly following the determination thereof. Not later than 11:00 a.m. on the date of any payment by the L/C Issuer under a Letter of Credit to be reimbursed in Dollars, or the Applicable Time on the date of any payment by the L/C Issuer under a Letter of Credit to be reimbursed in an Alternative Currency (each such date, an “ Honor Date ”), the Borrower shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing and in the applicable currency. In the event that (A) a drawing denominated in an Alternative Currency is to be reimbursed in Dollars pursuant to the second sentence in this Section and (B) the Dollar amount paid by the Borrower, whether on or after the Honor Date, shall not be adequate on the date of that payment to purchase in accordance with normal banking procedures a sum denominated in the Alternative Currency equal to the drawing, the Borrower agrees, as a separate and independent obligation, to indemnify the L/C Issuer for the loss resulting from its inability on that date to purchase the Alternative Currency in the full amount of the drawing. If the Borrower fails to so reimburse the L/C Issuer by such time, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (expressed in Dollars in the amount of the Dollar Equivalent thereof in the case of a Letter of Credit denominated in an Alternative Currency) (the “ Unreimbursed Amount ”), and the amount of such Lender’s Applicable Percentage thereof. In such event, the Borrower shall be deemed to have requested a Committed Borrowing of Base Rate Committed Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Committed Loans, but subject to the amount of the unutilized portion of the Aggregate Commitments and the conditions set forth in Section 4.02 (other than the delivery of a Committed Loan Notice). Any notice given by the L/C Issuer or the Administrative Agent pursuant to this Section 2.04(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.
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(ii) Each Lender shall upon any notice pursuant to Section 2.04(c)(i) make funds available (and the Administrative Agent may apply Cash Collateral provided for this purpose) for the account of the L/C Issuer, in Dollars, at the Administrative Agent’s Office for Dollar denominated payments in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.04(c)(iii) , each Lender that so makes funds available shall be deemed to have made a Base Rate Committed Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the L/C Issuer in Dollars.
(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Committed Borrowing of Base Rate Committed Loans because the conditions set forth in Section 4.02 cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Lender’s payment to the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.04(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.04 .
(iv) Until each Lender funds its Committed Loan or L/C Advance pursuant to this Section 2.04(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Applicable Percentage of such amount shall be solely for the account of the L/C Issuer.
(v) Each Lender’s obligation to make Committed Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.04(c) , shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, the Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided , however , that each Lender’s obligation to make Committed Loans pursuant to this Section 2.04(c) is subject to the conditions set forth in Section 4.02 (other than delivery by the Borrower of a Committed Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Borrower to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.
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(vi) If any Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(ii) , then, without limiting the other provisions of this Agreement, the L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the applicable Overnight Rate from time to time in effect, plus any administrative, processing or similar fees customarily charged by the L/C Issuer in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Committed Loan included in the relevant Committed Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of the L/C Issuer submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.
(d) Repayment of Participations .
(i) At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C Advance in respect of such payment in accordance with Section 2.04(c) , if the Administrative Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Applicable Percentage thereof in Dollars and in the same funds as those received by the Administrative Agent.
(ii) If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.04(c)(i) is required to be returned under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each Lender shall pay to the Administrative Agent for the account of the L/C Issuer its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the applicable Overnight Rate from time to time in effect. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.
(e) Obligations Absolute . The obligation of the Borrower to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:
(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;
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(ii) the existence of any claim, counterclaim, setoff, defense or other right that the Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;
(iii) any draft, demand, certificate or other document presented under such 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; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;
(iv) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law;
(v) any adverse change in the relevant exchange rates or in the availability of the relevant Alternative Currency to Borrower or any Subsidiary or in the relevant currency markets generally;
(vi) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or any Subsidiary;
(vii) waiver by the L/C Issuer of any requirement that exists for the L/C Issuer’s protection and not the protection of the Borrower or any waiver by the L/C Issuer which does not in fact materially prejudice the Borrower;
(viii) honor of a demand for payment presented electronically even if such Letter of Credit requires that demand be in the form of a draft; or
(ix) any payment made by the L/C Issuer in respect of an otherwise complying item presented after the date specified as the expiration date of, or the date by which documents must be received under, such Letter of Credit if presentation after such date is authorized by the UCC, the ISP or the UCP, as applicable.
The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrower’s instructions or other irregularity, the Borrower will immediately notify the L/C Issuer. The Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.
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(f) Role of L/C Issuer . Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document delivered by any party other than the L/C Issuer, the Administrative Agent or any of their Related Parties. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided , however , that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement and this assumption shall not release the L/C Issuer from liability to the Borrower for the L/C Issuer’s gross negligence or willful misconduct in honoring or failing to pay under any Letter of Credit in accordance with the terms of the following sentence. None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.04(e) ; provided , however , that anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C 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, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. The L/C Issuer may send a Letter of Credit or conduct any communication to or from the beneficiary via the Society for Worldwide Interbank Financial Telecommunication (SWIFT) message or overnight courier, or any other commercially reasonable means of communicating with a beneficiary.
(g) Applicability of ISP Limitation of Liability . Unless otherwise expressly agreed by the L/C Issuer and the Borrower when a Letter of Credit is issued the rules of the ISP shall apply to each standby Letter of Credit. Notwithstanding the foregoing, the L/C Issuer shall not be responsible to the Borrower for, and the L/C Issuer’s rights and remedies against the Borrower shall not be impaired by, any action or inaction of the L/C Issuer required or permitted under any law, order, or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including the Law or any order of a jurisdiction where the L/C Issuer or the beneficiary is located, the practice stated in the ISP or UCP, as applicable, or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade - International Financial Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.
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(h) Letter of Credit Fees . The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Applicable Percentage a Letter of Credit fee (the “ Letter of Credit Fee ”) for each standby Letter of Credit equal to the Applicable Rate times the Dollar Equivalent of the daily amount available to be drawn under such Letter of Credit; provided , however, any Letter of Credit Fees otherwise payable for the account of a Defaulting Lender with respect to any Letter of Credit as to which such Defaulting Lender has not provided Cash Collateral satisfactory to the L/C Issuer pursuant to this Section 2.04 shall be payable, to the maximum extent permitted by applicable Law, to the other Lenders in accordance with the upward adjustments in their respective Applicable Percentages allocable to such Letter of Credit pursuant to Section 2.18(a)(iv) , with the balance of such fee, if any, payable to the L/C Issuer for its own account. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06 . Letter of Credit Fees shall be (i) due and payable on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand and (ii) computed on a quarterly basis in arrears. If there is any change in the Applicable Rate during any quarter, the daily amount available to be drawn under each standby Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect. Notwithstanding anything to the contrary contained herein, upon the request of the Required Lenders, while any Event of Default exists, all Letter of Credit Fees shall accrue at the Default Rate.
(i) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer . The Borrower shall pay directly to the L/C Issuer for its own account a fronting fee with respect to each Letter of Credit, at the rate per annum specified in the Fee Letter, computed on the Dollar Equivalent of the daily amount available to be drawn under such Letter of Credit on a quarterly basis in arrears. Such fronting fee shall be due and payable on the tenth Business Day after the end of each March, June, September and December in respect of the most recently-ended quarterly period (or portion thereof, in the case of the first payment), commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06 . In addition, the Borrower shall pay directly to the L/C Issuer for its own account, in Dollars, the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.
(j) Conflict with Issuer Documents . In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.
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(k) Letters of Credit Issued for Subsidiaries . Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, the Borrower shall be obligated to reimburse the L/C Issuer hereunder for any and all drawings under such Letter of Credit. The Borrower hereby acknowledges that the issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such Subsidiaries.
2.05 Swing Line Loans.
(a) The Swing Line . Subject to the terms and conditions set forth herein, the Swing Line Lender, in reliance upon the agreements of the other Lenders set forth in this Section 2.05 , may in its sole discretion make loans in Dollars (each such loan, a “ Swing Line Loan ”) to the Borrower from time to time on any Business Day during the Availability Period in an aggregate amount not to exceed at any time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated with the Applicable Percentage of the Outstanding Amount of Committed Loans and L/C Obligations of the Lender acting as Swing Line Lender, may exceed the amount of such Lender’s Commitment; provided , however , that after giving effect to any Swing Line Loan, (i) the Total Outstandings shall not exceed the Aggregate Commitments, and (ii) the aggregate Outstanding Amount of the Committed Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Commitment, and provided , further , that the Borrower shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.05 , prepay under Section 2.06 , and reborrow under this Section 2.05 . Each Swing Line Loan shall be a Base Rate Committed Loan. Immediately upon the making of a Swing Line Loan, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Swing Line Loan.
(b) Borrowing Procedures . Each Swing Line Borrowing shall be made upon the Borrower’s irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be given by telephone. Each such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $100,000, and (ii) the requested borrowing date, which shall be a Business Day. Each such telephonic notice must be confirmed promptly by delivery to the Swing Line Lender and the Administrative Agent of a written Swing Line Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Promptly after receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof. Unless the Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Lender) prior to 2:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the first proviso to the first sentence of Section 2.05(a) , or (B) that one or more of the applicable conditions specified in Article IV is not then satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender will, not later than 3:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the Borrower at its office by crediting the account of the Borrower on the books of the Swing Line Lender in Same Day Funds.
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(c) Refinancing of Swing Line Loans .
(i) The Swing Line Lender at any time in its sole discretion may request, on behalf of the Borrower (which hereby irrevocably authorizes the Swing Line Lender to so request on its behalf), that each Lender make a Base Rate Committed Loan in an amount equal to such Lender’s Applicable Percentage of the amount of Swing Line Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Committed Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02 , without regard to the minimum and multiples specified therein for the principal amount of Base Rate Committed Loans, but subject to the unutilized portion of the Aggregate Commitments and the conditions set forth in Section 4.02 . The Swing Line Lender shall furnish the Borrower with a copy of the applicable Committed Loan Notice promptly after delivering such notice to the Administrative Agent. Each Lender shall make an amount equal to its Applicable Percentage of the amount specified in such Committed Loan Notice available to the Administrative Agent in Same Day Funds (and the Administrative Agent may apply Cash Collateral available with respect to the applicable Swing Line Loan) for the account of the Swing Line Lender at the Administrative Agent’s Office for Dollar denominated payments not later than 1:00 p.m. on the day specified in such Committed Loan Notice, whereupon, subject to Section 2.05(c)(ii) , each Lender that so makes funds available shall be deemed to have made a Base Rate Committed Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the Swing Line Lender.
(ii) If for any reason any Swing Line Loan cannot be refinanced by such a Committed Borrowing in accordance with Section 2.05(c)(i) , the request for Base Rate Committed Loans submitted by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender that each of the Lenders fund its risk participation in the relevant Swing Line Loan and each Lender’s payment to the Administrative Agent for the account of the Swing Line Lender pursuant to Section 2.05(c)(i) shall be deemed payment in respect of such participation.
(iii) If any Lender fails to make available to the Administrative Agent for the account of the Swing Line Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.05(c) by the time specified in Section 2.05(c)(i) , the Swing Line Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the applicable Overnight Rate from time to time in effect, plus any administrative, processing or similar fees customarily charged by the Swing Line Lender in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Committed Loan included in the relevant Committed Borrowing or funded participation in the relevant Swing Line Loan, as the case may be. A certificate of the Swing Line Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.
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(iv) Each Lender’s obligation to make Committed Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.05(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided , however , that each Lender’s obligation to make Committed Loans pursuant to this Section 2.05(c) is subject to the conditions set forth in Section 4.02 . No such funding of risk participations shall relieve or otherwise impair the obligation of the Borrower to repay Swing Line Loans, together with interest as provided herein.
(d) Repayment of Participations .
(i) At any time after any Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such Lender its Applicable Percentage thereof in the same funds as those received by the Swing Line Lender.
(ii) If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each Lender shall pay to the Swing Line Lender its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the applicable Overnight Rate. The Administrative Agent will make such demand upon the request of the Swing Line Lender. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.
(e) Interest for Account of Swing Line Lender . The Swing Line Lender shall be responsible for invoicing the Borrower for interest on the Swing Line Loans. Until each Lender funds its Base Rate Committed Loan or risk participation pursuant to this Section 2.05 to refinance such Lender’s Applicable Percentage of any Swing Line Loan, interest in respect of such Applicable Percentage shall be solely for the account of the Swing Line Lender.
(f) Payments Directly to Swing Line Lender . The Borrower shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.
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2.06 Prepayments .
(a) The Borrower may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Committed Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurocurrency Rate Committed Loans, (B) four Business Days (or five, in the case of prepayment of Loans denominated in Special Notice Currencies) prior to any date of prepayment of Eurocurrency Rate Committed Loans denominated in Alternative Currencies, and (C) on the date of prepayment of Base Rate Committed Loans; (ii) any prepayment of Eurocurrency Rate Committed Loans denominated in Dollars shall be in a principal amount of $50,000 or a whole multiple of $25,000 in excess thereof; (iii) any prepayment of Eurocurrency Rate Committed Loans denominated in Alternative Currencies shall be in a minimum principal amount of $50,000 or a whole multiple of $25,000 in excess thereof; and (iv) any prepayment of Base Rate Committed Loans shall be in a principal amount of $50,000 or a whole multiple of $25,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Committed Loans to be prepaid and, if Eurocurrency Rate Committed Loans are to be prepaid, the Interest Period(s) of such Loans. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurocurrency Rate Committed Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05 . Subject to Section 2.18 , each such prepayment shall be applied to the Committed Loans of the Lenders in accordance with their respective Applicable Percentages.
(b) [Intentionally Omitted]
(c) The Borrower may, upon notice to the Swing Line Lender (with a copy to the Administrative Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the date of the prepayment, and (ii) any such prepayment shall be in a minimum principal amount of $100,000. Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.
(d) If the Administrative Agent notifies the Borrower at any time that the Total Outstandings at any time exceed the Aggregate Commitments then in effect, the Borrower shall, within five (5) Business Days of the Borrower’s receipt of such notice, prepay Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to such excess; provided , however , that the Borrower shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.06(d) unless after the prepayment in full of the Committed Loans and Swing Line Loans the Total Outstandings exceed the Aggregate Commitments then in effect.
(e) If the Administrative Agent notifies the Borrower at any time that the Outstanding Amount of all Loans and L/C Obligations denominated in Alternative Currencies at such time exceeds the Alternative Currency Sublimit then in effect, then, within five (5) Business Days of Borrower’s receipt of such notice, the Borrower shall prepay such Loans and/or Cash Collateralize such L/C Obligations in an aggregate amount sufficient to (i) reduce such Outstanding Amount as of such date of payment/Cash Collateralization to an amount not to exceed the Alternative Currency Sublimit then in effect or (ii) Cash Collateralize such excess.
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2.07 Termination or Reduction of Commitments. The Borrower may, upon notice to the Administrative Agent, terminate the Aggregate Commitments, or from time to time permanently reduce the Aggregate Commitments; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. five Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $5,000,000 or any whole multiple of $500,000 in excess thereof, (iii) the Borrower shall not terminate or reduce the Aggregate Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Outstandings would exceed the Aggregate Commitments, and (iv) if, after giving effect to any reduction of the Aggregate Commitments, the Alternative Currency Sublimit, the Letter of Credit Sublimit or the Swing Line Sublimit exceeds the amount of the Aggregate Commitments, such Sublimit shall be automatically reduced by the amount of such excess. The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Commitments. Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage. All fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.
2.08 Repayment of Loans .
(a) The Borrower shall repay to the Lenders on the Maturity Date the aggregate principal amount of Committed Loans outstanding on such date.
(b) The Borrower shall repay each Swing Line Loan on the earlier to occur of (i) the date ten Business Days after such Loan is made and (ii) the Maturity Date.
2.09 Interest .
(a) Subject to the provisions of subsection (b) below, (i) each Eurocurrency Rate Committed Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurocurrency Rate for such Interest Period plus the Applicable Rate plus (in the case of a Eurocurrency Rate Committed Loan of any Lender which is lent from a Lending Office in the United Kingdom or a Participating Member State) the Mandatory Cost; (ii) each Base Rate Committed Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate; and (iii) each Swing Line Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate.
(b) (i) If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.
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(ii) If any amount (other than principal of any Loan) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.
(iii) Upon the request of the Required Lenders, while any Event of Default exists (other than as set forth in clause (b)(i) and (ii) above), the Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.
(iv) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.
(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.
2.10 Fees . In addition to certain fees described in subsections (h) and (i) of Section 2.04 :
(a) Lenders’ Upfront Fee . On the Closing Date, Borrower shall pay to Administrative Agent, for the account of each Lender in accordance with their respective Applicable Percentages, an upfront fee in an aggregate amount of fifteen one hundredths of one percent (0.15%) of the Aggregate Commitment as of the Closing Date. Such upfront fees are for the credit facilities committed by Lenders under this Agreement and are fully earned on the date paid. The upfront fee paid to each Lender is solely for its own account and is nonrefundable for any reason whatsoever.
(b) Unused Commitment Fee . The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Applicable Percentage, an unused commitment fee equal to the Applicable Rate times the actual daily amount by which the Aggregate Commitments exceed the sum of (i) the Outstanding Amount of Committed Loans and (ii) the Outstanding Amount of L/C Obligations, subject to adjustment as provided in Section 2.18 . The unused commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and on the last day of the Availability Period. The unused commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.
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2.11 Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate.
(a) All computations of fees and interest for Base Rate Committed Loans (including Base Rate Committed Loans determined by reference to the Eurocurrency Rate) shall be made on the basis of a year of 360 days, and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year) , or, in the case of interest in respect of Committed Loans denominated in Alternative Currencies as to which market practice differs from the foregoing, in accordance with such market practice. Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.13(a) , bear interest for one day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.
(b) If, as a result of any restatement of or other adjustment to the financial statements of the Borrower or for any other reason, the Borrower or the Lenders determine that (i) the Consolidated Leverage Ratio as calculated by the Borrower as of any applicable date was inaccurate and (ii) a proper calculation of the Consolidated Leverage Ratio would have resulted in higher pricing for such period, the Borrower shall immediately and retroactively be obligated to pay to the Administrative Agent for the account of the applicable Lenders or the L/C Issuer, as the case may be, promptly on demand by the Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, automatically and without further action by the Administrative Agent, any Lender or the L/C Issuer), an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period. This paragraph shall not limit the rights of the Administrative Agent, any Lender or the L/C Issuer, as the case may be, under Section 2.04(c)(iii) , 2.04(h) or 2.09(b) or under Article VIII . The Borrower’s obligations under this paragraph shall survive the termination of the Aggregate Commitments and the repayment of all other Obligations hereunder.
(c) If, as a result of any restatement of, or other adjustment to, the financial statements of the Borrower or, for any other reason, the Borrower or the Required Lenders determine that (i) the Consolidated Leverage Ratio as calculated by the Borrower as of any applicable date was inaccurate and (ii) a proper calculation of the Consolidated Leverage Ratio would have resulted in lower pricing for such period, the Administrative Agent shall use commercially reasonable efforts to request that the Lenders (or such Persons that were Lenders at the time such overpayment was made) pay to the Administrative Agent for the account of the Borrower an amount equal to the excess of the amount of interest and fees that was actually paid for such period over the amount of interest and fees that should have been paid for such period and the Administrative Agent shall refund to the Borrower the amount of such overpayment which is so returned to the Administrative Agent. The Administrative Agent’s obligations under this paragraph shall survive the termination of the Aggregate Commitments and the repayment of all other Obligations hereunder.
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2.12 Evidence of Debt .
(a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount, currency and maturity of its Loans and payments with respect thereto.
(b) In addition to the accounts and records referred to in subsection (a), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swing Line Loans. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.
2.13 Payments Generally; Administrative Agent’s Clawback .
(a) (i) General . All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein and except with respect to principal of and interest on Loans denominated in an Alternative Currency, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in Same Day Funds not later than 2:00 p.m. on the date specified herein. Except as otherwise expressly provided herein, all payments by the Borrower hereunder with respect to principal and interest on Loans denominated in an Alternative Currency shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the applicable Administrative Agent’s Office in such Alternative Currency and in Same Day Funds not later than the Applicable Time specified by the Administrative Agent on the dates specified herein. Without limiting the generality of the foregoing, the Administrative Agent may require that any payments due under this Agreement be made in the United States. If, for any reason, Borrower is prohibited by any Law from making any required payment hereunder in an Alternative Currency, Borrower shall make such payment in Dollars in the Dollar Equivalent of the Alternative Currency payment amount. The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent (i) after 2:00 p.m., in the case of payments in Dollars, or (ii) after the Applicable Time specified by the Administrative Agent in the case of payments in an Alternative Currency, shall in each case be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.
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(ii) On each date when the payment of any principal, interest or fees are due hereunder or under any Loan Document, the Borrower shall agree to maintain on deposit in an ordinary checking account maintained by the Borrower with Administrative Agent (as such account shall be designated by the Borrower in a written notice to Administrative Agent from time to time, the “ Borrower Account ”) an amount sufficient to pay such principal, interest or fees in full on such date. Borrower hereby authorizes the Administrative Agent (A) to deduct automatically all principal, interest or fees when due hereunder or under any Note from its Borrower Account, and (B) if and to the extent any payment of principal, interest or fees under this Agreement or any Loan Document is not made when due to deduct any such amount from any or all of the accounts of Borrower maintained at the Administrative Agent other than any accounts maintained for payroll for employees of the Borrower or any of its Subsidiaries. The Administrative Agent agrees to provide written notice to the Borrower of any automatic deduction made pursuant to this Section showing in reasonable detail the amounts of such deduction. Lenders agree to reimburse the Borrower based on their Applicable Percentage for any amounts deducted from such accounts in excess of amount due hereunder and under any other Loan Documents.
(b) (i) Funding by Lenders; Presumption by Administrative Agent . Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Committed Borrowing of Eurocurrency Rate Committed Loans (or, in the case of any Committed Borrowing of Base Rate Committed Loans, prior to 12:00 noon on the date of such Committed Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Committed Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Committed Borrowing of Base Rate Committed Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02 ) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Committed Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in Same Day Funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the Overnight Rate, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Committed Loans or in the case of Alternative Currencies in accordance with such market practice, in case, as applicable. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Committed Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Committed Loan included in such Committed Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.
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(ii) Payments by Borrower; Presumptions by Administrative Agent . Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the L/C Issuer hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the L/C Issuer, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the L/C Issuer, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the L/C Issuer, in Same Day Funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the Overnight Rate.
A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.
(c) Failure to Satisfy Conditions Precedent . If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II , and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.
(d) Obligations of Lenders Several . The obligations of the Lenders hereunder to make Committed Loans, to fund participations in Letters of Credit and Swing Line Loans and to make payments pursuant to Section 10.04(c) are several and not joint. The failure of any Lender to make any Committed Loan, to fund any such participation or to make any payment under Section 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Committed Loan, to purchase its participation or to make its payment under Section 10.04(c) .
(e) Funding Source . Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.
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2.14 Sharing of Payments by Lenders . If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Committed Loans made by it or the participations in L/C Obligations or in Swing Line Loans held by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Committed Loans or participations and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Committed Loans and subparticipations in L/C Obligations and Swing Line Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Committed Loans and other amounts owing them, provided that:
(i) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and
(ii) the provisions of this Section shall not be construed to apply to (x) any payment made by or on behalf of the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (y) the application of Cash Collateral provided for in Section 2.17 , or (z) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Committed Loans or subparticipations in L/C Obligations or Swing Line Loans to any assignee or participant, other than an assignment to the Borrower or any Affiliate thereof (as to which the provisions of this Section shall apply).
Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.
2.15 [Intentionally Omitted]
2.16 Increase in Commitments.
(a) Request for Increase . Provided there exists no Default, upon notice to the Administrative Agent (which shall promptly notify the Lenders), the Borrower may on a one-time basis, request an increase in the Aggregate Commitments (which increase may take the form of new revolving or term loan tranches) by an amount not exceeding $50,000,000; provided that any such request for an increase shall be in a minimum amount of $5,000,000. At the time of sending such notice, the Borrower (in consultation with the Administrative Agent) shall specify the time period within which each Lender is requested to respond (which shall in no event be less than ten (10) Business Days from the date of delivery of such notice to the Lenders).
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(b) Lender Elections to Increase . Each Lender shall notify the Administrative Agent within such time period whether or not it agrees to increase its Commitment and, if so, whether by an amount equal to, greater than, or less than its Applicable Percentage of such requested increase. Any Lender not responding within such time period shall be deemed to have declined to increase its Commitment.
(c) Notification by Administrative Agent; Additional Lenders . The Administrative Agent shall notify the Borrower and each Lender of the Lenders’ responses to each request made hereunder. To achieve the full amount of a requested increase and subject to the approval of the Administrative Agent, the L/C Issuer and the Swing Line Lender (which approvals shall not be unreasonably withheld), the Borrower may also invite additional Eligible Assignees to become Lenders pursuant to a joinder agreement in form and substance satisfactory to the Administrative Agent and its counsel.
(d) Effective Date and Allocations . If the Aggregate Commitments are increased in accordance with this Section, the Administrative Agent and the Borrower shall determine the effective date (the “ Increase Effective Date ”) and the final allocation of such increase. The Administrative Agent shall promptly notify the Borrower and the Lenders of the final allocation of such increase and the Increase Effective Date.
(e) Conditions to Effectiveness of Increase . As a condition precedent to such increase, (i) the Borrower shall deliver to the Administrative Agent a certificate of each Loan Party dated as of the Increase Effective Date (in sufficient copies for each Lender) signed by a Responsible Officer of such Loan Party (x) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such increase, and (y) in the case of the Borrower, certifying that, before and after giving effect to such increase, (A) the representations and warranties contained in Article V and the other Loan Documents are true and correct on and as of the Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Section 2.16 , the representations and warranties contained in subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 , and (B) no Default exists and (ii) to the extent that the increase of the Aggregate Commitments shall take the form of a term loan tranche, this Agreement shall be amended, in form and substance satisfactory to the Administrative Agent, to include such terms as are customary for a term loan commitment .
(f) Conflicting Provisions . This Section shall supersede any provisions in Section 2.14 or 10.01 to the contrary.
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2.17 Cash Collateral .
(a) Certain Credit Support Events . Upon the request of the Administrative Agent or the L/C Issuer (i) if the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing which cannot be repaid by the extension of a Base Rate Committed Loan as provided in Section 2.04(c) hereof, then the Borrower shall immediately repay such L/C Borrowing and (ii) if, as of the Letter of Credit Expiration Date, any L/C Obligation for any reason remains outstanding, the Borrower shall immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations for so long as such L/C Obligations shall remain outstanding. At any time that there shall exist a Defaulting Lender, immediately upon the request of the Administrative Agent, the L/C Issuer or the Swing Line Lender, the Borrower shall deliver to the Administrative Agent Cash Collateral in an amount sufficient to cover all Fronting Exposure (after giving effect to Section 2.18(a)(iv) and any Cash Collateral provided by the Defaulting Lender). Additionally, if the Administrative Agent notifies the Borrower at any time that the Outstanding Amount of all L/C Obligations at such time exceeds 105% of the Letter of Credit Sublimit then in effect, then within two (2) Business Days after receipt of such notice, the Borrower shall provide Cash Collateral for the Outstanding Amount of the L/C Obligations in an amount not less than the amount by which the Outstanding Amount of all L/C Obligations exceeds the Letter of Credit Sublimit.
(b) Grant of Security Interest . All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked, interest bearing deposit accounts at Bank of America. The Borrower, and to the extent provided by any Lender, such Lender, hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit of the Administrative Agent, the L/C Issuer and the Lenders (including the Swing Line Lender), and agrees to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant hereto, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.17(c) . If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent as herein provided, or that the total amount of such Cash Collateral is less than the applicable Fronting Exposure and other obligations secured thereby, the Borrower or the relevant Defaulting Lender will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency.
(c) Application . Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.17 or Sections 2.04 , 2.05 , 2.06 , 2.18 or 8.02 in respect of Letters of Credit or Swing Line Loans shall be held and applied to the satisfaction of the specific L/C Obligations, Swing Line Loans, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may be provided for herein.
(d) Release . Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with Section 10.06(b)(vi) )) or (ii) the Administrative Agent’s good faith determination that there exists excess Cash Collateral; provided , however, (x) that Cash Collateral furnished by or on behalf of a Loan Party shall not be released during the continuance of a Default or Event of Default (and following application as provided in this Section 2.17 may be otherwise applied in accordance with Section 8.03 ), and (y) the Person providing Cash Collateral and the L/C Issuer or Swing Line Lender, as applicable, may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.
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2.18 Defaulting Lenders .
(a) Adjustments . Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:
(i) Waivers and Amendments . That Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 10.01 .
(ii) Reallocation of Payments . Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 10.08 ), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first , to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second , to the payment on a pro rata basis of any amounts owing by that Defaulting Lender to the L/C Issuer or Swing Line Lender hereunder; third , if so determined by the Administrative Agent or requested by the L/C Issuer or Swing Line Lender, to be held as Cash Collateral for future funding obligations of that Defaulting Lender of any participation in any Letter of Credit or Swing Line Loan; fourth , as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth , if so determined by the Administrative Agent and the Borrower, to be held in an interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Loans under this Agreement; sixth , to the payment of any amounts owing to the Lenders, the L/C Issuer or Swing Line Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the L/C Issuer or Swing Line Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; seventh , so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and eighth , to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or L/C Borrowings in respect of which that Defaulting Lender has not fully funded its appropriate share and (y) such Loans or L/C Borrowings were made at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Borrowings owed to, all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Borrowings owed to, that Defaulting Lender. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.18(a)(ii) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.
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(iii) Certain Fees . That Defaulting Lender (x) shall not be entitled to receive any unused commitment fee pursuant to Section 2.10(b) for any period during which that Lender is a Defaulting Lender and (y) shall be limited in its right to receive Letter of Credit Fees as provided in Section 2.04(h) .
(iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure . During any period in which there is a Defaulting Lender, for purposes of computing the amount of the obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit or Swing Line Loans pursuant to Sections 2.04 and 2.05 , the “Applicable Percentage” of each non-Defaulting Lender shall be computed without giving effect to the Commitment of that Defaulting Lender; provided , that, (i) each such reallocation shall be given effect only if, at the date the applicable Lender becomes a Defaulting Lender, no Default or Event of Default exists; and (ii) the aggregate obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit and Swing Line Loans shall not exceed the positive difference, if any, of (1) the Commitment of that non-Defaulting Lender minus (2) the aggregate Outstanding Amount of the Committed Loans of that Lender.
(b) Defaulting Lender Cure . If the Borrower, the Administrative Agent, Swing Line Lender and the L/C Issuer agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Committed Loans and funded and unfunded participations in Letters of Credit and Swing Line Loans to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages (without giving effect to Section 2.18(a)(iv) ), whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided , further , that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
2.19 [Intentionally Omitted]
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ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes .
(a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes . (i) Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall to the extent permitted by applicable Laws be made free and clear of and without reduction or withholding for any Taxes. If, however, applicable Laws require the Borrower or the Administrative Agent to withhold or deduct any Tax, such Tax shall be withheld or deducted in accordance with such Laws as determined by the Borrower or the Administrative Agent, as the case may be, upon the basis of the information and documentation to be delivered pursuant to subsection (e) below.
(ii) If the Borrower or the Administrative Agent shall be required by the Code to withhold or deduct any Taxes, including both United States Federal backup withholding and withholding taxes, from any payment, then (A) the Borrower or the Administrative Agent shall, in each case as required by the Code, withhold or make such deductions as are determined by it to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) the Borrower or the Administrative Agent shall, in each case to the extent required by the Code, timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes or Other Taxes, the sum payable by the Borrower shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender or L/C Issuer, as the case may be, receives an amount equal to the sum it would have received had no such withholding or deduction been made.
(iii) If Borrower or the Administrative Agent shall be required by any applicable Laws other than the Code to withhold or deduct any Taxes from any payment, then (A) Borrower or the Administrative Agent shall, in each case as required by such Laws, withhold or make such deductions as are determined by it to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) Borrower or the Administrative Agent shall, in each case to the extent required by such Laws, timely pay the full amount so withheld or deducted by it to the relevant Governmental Authority in accordance with such Laws, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes or Other Taxes, the sum payable by the Borrower shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section), the Administrative Agent receives an amount equal to the sum it would have received had no such withholding or deduction been made.
(b) Payment of Other Taxes by the Borrower . Without limiting the provisions of subsection (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable Laws.
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(c) Tax Indemnifications . (i) Without limiting the provisions of subsection (a) or (b) above, the Borrower shall, and does hereby, indemnify the Administrative Agent, each Lender and the L/C Issuer, and shall make payment in respect thereof within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) withheld or deducted by the Borrower or the Administrative Agent or paid by the Administrative Agent, such Lender or the L/C Issuer, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. The Borrower shall also, and does hereby, indemnify the Administrative Agent, and shall make payment in respect thereof within 10 days after demand therefor, for any amount which a Lender or the L/C Issuer for any reason fails to pay indefeasibly to the Administrative Agent as required by clause (ii) of this subsection. A certificate as to the amount of any such payment or liability delivered to the Borrower by a Lender or the L/C Issuer (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or the L/C Issuer, shall be conclusive absent manifest error.
(ii) Without limiting the provisions of subsection (a) or (b) above, each Lender and the L/C Issuer shall, and does hereby, indemnify the Borrower and the Administrative Agent, and shall make payment in respect thereof within 10 days after demand therefor, against any and all Taxes and any and all related losses, claims, liabilities, penalties, interest and expenses (including the fees, charges and disbursements of any counsel for the Borrower or the Administrative Agent) incurred by or asserted against the Borrower or the Administrative Agent by any Governmental Authority as a result of the failure by such Lender or the L/C Issuer, as the case may be, to deliver, or as a result of the inaccuracy, inadequacy or deficiency of, any documentation required to be delivered by such Lender or the L/C Issuer, as the case may be, to the Borrower or the Administrative Agent pursuant to subsection (e). Each Lender and the L/C Issuer hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender or the L/C Issuer, as the case may be, under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this clause (ii). The agreements in this clause (ii) shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender or the L/C Issuer, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all other Obligations.
(d) Evidence of Payments . Upon request by the Borrower or the Administrative Agent, as the case may be, after any payment of Taxes by the Borrower or by the Administrative Agent to a Governmental Authority as provided in this Section 3.01 , the Borrower shall deliver to the Administrative Agent or the Administrative Agent shall deliver to the Borrower, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by Laws to report such payment or other evidence of such payment reasonably satisfactory to the Borrower or the Administrative Agent, as the case may be.
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(e) Status of Lenders; Tax Documentation . (i) Each Lender shall deliver to the Borrower and to the Administrative Agent, at the time or times prescribed by applicable Laws or when reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable Laws or by the taxing authorities of any jurisdiction and such other reasonably requested information as will permit the Borrower or the Administrative Agent, as the case may be, to determine (A) whether or not payments made hereunder or under any other Loan Document are subject to Taxes, (B) if applicable, the required rate of withholding or deduction, and (C) such Lender’s entitlement to any available exemption from, or reduction of, applicable Taxes in respect of all payments to be made to such Lender by the Borrower pursuant to this Agreement or otherwise to establish such Lender’s status for withholding tax purposes in the applicable jurisdiction.
(ii) Without limiting the generality of the foregoing,
(A) any Lender that is a “United States person” within the meaning of Section 7701(a)(30) of the Code shall deliver to the Borrower and the Administrative Agent executed originals of Internal Revenue Service Form W-9 or such other documentation or information prescribed by applicable Laws or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent, as the case may be, to determine whether or not such Lender is subject to backup withholding or information reporting requirements; and
(B) each Foreign Lender that is entitled under the Code or any applicable treaty to an exemption from or reduction of withholding tax with respect to payments hereunder or under any other Loan Document shall deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrower or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:
(I) executed originals of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party,
(II) executed originals of Internal Revenue Service Form W-8ECI,
(III) executed originals of Internal Revenue Service Form W-8IMY and all required supporting documentation,
(IV) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y) executed originals of Internal Revenue Service Form W-8BEN, or
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(V) executed originals of any other form prescribed by applicable Laws as a basis for claiming exemption from or a reduction in United States Federal withholding tax together with such supplementary documentation as may be prescribed by applicable Laws to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made.
(iii) Each Lender shall promptly (A) notify the Borrower and the Administrative Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction, and (B) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably necessary (including the re-designation of its Lending Office) to avoid any requirement of applicable Laws of any jurisdiction that the Borrower or the Administrative Agent make any withholding or deduction for taxes from amounts payable to such Lender.
(iv) The Borrower shall promptly deliver to the Administrative Agent or any Lender, as the Administrative Agent or such Lender shall reasonably request, on or prior to the Closing Date, and in a timely fashion thereafter, such documents and forms required by any relevant taxing authorities under the Laws of any jurisdiction, duly executed and completed by Borrower, as are required to be furnished by such Lender or the Administrative Agent under such Laws in connection with any payment by the Administrative Agent or any Lender of Taxes or Other Taxes, or otherwise in connection with the Loan Documents, with respect to such jurisdiction.
(f) Treatment of Certain Refunds . Unless required by applicable Laws, at no time shall the Administrative Agent have any obligation to file or otherwise pursue on behalf of a Lender or the L/C Issuer, or have any obligation to pay to any Lender or the L/C Issuer, any refund of Taxes withheld or deducted from funds paid to the account of such Lender or the L/C Issuer, as the case may be. If the Administrative Agent, any Lender or the L/C Issuer determines, in its sole discretion (absent manifest error), that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses and net of any loss or gain realized in the conversion of such funds from or to another currency incurred by the Administrative Agent, such Lender or the L/C Issuer, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of the Administrative Agent, such Lender or the L/C Issuer, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent, such Lender or the L/C Issuer in the event the Administrative Agent, such Lender or the L/C Issuer is required to repay such refund to such Governmental Authority. This subsection shall not be construed to require the Administrative Agent, any Lender or the L/C Issuer to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.
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3.02 Illegality . If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to the Eurocurrency Rate (whether denominated in Dollars or an Alternative Currency), or to determine or charge interest rates based upon the Eurocurrency Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars or any Alternative Currency in the applicable interbank market, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, (i) any obligation of such Lender to make or continue Eurocurrency Rate Committed Loans in the affected currency or currencies or, in the case of Eurocurrency Rate Committed Loans in Dollars, to convert Base Rate Committed Loans to Eurocurrency Rate Committed Loans shall be suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining Base Rate Committed Loans the interest rate on which is determined by reference to the Eurocurrency Rate component of the Base Rate, the interest rate on which Base Rate Committed Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurocurrency Rate component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable and such Loans are denominated in Dollars, convert all Eurocurrency Rate Committed Loans of such Lender to Base Rate Committed Loans (the interest rate on which Base Rate Committed Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurocurrency Rate component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurocurrency Rate Committed Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurocurrency Rate Committed Loans and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Eurocurrency Rate, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the Eurocurrency Rate component thereof until the Administrative is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Eurocurrency Rate. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted. Each Lender at its option may make any Credit Extension to the Borrower by causing any domestic or foreign branch or Affiliate of such Lender to make such Credit Extension; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Credit Extension in accordance with the terms of this Agreement.
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3.03 Inability to Determine Rates . If in connection with any request for a Eurocurrency Rate Committed Loan or a conversion to or continuation thereof (a) the Administrative Agent determines that deposits (whether in Dollars or an Alternative Currency) are not being offered to banks in the applicable offshore interbank eurodollar market for such currency for the applicable amount and Interest Period of such Eurocurrency Rate Committed Loan, (b) adequate and reasonable means do not exist for determining the Eurocurrency Rate for any requested Interest Period with respect to a proposed Eurocurrency Rate Committed Loan (whether denominated in Dollars or an Alternative Currency), or (c) the Eurocurrency Rate for any requested Interest Period with respect to a proposed Eurocurrency Rate Committed Loan does not adequately and fairly reflect the cost to such Lenders of funding such Eurocurrency Rate Loan, the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain Eurocurrency Rate Committed Loans in the affected currency or currencies shall be suspended, and (y) in the event of a determination described in the preceding sentence with respect to the Eurocurrency Rate component of the Base Rate, the utilization of the Eurocurrency Rate component in determining the Base Rate shall be suspended, in each case until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurocurrency Rate Committed Loans in the affected currency or currencies or, failing that, will be deemed to have converted such request into a request for a Committed Borrowing of Base Rate Committed Loans in the amount specified therein.
3.04 Increased Costs; Reserves on Eurocurrency Rate Committed Loans .
(a) Increased Costs Generally . If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except (A) any reserve requirement contemplated by Section 3.04(e) and (B) the requirements of the Bank of England and the Financial Services Authority or the European Central Bank reflected in the Mandatory Cost, other than as set forth below) or the L/C Issuer;
(ii) subject any Lender or the L/C Issuer to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any Eurocurrency Rate Committed Loan made by it, or change the basis of taxation of payments to such Lender or the L/C Issuer in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or the L/C Issuer);
(iii) result in the failure of the Mandatory Cost, as calculated hereunder, to represent the cost to any Lender of complying with the requirements of the Bank of England and/or the Financial Services Authority or the European Central Bank in relation to its making, funding or maintaining Eurocurrency Rate Committed Loans; or
(iv) impose on any Lender or the L/C Issuer or the London interbank market any other condition, cost or expense affecting this Agreement or Eurocurrency Rate Committed Loans made by such Lender or any Letter of Credit or participation therein;
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and the result of any of the foregoing shall be to increase the cost to such Lender of making, converting to, continuing or maintaining any Loan the interest on which is determined by reference to the Eurocurrency Rate (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the L/C Issuer, the Borrower will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered.
(b) Capital Requirements . If any Lender or the L/C Issuer determines that any Change in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such Lender’s or the L/C Issuer’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the L/C Issuer’s capital or on the capital of such Lender’s or the L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that which such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company for any such reduction suffered.
(c) Mandatory Costs . If any Lender or the L/C Issuer incurs any Mandatory Costs attributable to the Obligations, then from time to time the Borrower will pay to such Lender or the L/C Issuer, as the case may be, such Mandatory Costs. Such amount shall be expressed as a percentage rate per annum and shall be payable on the full amount of the applicable Obligations.
(d) Certificates for Reimbursement . A certificate of a Lender or the L/C Issuer setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its holding company, as the case may be, as specified in subsection (a), (b) or (c) of this Section and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay to such Lender or the L/C Issuer, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.
(e) Delay in Requests . Failure or delay on the part of any Lender or the L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender’s or the L/C Issuer’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the L/C Issuer, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the L/C Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).
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(f) Reserves on Eurocurrency Rate Committed Loans . The Borrower shall pay to each Lender, (i) as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each Eurocurrency Rate Committed Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive) and (ii) as long as such Lender shall be required to comply with any reserve ratio requirement or analogous requirement of any other central banking or financial regulatory authority imposed in respect of the maintenance of the Commitments or the funding of the Eurocurrency Rate Committed Loans, such additional costs (expressed as a percentage per annum and rounded upwards, if necessary, to the nearest five decimal places) equal to the actual costs allocated to such Commitment or Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which in each case shall be due and payable on each date on which interest is payable on such Loan, provided the Borrower shall have received at least 10 days’ prior notice (with a copy to the Administrative Agent) of such additional interest or costs from such Lender. If a Lender fails to give notice 10 days prior to the relevant Interest Payment Date, such additional interest or costs shall be due and payable 10 days from receipt of such notice.
3.05 Compensation for Losses . Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender harmless from any loss, cost or expense incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Committed Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);
(b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Committed Loan on the date or in the amount notified by the Borrower; or
(c) any failure by the Borrower to make payment of any Loan or drawing under any Letter of Credit (or interest due thereon) denominated in an Alternative Currency on its scheduled due date or any payment thereof in a different currency;
including any loss of anticipated profits and any loss, any foreign exchange losses or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained or from the performance of any foreign exchange contract. The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.
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For purposes of calculating amounts payable by the Borrower or the applicable Designated Borrower to the Lenders under this Section 3.05 , each Lender shall be deemed to have funded each Eurocurrency Rate Committed Loan made by it at the Eurocurrency Rate for such Loan by a matching deposit or other borrowing in the offshore interbank eurodollar market for a comparable amount and for such currency for a comparable period, whether or not such Eurocurrency Rate Committed Loan was in fact so funded.
3.06 Mitigation Obligations; Replacement of Lenders .
(a) Designation of a Different Lending Office . If any Lender requests compensation under Section 3.04 , or the Borrower is required to pay any additional amount to any Lender, the L/C Issuer, or any Governmental Authority for the account of any Lender or the L/C Issuer pursuant to Section 3.01 , or if any Lender gives a notice pursuant to Section 3.02 , then such Lender or the L/C Issuer shall, as applicable, use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender or the L/C Issuer, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04 , as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02 , as applicable, and (ii) in each case, would not subject such Lender or the L/C Issuer, as the case may be, to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender or the L/C Issuer, as the case may be.
(b) Replacement of Lenders . If (i) any Lender determines that it is unlawful for such Lender (but not other Lenders generally) to make, maintain or fund Eurocurrency Rate Loans, or to determine or charge interest rates based upon the Eurocurrency Rate in each case as set forth in Section 3.02(ii) , (ii) if any Lender requests compensation under Section 3.04 , or (iii) if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 , the Borrower may replace such Lender in accordance with Section 10.13 .
3.07 Survival . All of the Borrower’s obligations under this Article III shall survive termination of the Aggregate Commitments, repayment of all other Obligations hereunder, and resignation of the Administrative Agent.
ARTICLE IV. CONDITIONS PRECEDENT TO Credit Extensions
4.01 Conditions of Initial Credit Extension . The obligation of the L/C Issuer and each Lender to make its initial Credit Extension hereunder is subject to satisfaction of the following conditions precedent:
(a) The Administrative Agent’s receipt of the following, each of which shall be originals or electronically transmitted (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Administrative Agent and each of the Lenders:
(i) executed counterparts of this Agreement, all Collateral Documents and each Guaranty, sufficient in number for distribution to the Administrative Agent, each Lender and the Borrower;
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(ii) a Note executed by the Borrower in favor of each Lender requesting a Note;
(iii) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party;
(iv) such documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that each Loan Party is validly existing, in good standing (where such concept is applicable) and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect, which documents shall include:
(1) articles of incorporation or other charter documents as applicable certified to be true and correct and in force and effect by a Responsible Officer (“ Officer Certification ”),
(2) copies of resolutions of the board of directors or comparable managing body approving and adopting the Loan Documents, the transactions and authorizing execution and delivery thereof (with Officer Certification),
(3) a copy of the bylaws or comparable operating agreement of each Loan Party (with Officer Certification),
(4) certificates of good standing, existence or its equivalent certified as of a recent date by the appropriate Governmental Authorities of the state of incorporation or organization and each other state in which the failure to so qualify and be in good standing would reasonably be expected to have an Material Adverse Effect, and
(5) an incumbency certificate (with Officer Certification);
(v) a favorable opinion of counsel to the Loan Parties addressed to the Administrative Agent and each Lender and which may be relied upon by their respective successors and assigns, in form and substance satisfactory to the Administrative Agent;
(vi) a certificate of a Responsible Officer of each Loan Party either (A) attaching copies of all consents, licenses and approvals required in connection with the execution, delivery and performance by such Loan Party and the validity against such Loan Party of the Loan Documents to which it is a party, and such consents, licenses and approvals shall be in full force and effect, or (B) stating that no such consents, licenses or approvals are so required;
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(vii) a certificate signed by a Responsible Officer of the Borrower certifying (A) that the conditions specified in Sections 4.02(a) and (b) have been satisfied, and (B) that there has been no event or circumstance since the date of the Audited Financial Statements that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect;
(viii) a certificate signed by a Responsible Officer of Borrower and the Guarantors dated as of the Closing Date as to the solvency of the Borrower and the Guarantors following the consummation of the transactions contemplated herein and in form and substance satisfactory to Administrative Agent;
(ix) evidence that all insurance required to be maintained pursuant to the Loan Documents has been obtained and is in effect;
(x) in connection with the delivery of the Security Agreements and Stock Pledge:
(1) certificates representing the Equity Interests referred to therein accompanied by undated stock powers executed in blank or registered in the name of such nominee or nominees as the Administrative Agent shall specify, as applicable,
(2) proper financing statements in form appropriate for filing under the Uniform Commercial Code of all jurisdictions that the Administrative Agent may deem necessary or desirable in order to perfect the Liens created under the Security Agreements, covering the Collateral described in the Security Agreements,
(3) completed requests for information, dated on or before the date of the initial Credit Extension, listing the financing statements referred to in clause (2) above and all other effective financing statements filed in the jurisdictions referred to in clause (2) above that name any Loan Party as debtor, together with copies of such other financing statements, and
(4) evidence of the completion of all other actions, recordings and filings of or with respect to the Security Agreement that the Administrative Agent may deem necessary or desirable in order to perfect the Liens created thereby;
(xi) such other assurances, certificates, documents, consents or opinions as the Administrative Agent, the L/C Issuer the Swing Line Lender or the Required Lenders reasonably may require.
(b) Responsible Officers . Set forth on Schedule 4.1(b) are Responsible Officers that are permitted to sign Loan Documents on behalf of the Loan Parties, holding the offices indicated next to their respective names, as of the Closing Date. Such Authorized Officers are the duly elected and qualified officers of such Loan Party and are duly authorized to execute and deliver, on behalf of the respective Loan Party, the Credit Agreement, the Notes and the other Loan Documents.
(c) Any fees required to be paid on or before the Closing Date shall have been paid.
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(d) Unless waived by the Administrative Agent, the Borrower shall have paid all reasonable fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings ( provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent).
Without limiting the generality of the provisions of the last paragraph of Section 9.03(d) , for purposes of determining compliance with the conditions specified in this Section 4.01 , each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.
4.02 Conditions to all Credit Extensions . The obligation of each Lender to honor any Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed Loans to the other Type, or a continuation of Eurocurrency Rate Committed Loans) is subject to the following conditions precedent:
(a) The representations and warranties of the Borrower and each other Loan Party contained in Article V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects on and as of the date of such Credit Extension (except that to the extent that any representation and warranty is already qualified by materiality, in which case, such representation and warranty shall be true and correct as written as of such date), except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date (except that to the extent that any representation and warranty is already qualified by materiality, in which case, such representation and warranty shall be true and correct as written as of such date), and except that for purposes of this Section 4.02 , the representations and warranties contained in subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 .
(b) No Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof.
(c) The Administrative Agent and, if applicable, the L/C Issuer or the Swing Line Lender shall have received a Request for Credit Extension in accordance with the requirements hereof.
(d) In the case of a Credit Extension to be denominated in an Alternative Currency, there shall not have occurred any change in national or international financial, political or economic conditions or currency exchange rates or exchange controls which in the reasonable opinion of the Administrative Agent, the Required Lenders (in the case of any Loans to be denominated in an Alternative Currency) or the L/C Issuer (in the case of any Letter of Credit to be denominated in an Alternative Currency) would make it impracticable for such Credit Extension to be denominated in the relevant Alternative Currency.
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Each Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed Loans to the other Type or a continuation of Eurocurrency Rate Committed Loans) submitted by the Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Administrative Agent and the Lenders that:
5.01 Existence, Qualification and Power . Each Loan Party (a) is duly organized or formed, validly existing and, as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect.
5.02 Authorization; No Contravention . The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of such Person’s Organizational Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation to which such Person is Party or affecting such Person or the properties of such Person or any of its Subsidiaries where such conflict, breach or contravention would reasonably be expected to have a Material Adverse Effect or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law.
5.03 Governmental Authorization; Other Consents . Except (a) for the approvals of the Boards of Directors of the Loan Parties which have been obtained (as is applicable with respect to clauses (w) and (x) below), (b) for the filing of all financing statements in the proper form and in the proper jurisdictions as is applicable with respect to clause (y) below, and (c) as may be required by the laws of the jurisdictions of organization of the Foreign Subsidiaries with respect to clauses (x) and (y) below, no approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with (w) the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, (x) the grant by any Loan Party of the Liens granted by it pursuant to the Collateral Documents, (y) the perfection or maintenance of the Liens created under the Collateral Documents (including the priority nature thereof as provided in Section 5.21 hereof) or (z) the exercise by Lender of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Collateral Documents.
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5.04 Binding Effect . This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, except as enforcement may be limited by principles of equity, bankruptcy, insolvency, or other laws affecting a creditor’s rights generally.
5.05 Financial Statements; No Material Adverse Effect .
(a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the Consolidated financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof which are required to be shown in accordance with GAAP, including liabilities for taxes, material commitments and Indebtedness.
(b) The unaudited Consolidated balance sheet of the Borrower and its Subsidiaries dated September 30, 2013, and the related Consolidated statements of income or operations, shareholders’ equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, (ii) fairly present the Consolidated financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof which are required to be shown in accordance with GAAP, including liabilities for taxes, material commitments and Indebtedness.
(c) Since the date of the Audited Financial Statements (and, in addition, after delivery of the annual audited financial statements in accordance with Section 6.01 , from the date of the most recently delivered annual audited financial statements), there has been no event or circumstance, either individually or in the aggregate, that has had or would reasonably be expected to have a Material Adverse Effect.
5.06 Litigation . There are no actions, suits, proceedings, claims or disputes pending or, to the Knowledge of the Borrower, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect performance under this Agreement or any other Loan Document and (b) either individually or in the aggregate, if determined adversely, would reasonably be expected to have a Material Adverse Effect.
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5.07 No Default . Neither any Loan Party nor any Subsidiary thereof is in default under or with respect to any Contractual Obligation that would, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing or would result from the execution of this Agreement or any other Loan Document.
5.08 Ownership of Property; Liens . Each of the Borrower and each Subsidiary has good record and marketable title to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The property of the Borrower and its Subsidiaries is subject to no Liens, other than Liens permitted by Section 7.01 .
5.09 Environmental Compliance . The Borrower has reasonably concluded that it is not in violation of Environmental Laws and there are no claims against it alleging violations of Environmental Law which in either case would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
5.10 Insurance . The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrower, in such amounts with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Subsidiary operates.
5.11 Taxes . The Borrower and its Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against the Borrower or any Subsidiary that would, if made, have a Material Adverse Effect. Neither any Loan Party nor any Subsidiary thereof is party to any tax sharing agreement.
5.12 ERISA Compliance .
(a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state laws. Each Pension Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service. To the Knowledge of the Borrower, nothing has occurred that would prevent or cause the loss of such tax-qualified status that could not be reasonably corrected through the IRS Voluntary Correction Program.
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(b) Other than as disclosed on Schedule 5.12(b) hereto, there are no pending or, to the Knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that would reasonably be expected to have a Material Adverse Effect. There has been neither any transaction prohibited by ERISA nor any violation of the fiduciary responsibility rules with respect to any Plan that has resulted or would reasonably be expected to result in a Material Adverse Effect.
(c) Other than as disclosed on Schedule 5.12(c) hereto, since June 1, 2005, (i) no ERISA Event has occurred, and to the Knowledge of the Borrower or any ERISA Affiliate, no fact, event or circumstance exists that would reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan which would reasonably be expected to result in a Material Adverse Effect; (ii) the Borrower and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) as of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and, to the Knowledge of the Borrower or any ERISA Affiliate, no facts or circumstances exist that would reasonably be expected to cause the funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date; (iv) neither the Borrower nor any ERISA Affiliate has incurred any liability to the PBGC which would reasonably be expected to result in a Material Adverse Effect other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that would reasonably be expected to be subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and to the Knowledge of the Borrower or any ERISA Affiliate, no event or circumstance has occurred or exists that would reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan.
(d) Neither the Borrower nor any ERISA Affiliate maintains or contributes to, or has any unsatisfied obligation to contribute to, or liability under, any active or terminated Pension Plan other than (A) on the Closing Date, those listed on Schedule 5.12(d) hereto and (B) thereafter, Pension Plans not otherwise prohibited by this Agreement.
5.13 Subsidiaries; Equity Interests . No Loan Party has any Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13 , and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and non-assessable and are owned by a Loan Party in the amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens except those created under the Collateral Documents or permitted under the Loan Documents. No Loan Party has any equity investments in any corporation or entity other than those specifically disclosed in Part (a) or Part (b) of Schedule 5.13 . Set forth on Part (c) of Schedule 5.13 is a complete and accurate list of all Loan Parties, showing as of the Closing Date (as to each Loan Party) the jurisdiction of its incorporation. The copy of the charter of each Loan Party and each amendment thereto provided pursuant to Administrative Agent is a true and correct copy of each such document, each of which is valid and in full force and effect.
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5.14 Margin Regulations; Investment Company Act .
(a) The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.
(b) Neither the Borrower nor any Subsidiary is or is required to be registered as an “investment company” under the Investment Company Act of 1940.
5.15 Disclosure . The financial statements of the Borrower filed with the SEC disclose all material liabilities of the Borrower and its Subsidiaries, including all material contingent liabilities as set forth in the footnotes thereto, all as required by GAAP. No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished), when taken as a whole, contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions and estimates believed to be reasonable at the time. Accordingly, it is understood by the Administrative Agent and each Lender that such financial information is not viewed as fact or as a representation by the Borrower that such projections will be achieved, and that actual results during the period or periods covered by the projected financial information may differ from such projected financial information and some such differences may be material.
5.16 Compliance with Laws . Each Loan Party and each Subsidiary thereof is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
5.17 Taxpayer Identification Number . The Borrower’s U.S. taxpayer identification number is set forth on Schedule 10.02 .
5.18 Collateral Documents . The provisions of the Collateral Documents are effective to create in favor of the Administrative Agent for the benefit of the Secured Parties a legal, valid and enforceable first priority Lien (subject to Liens permitted by Section 7.01 ) on all right, title and interest of the respective Loan Parties in the Collateral described therein. Except for filings completed prior to the Closing Date and as contemplated hereby and by the Collateral Documents, no filing or other action will be necessary to perfect or protect such Liens.
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5.19 Intellectual Property; Licenses, Etc . The Borrower and its Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights (collectively, “ IP Rights ”) that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person. To the Knowledge of the Borrower, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by the Borrower or any Subsidiary infringes upon any rights held by any other Person. Except as specifically disclosed in Schedule 5.19 , no claim or litigation regarding any of the foregoing is pending or, to the Knowledge of the Borrower, threatened, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
5.20 Solvency . Each Loan Party is, individually and together with its Subsidiaries on a Consolidated basis, Solvent. “Solvent” and “Solvency” mean, with respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital, and (e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that would reasonably be expected to become an actual or matured liability
5.21 Rights in Collateral; Priority of Liens . Borrower and each other Loan Party own the property granted by it as Collateral under the Collateral Documents, free and clear of any and all Liens in favor of third parties other than Liens permitted by Section 7.01 . Upon the proper filing of UCC financing statements and the taking of the other actions required by the Required Lenders or the law, the Liens granted pursuant to the Collateral Documents will constitute valid and enforceable (subject to Liens permitted by this Agreement or the other Loan Documents, Liens arising by operation of law, incurred in the ordinary course of business), first, prior and perfected Liens on the Collateral in favor of Administrative Agent, for the ratable benefit the Lenders.
5.22 Sanctions Concerns . As of the Closing Date, no Loan Party, nor any Subsidiary, nor, to the Knowledge of the Loan Parties and their Subsidiaries, any director, officer, employee, agent, affiliate or representative thereof, is an individual or entity currently the subject of any Sanctions, nor is any Loan Party or any Subsidiary located, organized or resident in a Designated Jurisdiction as of the Closing Date.
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ARTICLE VI. AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01 , 6.02 , and 6.03 ) cause each Subsidiary to:
6.01 Financial Statements . Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders:
(a) as soon as available, but in any event within 120 days after the end of each fiscal year of the Borrower (or, if earlier, 15 days after the date required to be filed with the SEC (without giving effect to any extension permitted by the SEC)), a Consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related Consolidated statements of income or operations, changes in shareholders’ equity, and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit;
(b) as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower (or, if earlier, 5 days after the date required to be filed with the SEC (without giving effect to any extension permitted by the SEC)), a Consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, the related Consolidated statements of income or operations for such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, and the related Consolidated statements of changes in shareholders’ equity (if applicable), and cash flows for the portion of the Borrower’s fiscal year then ended, in each case setting forth in comparative form, as applicable, the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, certified by the chief executive officer, chief financial officer, or chief accounting officer of the Borrower as fairly presenting the financial condition, results of operations, shareholders’ equity (if applicable) and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes ; and
(c) as soon as available, but in any event at least 120 days after the end of each fiscal year of the Borrower, budgets prepared by management of the Borrower, in form satisfactory to the Administrative Agent and the Required Lenders, of Consolidated balance sheets and statements of income or operations and cash flows of the Borrower and its Subsidiaries on a monthly basis for the immediately following fiscal year (including the fiscal year in which the Maturity Date occurs).
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As to any information contained in materials furnished pursuant to Section 6.02(d) , the Borrower shall not be separately required to furnish such information under clause (a) or (b) above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish the information and materials described in clauses (a) and (b) above, which has not otherwise been previously disclosed in the material furnished pursuant to Section 6.02(d) , at the times specified therein.
6.02 Certificates; Other Information . Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders:
(a) [Intentionally Omitted]
(b) concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and (b) a duly completed Compliance Certificate signed by the chief executive officer, chief financial officer or chief accounting officer of the Borrower (which delivery may, unless the Administrative Agent, or a Lender requests executed originals, be by electronic communication including fax or email and shall be deemed to be an original authentic counterpart thereof for all purposes);
(c) promptly after any request by the Administrative Agent or any Lender, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of the Borrower by independent accountants in connection with the accounts or books of the Borrower or any Subsidiary, or any audit of any of them;
(d) promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto;
(e) promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of any Loan Party or any Subsidiary thereof pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to Section 6.01 or any other clause of this Section 6.02 ; and
(f) promptly, and in any event within ten (10) Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other material inquiry by such agency regarding financial or other operational results of any Loan Party or any Subsidiary thereof, which if adversely determined would reasonably be expected to have a Material Adverse Effect; and
(g) promptly, such additional information regarding the business, financial or corporate affairs of the Borrower or any Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request.
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Documents required to be delivered pursuant to Section 6.01(a) or (b) or Section 6.02(d) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 10.02 ; or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that the Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions ( i.e. , soft copies) of such documents. The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.
The Borrower hereby acknowledges that (a) the Administrative Agent will make available to the Lenders and the L/C Issuer materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “ Borrower Materials ”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “ Platform ”) and (b) certain of the Lenders (each, a “ Public Lender ”) may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the L/C Issuer and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of United States Federal and state securities laws ( provided , however , that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.07 ); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.” For avoidance of doubt, any Borrower Materials which are not marked “PUBLIC” by the Borrower shall be deemed material, non-public information.
6.03 Notices . Promptly notify the Administrative Agent:
(a) of the occurrence of any Default;
(b) of any matter that has resulted or would reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of the Borrower or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between the Borrower or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting the Borrower or any Subsidiary, including pursuant to any applicable Environmental Laws;
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(c) of the occurrence of any ERISA Event; and
(d) of any material change in accounting policies or financial reporting practices by the Borrower or any Subsidiary, including any determination by the Borrower referred to in Section 2.11(b) .
Each notice pursuant to this Section 6.03 shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.
6.04 Payment of Obligations . Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property, except for Liens permitted by this Agreement or the other Loan Documents; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness, unless the same would constitute Indebtedness permitted by this Agreement or the other Loan Documents and the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Subsidiary.
6.05 Preservation of Existence, Etc . (a) Preserve, renew and maintain in full force and effect its legal existence and good standing (where such concept is applicable) under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 7.04 or 7.05 ; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which would reasonably be expected to have a Material Adverse Effect.
6.06 Maintenance of Properties . (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities.
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6.07 Maintenance of Insurance . Maintain with financially sound and reputable insurance companies not Affiliates of the Borrower, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons and providing for not less than 30 days’ prior notice to the Administrative Agent of termination, lapse or cancellation of such insurance.
6.08 Compliance with Laws . Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.
6.09 Books and Records . (a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Borrower or such Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Borrower or such Subsidiary, as the case may be.
6.10 Inspection Rights . Permit representatives and independent contractors of the Administrative Agent and each Lender, at their own expense unless otherwise specifically provided for herein, to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower but limited to one such visit per year per site (for the Administrative Agent and all the Lenders collectively) unless an Event of Default shall have occurred and be continuing; provided , however , that when an Event of Default exists the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice; provided , however , that any such visit, inspection or examination shall be subject to the Borrower’s reasonable policies and practices applicable to safeguarding its trade secrets and proprietary products and practices, except as may be required by the Administrative Agent in connection with the exercise of its remedies under the Loan Documents during the continuance of an Event of Default and following the acceleration of the Indebtedness.
6.11 Use of Proceeds . Use the proceeds of the Credit Extensions for general corporate purposes, capital expenditures and Permitted Acquisitions, in each case, not in contravention of any Law or of any Loan Document.
6.12 Additional Guarantors. Notify the Administrative Agent at the time that any Person becomes a Domestic Subsidiary directly owned or controlled by Borrower, and promptly after the request of Administrative Agent (and in any event within 30 days), cause such Person to (a) become a Guarantor by executing and delivering to the Administrative Agent a counterpart of the Guaranty or such other document as the Administrative Agent shall deem appropriate for such purpose, (b) deliver to the Administrative Agent documents of the types referred to in clauses (i), (iii) and (iv) of Section 4.01(a) and favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to in clause (a)), all in form, content and scope reasonably satisfactory to the Administrative Agent and (c) with respect to Domestic Subsidiaries directly owned or controlled by Borrower as a result of the Anticipated Acquisition, execute a Joinder Agreement in the form attached hereto as Exhibit I and such other documents reasonably requested by the Administrative Agent.
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6.13 Collateral Records . To execute and deliver promptly, and to cause each other Loan Party to execute and deliver promptly, to Administrative Agent, from time to time, solely for Administrative Agent’s convenience in maintaining a record of the Collateral, such written statements and schedules as Administrative Agent may reasonably require designating, identifying or describing the Collateral. The failure by Borrower or any other Loan Party, however, to promptly give Agent such statements or schedules shall not affect, diminish, modify or otherwise limit the Liens on the Collateral granted pursuant to the Collateral Documents.
6.14 Further Assurances .
(a) Promptly upon request by the Administrative Agent, or any Lender through the Administrative Agent, (i) correct any material defect or error that may be discovered in any Loan Document or in the execution, acknowledgment, filing or recordation thereof, and (ii) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Administrative Agent, or any Lender through the Administrative Agent, may reasonably require from time to time in order to (A) carry out more effectively the purposes of the Loan Documents, (B) to the fullest extent permitted by applicable law, subject any Loan Party’s or any of its Domestic Subsidiaries’ properties, assets, rights or interests to the Liens now or hereafter intended to be covered by any of the Collateral Documents, (C) perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and any of the Liens intended to be created thereunder and (D) assure, convey, grant, assign, transfer, preserve, protect and confirm more effectively unto the Secured Parties the rights granted or now or hereafter intended to be granted to the Secured Parties under any Loan Document or under any other instrument executed in connection with any Loan Document to which any Loan Party is or is to be a party.
(b) To, and to cause each other Loan Party to, (i) defend the Collateral against all claims and demands of all Persons at any time claiming the same or any interest therein, (ii) comply with the requirements of all state and federal laws in order to grant to the Administrative Agent and Lenders valid and perfected first priority security interests in the Collateral (subject to Liens permitted under Section 7.01 ), with perfection, in the case of any investment property, deposit account or letter of credit being effected by giving the Administrative Agent control of such investment property or deposit account or letter of credit, rather than by the filing of a UCC financing statement with respect to such investment property, subject to the terms of the Security Agreements, and (iii) do whatever the Administrative Agent may reasonably request, from time to time, to effect the purposes of this Agreement and the other Loan Documents, including filing notices of liens, UCC financing statements, fixture filings and amendments, renewals and continuations thereof; cooperating with the Administrative Agent’s representatives; keeping stock records; obtaining waivers from landlords and mortgagees and from warehousemen and their landlords and mortgages; and, paying claims which might, if unpaid, become a Lien on the Collateral. The Administrative Agent is hereby authorized by Borrower to file any UCC financing statements covering the Collateral whether or not Borrower’s signatures appear thereon. In furtherance of the foregoing, each Loan Party hereby agrees to use reasonable best efforts to obtain waivers from each of the Loan Party’s landlords and warehousemen identified on Schedule 6.14(b) .
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6.15 Operating Accounts . The Borrower and the Guarantors will, and will cause each of their Domestic Subsidiaries to, maintain its primary operating and depository bank accounts at Bank of America at all times; provided , however , that any newly formed or newly acquired Domestic Subsidiary shall have one hundred eighty (180) days after its formation or acquisition to establish its primary operating and depository accounts at Bank of America. The Borrower, the Guarantors and their Domestic Subsidiaries may maintain additional accounts with Lenders other than Bank of America; provided , however , that with respect to any such account, the Administrative Agent and such other Lender shall have entered into a deposit account control agreement acceptable to the Administrative Agent.
ARTICLE VII. NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly:
7.01 Liens . Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following:
(a) Liens pursuant to any Loan Document;
(b) Liens existing on the date hereof and listed on Schedule 7.01 and any renewals or extensions thereof, provided that (i) the property covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased except as contemplated by Section 7.03(b) , (iii) the direct or any contingent obligor with respect thereto is not changed, and (iv) any renewal or extension of the obligations secured or benefited thereby is permitted by Section 7.03(b) ;
(c) Liens for taxes not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;
(d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person;
(e) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;
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(f) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;
(g) Liens securing judgments for the payment of money not constituting an Event of Default under Section 8.01(h) ;
(h) Liens securing Indebtedness permitted under Section 7.03(e) ; provided that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition;
(i) Easements, rights-of-way, zoning and similar restrictions, encumbrances or title defects (but specifically excluding mortgages and any other Liens securing Indebtedness) which, in the aggregate, do not materially detract from the value of the properties of, and do not materially and adversely interfere with the ordinary conduct of the business of the applicable Person;
(j) Liens in favor of any Foreign Obligation Provider securing the Foreign Subsidiary Secured Obligations permitted pursuant to Section 7.03(g) hereof.
(k) Liens on assets of any Foreign Subsidiary to secure Indebtedness of such Foreign Subsidiary permitted pursuant to Section 7.03(h) hereof; and
7.02 Investments . Make any Investments, except:
(a) Investments held by the Borrower or such Subsidiary in the form of cash or Cash Equivalents;
(b) advances to officers, directors and employees of the Borrower and Subsidiaries in an aggregate amount not to exceed $75,000 at any time outstanding, for travel, entertainment, relocation and analogous ordinary business purposes;
(c) Investments of the Borrower in any (directly or indirectly) wholly-owned Subsidiary and Investments of any (directly or indirectly) wholly-owned Subsidiary in the Borrower or in another (directly or indirectly) wholly-owned Subsidiary;
(d) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss;
(e) Guarantees permitted by Section 7.03 ;
(f) any Permitted Acquisition; and
(g) bank guarantees or performance guarantees in an aggregate outstanding amount not to exceed, together with all Letters of Credit, the Letter of Credit Sublimit.
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7.03 Indebtedness . Create, incur, assume or suffer to exist any Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Indebtedness outstanding on the date hereof and listed on Schedule 7.03 and any refinancings, refundings, renewals or extensions thereof; provided that (i) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder and (ii) the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such refinancing, refunding, renewing or extending Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Loan Parties or the Lenders than the terms of any agreement or instrument governing the Indebtedness being refinanced, refunded, renewed or extended and the interest rate applicable to any such refinancing, refunding, renewing or extending Indebtedness does not exceed the then applicable market interest rate;
(c) Guarantees of the Borrower or any Subsidiary in respect of Indebtedness otherwise permitted hereunder of the Borrower or such Subsidiary;
(d) obligations (contingent or otherwise) of the Borrower or any Subsidiary existing or arising under any Swap Contract, provided that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a “market view;” and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;
(e) Indebtedness in respect of Capital Leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within the limitations set forth in Section 7.01(h) ; provided , however , that the aggregate amount of all such Indebtedness at any one time outstanding shall not exceed $15,000,000;
(f) Indebtedness of (directly or indirectly) wholly owned Subsidiaries to Borrower;
(g) Indebtedness under the Foreign Obligation Loan Documents;
(h) Secured Indebtedness of Foreign Subsidiaries, not otherwise permitted under Section 7.03(b) and not inclusive of any Indebtedness otherwise permitted under Section 7.03(e) , from sources other than the Lenders and other than pursuant to this Agreement in an amount not to exceed the Dollar Equivalent of $15,000,000 at any time outstanding; and
(i) unsecured Indebtedness not otherwise permitted under clauses (a) through (h) above (but not inclusive of any Investments made by the Borrower pursuant to Section 7.02(c) ), in an aggregate principal amount not to exceed the Dollar Equivalent of $15,000,000 at any time outstanding.
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7.04 Fundamental Changes . Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result therefrom:
(a) any Subsidiary may merge with (i) the Borrower, provided that the Borrower shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries, provided that when any Guarantor is merging with another Subsidiary, the Guarantor shall be the continuing or surviving Person; and
(b) any Subsidiary may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or to another Subsidiary; provided that if the transferor in such a transaction is a Guarantor then the transferee must either be the Borrower or a Guarantor.
7.05 Dispositions . Make any Disposition or enter into any agreement to make any Disposition, except:
(a) Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;
(b) Dispositions of inventory in the ordinary course of business;
(c) Dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement property;
(d) Dispositions of property by any Subsidiary to the Borrower or to a wholly-owned Subsidiary; provided that if the transferor of such property is a Guarantor, the transferee thereof must either be the Borrower or a Guarantor;
(e) Dispositions permitted by Section 7.04 ;
(f) Licenses or leases in the ordinary course of business; and
(g) Other sales of assets in an aggregate amount for any Annual Period not to exceed the Annual Basket Amount; provided that in connection with a sale of assets in any Annual Period which reduces the amount available under the Annual Basket Amount for such Annual Period, if the Borrower or such Subsidiary re-invests the proceeds of such sale in other useful assets of the Borrower or such Subsidiary within nine months of the date of such sale and during such Annual Period, the aggregate amount of such proceeds reinvested shall increase the outstanding amount available under the Annual Basket Amount. For purposes of this Section 7.05(g) , “ Annual Basket Amount ” shall mean $25,000,000 and “ Annual Period ” shall mean each successive period of twelve consecutive months commencing on the Closing Date, provided that no unused portion of the Annual Basket Amount for any Annual Period may be “carried over” to a subsequent Annual Period;
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provided , however , that any Disposition pursuant to clauses (a) through (c) or clause (g) shall be for fair market value.
7.06 Restricted Payments . Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that, so long as no Default or Event of Default shall have occurred and be continuing at the time of any action described below or would result therefrom:
(a) each Subsidiary may make Restricted Payments to the Borrower, the Guarantors and any other Person that owns an Equity Interest in such Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;
(b) the Borrower and each Subsidiary may declare and make dividend payments or other distributions;
(c) the Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it with the proceeds received from the substantially concurrent issue of new shares of its common stock or other common Equity Interests;
(d) the Borrower may issue and sell its common Equity Interests, so long as the Net Cash Proceeds thereof are applied to the prepayment of the Loans pursuant to Section 2.06(a) ; and
(e) the Borrower may repurchase its outstanding Equity Interests.
7.07 Change in Nature of Business . Engage in any material line of business substantially different from those lines of business conducted by the Borrower and its Subsidiaries on the date hereof or any business substantially related or incidental thereto.
7.08 Transactions with Affiliates . Enter into any transaction of any kind with any Affiliate of the Borrower, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to the Borrower or such Subsidiary as would be obtainable by the Borrower or such Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate , provided that the foregoing restriction shall not apply to transactions between or among the Borrower and any Guarantor or between and among any Guarantors.
7.09 Burdensome Agreements . Enter into any Contractual Obligation (other than this Agreement or any other Loan Document or the agreement disclosed on Schedule 7.09 ) that (a) limits the ability (i) of any Subsidiary to make Restricted Payments to the Borrower or any Guarantor or to otherwise transfer property to the Borrower or any Guarantor, (ii) of any Subsidiary to Guarantee the Indebtedness of the Borrower or (iii) of the Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person; provided , however , that this clause (iii) shall not prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under Section 7.03(e) solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness; or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person.
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7.10 Use of Proceeds . Use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.
7.11 Bank Accounts. Other than accounts which are established and maintained with the Administrative Agent or any Lender, neither the Borrower nor the Guarantors will permit any of their Domestic Subsidiaries to, (a) establish any bank accounts other than those accounts listed on Schedule 7.11 , without the Administrative Agent’s prior written consent or (b) deposit into any of the payroll accounts listed on Schedule 7.11 any amounts in excess of amounts necessary to pay current payroll obligations from such accounts.
7.12 Inconsistent Agreements; Charter Amendments. None of the Borrower, the Guarantors nor any Subsidiary of any of them shall (a) enter into any agreement or arrangement which would restrict in any material respect the ability of the Borrower or its Subsidiaries to fulfill its Obligations under the Loan Documents, or (b) supplement, amend or otherwise modify the terms of their Organizational Documents if the effect thereof is to cause a Default or an Event of Default.
7.13 Accounting Changes. (a) Make any material change in its accounting policies or reporting practices, except as required by GAAP and with prior notification as required by Section 6.03(d) hereof, or (b) change its fiscal year.
7.14 Amendment, Etc. of Indebtedness. Amend, modify or change in any manner any term or condition of any Indebtedness set forth in Schedule 7.03 , except for any amendment refinancing, refunding, renewal or extension thereof permitted by Section 7.03(b).
7.15 Financial Covenants.
(a) Consolidated Interest Coverage Ratio . Permit the Consolidated Interest Coverage Ratio as of the end of each fiscal quarter of the Borrower to be less than 2.00:1.0. The Consolidated Interest Coverage Ratio will be calculated at the end of each reporting period for which this Agreement requires Borrower to deliver financial statements, using the results of the four fiscal quarter period ending with that reporting period and annually using the results of the Borrower’s fiscal year-end based on the Borrower’s audited financial statements.
(b) Consolidated Leverage Ratio . Permit the Consolidated Leverage Ratio as of the end of each fiscal quarter of the Borrower to be greater than 3.00:1.0.
(c) Consolidated EBITDA . Permit the Consolidated EBITDA as of the end of any fiscal quarter of the Borrower to be less than $30,000,000. Consolidated EBITDA will be calculated at the end of each reporting period for which this Agreement requires Borrower to deliver financial statements, using the results of the four fiscal quarter period ending with that reporting period and annually using the results of the Borrower’s fiscal year-end based on the Borrower’s audited financial statements.
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7.16 Sanctions. Directly or indirectly, use any Credit Extension or the proceeds of any Credit Extension, or lend, contribute or otherwise make available such Credit Extension or the proceeds of any Credit Extension to any Person, to fund any activities of or business with any Person, or in any Designated Jurisdiction, that, at the time of such funding, is the subject of Sanctions, or in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as Lender, Administrative Agent, L/C Issuer, Swingline Lender, or otherwise) of Sanctions.
ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES
8.01 Events of Default . Any of the following shall constitute an Event of Default:
(a) Non-Payment . The Borrower or any other Loan Party fails to pay (i) within one (1) Business Day after the same becomes due, and in the currency required hereunder, any amount of principal of any Loan or any L/C Obligation, or (ii) within three (3) Business Days after the same becomes due, any interest on any Loan or on any L/C Obligation, or any fee due hereunder, or (iii) within five (5) Business Days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or
(b) Specific Covenants . The Borrower fails to perform or observe any term, covenant or agreement contained in any of Section 6.01 , 6.02 , 6.03 , 6.05 , 6.10 , 6.11 or 6.12 or Article VII , or any Guarantor fails to perform or observe any term, covenant or agreement contained in the Guaranty; or
(c) Other Defaults . Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days after the chief executive officer, the chief financial officer, the chief operating officer (if any), the chief accounting officer or the chief legal officer of the Borrower becomes aware of, or the Borrower is notified by the Administrative Agent of, such Default, or the occurrence of or any other Event of Default under any other Loan Document (after giving effect to any applicable grace period); or
(d) Representations and Warranties . Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be materially incorrect or materially misleading when made or deemed made; or
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(e) Cross-Default . (i) Any Loan Party (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount and such failure continues beyond any applicable grace period, or (B) fails to observe or perform any other agreement or material condition relating to any such Indebtedness or Guarantee having an aggregate principal amount of more than the Threshold Amount or contained in any instrument or agreement evidencing, securing or relating thereto which continue beyond any applicable grace period, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which the Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) which continues beyond any applicable grace period or (B) any Termination Event (as so defined) under such Swap Contract as to which the Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the Borrower or such Subsidiary as a result thereof is greater than the Threshold Amount; or (iii) there occurs any default under any Foreign Obligation Loan Document which has continued beyond any applicable grace period; or
(f) Insolvency Proceedings, Etc. Any Loan Party institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or
(g) Inability to Pay Debts; Attachment . (i) Any Loan Party becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 60 days after its issue or levy; or
(h) Judgments . There is entered against any Loan Party (i) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders) exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 30 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or
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(i) ERISA . (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or would reasonably be expected to result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount that would reasonably be expected to have a Material Adverse Effect, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount that would reasonably be expected to have a Material Adverse Effect; and, in either case, so long as ERISA provides that such ERISA Event or failure to pay may be cured, such ERISA Event or failure to pay continues for a period of ten (10) Business Days; or
(j) Invalidity of Loan Documents . Any provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any provision of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document; or
(k) Material Adverse Effect . There occurs any event or circumstances that has a Material Adverse Effect; or
(l) Collateral Documents . Any Collateral Document after delivery thereof pursuant the terms of this Agreement shall for any reason (other than pursuant to the terms thereof) cease to create a valid and perfected first priority Lien (subject to Liens permitted by Section 7.01 ) on the Collateral purported to be covered thereby; or
(m) Change of Control . There occurs any Change of Control.
If a Default shall have occurred under the Loan Documents, then such Default will continue to exist until it either is cured (to the extent specifically permitted) in accordance with the Loan Documents or is otherwise expressly waived by Administrative Agent (with the approval of requisite Lenders (in their sole and absolute discretion) as determined in accordance with Section 10.1 ); and once an Event of Default occurs under the Loan Documents, then such Event of Default will continue to exist until it is expressly waived by the requisite Lenders or by the Administrative Agent with the approval of the requisite Lenders, as required hereunder in Section 10.1 .
8.02 Remedies Upon Event of Default . If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:
(a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;
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(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower;
(c) require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof); and
(d) exercise on behalf of itself, the Lenders and the L/C Issuer all rights and remedies available to it, the Lenders and the L/C Issuer under the Loan Documents;
provided , however , that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.
8.03 Application of Funds . After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02 ), any amounts received on account of the Obligations shall, subject to the provisions of Sections 2.17 and 2.18 , be applied by the Administrative Agent in the following order:
First , to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including reasonable fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III ) payable to the Administrative Agent in its capacity as such;
Second , to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders, the Foreign Obligation Providers and the L/C Issuer (including reasonable out-of-pocket fees, charges and disbursements of counsel to the respective Lenders, the Foreign Obligation Providers and the L/C Issuer (including fees and time charges for attorneys who may be employees of the Administrative Agent) and amounts payable under Article III ), ratably among them in proportion to the respective amounts described in this clause Second payable to them;
Third , to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans, L/C Borrowings and other Obligations, ratably among the Lenders, the Foreign Obligation Providers and the L/C Issuer in proportion to the respective amounts described in this clause Third payable to them;
Fourth , to payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Borrowings, ratably among the Lenders, the Foreign Obligation Providers and the L/C Issuer in proportion to the respective amounts described in this clause Fourth held by them;
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Fifth , to the Administrative Agent for the account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by the Borrower pursuant to Sections 2.04 and 2.17 and to the Foreign Obligation Providers, to cash collateralize undrawn contingent liability obligations owing to such Foreign Obligation Provider under the Foreign Obligation Loan Documents to the extent not otherwise cash collateralized by the applicable Foreign Subsidiary, in each case ratably among the Administrative Agent, for the account of the L/C Issuer and the Foreign Obligation Providers in proportion to the respective amounts described in this clause Fifth payable to them; and
Sixth , to payment of that portion of the Obligations arising under any Swap Contracts, ratably among the Lenders in proportion to the respective amounts described in this clause Sixth held by them;
Last , the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.
Subject to Sections 2.04(c) and 2.17 , amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.
ARTICLE IX. ADMINISTRATIVE AGENT
9.01 Appointment and Authority . Each of the Lenders and the L/C Issuer hereby irrevocably appoints, designates and authorizes Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the L/C Issuer, and neither the Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
The Administrative Agent shall also act as the “collateral agent” under the Loan Documents, and each of the Lenders and the L/C Issuer hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender and the L/C Issuer for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Administrative Agent, as “collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 9.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this Agreement (as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect thereto.
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9.02 Rights as a Lender . The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders or to provide notice to or consent of the Lenders with respect thereto.
9.03 Exculpatory Provisions . The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent and its Related Parties:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and
(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty or responsibility to disclose, and shall not be liable for the failure to disclose, any information relating to any Loan Party or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.
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Neither the Administrative Agent nor any of its Related Parties shall be liable for any action taken or not taken by the Administrative Agent under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby or thereby (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary), or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.02 ) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. Any such action taken or failure to act pursuant to the foregoing shall be binding on all Lenders. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given in writing to the Administrative Agent by the Borrower, a Lender or the L/C Issuer.
The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
9.04 Reliance by Administrative Agent . The Administrative Agent shall be entitled to rely upon, and shall be fully protected in relying and shall not incur any liability for relying upon, any notice, request, certificate, communication, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall be fully protected in relying and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the Administrative Agent may presume that such condition is satisfactory to such Lender or the L/C Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender or the L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Loan Parties), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. For purposes of determining compliance with the conditions specified in Section 4.01 , each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objections.
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9.05 Delegation of Duties . The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents
9.06 Resignation of Administrative Agent . (a) The Administrative Agent may at any time give notice of its resignation to the Lenders, the L/C Issuer and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective Date”), then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders and the L/C Issuer, appoint a successor Administrative Agent meeting the qualifications set forth above. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.
(b) With effect from the Resignation Effective Date (i) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the L/C Issuer under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (ii) except for any indemnity payments or other amounts then owed to the retiring Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the L/C Issuer directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Administrative Agent (other than as provided in Section 3.01(g) and other than any rights to indemnity payments or other amounts owed to the retiring Administrative Agent as of the Resignation Effective Date, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring Administrative Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.
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(c) Any resignation by Bank of America as Administrative Agent pursuant to this Section shall also constitute its resignation as L/C Issuer and Swing Line Lender. If Bank of America resigns as an L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto, including the right to require the Lenders to make Base Rate Committed Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c) . If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Committed Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c) . Upon the appointment by the Borrower of a successor L/C Issuer or Swing Line Lender hereunder (which successor shall in all cases be a Lender other than a Defaulting Lender), (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as applicable, (ii) the retiring L/C Issuer and Swing Line Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (iii) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.
9.07 Non-Reliance on Administrative Agent and Other Lenders . Each Lender and the L/C Issuer acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the L/C Issuer also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
9.08 No Other Duties, Etc . Anything herein to the contrary notwithstanding, no Lender holding a title listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or the L/C Issuer hereunder.
9.09 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise
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(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the L/C Issuer and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuer and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the L/C Issuer and the Administrative Agent under Sections 2.04(i) and (j) , 2.10 and 10.04 ) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders and the L/C Issuer, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.10 and 10.04 .
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or the L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or the L/C Issuer in any such proceeding.
The Loan Parties and the Secured Parties hereby irrevocably authorize the Administrative Agent, based upon the instruction of the Required Lenders, to (a) credit bid and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral at any sale thereof conducted under the provisions of the Bankruptcy Code of the United States, including under Section 363 of the Bankruptcy Code of the United States or any similar Laws in any other jurisdictions to which a Loan Party is subject, or (b) credit bid and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral at any other sale or foreclosure conducted by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with applicable Law. In connection with any such credit bid and purchase, the Obligations owed to the Secured Parties shall be entitled to be, and shall be, credit bid on a ratable basis (with Obligations with respect to contingent or unliquidated claims being estimated for such purpose if the fixing or liquidation thereof would not unduly delay the ability of the Administrative Agent to credit bid and purchase at such sale or other disposition of the Collateral and, if such claims cannot be estimated without unduly delaying the ability of the Administrative Agent to credit bid, then such claims shall be disregarded, not credit bid, and not entitled to any interest in the asset or assets purchased by means of such credit bid) and the Secured Parties whose Obligations are credit bid shall be entitled to receive interests (ratably based upon the proportion of their Obligations credit bid in relation to the aggregate amount of Obligations so credit bid) in the asset or assets so purchased (or in the Equity Interests of the acquisition vehicle or vehicles that are used to consummate such purchase). Except as provided above and otherwise expressly provided for herein or in the other Collateral Documents, the Administrative Agent will not execute and deliver a release of any Lien on any Collateral. Upon request by the Administrative Agent or the Borrower at any time, the Secured Parties will confirm in writing the Administrative Agent’s authority to release any such Liens on particular types or items of Collateral pursuant to this Section 9.09 .
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9.10 Collateral and Guaranty Matters. The Lenders and the L/C Issuer irrevocably authorize the Administrative Agent, at its option and in its discretion,
(a) to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit (other than Letters of Credit as to which other arrangements satisfactory to the Administrative Agent and the L/C Issuer shall have been made), (ii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, or (iii) subject to Section 10.01 , if approved, authorized or ratified in writing by the Required Lenders;
(b) to subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 7.01(i) ; and
(c) to release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.
Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section 9.10 . In each case as specified in this Section, the Administrative Agent will, at the Borrower’s expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Collateral Documents or to subordinate its interest in such item, or to release such Guarantor from its obligations under the Guaranty, in each case in accordance with the terms of the Loan Documents and this Section.
ARTICLE X. MISCELLANEOUS
10.01 Amendments, Etc . No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided , however , that no such amendment, waiver or consent shall:
(a) waive any condition set forth in Section 4.01(a) without the written consent of each Lender;
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(b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02 ) without the written consent of such Lender;
(c) postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;
(d) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or (subject to clause (iii) of the second proviso to this Section 10.01 ) any fees or other amounts payable hereunder or under any other Loan Document, or change the manner of computation of any financial ratio (including any change in any applicable defined term) used in determining the Applicable Rate that would result in a reduction of any interest rate on any Loan or any fee payable hereunder without the written consent of each Lender directly affected thereby; provided , however , that only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest or Letter of Credit Fees at the Default Rate;
(e) change Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender
(f) amend Section 1.06 or the definition of “Alternative Currency” without the written consent of each Lender;
(g) change any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; or
(h) release (x) all or substantially all of the value of the Guaranty or (y) all or substantially all of the Collateral in any transaction or series of related transactions, in each case, without the written consent of each Lender, except to the extent the release of any Guarantor or Collateral is permitted pursuant to Section 9.10 (in which case such release may be made by the Administrative Agent acting alone) ;
and, provided further , that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or duties of the Swing Line Lender under this Agreement; and (iii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.
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Notwithstanding any provision herein to the contrary, this Agreement may be amended with the written consent of the Required Lenders, the Administrative Agent and the Borrower (i) to add one or more additional revolving credit or term loan facilities to this Agreement , in each case subject to the limitations in Section 2.16 , and to permit the extensions of credit and all related obligations and liabilities arising in connection therewith from time to time outstanding to share ratably (or on a basis subordinated to the existing facilities hereunder) in the benefits of this Agreement and the other Loan Documents with the obligations and liabilities from time to time outstanding in respect of the existing facilities hereunder, and (ii) in connection with the foregoing, to permit, as deemed appropriate by the Administrative Agent and approved by the Required Lenders, the Lenders providing such additional credit facilities to participate in any required vote or action required to be approved by the Required Lenders or by any other number, percentage or class of Lenders hereunder.
Notwithstanding any provision herein to the contrary, this Agreement may be amended with the written consent of the Administrative Agent, the L/C Issuer, the Borrower and the Lenders affected thereby to amend the definition of “Alternative Currency” or “Eurocurrency Rate” solely to add additional currency options and the applicable interest rate with respect thereto, in each case solely to the extent permitted pursuant to Section 1.06.
10.02 Notices; Effectiveness; Electronic Communication .
(a) Notices Generally . Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be (i) delivered by personal delivery or nationally recognized overnight courier service, (ii) mailed by certified or registered mail or (iii) sent by facsimile transmission (with confirmation of successful transmission) or by electronic mail (provided, however, that if a notice is given by facsimile or electronic mail, a copy of such notice shall also be delivered by one of the methods set forth in clauses (i) or (ii) above) as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
(i) if to the Borrower, the Administrative Agent, the L/C Issuer or the Swing Line Lender, to the address, electronic facsimile number, electronic mail address or telephone number specified for such Person on Schedule 10.02 ; and
(ii) if to any other Lender, to the address, electronic facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Borrower).
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Notices and other communications delivered by personal delivery or nationally recognized overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by electronic facsimile shall be deemed to have been given when sent (except that, if not received during normal business hours of the recipient, shall be deemed to have been given at the opening of business on the next business day of such recipient after such recipient). Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).
(b) Electronic Communications . Notices and other communications to the Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) provided that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to Article II if such Lender or the L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.
(c) The Platform . THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to the Borrower, any Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided , however , that in no event shall any Agent Party have any liability to the Borrower, any Lender, the L/C Issuer or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).
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(d) Change of Address, Etc . Each of the Borrower, the Administrative Agent, the L/C Issuer and the Swing Line Lender may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the Borrower, the Administrative Agent, the L/C Issuer and the Swing Line Lender. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, facsimile number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities laws.
(e) Reliance by Administrative Agent, L/C Issuer and Lenders . The Administrative Agent, the L/C Issuer and the Lenders shall be entitled to rely and act upon any notices (including telephonic Committed Loan Notices and Swing Line Loan Notices) which are believed in good faith by the Administrative Agent, the L/C Issuer and the Lenders to have been given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify the Administrative Agent, the L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.
10.03 No Waiver; Cumulative Remedies; Enforcement . No failure by any Lender, the L/C Issuer or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
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Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.02 for the benefit of all the Lenders and the L/C Issuer; provided , however , that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) the L/C Issuer or the Swing Line Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as L/C Issuer or Swing Line Lender, as the case may be) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 10.08 (subject to the terms of Section 2.14 ), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided , further , that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.14 , any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
10.04 Expenses; Indemnity; Damage Waiver .
(a) Costs and Expenses . The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable out-of-pocket expenses incurred by the Administrative Agent, any Lender or the L/C Issuer (including the reasonable fees, charges and disbursements of any counsel for the Administrative Agent, any Lender or the L/C Issuer) (including fees and time charges for attorneys who may be employees of the Administrative Agent or, for any periods when Bank of America is the Administrative Agent and the L/C Issuer, employees of the L/C Issuer, without duplication) (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit. For purposes of clarity, the Borrower shall not be responsible for reimbursing the L/C Issuer (except as set forth above) or any Lender for any fees and time charges for attorneys who may be employees of the L/C Issuer (except as set forth above) or such Lender.
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(b) Indemnification by the Borrower . The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender and the L/C Issuer, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including out-of-pocket expenses for the reasonable fees, charges and disbursements of any counsel for any Indemnitee) (including fees and time charges for attorneys who may be employees of the Administrative Agent) incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents (including in respect of any matters addressed in Section 3.01), (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrower or any other Loan Party against an Indemnitee for breach in of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrower or such other Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.
(c) Reimbursement by Lenders . To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the L/C Issuer or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the L/C Issuer or such Related Party, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or the L/C Issuer in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or L/C Issuer in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.13(d) .
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(d) Waiver of Consequential Damages, Etc. (i) To the fullest extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.
(ii) To the fullest extent permitted by applicable law, neither the Administrative Agent, nor any Lender, nor any other Indemnitee shall assert, and each hereby waives, any claim against the Borrower on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby.
(e) Payments . All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.
(f) Survival . The agreements in this Section shall survive the resignation of the Administrative Agent, the L/C Issuer and the Swing Line Lender, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.
10.05 Payments Set Aside . To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent, the L/C Issuer or any Lender, or the Administrative Agent, the L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, the L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the applicable Overnight Rate from time to time in effect, in the applicable currency of such recovery or payment. The obligations of the Lenders and the L/C Issuer under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.
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10.06 Successors and Assigns .
(a) Successors and Assigns Generally . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the L/C Issuer and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Assignments by Lenders . Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b), participations in L/C Obligations and in Swing Line Loans) at the time owing to it); provided that any such assignment shall be subject to the following conditions:
(i) Minimum Amounts .
(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and
(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided , however , that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met.
(ii) Proportionate Amounts . Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, except that this clause (ii) shall not (A) apply to the rights in respect of the Swing Line Lender’s rights and obligations in respect of Swing Line Loans or (B) prohibit any Lender from assigning all or a portion of its rights and obligations among separate facilities on a non-pro rata basis;
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(iii) Required Consents . No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:
(A) the consent of the Borrower (such consent not to be unreasonably withheld) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof;
(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender;
(C) the consent of the L/C Issuer (such consent not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding); and
(D) the consent of the Swing Line Lender (such consent not to be unreasonably withheld or delayed) shall be required for any assignment.
(iv) Assignment and Assumption . The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided , however , that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
(v) No Assignment to Certain Persons . No such assignment shall be made (A) to the Borrower or any of the Borrower’s Affiliates or Subsidiaries, or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B), or (C) to a natural person.
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(vi) Certain Additional Payments . In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit and Swing Line Loans in accordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01 , 3.04 , 3.05 , and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment. Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.
(c) Register . The Administrative Agent, acting solely for this purpose as an agent of the Borrower (and such agency being solely for tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders 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, notwithstanding notice to the contrary. In addition, the Administrative Agent shall maintain on the Register information regarding the designation, and revocation of designation, of any Lender as a Defaulting Lender . The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
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(d) Participations . Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person, a Defaulting Lender or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “ Participant ”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Lenders and the L/C Issuer shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.
Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that affects such Participant. Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01 , 3.04 and 3.05 to the same extent as if it were a Lender hereunder and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.14 as though it were a Lender.
(e) Limitations upon Participant Rights . A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 3.01(e) as though it were a Lender.
(f) Certain Pledges . Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
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(g) Resignation as L/C Issuer or Swing Line Lender after Assignment . Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitment and Loans pursuant to subsection (b) above, Bank of America may, (i) upon 30 days’ notice to the Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon 30 days’ notice to the Borrower, resign as Swing Line Lender. In the event of any such resignation as L/C Issuer or Swing Line Lender, the Borrower shall be entitled to appoint from among the Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided , however , that no failure by the Borrower to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer or Swing Line Lender, as the case may be. If Bank of America resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Committed Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.04(c) ). If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Committed Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.05(c) . Upon the appointment of a successor L/C Issuer or Swing Line Lender, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as the case may be, and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.
10.07 Treatment of Certain Information; Confidentiality . Each of the Administrative Agent, the Lenders and the L/C Issuer agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, trustees, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or any Eligible Assignee invited to be a Lender pursuant to Section 2.16(c) or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender, the L/C Issuer or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower. For purposes of this Section, “Information” means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the L/C Issuer on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary, provided that, in the case of information received from the Borrower or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
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Each of the Administrative Agent, the Lenders and the L/C Issuer acknowledges that (a) the Information may include material non-public information concerning the Borrower or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including United States federal and state securities Laws.
10.08 Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender, the L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, after obtaining the prior written consent of the Administrative Agent, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the L/C Issuer or any such Affiliate to or for the credit or the account of the Borrower or any other Loan Party against any and all of the obligations of the Borrower or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or the L/C Issuer, irrespective of whether or not such Lender or the L/C Issuer shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower or such Loan Party may be contingent or unmatured or are owed to a branch or office of such Lender or the L/C Issuer different from the branch or office holding such deposit or obligated on such indebtedness; provided, that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.18 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, the L/C Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the L/C Issuer or their respective Affiliates may have. Each Lender and the L/C Issuer agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.
10.09 Interest Rate Limitation . Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “ Maximum Rate ”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.
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10.10 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01 , this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Agreement.
10.11 Survival of Representations and Warranties. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.
10.12 Severability . If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 10.12 , if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, the L/C Issuer or the Swing Line lender, as applicable, then such provisions shall be deemed to be in effect only to the extent not so limited.
10.13 Replacement of Lenders. If (a) any Lender requests compensation under Section 3.04, (b) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, (c) if any Lender is a Defaulting Lender, or (d) any Lender determines that it is unlawful for such Lender (but not the other Lenders generally) to make, maintain or fund Eurocurrency Rate Loans, or to determine or charge interest based upon the Eurocurrency Rate as set forth in Section 3.02, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:
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(a) the Borrower shall have paid to the Administrative Agent the assignment fee specified in Section 10.06(b) ;
(b) such Lender shall have received payment of an amount equal to 100% of the outstanding principal of its Loans and L/C Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05 ) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);
(c) in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01 , such assignment will result in a reduction in such compensation or payments thereafter; and
(d) such assignment does not conflict with applicable Laws.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.
10.14 Governing Law; Jurisdiction; Etc.
(a) GOVERNING LAW . THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CONNECTICUT.
(b) SUBMISSION TO JURISDICTION . EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF CONNECTICUT AND OF THE UNITED STATES DISTRICT COURT SITTING IN THE STATE OF CONNECTICUT, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH CONNECTICUT STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT (I) THE ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION OR (II) THE BORROWER OR ANY OTHER LOAN PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE ADMINISTRATIVE AGENT, THE L/C ISSUER OR ANY LENDER OR ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION.
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(c) WAIVER OF VENUE . EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) SERVICE OF PROCESS . EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02 . NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
10.15 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
10.16 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower and each other Loan Party acknowledges and agrees , and acknowledges its Affiliates’ understanding , that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent are arm’s-length commercial transactions between the Borrower , each other Loan Party and their respective Affiliates, on the one hand, and the Administrative Agent, on the other hand, (B) each of the Borrower and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower , any other Loan Party or any of their respective Affiliates, or any other Person and (B) the Administrative Agent has no obligation to the Borrower , any other Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent and its Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower, the other Loan Parties and their respective Affiliates, and the Administrative Agent has no obligation to disclose any of such interests to the Borrower , any other Loan Party or any of their respective Affiliates. To the fullest extent permitted by law, each of the Borrower and the other Loan Parties hereby waives and releases any claims that it may have against the Administrative Agent with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
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10.17 Electronic Execution of Assignments and Certain Other Documents. The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption or in any amendment or other modification hereof (including waivers and consents) shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
10.18 USA PATRIOT Act. Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Act. The Borrower shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.
10.19 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of Borrower in respect of any such sum due from it to the Administrative Agent or any Lender hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “ Judgment Currency ”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “ Agreement Currency ”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent or such Lender, as the case may be, of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent or such Lender, as the case may be, may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or any Lender from Borrower in the Agreement Currency, Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Lender, as the case may be, against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or any Lender in such currency, the Administrative Agent or such Lender, as the case may be, agrees to return the amount of any excess to Borrower (or to any other Person who may be entitled thereto under applicable law).
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10.20 PREJUDGMENT REMEDY WAIVER . THE BORROWER HEREBY REPRESENTS, WARRANTS AND ACKNOWLEDGES THAT THE FINANCING EVIDENCED HEREBY IS A COMMERCIAL TRANSACTION WITHIN THE MEANING OF CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED. THE BORROWER HEREBY WAIVES ITS RIGHT TO NOTICE AND PRIOR COURT HEARING OR COURT ORDER UNDER CONNECTICUT GENERAL STATUTES SECTIONS 52-278A ET. SEQ. AS AMENDED OR UNDER ANY OTHER STATE OR FEDERAL LAW WITH RESPECT TO ANY AND ALL PREJUDGMENT REMEDIES THE ADMINISTRATIVE AGENT OR ANY LENDER MAY EMPLOY TO ENFORCE THEIR RESPECTIVE RIGHTS AND REMEDIES HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS. MORE SPECIFICALLY, THE BORROWER ACKNOWLEDGES THAT UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT THE ADMINISTRATIVE AGENT’S OR ANY LENDER’S ATTORNEY MAY, PURSUANT TO, AND IN ACCORDANCE WITH, CONN. GEN. STATE. §52-278F, ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT SECURING A COURT ORDER PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER. THE BORROWER ACKNOWLEDGES AND RESERVES ITS RIGHT TO NOTICE AND A HEARING SUBSEQUENT TO THE ISSUANCE OF A WRIT FOR A PREJUDGMENT REMEDY AS AFORESAID AND THE ADMINISTRATIVE AGENT AND EACH LENDER ACKNOWLEDGES THE BORROWER’S RIGHT TO SAID HEARING SUBSEQUENT TO THE ISSUANCE OF SAID WRIT. THE BORROWER FURTHER WAIVES ITS RIGHTS TO REQUEST THAT THE ADMINISTRATIVE AGENT OR ANY LENDER POST A BOND, WITH OR WITHOUT SURETY, TO PROTECT THE BORROWER AGAINST DAMAGES THAT MAY BE CAUSED BY ANY PREJUDGMENT REMEDY SOUGHT OR OBTAINED BY THE ADMINISTRATIVE AGENT OR SUCH LENDER.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
LYDALL, INC. | ||
By: | /S/ Dale G. Barnhart | |
Name: Dale G. Barnhart | ||
Title: President & CEO |
bank of america, n.a. , as | ||
Administrative Agent | ||
By: | /S/ Christopher T. Phelan | |
Name: Christopher T. Phelan | ||
Title: Senior Vice President |
bank of america, n.a. , as a Lender, L/C Issuer and Swing Line Lender | ||
By: | /S/ Christopher T. Phelan | |
Name: Christopher T. Phelan | ||
Title: Senior Vice President |
Wells fargo bank, n.a. , as a Lender | ||
By: | /S/ Barbara Keegan | |
Name: Barbara Keegan | ||
Title: Senior Vice President |
Webster bank, national association , as a Lender | ||
By: | /S/ Matthew Riley | |
Name: Matthew Riley | ||
Title: Senior Vice President |
Exhibit 10.3
AMENDED AND RESTATED GUARANTY
This AMENDED AND RESTATED GUARANTY (this “ Guaranty ”), dated as of February 18, 2014, by LYDALL THERMAL/ACOUSTICAL, INC. , a Delaware corporation (“ Lydall Thermal ”), LYDALL FILTRATION/SEPARATION, INC. , a Connecticut corporation (“ Lydall Filtration ”), and LYDALL INTERNATIONAL, INC. , a Delaware corporation (“ Lydall International ” and each of Lydall Thermal, Lydall Filtration, and Lydall International is sometimes individually referred to herein as a “ Guarantor ”, and all three such entities are herein collectively referred to as, the “ Guarantors ”), is made in favor of Bank of America, N.A. , a national banking association (“ Bank of America ”), on behalf of itself and as administrative agent (in such capacity, the “ Agent ”) for the ratable benefit of itself, and the other lenders that are a party to the Credit Agreement (defined below) (collectively with Bank of America, the “ Lenders ”).
WHEREAS, the Guarantors are parties to a Guaranty (the “ Original Guaranty ”) dated as of June 16, 2011 made in favor of Bank of America, N.A. (in such capacity, “ BofA ”) pursuant to which the Guarantors guaranteed the obligations of Lydall, Inc. (the “ Company ”) to BofA under that certain Credit Agreement dated as of June 16, 2011 between the Company and BofA (the “ Original Credit Agreement ”) and the other Loan Documents, as defined in the Original Credit Agreement (the “ Original Loan Documents ”);
WHEREAS, pursuant to that certain Assignment dated as of the date hereof by and among BofA, the Agent, the Company and the Guarantors, BofA has assigned the Original Credit Agreement and the Original Loan Documents (including the Original Guaranty) to the Agent; and
WHEREAS, the Company, the Agent, the Guarantors, and the Lenders have amended and restated the Credit Agreement and the other Original Loan Documents and desire to amend and restate the Original Guaranty in its entirety as provided herein.
NOW THEREFORE, in consideration of the premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby amend and restate the Original Guaranty in its entirety as follows:
WHEREAS, LYDALL, INC. , a Delaware corporation (the “ Company ”), has entered into that certain Amended and Restated Credit Agreement dated as of even date herewith (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “ Credit Agreement ”), by and among the Company, the Lenders, and the Agent, pursuant to which the Lenders, subject to the terms and conditions contained therein, are to make loans or otherwise to extend credit or provide financial accommodations to the Company;
WHEREAS, each Guarantor is a subsidiary of the Company;
WHEREAS, each Guarantor expects to receive substantial direct and indirect benefits from the extensions of credit to the Company by the Lenders pursuant to the Credit Agreement (which benefits are hereby acknowledged);
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WHEREAS, it is a condition precedent to the Lenders’ making any loans or otherwise extending credit to the Company under the Credit Agreement that each Guarantor shall have executed and delivered this Guaranty to the Agent; and
WHEREAS, each Guarantor wishes to guaranty the Company’s obligations to the Lenders under or in respect of the Credit Agreement as provided herein.
NOW, THEREFORE, each Guarantor hereby agrees with the Agent as follows:
1. Definitions . The term “Obligations” and all other capitalized terms used herein without definition shall have the respective meanings provided therefor in the Credit Agreement.
2. Guaranty of Payment and Performance . Each Guarantor hereby jointly and severally guarantees to the Agent the full and punctual payment when due (whether at stated maturity, by required pre-payment, by acceleration or otherwise), as well as the performance, of all of the Obligations including all such which would become due but for the operation of the automatic stay pursuant to §362(a) of the Federal Bankruptcy Code and the operation of §§502(b) and 506(b) of the Federal Bankruptcy Code. This Guaranty is an absolute, unconditional and continuing guaranty of the full and punctual payment and performance of all of the Obligations and not of their collectibility only and is in no way conditioned upon any requirement that the Lenders first attempt to collect any of the Obligations from the Company or resort to any collateral security or other means of obtaining payment. Should the Company default in the payment or performance of any of the Obligations which default remains continuing beyond any applicable grace period, the obligations of each Guarantor hereunder with respect to such Obligations in default shall become immediately due and payable to the Agent, without demand or notice of any nature, all of which are expressly waived by each Guarantor. Payments by the Guarantors hereunder may be required by the Agent on any number of occasions.
3. Guarantors’ Agreement to Pay Enforcement Costs, etc. Each Guarantor further jointly and severally agrees, as the principal obligor and not as a guarantor only, to pay to the Agent, on demand, all costs and expenses (including court costs and reasonable legal expenses) incurred or expended by the Agent in connection with the Obligations, this Guaranty and the enforcement thereof, together with interest on amounts recoverable under this §3 from the time when such amounts become due until payment, whether before or after judgment, at the applicable rate of interest for overdue principal set forth in the Credit Agreement, provided that if such interest exceeds the maximum amount permitted to be paid under applicable law, then such interest shall be reduced to such maximum permitted amount.
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4. Waivers by Guarantors; Agent’s Freedom to Act . Each Guarantor agrees that the Obligations will be paid and performed strictly in accordance with their respective terms, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Agent with respect thereto. Each Guarantor waives promptness, diligence, presentment, demand, protest, notice of acceptance, notice of any Obligations incurred and all other notices of any kind, all defenses which may be available by virtue of any valuation, stay, moratorium law or other similar law now or hereafter in effect, any right to require the marshalling of assets of the Company or any other entity or other person primarily or secondarily liable with respect to any of the Obligations, and all suretyship defenses generally. Without limiting the generality of the foregoing, each Guarantor agrees to the provisions of any instrument evidencing, securing or otherwise executed in connection with any Obligation and agrees that the obligations of each Guarantor hereunder shall not be released or discharged, in whole or in part, or otherwise affected by (i) the failure of the Agent to assert any claim or demand or to enforce any right or remedy against the Company or any other entity or other person primarily or secondarily liable with respect to any of the Obligations; (ii) any extensions, compromise, refinancing, consolidation or renewals of any Obligation; (iii) any change in the time, place or manner of payment of any of the Obligations or any rescissions, waivers, compromise, refinancing, consolidation, amendments or modifications of any of the terms or provisions of the Credit Agreement, the Note, the other Loan Documents or any other agreement evidencing, securing or otherwise executed in connection with any of the Obligations; (iv) the addition, substitution or release of any entity or other person primarily or secondarily liable for any Obligation, (v) the adequacy of any rights which the Agent may have against any collateral security or other means of obtaining repayment of any of the Obligations; (vi) the impairment of any collateral securing any of the Obligations, including without limitation the failure to perfect or preserve any rights which the Agent might have in such collateral security or the substitution, exchange, surrender, release, loss or destruction of any such collateral security; or (vii) any other act or omission other than an express waiver, release or discharge which might in any manner, or to any extent, vary the risk of any Guarantor or otherwise operate as a release or discharge of any Guarantor, all of which may be done without notice to any Guarantor. To the fullest extent permitted by law, each Guarantor hereby expressly waives any and all rights or defenses arising by reason of (A) any “one action” or “anti-deficiency” law which would otherwise prevent the Agent from bringing any action, including any claim for a deficiency, or exercising any other right or remedy (including any right of set-off), against any Guarantor before or after the Agent’s commencement or completion of any foreclosure action, whether judicially, by exercise of power of sale or otherwise, or (B) any other law which in any other way would otherwise require any election of remedies by the Agent.
5. Unenforceability of Obligations Against Company . If for any reason the Company has no legal existence or is under no legal obligation to discharge any of the Obligations, or if any of the Obligations have become irrecoverable from the Company by reason of the Company’s insolvency, bankruptcy or reorganization or by other operation of law or for any other reason, this Guaranty shall nevertheless be binding on each Guarantor, jointly and severally, to the same extent as if such Guarantor at all times had been the principal obligor on all such Obligations. In the event that acceleration of the time for payment of any of the Obligations is stayed upon the insolvency, bankruptcy or reorganization of the Company, or for any other reason, all such amounts otherwise subject to acceleration under the terms of the Credit Agreement , the Note, the other Loan Documents or any other agreement evidencing, securing or otherwise executed in connection with any Obligation shall be immediately due and payable by the Guarantors.
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6. Subrogation; Subordination .
6.1. Waiver of Rights Against Company . Until the final payment and performance in full of all of the Obligations and any and all other obligations of the Company to the Agent or any affiliate of the Agent, (other than contingent indemnification obligations for which no claim has been asserted), none of the Guarantors shall exercise any rights against the Company arising as a result of payment by any Guarantor hereunder, by way of subrogation, reimbursement, restitution, contribution or otherwise, or prove any claim in competition with the Agent or such affiliate in respect of any payment hereunder in any bankruptcy, insolvency or reorganization case or proceedings of any nature; none of the Guarantors will claim any setoff, recoupment or counterclaim against the Company in respect of any liability of such Guarantor to the Company; and each Guarantor waives any benefit of and any right to participate in any collateral security which may be held by the Agent or any such affiliate.
6.2. Subordination . The payment of any amounts due with respect to any indebtedness of the Company now or hereafter owed to any Guarantor is hereby subordinated to the prior payment in full of all of the Obligations and any and all other obligations of the Company to the Agent or any affiliate of the Agent (other than contingent indemnification obligations for which no claim has been asserted); provided, however, that each Guarantor shall be permitted to receive payments of any of the Borrower’s obligations and indebtedness to such Guarantor so long as no Event of Default exists at such time. Each Guarantor agrees that, during the continuance of any Event of Default in the payment or performance of any of the Obligations, such Guarantor will not demand, sue for or otherwise attempt to collect any such indebtedness of the Company to such Guarantor. If, notwithstanding the foregoing sentence, during the continuance of any Event of Default, any Guarantor shall collect, enforce or receive any amounts in respect of such indebtedness, such amounts shall be collected, enforced and received by such Guarantor as trustee for the Agent and be paid over to the Agent on account of the Obligations without affecting in any manner the liability of such Guarantor under the other provisions of this Guaranty.
6.3. Provisions Supplemental . The provisions of this §6 shall be supplemental to, and not in derogation of, any rights and remedies of the Agent or any affiliate of the Agent under any separate subordination agreement which the Agent or such affiliate may at any time and from time to time enter into with any Guarantor.
7. Security; Setoff .
Each Guarantor hereby grants to the Agent, for the ratable benefit of the Lenders, a lien, security interest and a right of setoff as security for all liabilities and obligations to the Agent, whether now existing or hereafter arising, upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of the Agent or any entity under the control of the Agent, or in transit to any of them. At any time during the continuance of an Event of Default, without demand or notice, the Agent may set off the same or any part thereof and apply the same to any liability or obligation of such Guarantor under this Guaranty or any other Loan Document even though unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE THE AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. The Agent shall not be required to marshal any present or future security for, or guarantees of, the Obligations or to resort to any such security or guarantee in any particular order and each Guarantor waives, to the fullest extent that it lawfully can, (a) any right it might have to require the Agent to pursue any particular remedy before proceeding against it and (b) any right to the benefit of, or to direct the application of the proceeds of any collateral until the Obligations are paid in full.
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8. Further Assurances . Each Guarantor agrees that it will from time to time, at the request of the Agent, provide to the Agent such Guarantor’s most recent audited and unaudited balance sheets and related statements of income and changes in financial condition (prepared on a consolidated basis with such Guarantor’s subsidiaries, if any) to the extent not otherwise provided to the Agent, and such other information relating to the business and affairs of such Guarantor as the Agent may reasonably request.
Each Guarantor agrees to do all such things and execute all such documents as the Agent may reasonably consider necessary or desirable to give full effect to this Guaranty and to perfect and preserve the rights and powers of the Agent hereunder. Each Guarantor acknowledges and confirms that such Guarantor has established such Guarantor’s own adequate means of obtaining from the Company on a continuing basis all information desired by such Guarantor concerning the financial condition of the Company and that such Guarantor will look to the Company and not to the Agent in order for such Guarantor to keep adequately informed of changes in the Company’s financial condition.
9. Termination; Reinstatement . This Guaranty shall remain in full force and effect until the Agent is given written notice from each Guarantor of such Guarantor’s intention to discontinue this Guaranty, notwithstanding any intermediate or temporary payment or settlement of the whole or any part of the Obligations. No such notice shall be effective unless received and acknowledged by an officer of the Agent at the address of the Agent for notices set forth in §10.02 of the Credit Agreement. No such notice shall affect any rights of the Agent or of any affiliate of the Agent hereunder, including without limitation the rights set forth in §§4 and 6 hereof, with respect to any Obligations incurred or accrued prior to the receipt of such notice or any Obligations incurred or accrued pursuant to any contract or commitment in existence prior to such receipt, and all checks, drafts, notes, instruments (negotiable or otherwise) and writings made by or for the account of the Company and drawn on the Agent or any of its agents purporting to be dated on or before the date of receipt of such notice, although presented to and paid or accepted by the Agent after that date, shall form part of the Obligations. This Guaranty shall continue to be effective or be reinstated, notwithstanding any such notice, if at any time any payment made or value received with respect to any Obligation is rescinded or must otherwise be returned by the Agent upon the insolvency, bankruptcy or reorganization of the Company, or otherwise, all as though such payment had not been made or value received.
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10. Successors and Assigns . This Guaranty shall be binding upon each Guarantor and each Guarantor’s successors and assigns, and shall inure to the benefit of, and be enforceable by, the Agent and its successors and transferees and assigns permitted pursuant to the Credit Agreement. Without limiting the generality of the foregoing sentence, the Agent may assign or otherwise transfer the Credit Agreement, the Note, the other Loan Documents or any other agreement or note held by it evidencing, securing, or otherwise executed in connection with, the Obligations, or sell participations in any interest therein, to any other entity or other person all in accordance with the provisions of the Credit Agreement, and such other entity or other person shall thereupon become vested, to the extent set forth in the agreement evidencing such assignment, transfer or participation, with all the rights in respect thereof granted to the Agent herein.
11. Amendments and Waivers . No amendment or waiver of any provision of this Guaranty nor consent to any departure by any Guarantor therefrom shall be effective unless the same shall be in writing and signed by the Agent; provided, that no amendment hereto shall be effective without the writing and signature of the Guarantors and the Agent. No failure on the part of the Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.
12. Notices . Any notice required or permitted by this Agreement shall be in writing and shall be given: (a) by personal delivery, (b) by certified mail, return receipt requested, or (c) by nationally recognized overnight courier (e.g., Federal Express), or (d) by electronic facsimile transmission (with confirmation of successful transmission) or by electronic mail (provided, however, that if a notice is given by facsimile or electronic mail, a copy of such notice shall also be delivered by one of the other delivery methods set forth in clauses (a), (b) and (c) above), in each case addressed to such party at its address indicated below:
(a) | if to any Guarantor, |
Lydall Thermal/Acoustical, Inc.
Lydall Filtration/Separation, Inc.
and Lydall International, Inc.
c/o Lydall, Inc.
One Colonial Road
Manchester, CT 06042
Attention: General Counsel
Telephone: (860) 327-0230
Telecopier: (860) 646-8847
Email: cmdaniel@lydall.com
with a copy to:
Murtha Cullina LLP
CityPlace I
185 Asylum Street
Hartford, CT 06103
Attn: Frank J. Saccomandi, III Esq.
Telephone: (860) 240-6043
Telecopier: (860) 240-6150
Email: FSaccomandi@murthalaw.com
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(b) | if to the Agent, |
Bank of America, N.A.
CityPlace I
185 Asylum Street
Hartford, CT 06103
Attn: Christopher T. Phelan, Senior Vice President
Telephone: (860) 952-7492
Telecopier: (860) 952-7515
Email: christopher.phelan@baml.com
with a copy to:
Shipman & Goodwin LLP
One Constitution Plaza
Hartford, CT 06103-1919
Attn: James C. Schulwolf, Esq.
Telephone: (860) 251-5949
Telecopier: (860) 251-5211
Email: jschulwolf@goodwin.com
or to any other address as the parties hereto may designate by ten (10) days advance written notice to the other parties. Notices and other communications delivered by personal delivery or nationally recognized overnight courier service, mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by electronic facsimile or electronic mail shall be deemed to have been given when sent (except that, if not received during normal business hours of the recipient, shall be deemed to have been given at the opening of business on the next business day for such recipient after such receipt).
13. Governing Law; Consent to Jurisdiction .
THIS GUARANTY IS INTENDED TO TAKE EFFECT AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT . Each Guarantor agrees that any suit for the enforcement of this Guaranty may be brought in the courts of the State of Connecticut or any federal court sitting therein and consents to the nonexclusive jurisdiction of such court and to the service of process in any such suit being made upon such Guarantor by certified or registered mail at the address specified by reference in §12 hereof. Each Guarantor hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit was brought in an inconvenient forum.
14. Waiver of Jury Trial . EACH GUARANTOR AND THE AGENT MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY OR ANY OTHER DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY . Except as prohibited by law, each Guarantor hereby waives any right which it may have to claim or recover in any litigation referred to in the preceding sentence any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages. Each Guarantor (i) certifies that neither the Agent nor any representative, agent or attorney of the Agent has represented, expressly or otherwise, that the Agent would not, in the event of litigation, seek to enforce the foregoing waivers and (ii) acknowledges that, in entering into the Credit Agreement and the other Loan Documents to which the Agent is a party, the Agent is relying upon, among other things, the waivers and certifications contained in this §14.
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15. Prejudgment Remedy Waiver; Other Waivers . EACH GUARANTOR HEREBY REPRESENTS, WARRANTS AND ACKNOWLEDGES THAT THE FINANCING EVIDENCED HEREBY IS A COMMERCIAL TRANSACTION WITHIN THE MEANING OF CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED. EACH GUARANTOR HEREBY WAIVES ITS RIGHT TO NOTICE AND PRIOR COURT HEARING OR COURT ORDER UNDER CONNECTICUT GENERAL STATUTES SECTIONS 52-278a ET . SEQ . AS AMENDED OR UNDER ANY OTHER STATE OR FEDERAL LAW WITH RESPECT TO ANY AND ALL PREJUDGMENT REMEDIES THE AGENT MAY EMPLOY TO ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS. MORE SPECIFICALLY, EACH GUARANTOR ACKNOWLEDGES THAT UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT THE AGENT’S ATTORNEY MAY, PURSUANT TO, AND IN ACCORDANCE WITH, CONN. GEN. STAT. §52-278f, ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT SECURING A COURT ORDER PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER. EACH GUARANTOR ACKNOWLEDGES AND RESERVES ITS RIGHT TO NOTICE AND A HEARING SUBSEQUENT TO THE ISSUANCE OF A WRIT FOR PREJUDGMENT REMEDY AS AFORESAID AND THE AGENT ACKNOWLEDGES EACH GUARANTOR’S RIGHT TO SAID HEARING SUBSEQUENT TO THE ISSUANCE OF SAID WRIT. EACH GUARANTOR FURTHER WAIVES ITS RIGHTS TO REQUEST THAT THE AGENT POST A BOND, WITH OR WITHOUT SURETY, TO PROTECT SUCH GUARANTOR AGAINST DAMAGES THAT MAY BE CAUSED BY ANY PREJUDGMENT REMEDY SOUGHT OR OBTAINED BY THE AGENT.
16. Miscellaneous . This Guaranty constitutes the entire agreement of the Guarantors with respect to the matters set forth herein. The rights and remedies herein provided are cumulative and not exclusive of any remedies provided by law or any other agreement, and this Guaranty shall be in addition to any other guaranty of or collateral security for any of the Obligations. The invalidity or unenforceability of any one or more sections of this Guaranty shall not affect the validity or enforceability of its remaining provisions. Captions are for the ease of reference only and shall not affect the meaning of the relevant provisions. The meanings of all defined terms used in this Guaranty shall be equally applicable to the singular and plural forms of the terms defined.
[Signature page follows]
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed and delivered as of the date first above written.
LYDALL THERMAL/ACOUSTICAL, INC. | ||
By: | /S/ Dale G. Barnhart | |
Name: Dale G. Barnhart | ||
Title: President | ||
LYDALL filtration/separation, INC. | ||
By: | /S/ Dale G. Barnhart | |
Name: Dale G. Barnhart | ||
Title: President | ||
LYDALL INTERNATIONAL, INC. | ||
By: | /S/ Dale G. Barnhart | |
Name: Dale G. Barnhart | ||
Title: President |
[Signature Page to Amended and Restated Guaranty]
Acknowledged and Agreed to by:
BANK OF AMERICA, N.A., as Administrative Agent | ||
By: | /S/ Christopher T. Phelan | |
Name: | Christopher T. Phelan | |
Title: | Senior Vice President |
[Signature Page to Amended and Restated Guaranty]
Exhibit 10.4
AMENDED AND RESTATED SECURITY AGREEMENT
THIS SECURITY AGREEMENT , dated as of February 18, 2014 is made by and among LYDALL, INC. , a Delaware corporation (the “ Borrower ”) and BANK OF AMERICA, N.A., a national banking association (“ Bank of America ”) on behalf of itself and as Administrative Agent (in such capacity, the “ Agent ”) for the ratable benefit of itself and the other lenders that are a party to the Credit Agreement (defined below) (collectively with Bank of America, the “ Lenders ”).
WHEREAS, the Borrower and Bank of America, N.A. (in such capacity, “ BofA ”) are parties to a Security Agreement (the “ Original Security Agreement ”) dated as of June 16, 2011 pursuant to which the Borrower granted BofA a security interest in certain assets of the Borrower as security for the obligations of the Borrower under that certain Credit Agreement dated as of June 16, 2011 between the Borrower and BofA (the “ Original Credit Agreement ”) and the other Loan Documents, as defined in the Original Credit Agreement (the “ Original Loan Documents ”);
WHEREAS, pursuant to that certain Assignment dated as of the date hereof by and among BofA, the Agent, the Borrower and the Guarantors, as defined in the Original Credit Agreement, BofA has assigned the Original Credit Agreement and the Original Loan Documents (including the Original Security Agreement) to the Agent; and
WHEREAS, the Borrower, the Agent, the Guarantors and the Lenders have amended and restated the Credit Agreement and the other Original Loan Documents and desire to amend and restate the Original Security Agreement in its entirety as provided herein.
NOW THEREFORE, in consideration of the premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby amend and restate the Original Security Agreement in its entirety as follows:
WHEREAS, the Agent, the Lenders and the Borrower have entered into that certain Amended and Restated Credit Agreement dated as of even date herewith (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “ Credit Agreement ”), pursuant to which the Lenders, subject to the terms and conditions contained therein, are to make loans or otherwise to extend credit or provide financial accommodations to the Borrower;
WHEREAS, it is a condition precedent to the Lenders making any loans or otherwise extending credit or providing financial accommodations to the Borrower under the Credit Agreement that the Borrower execute and deliver to the Agent, for the ratable benefit of the Lenders, a security agreement in substantially the form hereof; and
WHEREAS, the Borrower wishes to grant a security interest in favor of the Agent, for the ratable benefit of the Lenders, as herein provided.
NOW, THEREFORE, in consideration of the promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions . All capitalized terms used herein without definitions shall have the respective meanings provided therefor in the Credit Agreement. The term “State,” as used herein, means the State of Connecticut. All terms defined in the Uniform Commercial Code of the State and used herein shall have the same definitions herein as specified therein. However, if a term is defined in Article 9 of the Uniform Commercial Code of the State differently than in another Article of the Uniform Commercial Code of the State, the term has the meaning specified in Article 9. The term “Obligations,” as used herein, shall have the meaning ascribed to it in the Credit Agreement.
2. Grant of Security Interest . The Borrower hereby grants to the Agent, for the ratable benefit of the Lenders, to secure the payment and performance in full of all of the Obligations, a security interest in and pledges and assigns the following properties, assets and rights of the Borrower, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof (all of the same being hereinafter called the “Collateral”): all assets including all personal and fixture property of every kind and nature, including without limitation all goods (including inventory, equipment and any accessions thereto), instruments (including promissory notes), documents, accounts (including health-care-insurance receivables), chattel paper (whether tangible or electronic), deposit accounts, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), commercial tort claims, securities and all other investment property, supporting obligations, any other contract rights or rights to the payment of money, insurance claims and proceeds, all general intangibles (including all payment intangibles), and all products and proceeds of the foregoing. Notwithstanding anything herein to the contrary, the term “Collateral” shall not include more than 65% of the equity interests of a first-tier Foreign Subsidiary (or more than 65% of the equity interests of a Domestic Subsidiary whose sole assets are the equity interests of Foreign Subsidiaries) or to the extent not yet paid to the Borrower or such Domestic Subsidiary to more than the corresponding proportion of dividends, distributions, interest and other payments with respect to more than 65% of such equity interests (such excluded assets herein called the “Excluded Assets”). The Agent acknowledges that the attachment of its security interest in any commercial tort claim as original collateral is subject to the Borrower’s compliance with § 4.7.
3. Authorization to File Financing Statements . The Borrower hereby irrevocably authorizes the Agent at any time and from time to time to file in any filing office in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as all assets or, as the case may be, all personal property of the Borrower or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform Commercial Code of the State or such jurisdiction specifically excluding, however, the Excluded Assets, or (ii) as being of an equal or lesser scope or with greater detail, and (b) provide any other information required by part 5 of Article 9 of the Uniform Commercial Code of the State or such other jurisdictions for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether the Borrower is an organization, the type of organization and any organizational identification number issued to the Borrower and, (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates. The Borrower agrees to furnish any such information to the Agent promptly upon the Agent’s request. The Borrower also ratifies its authorization for the Agent to have filed in any Uniform Commercial Code jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof.
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4. Other Actions . Further to insure the attachment, perfection and first priority of, and the ability of the Agent to enforce, the Agent’s security interest in the Collateral, the Borrower agrees, in each case at the Borrower’s expense, to take the following actions with respect to the following Collateral and without limitation on the Borrower’s other obligations contained in this Agreement:
4.1 . Promissory Notes and Tangible Chattel Paper . If the Borrower shall, now or at any time hereafter, hold or acquire any promissory notes or any tangible chattel paper individually having a face value in excess of $2,500,000 (each, a “Material Note” or “Material Tangible Chattel Paper”, as the case may be), the Borrower shall forthwith endorse, assign and deliver to the Agent each such Material Note or Material Chattel Paper, as the case may be, and, in each case of a required endorsement, assignment and delivery, accompanied by such instruments of transfer or assignment duly executed in blank as the Agent may from time to time specify.
4.2. Deposit Accounts . For each deposit account that the Borrower now or at any time hereafter opens or maintains, the Borrower shall, at the Agent’s request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Agent, either (a) cause the depositary bank to agree to comply, without further consent of the Borrower, at any time with instructions from the Agent to such depositary bank directing the disposition of funds from time to time credited to such deposit account, or (b) arrange for the Agent to become the customer of the depositary bank with respect to the deposit account, with the Borrower being permitted, only with the consent of the Agent, to exercise rights to withdraw funds from such deposit account. The Agent agrees with the Borrower that the Agent shall not give any such instructions or withhold any withdrawal rights from the Borrower, unless an Event of Default has occurred and is continuing, or, if effect were given to any withdrawal not otherwise permitted by the Loan Documents, would occur. The provisions of this paragraph shall not apply to (i) any deposit account for which the Borrower, the depositary bank and the Agent have entered into a cash collateral agreement specially negotiated among the Borrower, the depositary bank and the Agent for the specific purpose set forth therein, (ii) a deposit account for which the Agent is the depositary bank and is in automatic control, and (iii) any deposit accounts specially and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of the Borrower’s employees. Nothing in this Section 4.2 shall be construed to limit or otherwise derogate in any way the Borrower’s obligations under Section 6.15 of the Credit Agreement.
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4.3. Investment Property . Subject to the limitations set forth in Section 2 hereof, if the Borrower shall now or at any time hereafter hold or acquire any certificated securities of any Subsidiary, the Borrower shall forthwith endorse, assign and deliver the same to the Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Agent may from time to time specify. If any securities now or hereafter acquired by the Borrower are (a) (i) uncertificated or (ii) certificated and issued by a Person other than a Subsidiary, (b) issued to the Borrower or its nominee directly by the issuer thereof, and (c) have a principal amount or value in excess of $5,000,000 in the aggregate with respect to any one issuer (each a “Material Security”), the Borrower shall promptly notify the Agent thereof and, at the Agent’s request and option pursuant to an agreement in a form and substance reasonably satisfactory to the Agent, either (A) cause the issuer to agree to comply, without further consent of the Borrower, or such nominee, at any time with instructions from the Agent as to each Material Security or (B) arrange for the Agent to become the registered owner of the Material Securities. Subject to the limitations set forth in Section 2 hereof, if any securities, whether certificated or uncertificated, or other investment property now or hereafter acquired by the Borrower is held by the Borrower or its nominee through a securities intermediary or commodity intermediary and constitute a Material Security, the Borrower shall promptly notify the Agent thereof and, at the Agent’s request and option, the Borrower shall, pursuant to an agreement in form and substance reasonably satisfactory to the Agent, either (i) cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply, in each case without further consent of the Borrower or such nominee, at any time with entitlement orders or other instructions from the Agent to such securities intermediary as to such a Material Security, or (as the case may be) to apply any value distributed on account of any commodity contract as directed by the Agent to such commodity intermediary, or (ii) in the case of a Material Security held through a securities intermediary, arrange for the Agent to become the entitlement holder with respect to such a Material Security, with the Borrower being permitted, only with the consent of the Agent, to exercise rights to withdraw or otherwise deal with such investment property. The Agent agrees with the Borrower that the Agent shall not give any such entitlement orders or instructions or directions to any such issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by the Borrower, unless an Event of Default has occurred and is continuing, or, after giving effect to any such investment and withdrawal rights not otherwise permitted by the Loan Documents, would occur. The provisions of this paragraph shall not apply to any financial assets credited to a securities account for which the Agent is the securities intermediary.
4.4. Collateral in the Possession of a Bailee . If any Collateral having an aggregate value of more than $1,000,000 is now or at any time hereafter in the possession of a bailee at a particular location, the Borrower shall promptly notify the Agent thereof and, at the Agent’s request and option, shall use reasonable best efforts to obtain an acknowledgement from the bailee, in form and substance reasonably satisfactory to the Agent, that the bailee holds such Collateral for the benefit of the Agent and such bailee’s agreement to comply, without further consent of the Borrower, at any time with instructions of the Agent as to such Collateral. The Agent agrees with the Borrower that the Agent shall not give any such instructions unless an Event of Default has occurred and is continuing or would occur after taking into account any action by the Borrower with respect to the bailee.
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4.5. Electronic Chattel Paper and Transferable Records . If the Borrower, now or at any time hereafter, holds or acquires an interest in any electronic chattel paper, any electronic document or any “transferrable record,” individually having a face value in excess of $2,500,000 (each a “Material Electronic Paper”), the Borrower shall (i) promptly notify the Agent thereof and, (ii) at the request and option of the Agent, take such action as the Agent may reasonably request to vest in the Agent control of such Material Electronic Paper, under Section 9-105 of the Uniform Commercial Code of the State or any other relevant jurisdiction, Section 7-106 of the Uniform Commercial Code of the State or any other relevant jurisdiction, Section 201 of the federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, as applicable. The Agent agrees with the Borrower that the Agent will arrange, pursuant to procedures satisfactory to the Agent and so long as such procedures will not result in the Agent’s loss of control, for the Borrower to make alterations to the electronic chattel paper, electronic document or transferable record permitted under UCC Section 9-105, UCC Section 7-106, or, as the case may be, Section 201 of the federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act for a party in control to make without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by the Borrower with respect to such electronic chattel paper, electronic document or transferrable record. The provisions of this Section 4.6 relating to electronic documents and “control” under UCC Section 7-106 apply in the event that the 2003 revisions to Article 7, with amendments to Article 9, of the Uniform Commercial Code, in substantially the form approved by the American Law Institute and the National Conference of Commissioners on Uniform State Laws, are now or hereafter adopted and become effective in the State or in any other relevant jurisdiction.
4.6. Letter-of-Credit Rights . If the Borrower is, now or at any time hereafter, a beneficiary under a letter of credit now or hereafter individually having a maximum amount that may be drawn in excess of $2,500,000 (each, a “Material Letter of Credit”), the Borrower shall promptly notify the Agent thereof and, at the request and option of the Agent, the Borrower shall, pursuant to an agreement in form and substance satisfactory to the Agent, either (A) arrange for the issuer and any confirmer or other nominated person of each such Material Letter of Credit, to consent to an assignment to the Agent of the proceeds of such Material Letter of Credit or (B) arrange for the Agent to become the transferee beneficiary of such Material Letter of Credit.
4.7 Commercial Tort Claims . If the Borrower shall now or at any time hereafter hold or acquire a commercial tort claim with respect to which the Borrower has commenced legal action by filing a lawsuit in court and having a value reasonably estimated by the Borrower to be in excess of $5,000,000, the Borrower shall promptly notify the Agent in a writing signed by the Borrower of the particulars thereof, and grant to the Agent in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Agent. Such Notice shall be deemed to be an amendment to the Borrower’s Perfection Certificate with respect to such commercial tort claim.
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4.8. Other Actions as to any and all Collateral . The Borrower further agrees, upon request of the Agent and at the Agent’s option, to take any and all other actions as the Agent may reasonably determine to be necessary or useful for the attachment, perfection and first priority of (subject, however, to Liens permitted under the Credit Agreement), and the ability of the Agent to enforce, the Agent’s security interest in any and all of the Collateral, including, without limitation, (a) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the Uniform Commercial Code, to the extent, if any, that the Borrower’s signature thereon is required therefor, (b) causing the Agent’s name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of the Agent to enforce, the Agent’s security interest in such Collateral, (c) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of the Agent to enforce, the Agent’s security interest in such Collateral, (d) obtaining governmental and other third party waivers, consents and approvals in form and substance satisfactory to the Agent, including, without limitation, any consent of any licensor, lessor or other person obligated on Collateral, (e) using reasonable best efforts to obtain waivers from mortgagees and landlords in form and substance satisfactory to the Agent and in accordance with the terms of the Credit Agreement, and (f) taking all actions under any earlier versions of the Uniform Commercial Code or under any other law, as reasonably determined by the Agent to be applicable in any relevant Uniform Commercial Code or other jurisdiction, including any foreign jurisdiction.
5. Relation to Other Security Documents . The provisions of this Agreement supplement the provisions of any real estate mortgage or deed of trust, if any, granted by the Borrower to the Agent and which secures the payment or performance of any of the Obligations. Nothing contained in any such real estate mortgage or deed of trust shall derogate from any of the rights or remedies of the Agent hereunder.
6. Representations and Warranties Concerning Borrower’s Legal Status . The Borrower represents and warrants to the Agent as follows: (a) the Borrower’s exact legal name is that indicated on the signature page hereof, (b) the Borrower is an organization of the type, and is organized in the jurisdiction, set forth on its Perfection Certificate dated the date hereof and attached hereto as Exhibit A (the “Perfection Certificate”), (c) the Perfection Certificate accurately sets forth the organizational identification number or accurately states that the Borrower has none, (d) the Perfection Certificate accurately sets forth the Borrower’s place of business or, if more than one, its chief executive office, as well as the Borrower’s mailing address, if different, and (e) all other information set forth on the Perfection Certificate pertaining to the Borrower is accurate and complete in all material respects.
7. Covenants Concerning Borrower’s Legal Status . The Borrower covenants with the Agent as follows: (a) without providing at least thirty (30) days prior written notice to the Agent, the Borrower will not change its name, its place of business or, if more than one, chief executive office, or its mailing address or organizational identification number if it has one, (b) if the Borrower does not have an organizational identification number and later obtains one, the Borrower will promptly notify the Agent of such organizational identification number, and (c) the Borrower will not change its type of organization, jurisdiction of organization or other legal structure except as permitted in the Credit Agreement.
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8. Representations and Warranties Concerning Collateral Etc . The Borrower further represents and warrants to the Agent as follows: (a) the Borrower is the owner of, or has other rights in, or power to transfer, the Collateral, free from any right or claim of any person or any adverse lien, security interest or other encumbrance, except for the security interest created by this Agreement and Permitted Liens, (b) none of the Collateral constitutes, or is the proceeds of, “farm products” as defined in §9-102(a)(34) of the Uniform Commercial Code of the State, (c) none of the account debtors or other persons obligated on any of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral, (d) to the best of its knowledge, the Borrower holds no commercial tort claim except as indicated on the Perfection Certificate, (e) the Borrower has at all times operated its business in compliance in all material respects with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances, and (f) all other information set forth on the Perfection Certificate pertaining to the Collateral is accurate and complete in all material respects.
9. Covenants Concerning Collateral, Etc . The Borrower further covenants with the Agent as follows: (a) the Collateral, to the extent not delivered to the Agent pursuant to Section 4 hereof or disposed of as permitted by the Credit Agreement, will be kept at those locations listed on the Perfection Certificate, as the same may be amended from time to time as herein provided, and the Borrower will not remove the Collateral from such locations without providing at least fifteen (15) days prior written notice to the Agent except (i) to another location listed on the Perfection Certificate, or (ii) to another location of the Borrower or one of its Subsidiaries that is located within the United States but not listed on the Perfection Certificate, as amended from time to time (any such location, an “Unlisted Location”); provided , that the aggregate value of the Collateral located at such Unlisted Location shall not exceed $1,000,000, or (iii) motor vehicles or (iv) the removal of Collateral for up to thirty (30) days to repair such Collateral, in each case, in the ordinary course of business, (b) except for the security interest herein granted and Permitted Liens, the Borrower shall be the owner of, or have other rights in or power to transfer, the Collateral free from any right or claim of any other person or any lien, security interest or other encumbrance, and the Borrower shall defend the same against all claims and demands of all persons at any time claiming the same or any interests therein adverse to the Agent, (c) the Borrower shall not pledge, mortgage or create, or suffer to exist any right of any person in or claim by any person to the Collateral, or any security interest, lien or other encumbrance in the Collateral in favor of any person, other than the Agent except for Permitted Liens, (d) the Borrower will keep the Collateral in good order and repair and will not use the same in violation of law or any policy of insurance thereon, (e) the Borrower will permit the Agent, or its designee, to inspect the Collateral at any reasonable time during normal business hours, wherever located, (f) the Borrower will pay promptly when due all taxes, assessments, governmental charges and levies upon the Collateral or incurred in connection with the use or operation of the Collateral or incurred in connection with this Agreement, (g) the Borrower will continue to operate its business in compliance in all material respects with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances, (h) the Borrower will not sell or otherwise dispose, or offer to sell or otherwise dispose, of the Collateral or any interest therein except for dispositions permitted by the Credit Agreement, and (i) with each annual Compliance Certificate delivered pursuant to Section 6.02 of the Credit Agreement, the Borrower shall provide information updating the Perfection Certificate, including without limitation any new locations at which any Collateral is located.
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10. Insurance .
10.1. Maintenance of Insurance . The Borrower will maintain with financially sound and reputable insurers insurance with respect to its properties and business against such casualties and contingencies as shall be in accordance with general practices of businesses engaged in similar activities in similar geographic areas. Such insurance shall be in such minimum amounts that the Borrower will not be deemed a co-insurer under applicable insurance laws, regulations and policies and otherwise shall be in such amounts, contain such terms, be in such forms and be for such periods as may be reasonably satisfactory to the Agent. In addition, all such property casualty insurance shall be payable to the Agent as loss payee under a loss payee clause reasonably acceptable to the Agent. Without limiting the foregoing, the Borrower will (i) keep all of its physical property insured with casualty or physical hazard insurance on an “all risks” basis, with broad form flood and earthquake coverages and electronic data processing coverage, with a full replacement cost endorsement and an “agreed amount” clause in an amount equal to 100% of the full replacement cost of such property, (ii) maintain all such workers’ compensation or similar insurance as may be required by law and (iii) maintain, in amounts and with deductibles equal to those generally maintained by businesses engaged in similar activities in similar geographic areas, general public liability insurance against claims of bodily injury, death or property damage occurring, on, in or about the properties of the Borrower; business interruption insurance; and product liability insurance.
10.2. Insurance Proceeds . The proceeds of any casualty insurance in respect of any casualty loss of any of the Collateral shall, subject to the rights, if any, of other parties with an interest having priority in the property covered thereby, (i) so long as no Event of Default has occurred and is continuing, be disbursed to the Borrower for direct application by the Borrower to the repair or replacement of the Borrower’s property so damaged or destroyed, with any excess proceeds to be retained by the Borrower, and (ii) if an Event of Default has occurred and is continuing, be distributed to the Agent to be held by the Agent as cash collateral for the Obligations. The Agent may, at its sole option, disburse from time to time all or any part of such proceeds so held as cash collateral, upon such terms and conditions as the Agent may reasonably prescribe, for direct application by the Borrower solely to the repair or replacement of the Borrower’s property so damaged or destroyed, or the Agent may apply all or any part of such proceeds to the Obligations.
10.3. Continuation of Insurance . All policies of insurance shall provide for at least thirty (30) days prior written cancellation notice to the Agent. In the event of failure by the Borrower to provide and maintain insurance as herein provided, the Agent may, at its option, provide such insurance and charge the amount thereof to the Borrower. The Borrower shall furnish the Agent with certificates of insurance and policies evidencing compliance with the foregoing insurance provision.
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11. Collateral Protection Expenses: Preservation of Collateral .
11.1. Expenses Incurred by Agent . In the Agent’s discretion, if the Borrower fails to do so, the Agent may discharge taxes and other encumbrances at any time levied or placed on any of the Collateral, make repairs thereto, maintain any of the Collateral, and pay any necessary filing fees or insurance premiums. The Borrower agrees to reimburse the Agent on demand for all expenditures so made. The Agent shall have no obligation to the Borrower to make any such expenditures, nor shall the making thereof be construed as a waiver or cure of any Default or Event of Default.
11.2. Agent’s Obligations and Duties . Anything herein to the contrary notwithstanding, the Borrower shall remain obligated and liable under each contract or agreement comprised in the Collateral to be observed or performed by the Borrower thereunder. The Agent shall not have any obligation or liability under any such contract or agreement by reason of, or arising out of, this Agreement or the receipt by the Agent of any payment relating to any of the Collateral, nor shall the Agent be obligated in any manner to perform any of the obligations of the Borrower under, or pursuant to, any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment received by the Agent in respect of the Collateral or as to the sufficiency of any performance by any party under any such contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to the Agent or to which the Agent may be entitled at any time or times. The Agent’s sole duty with respect to the custody, safe keeping and physical preservation of the Collateral in its possession, under §9-207 of the Uniform Commercial Code of the State or otherwise, shall be to deal with such Collateral in the same manner as the Agent deals with similar property for its own account.
12. Securities and Deposits . The Agent may at any time following the occurrence and during the continuance of an Event of Default, at its option, transfer to itself or any nominee any securities constituting Collateral, receive any income thereon and hold such income as additional Collateral or apply it to the Obligations. Whether or not any Obligations are due, the Agent may following the occurrence and during the continuance of an Event of Default demand, sue for, collect, or make any settlement or compromise which it deems desirable with respect to the Collateral. Regardless of the adequacy of Collateral or any other security for the Obligations, any deposits or other sums at any time credited by or due from the Agent to the Borrower may at any time during the continuance of an Event of Default be applied to, or set off against, any of the Obligations then due and owing.
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13. Notification to Account Debtors and Other Persons Obligated on Collateral . If an Event of Default shall have occurred and be continuing, the Borrower shall, at the request and option of the Agent, notify account debtors and other persons obligated on any of the Collateral of the security interest of the Agent in any account, chattel paper, general intangible, instrument or other Collateral and that payment thereof is to be made directly to the Agent or to any financial institution designated by the Agent as the Agent’s agent therefor, and the Agent may itself, if an Event of Default shall have occurred and be continuing, without notice to or demand upon the Borrower, so notify account debtors and other persons obligated on Collateral, which notice may include the provision to such account debtors and other persons of an accounts receivable letter which, if provided, may be (a) substantially in the form attached hereto as Exhibit B (Agent having required Borrower to execute an undated accounts receivable letter in the form of Exhibit B attached hereto which Agent agrees to hold and not release unless Agent is permitted to send such letter as provided in this Section 13), or (b) in another form executed by Borrower upon request of Agent. After the making of such a request or the giving of any such notification, the Borrower shall hold any proceeds of collection of accounts, chattel paper, general intangibles, instruments and other Collateral received by the Borrower as trustee for the Agent without commingling the same with other funds of the Borrower and shall turn the same over to the Agent in the identical form received, together with any necessary endorsements or assignments. The Agent shall apply the proceeds of collection of accounts, chattel paper, general intangibles, instruments and other Collateral received by the Agent to the Obligations, such proceeds to be immediately credited after final payment in cash or other immediately available funds of the items giving rise to them.
14. Power of Attorney .
14.1. Appointment and Powers of Agent . The Borrower hereby irrevocably constitutes and appoints the Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Borrower or in the Agent’s own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or useful to accomplish the purposes of this Agreement and, without limiting the generality of the foregoing, hereby gives said attorneys the power and right, on behalf of the Borrower, without notice to or assent by the Borrower, to do the following:
(a) upon the occurrence and during the continuance of an Event of Default, generally to sell, transfer, pledge, make any agreement with respect to or otherwise dispose of or deal with any of the Collateral in such manner as is consistent with the Uniform Commercial Code of the State and as fully and completely as though the Agent were the absolute owner thereof for all purposes, and to do, at the Borrower’s expense, at any time, or from time to time, all acts and things which the Agent deems necessary or useful to protect, preserve or realize upon the Collateral and the Agent’s security interest therein, in order to effect the intent of this Agreement, all no less fully and effectively as the Borrower might do, including, without limitation, (i) the filing and prosecuting of registration and transfer applications with the appropriate federal, state or local agencies or authorities with respect to trademarks, copyrights and patentable inventions and processes, (ii) upon written notice to the Borrower, the exercise of voting rights with respect to voting securities, which rights may be exercised, if the Agent so elects, with a view to causing the liquidation of assets of the issuer of any such securities and (iii) the execution, delivery and recording, in connection with any sale or other disposition of any Collateral, of the endorsements, assignments or other instruments of conveyance or transfer with respect to such Collateral; and
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(b) to the extent that the Borrower’s authorization given in §3 is not sufficient, to file such financing statements with respect hereto, with or without the Borrower’s signature, or a photocopy of this Agreement in substitution for a financing statement, as the Agent may deem appropriate and to execute in the Borrower’s name such financing statements and amendments thereto and continuation statements which may require the Borrower’s signature.
14.2. Ratification by Borrower . To the extent permitted by law, the Borrower hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and is irrevocable.
14.3. No Duty on Agent . The powers conferred on the Agent hereunder are solely to protect its interests in the Collateral and shall not impose any duty upon it to exercise any such powers. The Agent shall be accountable only for the amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to the Borrower for any act or failure to act, except for the Agent’s own gross negligence or willful misconduct.
15. Rights and Remedies . If an Event of Default shall have occurred and be continuing, the Agent, without any other notice to or demand upon the Borrower, shall have in any jurisdiction in which enforcement hereof is sought, in addition to all other rights and remedies, the rights and remedies of a secured party under the Uniform Commercial Code of the State and of such jurisdiction and any additional rights and remedies as may be provided to a secured party in any jurisdiction in which Collateral is located, including, without limitation, the right to take possession of the Collateral, and for that purpose the Agent may, so far as the Borrower can give authority therefor, enter upon any premises on which the Collateral may be situated and remove the same therefrom. The Agent may in its discretion require the Borrower to assemble all or any part of the Collateral at such location or locations within the jurisdiction(s) of the Borrower’s principal office(s) or at such other locations as the Agent may reasonably designate. Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Agent shall give to the Borrower at least ten (10) Business Days prior written notice of the time and place of any public sale of Collateral or of the time after which any private sale or any other intended disposition is to be made. The Borrower hereby acknowledges that ten (10) Business Days prior written notice of such sale or sales shall be reasonable notice. In addition, the Borrower waives any and all rights that it may have to a judicial hearing in advance of the enforcement of any of the Agent’s rights and remedies hereunder, including, without limitation, its right following an Event of Default to take immediate possession of the Collateral and to exercise its rights and remedies with respect thereto.
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16. Standards for Exercising Rights and Remedies . To the extent that applicable law imposes duties on the Agent to exercise remedies in a commercially reasonable manner, the Borrower acknowledges and agrees that it is not commercially unreasonable for the Agent (a) to fail to incur expenses reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to fail to complete raw material or work in process into finished goods or other finished products for disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against account debtors or other persons obligated on Collateral or to fail to remove liens or encumbrances on or any adverse claims against Collateral, (d) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other persons, whether or not in the same business as the Borrower, for expressions of interest in acquiring all, or any portion of, the Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (h) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim disposition warranties, (k) to purchase insurance or credit enhancements to insure the Agent against risks of loss, collection or disposition of Collateral or to provide to the Agent a guaranteed return from the collection or disposition of Collateral, or (l) to the extent deemed appropriate by the Agent, to obtain the services of brokers, investment bankers, consultants and other professionals to assist the Agent in the collection, or disposition of, any of the Collateral. The Borrower acknowledges that the purpose of this §16 is to provide non-exhaustive indications of what actions or omissions by the Agent would fulfill the Agent’s duties under the Uniform Commercial Code of the State or any other relevant jurisdiction in the Agent’s exercise of remedies against the Collateral and that other actions or omissions by the Agent shall not be deemed to fail to fulfill such duties solely on account of not being indicated in this §16. Without limitation upon the foregoing, nothing contained in this §16 shall be construed to grant any rights to the Borrower or to impose any duties on the Agent that would not have been granted or imposed by this Agreement or by applicable law in the absence of this §16.
17. No Waiver by Agent, etc . The Agent shall not be deemed to have waived any of its rights and remedies in respect of the Obligations or the Collateral unless such waiver shall be in writing and signed by the Agent. No delay or omission on the part of the Agent in exercising any right or remedy shall operate as a waiver of such right or remedy or any other right or remedy. A waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion. All rights and remedies of the Agent with respect to the Obligations or the Collateral, whether evidenced hereby or by any other instrument or papers, shall be cumulative and may be exercised singularly, alternatively, successively or concurrently at such time or at such times as the Agent deems expedient.
18. Suretyship Waivers by Borrower . Except as may be otherwise specifically provided in the Credit Agreement, the Borrower waives demand, notice, protest, notice of acceptance of this Agreement, notice of loans made, credit extended, Collateral received or delivered or other action taken in reliance hereon and all other demands and notices of any description. With respect to both the Obligations and the Collateral, the Borrower assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of or failure to perfect any security interest in any Collateral, to the addition or release of any party or person primarily or secondarily liable, to the acceptance of partial payment thereon and the settlement, compromising or adjusting of any thereof, all in such manner and at such time or times as the Agent may deem advisable. The Agent shall have no duty as to the collection or protection of the Collateral or any income therefrom, the preservation of rights against prior parties, or the preservation of any rights pertaining thereto beyond the safe custody thereof as set forth in Section 11.2. The Borrower further waives any and all other suretyship defenses.
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19. Marshalling . The Agent shall not be required to marshal any present or future collateral security (including but not limited to the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of its rights and remedies hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising. To the extent that it lawfully may, the Borrower hereby agrees that it will not invoke any law relating to the marshalling of collateral which might cause delay in or impede the enforcement of the Agent’s rights and remedies under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, the Borrower hereby irrevocably waives the benefits of all such laws.
20. Proceeds of Dispositions; Expenses . The Borrower shall pay to the Agent on demand amounts equal to any and all reasonable expenses, including, without limitation, reasonable attorneys’ fees and disbursements, incurred or paid by the Agent in protecting, preserving or enforcing the Agent’s rights and remedies under, or in respect of, any of the Obligations or any of the Collateral. After deducting all of said expenses, the residue of any proceeds of collection or sale or other disposition of Collateral shall, to the extent actually received in cash, be applied to the payment of the Obligations in such order or preference as the Agent may determine or in such order or preference as is provided in the Credit Agreement, proper allowance and provision being made for any Obligations not then due. Upon the final payment and satisfaction in full of all of the Obligations and after making any payments required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the Uniform Commercial Code of the State, any excess shall be returned to the Borrower. In the absence of final payment and satisfaction in full of all of the Obligations, the Borrower shall remain liable for any deficiency.
21. Overdue Amounts . Until paid, all amounts which become due and payable by the Borrower hereunder shall be a debt secured by the Collateral and if not otherwise paid within any applicable grace period after the same becomes due shall bear, whether before or after judgment, interest at the rate of interest for overdue principal set forth in the Credit Agreement.
22. Governing Law; Consent to Jurisdiction . THIS AGREEMENT IS INTENDED TO TAKE EFFECT AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE. The Borrower agrees that any action or claim arising out of any dispute in connection with this Agreement, any rights or obligations hereunder or the performance or enforcement of such rights or obligations may be brought in the courts of the State or any federal court sitting therein and consents to the non-exclusive jurisdiction of such court and to service of process in any such suit being made upon the Borrower by certified or registered mail at the address specified in the Credit Agreement. The Borrower hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit is brought in an inconvenient forum.
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23. Waiver of Jury Trial . EACH PARTY HERETO WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OR ENFORCEMENT OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Borrower waives any right which it may have to claim or recover in any litigation referred to in the preceding sentence any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages. The Borrower (i) certifies that neither the Agent nor any representative, agent or attorney of the Agent has represented, expressly or otherwise, that the Agent would not, in the event of litigation, seek to enforce the foregoing waivers or other waivers contained in this Agreement and (ii) acknowledges that, in entering into the Credit Agreement and the other Loan Documents to which the Agent is a party, the Agent is relying upon, among other things, the waivers and certifications contained in this Section 23.
24. Miscellaneous . The headings of each section of this Agreement are for convenience only and shall not define or limit the provisions thereof. This Agreement and all rights and obligations hereunder shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Agent and its successors and assigns permitted pursuant to the Credit Agreement. If any term of this Agreement shall be held to be invalid, illegal or unenforceable, the validity of all other terms hereof shall in no way be affected thereby, and this Agreement shall be construed and be enforceable as if such invalid, illegal or unenforceable term had not been included herein. The Borrower acknowledges receipt of a copy of this Agreement.
25. PREJUDGMENT REMEDY WAIVER .
THE BORROWER HEREBY REPRESENTS, WARRANTS AND ACKNOWLEDGES THAT THE FINANCING EVIDENCED HEREBY IS A COMMERCIAL TRANSACTION WITHIN THE MEANING OF CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED. THE BORROWER HEREBY WAIVES ITS RIGHT TO NOTICE AND PRIOR COURT HEARING OR COURT ORDER UNDER CONNECTICUT GENERAL STATUTES SECTIONS 52-278a ET . SEQ . AS AMENDED OR UNDER ANY OTHER STATE OR FEDERAL LAW WITH RESPECT TO ANY AND ALL PREJUDGMENT REMEDIES THE AGENT MAY EMPLOY TO ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS. MORE SPECIFICALLY, THE BORROWER ACKNOWLEDGES THAT UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT THE AGENT’S ATTORNEY MAY, PURSUANT TO, AND IN ACCORDANCE WITH, CONN. GEN. STAT. §52-278f, ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT SECURING A COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER. THE BORROWER ACKNOWLEDGES AND RESERVES ITS RIGHT TO NOTICE AND A HEARING SUBSEQUENT TO THE ISSUANCE OF A WRIT FOR PREJUDGMENT REMEDY AS AFORESAID AND THE AGENT ACKNOWLEDGES THE BORROWER’S RIGHT TO SAID HEARING SUBSEQUENT TO THE ISSUANCE OF SAID WRIT. THE BORROWER FURTHER WAIVES ITS RIGHTS TO REQUEST THAT THE AGENT POST A BOND, WITH OR WITHOUT SURETY, TO PROTECT BORROWER AGAINST DAMAGES THAT MAY BE CAUSED BY ANY PREJUDGMENT REMEDY SOUGHT OR OBTAINED BY THE AGENT.
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26. Amendments . Neither this Agreement nor any term hereof may be amended, waived, discharged or terminated, except by a written instrument signed by the Borrower and the Agent.
27. Electronic Self-Help Authorization . Upon and during the continuance of an Event of Default, the Agent shall have, in addition to all other rights and remedies contained in this Agreement, (which the Borrower, and, by becoming bound by the Obligations or this Agreement, all other obligors, guarantors and any new debtors accept and agree upon), the right to locate, disable or to take possession of the Collateral by electronic, digital, magnetic or wireless optical electromagnetic or similar means after giving any notices required under applicable law.
28. Termination . At such time as all of the Obligations (other than contingent indemnification obligations for which no claim has been asserted) have been finally paid and satisfied in full and the Commitment has been irrevocably terminated, this Agreement shall terminate and Agent shall, upon written request and at the expense of Borrower, execute and deliver to Borrower all documents and other instruments as may be necessary or proper to evidence the termination of Agent’s security interest in the Collateral and Agent shall return to Borrower any Collateral then in Agent’s possession.
[Signature page follows]
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Exhibit 10.4
IN WITNESS WHEREOF, intending to be legally bound, the Borrower has caused this Agreement to be duly executed as of the date first above written.
LYDALL, INC. | |||
By: | /S/ Dale G. Barnhart | ||
Name: Dale G. Barnhart | |||
Title: President & CEO |
Accepted:
BANK OF AMERICA, N.A., as Administrative Agent
By: | /S/ Christopher T. Phelan | |
Name: | Christopher T. Phelan | |
Title: | Senior Vice President |
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF CONNECTICUT | ) | |||
) | ss: | MANCHESTER | ||
COUNTY OF HARTFORD | ) |
Before me, the undersigned, personally appeared Dale G. Barnhart, to me known personally, and who, being by me duly sworn, deposes and says that he is the President and CEO of Lydall, Inc., and that said instrument was signed and sealed on behalf of said company by authority of its Board of Directors, and said President and CEO acknowledged said instrument to be his free act and deed as such Officer and the free act and deed of said company on this 18th day of February, 2014.
/S/ Kathleen Carroll | |
[SEAL] | Notary Public/Commissioner of the Superior Court |
My commission expires: 06/30/14 |
Exhibit 10.5
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT , dated as of February 18, 2014 is made by and among LYDALL THERMAL/ACOUSTICAL, INC. , a Delaware corporation (the “Guarantor” ) and BANK OF AMERICA, N.A., a national banking association (“ Bank of America ”) on behalf of itself and as Administrative Agent (in such capacity, the “ Agent ”) for the ratable benefit of itself and the other lenders that are a party to the Credit Agreement (defined below) (collectively with Bank of America, the “ Lenders ”).
WHEREAS, the Guarantor and Bank of America, N.A. (in such capacity, “ BofA ”) are parties to a Security Agreement (the “ Original Lydall Thermal Security Agreement ”) dated as of June 16, 2011 pursuant to which the Guarantor granted BofA a security interest in certain assets of the Guarantor as security for the obligations of Lydall, Inc. (the “ Borrower ”) to BofA under that certain Credit Agreement dated as of June 16, 2011 between the Borrower and BofA (the “ Original Credit Agreement ”) and the other Loan Documents, as defined in the Original Credit Agreement (the “ Original Loan Documents ”);
WHEREAS, pursuant to that certain Assignment dated as of the date hereof by and among BofA, the Agent, the Borrower and the Guarantors, as defined in the Original Credit Agreement, BofA has assigned the Original Credit Agreement and the Original Loan Documents (including the Original Lydall Thermal Security Agreement) to the Agent; and
WHEREAS, the Borrower, the Agent, the Guarantors and the Lenders have amended and restated the Credit Agreement and the other Original Loan Documents and desire to amend and restate the Original Lydall Thermal Security Agreement in its entirety as provided herein.
NOW THEREFORE, in consideration of the premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby amend and restate the Original Lydall Thermal Security Agreement in its entirety as follows:
WHEREAS, the Lenders, the Agent and Lydall, Inc., a Delaware corporation (the “Borrower” ), have entered into that certain Amended and Restated Credit Agreement dated as of even date herewith (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Credit Agreement” ), pursuant to which the Lenders, subject to the terms and conditions contained therein, are to make loans or otherwise to extend credit or provide financial accommodations to the Borrower;
WHEREAS, Guarantor is a party to that certain Guaranty Agreement dated as of the date hereof by and among Lydall Filtration/Separation, Inc., a Connecticut corporation, Lydall International, Inc., a Delaware corporation, the Guarantor and the Agent (the “ Guaranty Agreement ”), pursuant to which Guarantor guarantees certain Obligations as set forth in the Guaranty Agreement;
WHEREAS, it is a condition precedent to the Lenders making any loans or otherwise extending credit or providing financial accommodations to the Borrower under the Credit Agreement that the Guarantor execute and deliver to the Agent, for the ratable benefit of the Lenders, a security agreement in substantially the form hereof; and
WHEREAS, the Guarantor wishes to grant a security interest in favor of the Agent, for the ratable benefit of the Lenders, as herein provided.
NOW, THEREFORE, in consideration of the promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions . All capitalized terms used herein without definitions shall have the respective meanings provided therefor in the Credit Agreement. The term “State,” as used herein, means the State of Connecticut. All terms defined in the Uniform Commercial Code of the State and used herein shall have the same definitions herein as specified therein. However, if a term is defined in Article 9 of the Uniform Commercial Code of the State differently than in another Article of the Uniform Commercial Code of the State, the term has the meaning specified in Article 9. The term “Obligations,” as used herein, shall have the meaning ascribed to it in the Credit Agreement.
2. Grant of Security Interest . The Guarantor hereby grants to the Agent, for the ratable benefit of the Lenders, to secure the payment and performance in full of all of the Obligations, a security interest in and pledges and assigns the following properties, assets and rights of the Guarantor, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof (all of the same being hereinafter called the “Collateral”): all assets including all personal and fixture property of every kind and nature, including without limitation all goods (including inventory, equipment and any accessions thereto), instruments (including promissory notes), documents, accounts (including health-care-insurance receivables), chattel paper (whether tangible or electronic), deposit accounts, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), commercial tort claims, securities and all other investment property, supporting obligations, any other contract rights or rights to the payment of money, insurance claims and proceeds, all general intangibles (including all payment intangibles), and all products and proceeds of the foregoing. Notwithstanding anything herein to the contrary, the term “Collateral” shall not include more than 65% of the equity interests of a first-tier Foreign Subsidiary (or more than 65% of the equity interests of a Domestic Subsidiary whose sole assets are the equity interests of Foreign Subsidiaries) or to the extent not yet paid to the Guarantor or such Domestic Subsidiary to more than the corresponding proportion of dividends, distributions, interest and other payments with respect to more than 65% of such equity interests (such excluded assets herein called the “Excluded Assets”). The Agent acknowledges that the attachment of its security interest in any commercial tort claim as original collateral is subject to the Guarantor’s compliance with § 4.7.
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3. Authorization to File Financing Statements . The Guarantor hereby irrevocably authorizes the Agent at any time and from time to time to file in any filing office in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as all assets or, as the case may be, all personal property of the Guarantor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform Commercial Code of the State or such jurisdiction specifically excluding, however, the Excluded Assets, or (ii) as being of an equal or lesser scope or with greater detail, and (b) provide any other information required by part 5 of Article 9 of the Uniform Commercial Code of the State or such other jurisdictions for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether the Guarantor is an organization, the type of organization and any organizational identification number issued to the Guarantor and, (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates. The Guarantor agrees to furnish any such information to the Agent promptly upon the Agent’s request. The Guarantor also ratifies its authorization for the Agent to have filed in any Uniform Commercial Code jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof.
4. Other Actions . Further to insure the attachment, perfection and first priority of, and the ability of the Agent to enforce, the Agent’s security interest in the Collateral, the Guarantor agrees, in each case at the Guarantor’s expense, to take the following actions with respect to the following Collateral and without limitation on the Guarantor’s other obligations contained in this Agreement:
4.1 . Promissory Notes and Tangible Chattel Paper . If the Guarantor shall, now or at any time hereafter, hold or acquire any promissory notes or any tangible chattel paper individually having a face value in excess of $2,500,000 (each, a “Material Note” or “Material Tangible Chattel Paper”, as the case may be), the Guarantor shall forthwith endorse, assign and deliver to the Agent each such Material Note or Material Chattel Paper, as the case may be, and, in each case of a required endorsement, assignment and delivery, accompanied by such instruments of transfer or assignment duly executed in blank as the Agent may from time to time specify.
4.2. Deposit Accounts . For each deposit account that the Guarantor now or at any time hereafter opens or maintains, the Guarantor shall, at the Agent’s request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Agent, either (a) cause the depositary bank to agree to comply, without further consent of the Guarantor, at any time with instructions from the Agent to such depositary bank directing the disposition of funds from time to time credited to such deposit account, or (b) arrange for the Agent to become the customer of the depositary bank with respect to the deposit account, with the Guarantor being permitted, only with the consent of the Agent, to exercise rights to withdraw funds from such deposit account. The Agent agrees with the Guarantor that the Agent shall not give any such instructions or withhold any withdrawal rights from the Guarantor, unless an Event of Default has occurred and is continuing, or, if effect were given to any withdrawal not otherwise permitted by the Loan Documents, would occur. The provisions of this paragraph shall not apply to (i) any deposit account for which the Guarantor, the depositary bank and the Agent have entered into a cash collateral agreement specially negotiated among the Guarantor, the depositary bank and the Agent for the specific purpose set forth therein, (ii) a deposit account for which the Agent is the depositary bank and is in automatic control, and (iii) any deposit accounts specially and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of the Guarantor’s employees. Nothing in this Section 4.2 shall be construed to limit or otherwise derogate in any way the Guarantor’s obligations under Section 6.15 of the Credit Agreement.
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4.3. Investment Property . Subject to the limitations set forth in Section 2 hereof, if the Guarantor shall now or at any time hereafter hold or acquire any certificated securities of any Subsidiary, the Guarantor shall forthwith endorse, assign and deliver the same to the Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Agent may from time to time specify. If any securities now or hereafter acquired by the Guarantor are (a) (i) uncertificated or (ii) certificated and issued by a Person other than a Subsidiary, (b) issued to the Guarantor or its nominee directly by the issuer thereof, and (c) have a principal amount or value in excess of $5,000,000 in the aggregate with respect to any one issuer (each a “Material Security”), the Guarantor shall promptly notify the Agent thereof and, at the Agent’s request and option pursuant to an agreement in a form and substance reasonably satisfactory to the Agent, either (A) cause the issuer to agree to comply, without further consent of the Guarantor, or such nominee, at any time with instructions from the Agent as to each Material Security or (B) arrange for the Agent to become the registered owner of the Material Securities. Subject to the limitations set forth in Section 2 hereof, if any securities, whether certificated or uncertificated, or other investment property now or hereafter acquired by the Guarantor is held by the Guarantor or its nominee through a securities intermediary or commodity intermediary and constitute a Material Security, the Guarantor shall promptly notify the Agent thereof and, at the Agent’s request and option, the Guarantor shall, pursuant to an agreement in form and substance reasonably satisfactory to the Agent, either (i) cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply, in each case without further consent of the Guarantor or such nominee, at any time with entitlement orders or other instructions from the Agent to such securities intermediary as to such a Material Security, or (as the case may be) to apply any value distributed on account of any commodity contract as directed by the Agent to such commodity intermediary, or (ii) in the case of a Material Security held through a securities intermediary, arrange for the Agent to become the entitlement holder with respect to such a Material Security, with the Guarantor being permitted, only with the consent of the Agent, to exercise rights to withdraw or otherwise deal with such investment property. The Agent agrees with the Guarantor that the Agent shall not give any such entitlement orders or instructions or directions to any such issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by the Guarantor, unless an Event of Default has occurred and is continuing, or, after giving effect to any such investment and withdrawal rights not otherwise permitted by the Loan Documents, would occur. The provisions of this paragraph shall not apply to any financial assets credited to a securities account for which the Agent is the securities intermediary.
4.4. Collateral in the Possession of a Bailee . If any Collateral having an aggregate value of more than $1,000,000 is now or at any time hereafter in the possession of a bailee at a particular location, the Guarantor shall promptly notify the Agent thereof and, at the Agent’s request and option, shall use reasonable best efforts to obtain an acknowledgement from the bailee, in form and substance reasonably satisfactory to the Agent, that the bailee holds such Collateral for the benefit of the Agent and such bailee’s agreement to comply, without further consent of the Guarantor, at any time with instructions of the Agent as to such Collateral. The Agent agrees with the Guarantor that the Agent shall not give any such instructions unless an Event of Default has occurred and is continuing or would occur after taking into account any action by the Guarantor with respect to the bailee.
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4.5. Electronic Chattel Paper and Transferable Records . If the Guarantor, now or at any time hereafter, holds or acquires an interest in any electronic chattel paper, any electronic document or any “transferrable record,” individually having a face value in excess of $2,500,000 (each a “Material Electronic Paper”), the Guarantor shall (i) promptly notify the Agent thereof and, (ii) at the request and option of the Agent, take such action as the Agent may reasonably request to vest in the Agent control of such Material Electronic Paper, under Section 9-105 of the Uniform Commercial Code of the State or any other relevant jurisdiction, Section 7-106 of the Uniform Commercial Code of the State or any other relevant jurisdiction, Section 201 of the federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, as applicable. The Agent agrees with the Guarantor that the Agent will arrange, pursuant to procedures satisfactory to the Agent and so long as such procedures will not result in the Agent’s loss of control, for the Guarantor to make alterations to the electronic chattel paper, electronic document or transferable record permitted under UCC Section 9-105, UCC Section 7-106, or, as the case may be, Section 201 of the federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act for a party in control to make without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by the Guarantor with respect to such electronic chattel paper, electronic document or transferrable record. The provisions of this Section 4.6 relating to electronic documents and “control” under UCC Section 7-106 apply in the event that the 2003 revisions to Article 7, with amendments to Article 9, of the Uniform Commercial Code, in substantially the form approved by the American Law Institute and the National Conference of Commissioners on Uniform State Laws, are now or hereafter adopted and become effective in the State or in any other relevant jurisdiction.
4.6. Letter-of-Credit Rights . If the Guarantor is, now or at any time hereafter, a beneficiary under a letter of credit now or hereafter individually having a maximum amount that may be drawn in excess of $2,500,000 (each, a “Material Letter of Credit”), the Guarantor shall promptly notify the Agent thereof and, at the request and option of the Agent, the Guarantor shall, pursuant to an agreement in form and substance satisfactory to the Agent, either (A) arrange for the issuer and any confirmer or other nominated person of each such Material Letter of Credit, to consent to an assignment to the Agent of the proceeds of such Material Letter of Credit or (B) arrange for the Agent to become the transferee beneficiary of such Material Letter of Credit.
4.7 Commercial Tort Claims . If the Guarantor shall now or at any time hereafter hold or acquire a commercial tort claim with respect to which the Guarantor has commenced legal action by filing a lawsuit in court and having a value reasonably estimated by the Guarantor to be in excess of $5,000,000, the Guarantor shall promptly notify the Agent in a writing signed by the Guarantor of the particulars thereof, and grant to the Agent in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Agent. Such Notice shall be deemed to be an amendment to the Guarantor’s Perfection Certificate with respect to such commercial tort claim.
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4.8. Other Actions as to any and all Collateral . The Guarantor further agrees, upon request of the Agent and at the Agent’s option, to take any and all other actions as the Agent may reasonably determine to be necessary or useful for the attachment, perfection and first priority of (subject, however, to Liens permitted under the Credit Agreement), and the ability of the Agent to enforce, the Agent’s security interest in any and all of the Collateral, including, without limitation, (a) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the Uniform Commercial Code, to the extent, if any, that the Guarantor’s signature thereon is required therefor, (b) causing the Agent’s name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of the Agent to enforce, the Agent’s security interest in such Collateral, (c) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of the Agent to enforce, the Agent’s security interest in such Collateral, (d) obtaining governmental and other third party waivers, consents and approvals in form and substance satisfactory to the Agent, including, without limitation, any consent of any licensor, lessor or other person obligated on Collateral, (e) using reasonable best efforts to obtain waivers from mortgagees and landlords in form and substance satisfactory to the Agent and in accordance with the terms of the Credit Agreement, and (f) taking all actions under any earlier versions of the Uniform Commercial Code or under any other law, as reasonably determined by the Agent to be applicable in any relevant Uniform Commercial Code or other jurisdiction, including any foreign jurisdiction.
5. Relation to Other Security Documents . The provisions of this Agreement supplement the provisions of any real estate mortgage or deed of trust, if any, granted by the Guarantor to the Agent and which secures the payment or performance of any of the Obligations. Nothing contained in any such real estate mortgage or deed of trust shall derogate from any of the rights or remedies of the Agent hereunder.
6. Representations and Warranties Concerning Guarantor’s Legal Status . The Guarantor represents and warrants to the Agent as follows: (a) the Guarantor’s exact legal name is that indicated on the signature page hereof, (b) the Guarantor is an organization of the type, and is organized in the jurisdiction, set forth on its Perfection Certificate dated the date hereof and attached hereto as Exhibit A (the “Perfection Certificate”), (c) the Perfection Certificate accurately sets forth the organizational identification number or accurately states that the Guarantor has none, (d) the Perfection Certificate accurately sets forth the Guarantor’s place of business or, if more than one, its chief executive office, as well as the Guarantor’s mailing address, if different, and (e) all other information set forth on the Perfection Certificate pertaining to the Guarantor is accurate and complete in all material respects.
7. Covenants Concerning Guarantor’s Legal Status . The Guarantor covenants with the Agent as follows: (a) without providing at least thirty (30) days prior written notice to the Agent, the Guarantor will not change its name, its place of business or, if more than one, chief executive office, or its mailing address or organizational identification number if it has one, (b) if the Guarantor does not have an organizational identification number and later obtains one, the Guarantor will promptly notify the Agent of such organizational identification number, and (c) the Guarantor will not change its type of organization, jurisdiction of organization or other legal structure except as permitted in the Credit Agreement.
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8. Representations and Warranties Concerning Collateral Etc . The Guarantor further represents and warrants to the Agent as follows: (a) the Guarantor is the owner of, or has other rights in, or power to transfer, the Collateral, free from any right or claim of any person or any adverse lien, security interest or other encumbrance, except for the security interest created by this Agreement and Permitted Liens, (b) none of the Collateral constitutes, or is the proceeds of, “farm products” as defined in §9-102(a)(34) of the Uniform Commercial Code of the State, (c) none of the account debtors or other persons obligated on any of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral, (d) to the best of its knowledge, the Guarantor holds no commercial tort claim except as indicated on the Perfection Certificate, (e) the Guarantor has at all times operated its business in compliance in all material respects with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances, and (f) all other information set forth on the Perfection Certificate pertaining to the Collateral is accurate and complete in all material respects.
9. Covenants Concerning Collateral, Etc . The Guarantor further covenants with the Agent as follows: (a) the Collateral, to the extent not delivered to the Agent pursuant to Section 4 hereof or disposed of as permitted by the Credit Agreement, will be kept at those locations listed on the Perfection Certificate, as the same may be amended from time to time as herein provided, and the Guarantor will not remove the Collateral from such locations without providing at least fifteen (15) days prior written notice to the Agent except (i) to another location listed on the Perfection Certificate, or (ii) to another location of the Guarantor or one of its Subsidiaries or one of the other Subsidiaries of Borrower, in each case, that is located within the United States but not listed on the Perfection Certificate, as amended from time to time (any such location, an “Unlisted Location”); provided , that the aggregate value of the Collateral located at such Unlisted Location shall not exceed $1,000,000, or (iii) motor vehicles or (iv) the removal of Collateral for up to thirty (30) days to repair such Collateral, in each case, in the ordinary course of business, (b) except for the security interest herein granted and Permitted Liens, the Guarantor shall be the owner of, or have other rights in or power to transfer, the Collateral free from any right or claim of any other person or any lien, security interest or other encumbrance, and the Guarantor shall defend the same against all claims and demands of all persons at any time claiming the same or any interests therein adverse to the Agent, (c) the Guarantor shall not pledge, mortgage or create, or suffer to exist any right of any person in or claim by any person to the Collateral, or any security interest, lien or other encumbrance in the Collateral in favor of any person, other than the Agent except for Permitted Liens, (d) the Guarantor will keep the Collateral in good order and repair and will not use the same in violation of law or any policy of insurance thereon, (e) the Guarantor will permit the Agent, or its designee, to inspect the Collateral at any reasonable time during normal business hours, wherever located, (f) the Guarantor will pay promptly when due all taxes, assessments, governmental charges and levies upon the Collateral or incurred in connection with the use or operation of the Collateral or incurred in connection with this Agreement, (g) the Guarantor will continue to operate its business in compliance in all material respects with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances, (h) the Guarantor will not sell or otherwise dispose, or offer to sell or otherwise dispose, of the Collateral or any interest therein except for dispositions permitted by the Credit Agreement, and (i) with each annual Compliance Certificate delivered by Borrower pursuant to Section 6.02 of the Credit Agreement, the Guarantor shall cause Borrower to provide information updating the Perfection Certificate, including without limitation any new locations at which any Collateral is located.
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10. Insurance .
10.1. Maintenance of Insurance . The Guarantor will maintain with financially sound and reputable insurers insurance with respect to its properties and business against such casualties and contingencies as shall be in accordance with general practices of businesses engaged in similar activities in similar geographic areas. Such insurance shall be in such minimum amounts that the Guarantor will not be deemed a co-insurer under applicable insurance laws, regulations and policies and otherwise shall be in such amounts, contain such terms, be in such forms and be for such periods as may be reasonably satisfactory to the Agent. In addition, all such property casualty insurance shall be payable to the Agent as loss payee under a loss payee clause reasonably acceptable to the Agent. Without limiting the foregoing, the Guarantor will (i) keep all of its physical property insured with casualty or physical hazard insurance on an “all risks” basis, with broad form flood and earthquake coverages and electronic data processing coverage, with a full replacement cost endorsement and an “agreed amount” clause in an amount equal to 100% of the full replacement cost of such property, (ii) maintain all such workers’ compensation or similar insurance as may be required by law and (iii) maintain, in amounts and with deductibles equal to those generally maintained by businesses engaged in similar activities in similar geographic areas, general public liability insurance against claims of bodily injury, death or property damage occurring, on, in or about the properties of the Guarantor; business interruption insurance; and product liability insurance.
10.2. Insurance Proceeds . The proceeds of any casualty insurance in respect of any casualty loss of any of the Collateral shall, subject to the rights, if any, of other parties with an interest having priority in the property covered thereby, (i) so long as no Event of Default has occurred and is continuing, be disbursed to the Guarantor for direct application by the Guarantor to the repair or replacement of the Guarantor’s property so damaged or destroyed, with any excess proceeds to be retained by the Guarantor, and (ii) if an Event of Default has occurred and is continuing, be distributed to the Agent to be held by the Agent as cash collateral for the Obligations. The Agent may, at its sole option, disburse from time to time all or any part of such proceeds so held as cash collateral, upon such terms and conditions as the Agent may reasonably prescribe, for direct application by the Guarantor solely to the repair or replacement of the Guarantor’s property so damaged or destroyed, or the Agent may apply all or any part of such proceeds to the Obligations.
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10.3. Continuation of Insurance . All policies of insurance shall provide for at least thirty (30) days prior written cancellation notice to the Agent. In the event of failure by the Guarantor to provide and maintain insurance as herein provided, the Agent may, at its option, provide such insurance and charge the amount thereof to the Guarantor. The Guarantor shall furnish the Agent with certificates of insurance and policies evidencing compliance with the foregoing insurance provision.
11. Collateral Protection Expenses: Preservation of Collateral .
11.1. Expenses Incurred by Agent . In the Agent’s discretion, if the Guarantor fails to do so, the Agent may discharge taxes and other encumbrances at any time levied or placed on any of the Collateral, make repairs thereto, maintain any of the Collateral, and pay any necessary filing fees or insurance premiums. The Guarantor agrees to reimburse the Agent on demand for all expenditures so made. The Agent shall have no obligation to the Guarantor to make any such expenditures, nor shall the making thereof be construed as a waiver or cure of any Default or Event of Default.
11.2. Agent’s Obligations and Duties . Anything herein to the contrary notwithstanding, the Guarantor shall remain obligated and liable under each contract or agreement comprised in the Collateral to be observed or performed by the Guarantor thereunder. The Agent shall not have any obligation or liability under any such contract or agreement by reason of, or arising out of, this Agreement or the receipt by the Agent of any payment relating to any of the Collateral, nor shall the Agent be obligated in any manner to perform any of the obligations of the Guarantor under, or pursuant to, any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment received by the Agent in respect of the Collateral or as to the sufficiency of any performance by any party under any such contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to the Agent or to which the Agent may be entitled at any time or times. The Agent’s sole duty with respect to the custody, safe keeping and physical preservation of the Collateral in its possession, under §9-207 of the Uniform Commercial Code of the State or otherwise, shall be to deal with such Collateral in the same manner as the Agent deals with similar property for its own account.
12. Securities and Deposits . The Agent may at any time following the occurrence and during the continuance of an Event of Default, at its option, transfer to itself or any nominee any securities constituting Collateral, receive any income thereon and hold such income as additional Collateral or apply it to the Obligations. Whether or not any Obligations are due, the Agent may following the occurrence and during the continuance of an Event of Default demand, sue for, collect, or make any settlement or compromise which it deems desirable with respect to the Collateral. Regardless of the adequacy of Collateral or any other security for the Obligations, any deposits or other sums at any time credited by or due from the Agent to the Guarantor may at any time during the continuance of an Event of Default be applied to, or set off against, any of the Obligations then due and owing.
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13. Notification to Account Debtors and Other Persons Obligated on Collateral . If an Event of Default shall have occurred and be continuing, the Guarantor shall, at the request and option of the Agent, notify account debtors and other persons obligated on any of the Collateral of the security interest of the Agent in any account, chattel paper, general intangible, instrument or other Collateral and that payment thereof is to be made directly to the Agent or to any financial institution designated by the Agent as the Agent’s agent therefor, and the Agent may itself, if an Event of Default shall have occurred and be continuing, without notice to or demand upon the Guarantor, so notify account debtors and other persons obligated on Collateral, which notice may include the provision to such account debtors and other persons of an accounts receivable letter which, if provided, may be (a) substantially in the form attached hereto as Exhibit B (Agent having required Guarantor to execute an undated accounts receivable letter in the form of Exhibit B attached hereto which Agent agrees to hold and not release unless Agent is permitted to send such letter as provided in this Section 13), or (b) in another form executed by Guarantor upon request of Agent. After the making of such a request or the giving of any such notification, the Guarantor shall hold any proceeds of collection of accounts, chattel paper, general intangibles, instruments and other Collateral received by the Guarantor as trustee for the Agent without commingling the same with other funds of the Guarantor and shall turn the same over to the Agent in the identical form received, together with any necessary endorsements or assignments. The Agent shall apply the proceeds of collection of accounts, chattel paper, general intangibles, instruments and other Collateral received by the Agent to the Obligations, such proceeds to be immediately credited after final payment in cash or other immediately available funds of the items giving rise to them.
14. Power of Attorney .
14.1. Appointment and Powers of Agent . The Guarantor hereby irrevocably constitutes and appoints the Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Guarantor or in the Agent’s own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or useful to accomplish the purposes of this Agreement and, without limiting the generality of the foregoing, hereby gives said attorneys the power and right, on behalf of the Guarantor, without notice to or assent by the Guarantor, to do the following:
(a) upon the occurrence and during the continuance of an Event of Default, generally to sell, transfer, pledge, make any agreement with respect to or otherwise dispose of or deal with any of the Collateral in such manner as is consistent with the Uniform Commercial Code of the State and as fully and completely as though the Agent were the absolute owner thereof for all purposes, and to do, at the Guarantor’s expense, at any time, or from time to time, all acts and things which the Lender deems necessary or useful to protect, preserve or realize upon the Collateral and the Agent’s security interest therein, in order to effect the intent of this Agreement, all no less fully and effectively as the Guarantor might do, including, without limitation, (i) the filing and prosecuting of registration and transfer applications with the appropriate federal, state or local agencies or authorities with respect to trademarks, copyrights and patentable inventions and processes, (ii) upon written notice to the Guarantor, the exercise of voting rights with respect to voting securities, which rights may be exercised, if the Agent so elects, with a view to causing the liquidation of assets of the issuer of any such securities and (iii) the execution, delivery and recording, in connection with any sale or other disposition of any Collateral, of the endorsements, assignments or other instruments of conveyance or transfer with respect to such Collateral; and
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(b) to the extent that the Guarantor’s authorization given in §3 is not sufficient, to file such financing statements with respect hereto, with or without the Guarantor’s signature, or a photocopy of this Agreement in substitution for a financing statement, as the Agent may deem appropriate and to execute in the Guarantor’s name such financing statements and amendments thereto and continuation statements which may require the Guarantor’s signature.
14.2. Ratification by Guarantor . To the extent permitted by law, the Guarantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and is irrevocable.
14.3. No Duty on Agent . The powers conferred on the Agent hereunder are solely to protect its interests in the Collateral and shall not impose any duty upon it to exercise any such powers. The Agent shall be accountable only for the amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to the Guarantor for any act or failure to act, except for the Agent’s own gross negligence or willful misconduct.
15. Rights and Remedies . If an Event of Default shall have occurred and be continuing, the Agent, without any other notice to or demand upon the Guarantor, shall have in any jurisdiction in which enforcement hereof is sought, in addition to all other rights and remedies, the rights and remedies of a secured party under the Uniform Commercial Code of the State and of such jurisdiction and any additional rights and remedies as may be provided to a secured party in any jurisdiction in which Collateral is located, including, without limitation, the right to take possession of the Collateral, and for that purpose the Agent may, so far as the Guarantor can give authority therefor, enter upon any premises on which the Collateral may be situated and remove the same therefrom. The Agent may in its discretion require the Guarantor to assemble all or any part of the Collateral at such location or locations within the jurisdiction(s) of the Guarantor’s principal office(s) or at such other locations as the Agent may reasonably designate. Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Agent shall give to the Guarantor at least ten (10) Business Days prior written notice of the time and place of any public sale of Collateral or of the time after which any private sale or any other intended disposition is to be made. The Guarantor hereby acknowledges that ten (10) Business Days prior written notice of such sale or sales shall be reasonable notice. In addition, the Guarantor waives any and all rights that it may have to a judicial hearing in advance of the enforcement of any of the Agent’s rights and remedies hereunder, including, without limitation, its right following an Event of Default to take immediate possession of the Collateral and to exercise its rights and remedies with respect thereto.
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16. Standards for Exercising Rights and Remedies . To the extent that applicable law imposes duties on the Agent to exercise remedies in a commercially reasonable manner, the Guarantor acknowledges and agrees that it is not commercially unreasonable for the Agent (a) to fail to incur expenses reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to fail to complete raw material or work in process into finished goods or other finished products for disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against account debtors or other persons obligated on Collateral or to fail to remove liens or encumbrances on or any adverse claims against Collateral, (d) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other persons, whether or not in the same business as the Guarantor, for expressions of interest in acquiring all, or any portion of, the Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (h) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim disposition warranties, (k) to purchase insurance or credit enhancements to insure the Agent against risks of loss, collection or disposition of Collateral or to provide to the Agent a guaranteed return from the collection or disposition of Collateral, or (l) to the extent deemed appropriate by the Agent, to obtain the services of brokers, investment bankers, consultants and other professionals to assist the Agent in the collection, or disposition of, any of the Collateral. The Guarantor acknowledges that the purpose of this §16 is to provide non-exhaustive indications of what actions or omissions by the Agent would fulfill the Agent’s duties under the Uniform Commercial Code of the State or any other relevant jurisdiction in the Agent’s exercise of remedies against the Collateral and that other actions or omissions by the Agent shall not be deemed to fail to fulfill such duties solely on account of not being indicated in this §16. Without limitation upon the foregoing, nothing contained in this §16 shall be construed to grant any rights to the Guarantor or to impose any duties on the Agent that would not have been granted or imposed by this Agreement or by applicable law in the absence of this §16.
17. No Waiver by Agent, etc . The Agent shall not be deemed to have waived any of its rights and remedies in respect of the Obligations or the Collateral unless such waiver shall be in writing and signed by the Agent. No delay or omission on the part of the Agent in exercising any right or remedy shall operate as a waiver of such right or remedy or any other right or remedy. A waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion. All rights and remedies of the Agent with respect to the Obligations or the Collateral, whether evidenced hereby or by any other instrument or papers, shall be cumulative and may be exercised singularly, alternatively, successively or concurrently at such time or at such times as the Agent deems expedient.
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18. Suretyship Waivers by Guarantor . Except as may be otherwise specifically provided in the Credit Agreement, the Guarantor waives demand, notice, protest, notice of acceptance of this Agreement, notice of loans made, credit extended, Collateral received or delivered or other action taken in reliance hereon and all other demands and notices of any description. With respect to both the Obligations and the Collateral, the Guarantor assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of or failure to perfect any security interest in any Collateral, to the addition or release of any party or person primarily or secondarily liable, to the acceptance of partial payment thereon and the settlement, compromising or adjusting of any thereof, all in such manner and at such time or times as the Agent may deem advisable. The Agent shall have no duty as to the collection or protection of the Collateral or any income therefrom, the preservation of rights against prior parties, or the preservation of any rights pertaining thereto beyond the safe custody thereof as set forth in Section 11.2. The Guarantor further waives any and all other suretyship defenses.
19. Marshalling . The Agent shall not be required to marshal any present or future collateral security (including but not limited to the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of its rights and remedies hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising. To the extent that it lawfully may, the Guarantor hereby agrees that it will not invoke any law relating to the marshalling of collateral which might cause delay in or impede the enforcement of the Agent’s rights and remedies under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, the Guarantor hereby irrevocably waives the benefits of all such laws.
20. Proceeds of Dispositions; Expenses . The Guarantor shall pay to the Agent on demand amounts equal to any and all reasonable expenses, including, without limitation, reasonable attorneys’ fees and disbursements, incurred or paid by the Agent in protecting, preserving or enforcing the Agent’s rights and remedies under, or in respect of, any of the Obligations or any of the Collateral. After deducting all of said expenses, the residue of any proceeds of collection or sale or other disposition of Collateral shall, to the extent actually received in cash, be applied to the payment of the Obligations in such order or preference as the Agent may determine or in such order or preference as is provided in the Credit Agreement, proper allowance and provision being made for any Obligations not then due. Upon the final payment and satisfaction in full of all of the Obligations and after making any payments required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the Uniform Commercial Code of the State, any excess shall be returned to the Guarantor. In the absence of final payment and satisfaction in full of all of the Obligations, the Guarantor shall remain liable for any deficiency.
21. Overdue Amounts . Until paid, all amounts which become due and payable by the Guarantor hereunder shall be a debt secured by the Collateral and if not otherwise paid within any applicable grace period after the same becomes due shall bear, whether before or after judgment, interest at the rate of interest for overdue principal set forth in the Credit Agreement.
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22. Governing Law; Consent to Jurisdiction . THIS AGREEMENT IS INTENDED TO TAKE EFFECT AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT. The Guarantor agrees that any action or claim arising out of any dispute in connection with this Agreement, any rights or obligations hereunder or the performance or enforcement of such rights or obligations may be brought in the courts of the State of Connecticut or any federal court sitting therein and consents to the non-exclusive jurisdiction of such court and to service of process in any such suit being made upon the Guarantor by certified or registered mail at the address specified in the Credit Agreement. The Guarantor hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit is brought in an inconvenient forum.
23. Waiver of Jury Trial . EACH PARTY HERETO WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OR ENFORCEMENT OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Guarantor waives any right which it may have to claim or recover in any litigation referred to in the preceding sentence any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages. The Guarantor (i) certifies that neither the Agent nor any representative, agent or attorney of the Agent has represented, expressly or otherwise, that the Agent would not, in the event of litigation, seek to enforce the foregoing waivers or other waivers contained in this Agreement and (ii) acknowledges that, in entering into the Credit Agreement and the other Loan Documents to which the Agent is a party, the Agent is relying upon, among other things, the waivers and certifications contained in this Section 23.
24. Miscellaneous . The headings of each section of this Agreement are for convenience only and shall not define or limit the provisions thereof. This Agreement and all rights and obligations hereunder shall be binding upon the Guarantor and its successors and assigns, and shall inure to the benefit of the Agent and its successors and assigns permitted pursuant to the Credit Agreement. If any term of this Agreement shall be held to be invalid, illegal or unenforceable, the validity of all other terms hereof shall in no way be affected thereby, and this Agreement shall be construed and be enforceable as if such invalid, illegal or unenforceable term had not been included herein. The Guarantor acknowledges receipt of a copy of this Agreement.
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25. PREJUDGMENT REMEDY WAIVER .
THE GUARANTOR HEREBY REPRESENTS, WARRANTS AND ACKNOWLEDGES THAT THE FINANCING EVIDENCED HEREBY IS A COMMERCIAL TRANSACTION WITHIN THE MEANING OF CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED. THE GUARANTOR HEREBY WAIVES ITS RIGHT TO NOTICE AND PRIOR COURT HEARING OR COURT ORDER UNDER CONNECTICUT GENERAL STATUTES SECTIONS 52-278a ET . SEQ . AS AMENDED OR UNDER ANY OTHER STATE OR FEDERAL LAW WITH RESPECT TO ANY AND ALL PREJUDGMENT REMEDIES THE AGENT MAY EMPLOY TO ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS. MORE SPECIFICALLY, THE GUARANTOR ACKNOWLEDGES THAT UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT THE AGENT’S ATTORNEY MAY, PURSUANT TO, AND IN ACCORDANCE WITH, CONN. GEN. STAT. §52-278f, ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT SECURING A COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER. THE GUARANTOR ACKNOWLEDGES AND RESERVES ITS RIGHT TO NOTICE AND A HEARING SUBSEQUENT TO THE ISSUANCE OF A WRIT FOR PREJUDGMENT REMEDY AS AFORESAID AND THE AGENT ACKNOWLEDGES THE GUARANTOR’S RIGHT TO SAID HEARING SUBSEQUENT TO THE ISSUANCE OF SAID WRIT. THE GUARANTOR FURTHER WAIVES ITS RIGHTS TO REQUEST THAT THE AGENT POST A BOND, WITH OR WITHOUT SURETY, TO PROTECT GUARANTOR AGAINST DAMAGES THAT MAY BE CAUSED BY ANY PREJUDGMENT REMEDY SOUGHT OR OBTAINED BY THE AGENT.
26. Amendments . Neither this Agreement nor any term hereof may be amended, waived, discharged or terminated, except by a written instrument signed by the Guarantor and the Agent.
27. Electronic Self-Help Authorization . Upon and during the continuance of an Event of Default, the Agent shall have, in addition to all other rights and remedies contained in this Agreement, (which the Guarantor, and, by becoming bound by the Obligations or this Agreement, all other obligors, guarantors and any new debtors accept and agree upon), the right to locate, disable or to take possession of the Collateral by electronic, digital, magnetic or wireless optical electromagnetic or similar means after giving any notices required under applicable law.
28. Termination . At such time as all of the Obligations (other than contingent indemnification obligations for which no claim has been asserted) have been finally paid and satisfied in full and the Commitment has been irrevocably terminated, this Agreement shall terminate and Agent shall, upon written request and at the expense of Guarantor, execute and deliver to Guarantor all documents and other instruments as may be necessary or proper to evidence the termination of Agent’s security interest in the Collateral and Agent shall return to Guarantor any Collateral then in Agent’s possession.
[Signature page follows]
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IN WITNESS WHEREOF, intending to be legally bound, the Guarantor has caused this Agreement to be duly executed as of the date first above written.
LYDALL THERMAL/ACOUSTICAL, INC. | ||
By: | /S/ Dale G. Barnhart | |
Name: Dale G. Barnhart | ||
Title: President |
Accepted:
BANK OF AMERICA, N.A., as Administrative Agent | ||
By: | /S/ Christopher T. Phelan | |
Name: Christopher T. Phelan | ||
Title: Senior Vice President |
[Signature Page to BOA-Thermal/Acoustical Amended and Restated
Security Agreement]
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF CONNECTICUT ) | |||
) | ss: | MANCHESTER | |
COUNTY OF HARTFORD ) |
Before me, the undersigned, personally appeared Dale G. Barnhart, to me known personally, and who, being by me duly sworn, deposes and says that he is the President of Lydall Thermal/Acoustical, Inc., and that said instrument was signed and sealed on behalf of said company by authority of its Board of Directors, and said President acknowledged said instrument to be his free act and deed as such Officer and the free act and deed of said company on this 14th day of February, 2014.
/s/ Kathleen Carroll | |
[SEAL] | Notary Public/Commissioner of the Superior Court |
My commission expires: 06/30/14 |
[Acknowledgement Page to BOA-Thermal/Acoustical Amended and Restated
Security Agreement]
Exhibit 10.5
[Exhibit B to Perfection Certificate - Lydall Thermal/Acoustical]
Exhibit 10.6
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT , dated as of February 18, 2014 is made by and among LYDALL FILTRATION/SEPARATION, INC. , a Connecticut corporation (the “Guarantor” ) and BANK OF AMERICA, N.A., a national banking association (“ Bank of America ”) on behalf of itself and as Administrative Agent (in such capacity, the “ Agent ”) for the ratable benefit of itself and the other lenders that are a party to the Credit Agreement (defined below) (collectively with Bank of America, the “ Lenders ”).
WHEREAS, the Guarantor and Bank of America, N.A. (in such capacity, “ BofA ”) are parties to a Security Agreement (the “ Original Lydall Filtration Security Agreement ”) dated as of June 16, 2011 pursuant to which the Guarantor granted BofA a security interest in certain assets of the Guarantor as security for the obligations of Lydall, Inc. (the “ Borrower ”) to BofA under that certain Credit Agreement dated as of June 16, 2011 between the Borrower and BofA (the “ Original Credit Agreement ”) and the other Loan Documents, as defined in the Original Credit Agreement (the “ Original Loan Documents ”);
WHEREAS, pursuant to that certain Assignment dated as of the date hereof by and among BofA, the Agent, the Borrower and the Guarantors, as defined in the Original Credit Agreement, BofA has assigned the Original Credit Agreement and the Original Loan Documents (including the Original Lydall Filtration Security Agreement) to the Agent; and
WHEREAS, the Borrower, the Agent, the Guarantors and the Lenders have amended and restated the Credit Agreement and the other Original Loan Documents and desire to amend and restate the Original Lydall Filtration Security Agreement in its entirety as provided herein.
NOW THEREFORE, in consideration of the premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby amend and restate the Original Lydall Filtration Security Agreement in its entirety as follows:
WHEREAS, the Lenders, the Agent and Lydall, Inc., a Delaware corporation (the “Borrower” ), have entered into that certain Amended and Restated Credit Agreement dated as of even date herewith (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Credit Agreement” ), pursuant to which the Lenders, subject to the terms and conditions contained therein, are to make loans or otherwise to extend credit or provide financial accommodations to the Borrower;
WHEREAS, Guarantor is a party to that certain Guaranty Agreement dated as of the date hereof by and among Lydall International, Inc., a Delaware corporation, Lydall Thermal/Acoustical, Inc., a Delaware corporation, the Guarantor and the Agent (the “ Guaranty Agreement ”), pursuant to which Guarantor guarantees certain Obligations as set forth in the Guaranty Agreement;
WHEREAS, it is a condition precedent to the Lenders making any loans or otherwise extending credit or providing financial accommodations to the Borrower under the Credit Agreement that the Guarantor execute and deliver to the Agent, for the ratable benefit of the Lenders, a security agreement in substantially the form hereof; and
WHEREAS, the Guarantor wishes to grant a security interest in favor of the Agent, for the ratable benefit of the Lenders, as herein provided.
NOW, THEREFORE, in consideration of the promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions . All capitalized terms used herein without definitions shall have the respective meanings provided therefor in the Credit Agreement. The term “State,” as used herein, means the State of Connecticut. All terms defined in the Uniform Commercial Code of the State and used herein shall have the same definitions herein as specified therein. However, if a term is defined in Article 9 of the Uniform Commercial Code of the State differently than in another Article of the Uniform Commercial Code of the State, the term has the meaning specified in Article 9. The term “Obligations,” as used herein, shall have the meaning ascribed to it in the Credit Agreement.
2. Grant of Security Interest . The Guarantor hereby grants to the Agent, for the ratable benefit of the Lenders, to secure the payment and performance in full of all of the Obligations, a security interest in and pledges and assigns the following properties, assets and rights of the Guarantor, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof (all of the same being hereinafter called the “Collateral”): all assets including all personal and fixture property of every kind and nature, including without limitation all goods (including inventory, equipment and any accessions thereto), instruments (including promissory notes), documents, accounts (including health-care-insurance receivables), chattel paper (whether tangible or electronic), deposit accounts, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), commercial tort claims, securities and all other investment property, supporting obligations, any other contract rights or rights to the payment of money, insurance claims and proceeds, all general intangibles (including all payment intangibles), and all products and proceeds of the foregoing. Notwithstanding anything herein to the contrary, the term “Collateral” shall not include more than 65% of the equity interests of a first-tier Foreign Subsidiary (or more than 65% of the equity interests of a Domestic Subsidiary whose sole assets are the equity interests of Foreign Subsidiaries) or to the extent not yet paid to the Guarantor or such Domestic Subsidiary to more than the corresponding proportion of dividends, distributions, interest and other payments with respect to more than 65% of such equity interests (such excluded assets herein called the “Excluded Assets”). The Agent acknowledges that the attachment of its security interest in any commercial tort claim as original collateral is subject to the Guarantor’s compliance with § 4.7.
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3. Authorization to File Financing Statements . The Guarantor hereby irrevocably authorizes the Agent at any time and from time to time to file in any filing office in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as all assets or, as the case may be, all personal property of the Guarantor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform Commercial Code of the State or such jurisdiction specifically excluding, however, the Excluded Assets, or (ii) as being of an equal or lesser scope or with greater detail, and (b) provide any other information required by part 5 of Article 9 of the Uniform Commercial Code of the State or such other jurisdictions for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether the Guarantor is an organization, the type of organization and any organizational identification number issued to the Guarantor and, (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates. The Guarantor agrees to furnish any such information to the Agent promptly upon the Agent’s request. The Guarantor also ratifies its authorization for the Agent to have filed in any Uniform Commercial Code jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof.
4. Other Actions . Further to insure the attachment, perfection and first priority of, and the ability of the Agent to enforce, the Agent’s security interest in the Collateral, the Guarantor agrees, in each case at the Guarantor’s expense, to take the following actions with respect to the following Collateral and without limitation on the Guarantor’s other obligations contained in this Agreement:
4.1 . Promissory Notes and Tangible Chattel Paper . If the Guarantor shall, now or at any time hereafter, hold or acquire any promissory notes or any tangible chattel paper individually having a face value in excess of $2,500,000 (each, a “Material Note” or “Material Tangible Chattel Paper”, as the case may be), the Guarantor shall forthwith endorse, assign and deliver to the Agent each such Material Note or Material Chattel Paper, as the case may be, and, in each case of a required endorsement, assignment and delivery, accompanied by such instruments of transfer or assignment duly executed in blank as the Agent may from time to time specify.
4.2. Deposit Accounts . For each deposit account that the Guarantor now or at any time hereafter opens or maintains, the Guarantor shall, at the Agent’s request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Agent, either (a) cause the depositary bank to agree to comply, without further consent of the Guarantor, at any time with instructions from the Agent to such depositary bank directing the disposition of funds from time to time credited to such deposit account, or (b) arrange for the Agent to become the customer of the depositary bank with respect to the deposit account, with the Guarantor being permitted, only with the consent of the Agent, to exercise rights to withdraw funds from such deposit account. The Agent agrees with the Guarantor that the Agent shall not give any such instructions or withhold any withdrawal rights from the Guarantor, unless an Event of Default has occurred and is continuing, or, if effect were given to any withdrawal not otherwise permitted by the Loan Documents, would occur. The provisions of this paragraph shall not apply to (i) any deposit account for which the Guarantor, the depositary bank and the Agent have entered into a cash collateral agreement specially negotiated among the Guarantor, the depositary bank and the Agent for the specific purpose set forth therein, (ii) a deposit account for which the Agent is the depositary bank and is in automatic control, and (iii) any deposit accounts specially and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of the Guarantor’s employees. Nothing in this Section 4.2 shall be construed to limit or otherwise derogate in any way the Guarantor’s obligations under Section 6.15 of the Credit Agreement.
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4.3. Investment Property . Subject to the limitations set forth in Section 2 hereof, if the Guarantor shall now or at any time hereafter hold or acquire any certificated securities of any Subsidiary, the Guarantor shall forthwith endorse, assign and deliver the same to the Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Agent may from time to time specify. If any securities now or hereafter acquired by the Guarantor are (a) (i) uncertificated or (ii) certificated and issued by a Person other than a Subsidiary, (b) issued to the Guarantor or its nominee directly by the issuer thereof, and (c) have a principal amount or value in excess of $5,000,000 in the aggregate with respect to any one issuer (each a “Material Security”), the Guarantor shall promptly notify the Agent thereof and, at the Agent’s request and option pursuant to an agreement in a form and substance reasonably satisfactory to the Agent, either (A) cause the issuer to agree to comply, without further consent of the Guarantor, or such nominee, at any time with instructions from the Agent as to each Material Security or (B) arrange for the Agent to become the registered owner of the Material Securities. Subject to the limitations set forth in Section 2 hereof, if any securities, whether certificated or uncertificated, or other investment property now or hereafter acquired by the Guarantor is held by the Guarantor or its nominee through a securities intermediary or commodity intermediary and constitute a Material Security, the Guarantor shall promptly notify the Agent thereof and, at the Agent’s request and option, the Guarantor shall, pursuant to an agreement in form and substance reasonably satisfactory to the Agent, either (i) cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply, in each case without further consent of the Guarantor or such nominee, at any time with entitlement orders or other instructions from the Agent to such securities intermediary as to such a Material Security, or (as the case may be) to apply any value distributed on account of any commodity contract as directed by the Agent to such commodity intermediary, or (ii) in the case of a Material Security held through a securities intermediary, arrange for the Agent to become the entitlement holder with respect to such a Material Security, with the Guarantor being permitted, only with the consent of the Agent, to exercise rights to withdraw or otherwise deal with such investment property. The Agent agrees with the Guarantor that the Agent shall not give any such entitlement orders or instructions or directions to any such issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by the Guarantor, unless an Event of Default has occurred and is continuing, or, after giving effect to any such investment and withdrawal rights not otherwise permitted by the Loan Documents, would occur. The provisions of this paragraph shall not apply to any financial assets credited to a securities account for which the Agent is the securities intermediary.
4.4. Collateral in the Possession of a Bailee . If any Collateral having an aggregate value of more than $1,000,000 is now or at any time hereafter in the possession of a bailee at a particular location, the Guarantor shall promptly notify the Agent thereof and, at the Agent’s request and option, shall use reasonable best efforts to obtain an acknowledgement from the bailee, in form and substance reasonably satisfactory to the Agent, that the bailee holds such Collateral for the benefit of the Agent and such bailee’s agreement to comply, without further consent of the Guarantor, at any time with instructions of the Agent as to such Collateral. The Agent agrees with the Guarantor that the Agent shall not give any such instructions unless an Event of Default has occurred and is continuing or would occur after taking into account any action by the Guarantor with respect to the bailee.
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4.5. Electronic Chattel Paper and Transferable Records . If the Guarantor, now or at any time hereafter, holds or acquires an interest in any electronic chattel paper, any electronic document or any “transferrable record,” individually having a face value in excess of $2,500,000 (each a “Material Electronic Paper”), the Guarantor shall (i) promptly notify the Agent thereof and, (ii) at the request and option of the Agent, take such action as the Agent may reasonably request to vest in the Agent control of such Material Electronic Paper, under Section 9-105 of the Uniform Commercial Code of the State or any other relevant jurisdiction, Section 7-106 of the Uniform Commercial Code of the State or any other relevant jurisdiction, Section 201 of the federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, as applicable. The Agent agrees with the Guarantor that the Agent will arrange, pursuant to procedures satisfactory to the Agent and so long as such procedures will not result in the Agent’s loss of control, for the Guarantor to make alterations to the electronic chattel paper, electronic document or transferable record permitted under UCC Section 9-105, UCC Section 7-106, or, as the case may be, Section 201 of the federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act for a party in control to make without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by the Guarantor with respect to such electronic chattel paper, electronic document or transferrable record. The provisions of this Section 4.6 relating to electronic documents and “control” under UCC Section 7-106 apply in the event that the 2003 revisions to Article 7, with amendments to Article 9, of the Uniform Commercial Code, in substantially the form approved by the American Law Institute and the National Conference of Commissioners on Uniform State Laws, are now or hereafter adopted and become effective in the State or in any other relevant jurisdiction.
4.6. Letter-of-Credit Rights . If the Guarantor is, now or at any time hereafter, a beneficiary under a letter of credit now or hereafter individually having a maximum amount that may be drawn in excess of $2,500,000 (each, a “Material Letter of Credit”), the Guarantor shall promptly notify the Agent thereof and, at the request and option of the Agent, the Guarantor shall, pursuant to an agreement in form and substance satisfactory to the Agent, either (A) arrange for the issuer and any confirmer or other nominated person of each such Material Letter of Credit, to consent to an assignment to the Agent of the proceeds of such Material Letter of Credit or (B) arrange for the Agent to become the transferee beneficiary of such Material Letter of Credit.
4.7 Commercial Tort Claims . If the Guarantor shall now or at any time hereafter hold or acquire a commercial tort claim with respect to which the Guarantor has commenced legal action by filing a lawsuit in court and having a value reasonably estimated by the Guarantor to be in excess of $5,000,000, the Guarantor shall promptly notify the Agent in a writing signed by the Guarantor of the particulars thereof, and grant to the Agent in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Agent. Such Notice shall be deemed to be an amendment to the Guarantor’s Perfection Certificate with respect to such commercial tort claim.
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4.8. Other Actions as to any and all Collateral . The Guarantor further agrees, upon request of the Agent and at the Agent’s option, to take any and all other actions as the Agent may reasonably determine to be necessary or useful for the attachment, perfection and first priority of (subject, however, to Liens permitted under the Credit Agreement), and the ability of the Agent to enforce, the Agent’s security interest in any and all of the Collateral, including, without limitation, (a) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the Uniform Commercial Code, to the extent, if any, that the Guarantor’s signature thereon is required therefor, (b) causing the Agent’s name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of the Agent to enforce, the Agent’s security interest in such Collateral, (c) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of the Agent to enforce, the Agent’s security interest in such Collateral, (d) obtaining governmental and other third party waivers, consents and approvals in form and substance satisfactory to the Agent, including, without limitation, any consent of any licensor, lessor or other person obligated on Collateral, (e) using reasonable best efforts to obtain waivers from mortgagees and landlords in form and substance satisfactory to the Agent and in accordance with the terms of the Credit Agreement, and (f) taking all actions under any earlier versions of the Uniform Commercial Code or under any other law, as reasonably determined by the Agent to be applicable in any relevant Uniform Commercial Code or other jurisdiction, including any foreign jurisdiction.
5. Relation to Other Security Documents . The provisions of this Agreement supplement the provisions of any real estate mortgage or deed of trust, if any, granted by the Guarantor to the Agent and which secures the payment or performance of any of the Obligations. Nothing contained in any such real estate mortgage or deed of trust shall derogate from any of the rights or remedies of the Agent hereunder.
6. Representations and Warranties Concerning Guarantor’s Legal Status . The Guarantor represents and warrants to the Agent as follows: (a) the Guarantor’s exact legal name is that indicated on the signature page hereof, (b) the Guarantor is an organization of the type, and is organized in the jurisdiction, set forth on its Perfection Certificate dated the date hereof and attached hereto as Exhibit A (the “Perfection Certificate”), (c) the Perfection Certificate accurately sets forth the organizational identification number or accurately states that the Guarantor has none, (d) the Perfection Certificate accurately sets forth the Guarantor’s place of business or, if more than one, its chief executive office, as well as the Guarantor’s mailing address, if different, and (e) all other information set forth on the Perfection Certificate pertaining to the Guarantor is accurate and complete in all material respects.
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7. Covenants Concerning Guarantor’s Legal Status . The Guarantor covenants with the Agent as follows: (a) without providing at least thirty (30) days prior written notice to the Agent, the Guarantor will not change its name, its place of business or, if more than one, chief executive office, or its mailing address or organizational identification number if it has one, (b) if the Guarantor does not have an organizational identification number and later obtains one, the Guarantor will promptly notify the Agent of such organizational identification number, and (c) the Guarantor will not change its type of organization, jurisdiction of organization or other legal structure except as permitted in the Credit Agreement.
8. Representations and Warranties Concerning Collateral Etc . The Guarantor further represents and warrants to the Agent as follows: (a) the Guarantor is the owner of, or has other rights in, or power to transfer, the Collateral, free from any right or claim of any person or any adverse lien, security interest or other encumbrance, except for the security interest created by this Agreement and Permitted Liens, (b) none of the Collateral constitutes, or is the proceeds of, “farm products” as defined in §9-102(a)(34) of the Uniform Commercial Code of the State, (c) none of the account debtors or other persons obligated on any of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral, (d) to the best of its knowledge, the Guarantor holds no commercial tort claim except as indicated on the Perfection Certificate, (e) the Guarantor has at all times operated its business in compliance in all material respects with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances, and (f) all other information set forth on the Perfection Certificate pertaining to the Collateral is accurate and complete in all material respects.
9. Covenants Concerning Collateral, Etc . The Guarantor further covenants with the Agent as follows: (a) the Collateral, to the extent not delivered to the Agent pursuant to Section 4 hereof or disposed of as permitted by the Credit Agreement, will be kept at those locations listed on the Perfection Certificate, as the same may be amended from time to time as herein provided, and the Guarantor will not remove the Collateral from such locations without providing at least fifteen (15) days prior written notice to the Agent except (i) to another location listed on the Perfection Certificate, or (ii) to another location of the Guarantor or one of its Subsidiaries or one of the other Subsidiaries of Borrower, in each case, that is located within the United States but not listed on the Perfection Certificate, as amended from time to time (any such location, an “Unlisted Location”); provided , that the aggregate value of the Collateral located at such Unlisted Location shall not exceed $1,000,000, or (iii) motor vehicles or (iv) the removal of Collateral for up to thirty (30) days to repair such Collateral, in each case, in the ordinary course of business, (b) except for the security interest herein granted and Permitted Liens, the Guarantor shall be the owner of, or have other rights in or power to transfer, the Collateral free from any right or claim of any other person or any lien, security interest or other encumbrance, and the Guarantor shall defend the same against all claims and demands of all persons at any time claiming the same or any interests therein adverse to the Agent, (c) the Guarantor shall not pledge, mortgage or create, or suffer to exist any right of any person in or claim by any person to the Collateral, or any security interest, lien or other encumbrance in the Collateral in favor of any person, other than the Agent except for Permitted Liens, (d) the Guarantor will keep the Collateral in good order and repair and will not use the same in violation of law or any policy of insurance thereon, (e) the Guarantor will permit the Agent, or its designee, to inspect the Collateral at any reasonable time during normal business hours, wherever located, (f) the Guarantor will pay promptly when due all taxes, assessments, governmental charges and levies upon the Collateral or incurred in connection with the use or operation of the Collateral or incurred in connection with this Agreement, (g) the Guarantor will continue to operate its business in compliance in all material respects with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances, (h) the Guarantor will not sell or otherwise dispose, or offer to sell or otherwise dispose, of the Collateral or any interest therein except for dispositions permitted by the Credit Agreement, and (i) with each annual Compliance Certificate delivered by Borrower pursuant to Section 6.02 of the Credit Agreement, the Guarantor shall cause Borrower to provide information updating the Perfection Certificate, including without limitation any new locations at which any Collateral is located.
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10. Insurance .
10.1. Maintenance of Insurance . The Guarantor will maintain with financially sound and reputable insurers insurance with respect to its properties and business against such casualties and contingencies as shall be in accordance with general practices of businesses engaged in similar activities in similar geographic areas. Such insurance shall be in such minimum amounts that the Guarantor will not be deemed a co-insurer under applicable insurance laws, regulations and policies and otherwise shall be in such amounts, contain such terms, be in such forms and be for such periods as may be reasonably satisfactory to the Agent. In addition, all such property casualty insurance shall be payable to the Agent as loss payee under a loss payee clause reasonably acceptable to the Agent. Without limiting the foregoing, the Guarantor will (i) keep all of its physical property insured with casualty or physical hazard insurance on an “all risks” basis, with broad form flood and earthquake coverages and electronic data processing coverage, with a full replacement cost endorsement and an “agreed amount” clause in an amount equal to 100% of the full replacement cost of such property, (ii) maintain all such workers’ compensation or similar insurance as may be required by law and (iii) maintain, in amounts and with deductibles equal to those generally maintained by businesses engaged in similar activities in similar geographic areas, general public liability insurance against claims of bodily injury, death or property damage occurring, on, in or about the properties of the Guarantor; business interruption insurance; and product liability insurance.
10.2. Insurance Proceeds . The proceeds of any casualty insurance in respect of any casualty loss of any of the Collateral shall, subject to the rights, if any, of other parties with an interest having priority in the property covered thereby, (i) so long as no Event of Default has occurred and is continuing, be disbursed to the Guarantor for direct application by the Guarantor to the repair or replacement of the Guarantor’s property so damaged or destroyed, with any excess proceeds to be retained by the Guarantor, and (ii) if an Event of Default has occurred and is continuing, be distributed to the Agent to be held by the Agent as cash collateral for the Obligations. The Agent may, at its sole option, disburse from time to time all or any part of such proceeds so held as cash collateral, upon such terms and conditions as the Agent may reasonably prescribe, for direct application by the Guarantor solely to the repair or replacement of the Guarantor’s property so damaged or destroyed, or the Agent may apply all or any part of such proceeds to the Obligations.
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10.3. Continuation of Insurance . All policies of insurance shall provide for at least thirty (30) days prior written cancellation notice to the Agent. In the event of failure by the Guarantor to provide and maintain insurance as herein provided, the Agent may, at its option, provide such insurance and charge the amount thereof to the Guarantor. The Guarantor shall furnish the Agent with certificates of insurance and policies evidencing compliance with the foregoing insurance provision.
11. Collateral Protection Expenses: Preservation of Collateral .
11.1. Expenses Incurred by Agent . In the Agent’s discretion, if the Guarantor fails to do so, the Agent may discharge taxes and other encumbrances at any time levied or placed on any of the Collateral, make repairs thereto, maintain any of the Collateral, and pay any necessary filing fees or insurance premiums. The Guarantor agrees to reimburse the Agent on demand for all expenditures so made. The Agent shall have no obligation to the Guarantor to make any such expenditures, nor shall the making thereof be construed as a waiver or cure of any Default or Event of Default.
11.2. Agent’s Obligations and Duties . Anything herein to the contrary notwithstanding, the Guarantor shall remain obligated and liable under each contract or agreement comprised in the Collateral to be observed or performed by the Guarantor thereunder. The Agent shall not have any obligation or liability under any such contract or agreement by reason of, or arising out of, this Agreement or the receipt by the Agent of any payment relating to any of the Collateral, nor shall the Agent be obligated in any manner to perform any of the obligations of the Guarantor under, or pursuant to, any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment received by the Agent in respect of the Collateral or as to the sufficiency of any performance by any party under any such contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to the Agent or to which the Agent may be entitled at any time or times. The Agent’s sole duty with respect to the custody, safe keeping and physical preservation of the Collateral in its possession, under §9-207 of the Uniform Commercial Code of the State or otherwise, shall be to deal with such Collateral in the same manner as the Agent deals with similar property for its own account.
12. Securities and Deposits . The Agent may at any time following the occurrence and during the continuance of an Event of Default, at its option, transfer to itself or any nominee any securities constituting Collateral, receive any income thereon and hold such income as additional Collateral or apply it to the Obligations. Whether or not any Obligations are due, the Agent may following the occurrence and during the continuance of an Event of Default demand, sue for, collect, or make any settlement or compromise which it deems desirable with respect to the Collateral. Regardless of the adequacy of Collateral or any other security for the Obligations, any deposits or other sums at any time credited by or due from the Agent to the Guarantor may at any time during the continuance of an Event of Default be applied to, or set off against, any of the Obligations then due and owing.
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13. Notification to Account Debtors and Other Persons Obligated on Collateral . If an Event of Default shall have occurred and be continuing, the Guarantor shall, at the request and option of the Agent, notify account debtors and other persons obligated on any of the Collateral of the security interest of the Agent in any account, chattel paper, general intangible, instrument or other Collateral and that payment thereof is to be made directly to the Agent or to any financial institution designated by the Agent as the Agent’s agent therefor, and the Agent may itself, if an Event of Default shall have occurred and be continuing, without notice to or demand upon the Guarantor, so notify account debtors and other persons obligated on Collateral, which notice may include the provision to such account debtors and other persons of an accounts receivable letter which, if provided, may be (a) substantially in the form attached hereto as Exhibit B (Agent having required Guarantor to execute an undated accounts receivable letter in the form of Exhibit B attached hereto which Agent agrees to hold and not release unless Agent is permitted to send such letter as provided in this Section 13), or (b) in another form executed by Guarantor upon request of Agent. After the making of such a request or the giving of any such notification, the Guarantor shall hold any proceeds of collection of accounts, chattel paper, general intangibles, instruments and other Collateral received by the Guarantor as trustee for the Agent without commingling the same with other funds of the Guarantor and shall turn the same over to the Agent in the identical form received, together with any necessary endorsements or assignments. The Agent shall apply the proceeds of collection of accounts, chattel paper, general intangibles, instruments and other Collateral received by the Agent to the Obligations, such proceeds to be immediately credited after final payment in cash or other immediately available funds of the items giving rise to them.
14. Power of Attorney .
14.1. Appointment and Powers of Agent . The Guarantor hereby irrevocably constitutes and appoints the Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Guarantor or in the Agent’s own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or useful to accomplish the purposes of this Agreement and, without limiting the generality of the foregoing, hereby gives said attorneys the power and right, on behalf of the Guarantor, without notice to or assent by the Guarantor, to do the following:
(a) upon the occurrence and during the continuance of an Event of Default, generally to sell, transfer, pledge, make any agreement with respect to or otherwise dispose of or deal with any of the Collateral in such manner as is consistent with the Uniform Commercial Code of the State and as fully and completely as though the Agent were the absolute owner thereof for all purposes, and to do, at the Guarantor’s expense, at any time, or from time to time, all acts and things which the Lender deems necessary or useful to protect, preserve or realize upon the Collateral and the Agent’s security interest therein, in order to effect the intent of this Agreement, all no less fully and effectively as the Guarantor might do, including, without limitation, (i) the filing and prosecuting of registration and transfer applications with the appropriate federal, state or local agencies or authorities with respect to trademarks, copyrights and patentable inventions and processes, (ii) upon written notice to the Guarantor, the exercise of voting rights with respect to voting securities, which rights may be exercised, if the Agent so elects, with a view to causing the liquidation of assets of the issuer of any such securities and (iii) the execution, delivery and recording, in connection with any sale or other disposition of any Collateral, of the endorsements, assignments or other instruments of conveyance or transfer with respect to such Collateral; and
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(b) to the extent that the Guarantor’s authorization given in §3 is not sufficient, to file such financing statements with respect hereto, with or without the Guarantor’s signature, or a photocopy of this Agreement in substitution for a financing statement, as the Agent may deem appropriate and to execute in the Guarantor’s name such financing statements and amendments thereto and continuation statements which may require the Guarantor’s signature.
14.2. Ratification by Guarantor . To the extent permitted by law, the Guarantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and is irrevocable.
14.3. No Duty on Agent . The powers conferred on the Agent hereunder are solely to protect its interests in the Collateral and shall not impose any duty upon it to exercise any such powers. The Agent shall be accountable only for the amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to the Guarantor for any act or failure to act, except for the Agent’s own gross negligence or willful misconduct.
15. Rights and Remedies . If an Event of Default shall have occurred and be continuing, the Agent, without any other notice to or demand upon the Guarantor, shall have in any jurisdiction in which enforcement hereof is sought, in addition to all other rights and remedies, the rights and remedies of a secured party under the Uniform Commercial Code of the State and of such jurisdiction and any additional rights and remedies as may be provided to a secured party in any jurisdiction in which Collateral is located, including, without limitation, the right to take possession of the Collateral, and for that purpose the Agent may, so far as the Guarantor can give authority therefor, enter upon any premises on which the Collateral may be situated and remove the same therefrom. The Agent may in its discretion require the Guarantor to assemble all or any part of the Collateral at such location or locations within the jurisdiction(s) of the Guarantor’s principal office(s) or at such other locations as the Agent may reasonably designate. Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Agent shall give to the Guarantor at least ten (10) Business Days prior written notice of the time and place of any public sale of Collateral or of the time after which any private sale or any other intended disposition is to be made. The Guarantor hereby acknowledges that ten (10) Business Days prior written notice of such sale or sales shall be reasonable notice. In addition, the Guarantor waives any and all rights that it may have to a judicial hearing in advance of the enforcement of any of the Agent’s rights and remedies hereunder, including, without limitation, its right following an Event of Default to take immediate possession of the Collateral and to exercise its rights and remedies with respect thereto.
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16. Standards for Exercising Rights and Remedies . To the extent that applicable law imposes duties on the Agent to exercise remedies in a commercially reasonable manner, the Guarantor acknowledges and agrees that it is not commercially unreasonable for the Agent (a) to fail to incur expenses reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to fail to complete raw material or work in process into finished goods or other finished products for disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against account debtors or other persons obligated on Collateral or to fail to remove liens or encumbrances on or any adverse claims against Collateral, (d) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other persons, whether or not in the same business as the Guarantor, for expressions of interest in acquiring all, or any portion of, the Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (h) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim disposition warranties, (k) to purchase insurance or credit enhancements to insure the Agent against risks of loss, collection or disposition of Collateral or to provide to the Agent a guaranteed return from the collection or disposition of Collateral, or (l) to the extent deemed appropriate by the Agent, to obtain the services of brokers, investment bankers, consultants and other professionals to assist the Agent in the collection, or disposition of, any of the Collateral. The Guarantor acknowledges that the purpose of this §16 is to provide non-exhaustive indications of what actions or omissions by the Agent would fulfill the Agent’s duties under the Uniform Commercial Code of the State or any other relevant jurisdiction in the Agent’s exercise of remedies against the Collateral and that other actions or omissions by the Agent shall not be deemed to fail to fulfill such duties solely on account of not being indicated in this §16. Without limitation upon the foregoing, nothing contained in this §16 shall be construed to grant any rights to the Guarantor or to impose any duties on the Agent that would not have been granted or imposed by this Agreement or by applicable law in the absence of this §16.
17. No Waiver by Agent, etc . The Agent shall not be deemed to have waived any of its rights and remedies in respect of the Obligations or the Collateral unless such waiver shall be in writing and signed by the Agent. No delay or omission on the part of the Agent in exercising any right or remedy shall operate as a waiver of such right or remedy or any other right or remedy. A waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion. All rights and remedies of the Agent with respect to the Obligations or the Collateral, whether evidenced hereby or by any other instrument or papers, shall be cumulative and may be exercised singularly, alternatively, successively or concurrently at such time or at such times as the Agent deems expedient.
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18. Suretyship Waivers by Guarantor . Except as may be otherwise specifically provided in the Credit Agreement, the Guarantor waives demand, notice, protest, notice of acceptance of this Agreement, notice of loans made, credit extended, Collateral received or delivered or other action taken in reliance hereon and all other demands and notices of any description. With respect to both the Obligations and the Collateral, the Guarantor assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of or failure to perfect any security interest in any Collateral, to the addition or release of any party or person primarily or secondarily liable, to the acceptance of partial payment thereon and the settlement, compromising or adjusting of any thereof, all in such manner and at such time or times as the Agent may deem advisable. The Agent shall have no duty as to the collection or protection of the Collateral or any income therefrom, the preservation of rights against prior parties, or the preservation of any rights pertaining thereto beyond the safe custody thereof as set forth in Section 11.2. The Guarantor further waives any and all other suretyship defenses.
19. Marshalling . The Agent shall not be required to marshal any present or future collateral security (including but not limited to the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of its rights and remedies hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising. To the extent that it lawfully may, the Guarantor hereby agrees that it will not invoke any law relating to the marshalling of collateral which might cause delay in or impede the enforcement of the Agent’s rights and remedies under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, the Guarantor hereby irrevocably waives the benefits of all such laws.
20. Proceeds of Dispositions; Expenses . The Guarantor shall pay to the Agent on demand amounts equal to any and all reasonable expenses, including, without limitation, reasonable attorneys’ fees and disbursements, incurred or paid by the Agent in protecting, preserving or enforcing the Agent’s rights and remedies under, or in respect of, any of the Obligations or any of the Collateral. After deducting all of said expenses, the residue of any proceeds of collection or sale or other disposition of Collateral shall, to the extent actually received in cash, be applied to the payment of the Obligations in such order or preference as the Agent may determine or in such order or preference as is provided in the Credit Agreement, proper allowance and provision being made for any Obligations not then due. Upon the final payment and satisfaction in full of all of the Obligations and after making any payments required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the Uniform Commercial Code of the State, any excess shall be returned to the Guarantor. In the absence of final payment and satisfaction in full of all of the Obligations, the Guarantor shall remain liable for any deficiency.
21. Overdue Amounts . Until paid, all amounts which become due and payable by the Guarantor hereunder shall be a debt secured by the Collateral and if not otherwise paid within any applicable grace period after the same becomes due shall bear, whether before or after judgment, interest at the rate of interest for overdue principal set forth in the Credit Agreement.
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22. Governing Law; Consent to Jurisdiction . THIS AGREEMENT IS INTENDED TO TAKE EFFECT AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT. The Guarantor agrees that any action or claim arising out of any dispute in connection with this Agreement, any rights or obligations hereunder or the performance or enforcement of such rights or obligations may be brought in the courts of the State of Connecticut or any federal court sitting therein and consents to the non-exclusive jurisdiction of such court and to service of process in any such suit being made upon the Guarantor by certified or registered mail at the address specified in the Credit Agreement. The Guarantor hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit is brought in an inconvenient forum.
23. Waiver of Jury Trial . EACH PARTY HERETO WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OR ENFORCEMENT OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Guarantor waives any right which it may have to claim or recover in any litigation referred to in the preceding sentence any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages. The Guarantor (i) certifies that neither the Agent nor any representative, agent or attorney of the Agent has represented, expressly or otherwise, that the Agent would not, in the event of litigation, seek to enforce the foregoing waivers or other waivers contained in this Agreement and (ii) acknowledges that, in entering into the Credit Agreement and the other Loan Documents to which the Agent is a party, the Agent is relying upon, among other things, the waivers and certifications contained in this Section 23.
24. Miscellaneous . The headings of each section of this Agreement are for convenience only and shall not define or limit the provisions thereof. This Agreement and all rights and obligations hereunder shall be binding upon the Guarantor and its successors and assigns, and shall inure to the benefit of the Agent and its successors and assigns permitted pursuant to the Credit Agreement. If any term of this Agreement shall be held to be invalid, illegal or unenforceable, the validity of all other terms hereof shall in no way be affected thereby, and this Agreement shall be construed and be enforceable as if such invalid, illegal or unenforceable term had not been included herein. The Guarantor acknowledges receipt of a copy of this Agreement.
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25. PREJUDGMENT REMEDY WAIVER .
THE GUARANTOR HEREBY REPRESENTS, WARRANTS AND ACKNOWLEDGES THAT THE FINANCING EVIDENCED HEREBY IS A COMMERCIAL TRANSACTION WITHIN THE MEANING OF CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED. THE GUARANTOR HEREBY WAIVES ITS RIGHT TO NOTICE AND PRIOR COURT HEARING OR COURT ORDER UNDER CONNECTICUT GENERAL STATUTES SECTIONS 52-278a ET . SEQ . AS AMENDED OR UNDER ANY OTHER STATE OR FEDERAL LAW WITH RESPECT TO ANY AND ALL PREJUDGMENT REMEDIES THE AGENT MAY EMPLOY TO ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS. MORE SPECIFICALLY, THE GUARANTOR ACKNOWLEDGES THAT UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT THE AGENT’S ATTORNEY MAY, PURSUANT TO, AND IN ACCORDANCE WITH, CONN. GEN. STAT. §52-278f, ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT SECURING A COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER. THE GUARANTOR ACKNOWLEDGES AND RESERVES ITS RIGHT TO NOTICE AND A HEARING SUBSEQUENT TO THE ISSUANCE OF A WRIT FOR PREJUDGMENT REMEDY AS AFORESAID AND THE AGENT ACKNOWLEDGES THE GUARANTOR’S RIGHT TO SAID HEARING SUBSEQUENT TO THE ISSUANCE OF SAID WRIT. THE GUARANTOR FURTHER WAIVES ITS RIGHTS TO REQUEST THAT THE AGENT POST A BOND, WITH OR WITHOUT SURETY, TO PROTECT GUARANTOR AGAINST DAMAGES THAT MAY BE CAUSED BY ANY PREJUDGMENT REMEDY SOUGHT OR OBTAINED BY THE AGENT.
26. Amendments . Neither this Agreement nor any term hereof may be amended, waived, discharged or terminated, except by a written instrument signed by the Guarantor and the Agent.
27. Electronic Self-Help Authorization . Upon and during the continuance of an Event of Default, the Agent shall have, in addition to all other rights and remedies contained in this Agreement, (which the Guarantor, and, by becoming bound by the Obligations or this Agreement, all other obligors, guarantors and any new debtors accept and agree upon), the right to locate, disable or to take possession of the Collateral by electronic, digital, magnetic or wireless optical electromagnetic or similar means after giving any notices required under applicable law.
28. Termination . At such time as all of the Obligations (other than contingent indemnification obligations for which no claim has been asserted) have been finally paid and satisfied in full and the Commitment has been irrevocably terminated, this Agreement shall terminate and Agent shall, upon written request and at the expense of Guarantor, execute and deliver to Guarantor all documents and other instruments as may be necessary or proper to evidence the termination of Agent’s security interest in the Collateral and Agent shall return to Guarantor any Collateral then in Agent’s possession.
[Signature page follows]
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IN WITNESS WHEREOF, intending to be legally bound, the Guarantor has caused this Agreement to be duly executed as of the date first above written.
LYDALL FILTRATION/SEPARATION, INC. | |||
By: | /S/ Dale G. Barnhart | ||
Name: Dale G. Barnhart | |||
Title: President |
Accepted:
BANK OF AMERICA, N.A., as Administrative Agent
By: | /S/ Christopher T. Phelan | |
Name: | Christopher T. Phelan | |
Title: | Senior Vice President |
[SIGNATURE PAGE TO AMENDED & RESTATED SECURITY AG. -LYDALL FILTRATION]
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF CONNECTICUT | ) | |||
) | ss: | MANCHESTER | ||
COUNTY OF HARTFORD | ) |
Before me, the undersigned, personally appeared Dale G. Barnhart, to me known personally, and who, being by me duly sworn, deposes and says that he is the President of Lydall Filtration/Separation, Inc., and that said instrument was signed and sealed on behalf of said company by authority of its Board of Directors, and said President acknowledged said instrument to be his free act and deed as such Officer and the free act and deed of said company on this 14th day of February, 2014.
/s/ Kathleen Carroll | |
[SEAL] | Notary Public/Commissioner of the Superior Court |
My commission expires: 06/30/14 |
Exhibit 10.7
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT , dated as of February 18, 2014 is made by and among LYDALL INTERNATIONAL, INC. , a Delaware corporation (the “Guarantor” ) and BANK OF AMERICA, N.A., a national banking association (“ Bank of America ”) on behalf of itself and as Administrative Agent (in such capacity, the “ Agent ”) for the ratable benefit of itself and the other lenders that are a party to the Credit Agreement (defined below) (collectively with Bank of America, the “ Lenders ”).
WHEREAS, the Guarantor and Bank of America, N.A. (in such capacity, “ BofA ”) are parties to a Security Agreement (the “ Original Lydall International Security Agreement ”) dated as of June 16, 2011 pursuant to which the Guarantor granted BofA a security interest in certain assets of the Guarantor as security for the obligations of Lydall, Inc. (the “ Borrower ”) to BofA under that certain Credit Agreement dated as of June 16, 2011 between the Borrower and BofA (the “ Original Credit Agreement ”) and the other Loan Documents, as defined in the Original Credit Agreement (the “ Original Loan Documents ”);
WHEREAS, pursuant to that certain Assignment dated as of the date hereof by and among BofA, the Agent, the Borrower and the Guarantors, as defined in the Original Credit Agreement, BofA has assigned the Original Credit Agreement and the Original Loan Documents (including the Original Lydall International Security Agreement) to the Agent; and
WHEREAS, the Borrower, the Agent, the Guarantors and the Lenders have amended and restated the Credit Agreement and the other Original Loan Documents and desire to amend and restate the Original Lydall International Security Agreement in its entirety as provided herein.
NOW THEREFORE, in consideration of the premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby amend and restate the Original Lydall International Security Agreement in its entirety as follows:
WHEREAS, the Lenders, the Agent and Lydall, Inc., a Delaware corporation (the “Borrower” ), have entered into that certain Amended and Restated Credit Agreement dated as of even date herewith (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Credit Agreement” ), pursuant to which the Lenders, subject to the terms and conditions contained therein, are to make loans or otherwise to extend credit or provide financial accommodations to the Borrower;
WHEREAS, Guarantor is a party to that certain Guaranty Agreement dated as of the date hereof by and among Lydall Filtration/Separation, Inc., a Connecticut corporation, Lydall Thermal/Acoustical, Inc., a Delaware corporation, the Guarantor and the Agent (the “ Guaranty Agreement ”), pursuant to which Guarantor guarantees certain Obligations as set forth in the Guaranty Agreement;
WHEREAS, it is a condition precedent to the Lenders making any loans or otherwise extending credit or providing financial accommodations to the Borrower under the Credit Agreement that the Guarantor execute and deliver to the Agent, for the ratable benefit of the Lenders, a security agreement in substantially the form hereof; and
WHEREAS, the Guarantor wishes to grant a security interest in favor of the Agent, for the ratable benefit of the Lenders, as herein provided.
NOW, THEREFORE, in consideration of the promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions . All capitalized terms used herein without definitions shall have the respective meanings provided therefor in the Credit Agreement. The term “State,” as used herein, means the State of Connecticut. All terms defined in the Uniform Commercial Code of the State and used herein shall have the same definitions herein as specified therein. However, if a term is defined in Article 9 of the Uniform Commercial Code of the State differently than in another Article of the Uniform Commercial Code of the State, the term has the meaning specified in Article 9. The term “Obligations,” as used herein, shall have the meaning ascribed to it in the Credit Agreement.
2. Grant of Security Interest . The Guarantor hereby grants to the Agent, for the ratable benefit of the Lenders, to secure the payment and performance in full of all of the Obligations, a security interest in and pledges and assigns the following properties, assets and rights of the Guarantor, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof (all of the same being hereinafter called the “Collateral”): all assets including all personal and fixture property of every kind and nature, including without limitation all goods (including inventory, equipment and any accessions thereto), instruments (including promissory notes), documents, accounts (including health-care-insurance receivables), chattel paper (whether tangible or electronic), deposit accounts, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), commercial tort claims, securities and all other investment property, supporting obligations, any other contract rights or rights to the payment of money, insurance claims and proceeds, all general intangibles (including all payment intangibles), and all products and proceeds of the foregoing. Notwithstanding anything herein to the contrary, the term “Collateral” shall not include more than 65% of the equity interests of a first-tier Foreign Subsidiary (or more than 65% of the equity interests of a Domestic Subsidiary whose sole assets are the equity interests of Foreign Subsidiaries) or to the extent not yet paid to the Guarantor or such Domestic Subsidiary to more than the corresponding proportion of dividends, distributions, interest and other payments with respect to more than 65% of such equity interests (such excluded assets herein called the “Excluded Assets”). The Agent acknowledges that the attachment of its security interest in any commercial tort claim as original collateral is subject to the Guarantor’s compliance with § 4.7.
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3. Authorization to File Financing Statements . The Guarantor hereby irrevocably authorizes the Agent at any time and from time to time to file in any filing office in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as all assets or, as the case may be, all personal property of the Guarantor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform Commercial Code of the State or such jurisdiction specifically excluding, however, the Excluded Assets, or (ii) as being of an equal or lesser scope or with greater detail, and (b) provide any other information required by part 5 of Article 9 of the Uniform Commercial Code of the State or such other jurisdictions for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether the Guarantor is an organization, the type of organization and any organizational identification number issued to the Guarantor and, (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates. The Guarantor agrees to furnish any such information to the Agent promptly upon the Agent’s request. The Guarantor also ratifies its authorization for the Agent to have filed in any Uniform Commercial Code jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof.
4. Other Actions . Further to insure the attachment, perfection and first priority of, and the ability of the Agent to enforce, the Agent’s security interest in the Collateral, the Guarantor agrees, in each case at the Guarantor’s expense, to take the following actions with respect to the following Collateral and without limitation on the Guarantor’s other obligations contained in this Agreement:
4.1 . Promissory Notes and Tangible Chattel Paper . If the Guarantor shall, now or at any time hereafter, hold or acquire any promissory notes or any tangible chattel paper individually having a face value in excess of $2,500,000 (each, a “Material Note” or “Material Tangible Chattel Paper”, as the case may be), the Guarantor shall forthwith endorse, assign and deliver to the Agent each such Material Note or Material Chattel Paper, as the case may be, and, in each case of a required endorsement, assignment and delivery, accompanied by such instruments of transfer or assignment duly executed in blank as the Agent may from time to time specify.
4.2. Deposit Accounts . For each deposit account that the Guarantor now or at any time hereafter opens or maintains, the Guarantor shall, at the Agent’s request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Agent, either (a) cause the depositary bank to agree to comply, without further consent of the Guarantor, at any time with instructions from the Agent to such depositary bank directing the disposition of funds from time to time credited to such deposit account, or (b) arrange for the Agent to become the customer of the depositary bank with respect to the deposit account, with the Guarantor being permitted, only with the consent of the Agent, to exercise rights to withdraw funds from such deposit account. The Agent agrees with the Guarantor that the Agent shall not give any such instructions or withhold any withdrawal rights from the Guarantor, unless an Event of Default has occurred and is continuing, or, if effect were given to any withdrawal not otherwise permitted by the Loan Documents, would occur. The provisions of this paragraph shall not apply to (i) any deposit account for which the Guarantor, the depositary bank and the Agent have entered into a cash collateral agreement specially negotiated among the Guarantor, the depositary bank and the Agent for the specific purpose set forth therein, (ii) a deposit account for which the Agent is the depositary bank and is in automatic control, and (iii) any deposit accounts specially and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of the Guarantor’s employees. Nothing in this Section 4.2 shall be construed to limit or otherwise derogate in any way the Guarantor’s obligations under Section 6.15 of the Credit Agreement.
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4.3. Investment Property . Subject to the limitations set forth in Section 2 hereof, if the Guarantor shall now or at any time hereafter hold or acquire any certificated securities of any Subsidiary, the Guarantor shall forthwith endorse, assign and deliver the same to the Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Agent may from time to time specify. If any securities now or hereafter acquired by the Guarantor are (a) (i) uncertificated or (ii) certificated and issued by a Person other than a Subsidiary, (b) issued to the Guarantor or its nominee directly by the issuer thereof, and (c) have a principal amount or value in excess of $5,000,000 in the aggregate with respect to any one issuer (each a “Material Security”), the Guarantor shall promptly notify the Agent thereof and, at the Agent’s request and option pursuant to an agreement in a form and substance reasonably satisfactory to the Agent, either (A) cause the issuer to agree to comply, without further consent of the Guarantor, or such nominee, at any time with instructions from the Agent as to each Material Security or (B) arrange for the Agent to become the registered owner of the Material Securities. Subject to the limitations set forth in Section 2 hereof, if any securities, whether certificated or uncertificated, or other investment property now or hereafter acquired by the Guarantor is held by the Guarantor or its nominee through a securities intermediary or commodity intermediary and constitute a Material Security, the Guarantor shall promptly notify the Agent thereof and, at the Agent’s request and option, the Guarantor shall, pursuant to an agreement in form and substance reasonably satisfactory to the Agent, either (i) cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply, in each case without further consent of the Guarantor or such nominee, at any time with entitlement orders or other instructions from the Agent to such securities intermediary as to such a Material Security, or (as the case may be) to apply any value distributed on account of any commodity contract as directed by the Agent to such commodity intermediary, or (ii) in the case of a Material Security held through a securities intermediary, arrange for the Agent to become the entitlement holder with respect to such a Material Security, with the Guarantor being permitted, only with the consent of the Agent, to exercise rights to withdraw or otherwise deal with such investment property. The Agent agrees with the Guarantor that the Agent shall not give any such entitlement orders or instructions or directions to any such issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by the Guarantor, unless an Event of Default has occurred and is continuing, or, after giving effect to any such investment and withdrawal rights not otherwise permitted by the Loan Documents, would occur. The provisions of this paragraph shall not apply to any financial assets credited to a securities account for which the Agent is the securities intermediary.
4.4. Collateral in the Possession of a Bailee . If any Collateral having an aggregate value of more than $1,000,000 is now or at any time hereafter in the possession of a bailee at a particular location, the Guarantor shall promptly notify the Agent thereof and, at the Agent’s request and option, shall use reasonable best efforts to obtain an acknowledgement from the bailee, in form and substance reasonably satisfactory to the Agent, that the bailee holds such Collateral for the benefit of the Agent and such bailee’s agreement to comply, without further consent of the Guarantor, at any time with instructions of the Agent as to such Collateral. The Agent agrees with the Guarantor that the Agent shall not give any such instructions unless an Event of Default has occurred and is continuing or would occur after taking into account any action by the Guarantor with respect to the bailee.
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4.5. Electronic Chattel Paper and Transferable Records . If the Guarantor, now or at any time hereafter, holds or acquires an interest in any electronic chattel paper, any electronic document or any “transferrable record,” individually having a face value in excess of $2,500,000 (each a “Material Electronic Paper”), the Guarantor shall (i) promptly notify the Agent thereof and, (ii) at the request and option of the Agent, take such action as the Agent may reasonably request to vest in the Agent control of such Material Electronic Paper, under Section 9-105 of the Uniform Commercial Code of the State or any other relevant jurisdiction, Section 7-106 of the Uniform Commercial Code of the State or any other relevant jurisdiction, Section 201 of the federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, as applicable. The Agent agrees with the Guarantor that the Agent will arrange, pursuant to procedures satisfactory to the Agent and so long as such procedures will not result in the Agent’s loss of control, for the Guarantor to make alterations to the electronic chattel paper, electronic document or transferable record permitted under UCC Section 9-105, UCC Section 7-106, or, as the case may be, Section 201 of the federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act for a party in control to make without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by the Guarantor with respect to such electronic chattel paper, electronic document or transferrable record. The provisions of this Section 4.6 relating to electronic documents and “control” under UCC Section 7-106 apply in the event that the 2003 revisions to Article 7, with amendments to Article 9, of the Uniform Commercial Code, in substantially the form approved by the American Law Institute and the National Conference of Commissioners on Uniform State Laws, are now or hereafter adopted and become effective in the State or in any other relevant jurisdiction.
4.6. Letter-of-Credit Rights . If the Guarantor is, now or at any time hereafter, a beneficiary under a letter of credit now or hereafter individually having a maximum amount that may be drawn in excess of $2,500,000 (each, a “Material Letter of Credit”), the Guarantor shall promptly notify the Agent thereof and, at the request and option of the Agent, the Guarantor shall, pursuant to an agreement in form and substance satisfactory to the Agent, either (A) arrange for the issuer and any confirmer or other nominated person of each such Material Letter of Credit, to consent to an assignment to the Agent of the proceeds of such Material Letter of Credit or (B) arrange for the Agent to become the transferee beneficiary of such Material Letter of Credit.
4.7 Commercial Tort Claims . If the Guarantor shall now or at any time hereafter hold or acquire a commercial tort claim with respect to which the Guarantor has commenced legal action by filing a lawsuit in court and having a value reasonably estimated by the Guarantor to be in excess of $5,000,000, the Guarantor shall promptly notify the Agent in a writing signed by the Guarantor of the particulars thereof, and grant to the Agent in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Agent. Such Notice shall be deemed to be an amendment to the Guarantor’s Perfection Certificate with respect to such commercial tort claim.
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4.8. Other Actions as to any and all Collateral . The Guarantor further agrees, upon request of the Agent and at the Agent’s option, to take any and all other actions as the Agent may reasonably determine to be necessary or useful for the attachment, perfection and first priority of (subject, however, to Liens permitted under the Credit Agreement), and the ability of the Agent to enforce, the Agent’s security interest in any and all of the Collateral, including, without limitation, (a) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the Uniform Commercial Code, to the extent, if any, that the Guarantor’s signature thereon is required therefor, (b) causing the Agent’s name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of the Agent to enforce, the Agent’s security interest in such Collateral, (c) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of the Agent to enforce, the Agent’s security interest in such Collateral, (d) obtaining governmental and other third party waivers, consents and approvals in form and substance satisfactory to the Agent, including, without limitation, any consent of any licensor, lessor or other person obligated on Collateral, (e) using reasonable best efforts to obtain waivers from mortgagees and landlords in form and substance satisfactory to the Agent and in accordance with the terms of the Credit Agreement, and (f) taking all actions under any earlier versions of the Uniform Commercial Code or under any other law, as reasonably determined by the Agent to be applicable in any relevant Uniform Commercial Code or other jurisdiction, including any foreign jurisdiction.
5. Relation to Other Security Documents . The provisions of this Agreement supplement the provisions of any real estate mortgage or deed of trust, if any, granted by the Guarantor to the Agent and which secures the payment or performance of any of the Obligations. Nothing contained in any such real estate mortgage or deed of trust shall derogate from any of the rights or remedies of the Agent hereunder.
6. Representations and Warranties Concerning Guarantor’s Legal Status . The Guarantor represents and warrants to the Agent as follows: (a) the Guarantor’s exact legal name is that indicated on the signature page hereof, (b) the Guarantor is an organization of the type, and is organized in the jurisdiction, set forth on its Perfection Certificate dated the date hereof and attached hereto as Exhibit A (the “Perfection Certificate”), (c) the Perfection Certificate accurately sets forth the organizational identification number or accurately states that the Guarantor has none, (d) the Perfection Certificate accurately sets forth the Guarantor’s place of business or, if more than one, its chief executive office, as well as the Guarantor’s mailing address, if different, and (e) all other information set forth on the Perfection Certificate pertaining to the Guarantor is accurate and complete in all material respects.
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7. Covenants Concerning Guarantor’s Legal Status . The Guarantor covenants with the Agent as follows: (a) without providing at least thirty (30) days prior written notice to the Agent, the Guarantor will not change its name, its place of business or, if more than one, chief executive office, or its mailing address or organizational identification number if it has one, (b) if the Guarantor does not have an organizational identification number and later obtains one, the Guarantor will promptly notify the Agent of such organizational identification number, and (c) the Guarantor will not change its type of organization, jurisdiction of organization or other legal structure except as permitted in the Credit Agreement.
8. Representations and Warranties Concerning Collateral Etc . The Guarantor further represents and warrants to the Agent as follows: (a) the Guarantor is the owner of, or has other rights in, or power to transfer, the Collateral, free from any right or claim of any person or any adverse lien, security interest or other encumbrance, except for the security interest created by this Agreement and Permitted Liens, (b) none of the Collateral constitutes, or is the proceeds of, “farm products” as defined in §9-102(a)(34) of the Uniform Commercial Code of the State, (c) none of the account debtors or other persons obligated on any of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral, (d) to the best of its knowledge, the Guarantor holds no commercial tort claim except as indicated on the Perfection Certificate, (e) the Guarantor has at all times operated its business in compliance in all material respects with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances, and (f) all other information set forth on the Perfection Certificate pertaining to the Collateral is accurate and complete in all material respects.
9. Covenants Concerning Collateral, Etc . The Guarantor further covenants with the Agent as follows: (a) the Collateral, to the extent not delivered to the Agent pursuant to Section 4 hereof or disposed of as permitted by the Credit Agreement, will be kept at those locations listed on the Perfection Certificate, as the same may be amended from time to time as herein provided, and the Guarantor will not remove the Collateral from such locations without providing at least fifteen (15) days prior written notice to the Agent except (i) to another location listed on the Perfection Certificate, or (ii) to another location of the Guarantor or one of its Subsidiaries or one of the other Subsidiaries of Borrower, in each case, that is located within the United States but not listed on the Perfection Certificate, as amended from time to time (any such location, an “Unlisted Location”); provided , that the aggregate value of the Collateral located at such Unlisted Location shall not exceed $1,000,000, or (iii) motor vehicles or (iv) the removal of Collateral for up to thirty (30) days to repair such Collateral, in each case, in the ordinary course of business, (b) except for the security interest herein granted and Permitted Liens, the Guarantor shall be the owner of, or have other rights in or power to transfer, the Collateral free from any right or claim of any other person or any lien, security interest or other encumbrance, and the Guarantor shall defend the same against all claims and demands of all persons at any time claiming the same or any interests therein adverse to the Agent, (c) the Guarantor shall not pledge, mortgage or create, or suffer to exist any right of any person in or claim by any person to the Collateral, or any security interest, lien or other encumbrance in the Collateral in favor of any person, other than the Agent except for Permitted Liens, (d) the Guarantor will keep the Collateral in good order and repair and will not use the same in violation of law or any policy of insurance thereon, (e) the Guarantor will permit the Agent, or its designee, to inspect the Collateral at any reasonable time during normal business hours, wherever located, (f) the Guarantor will pay promptly when due all taxes, assessments, governmental charges and levies upon the Collateral or incurred in connection with the use or operation of the Collateral or incurred in connection with this Agreement, (g) the Guarantor will continue to operate its business in compliance in all material respects with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances, (h) the Guarantor will not sell or otherwise dispose, or offer to sell or otherwise dispose, of the Collateral or any interest therein except for dispositions permitted by the Credit Agreement, and (i) with each annual Compliance Certificate delivered by Borrower pursuant to Section 6.02 of the Credit Agreement, the Guarantor shall cause Borrower to provide information updating the Perfection Certificate, including without limitation any new locations at which any Collateral is located.
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10. Insurance .
10.1. Maintenance of Insurance . The Guarantor will maintain with financially sound and reputable insurers insurance with respect to its properties and business against such casualties and contingencies as shall be in accordance with general practices of businesses engaged in similar activities in similar geographic areas. Such insurance shall be in such minimum amounts that the Guarantor will not be deemed a co-insurer under applicable insurance laws, regulations and policies and otherwise shall be in such amounts, contain such terms, be in such forms and be for such periods as may be reasonably satisfactory to the Agent. In addition, all such property casualty insurance shall be payable to the Agent as loss payee under a loss payee clause reasonably acceptable to the Agent. Without limiting the foregoing, the Guarantor will (i) keep all of its physical property insured with casualty or physical hazard insurance on an “all risks” basis, with broad form flood and earthquake coverages and electronic data processing coverage, with a full replacement cost endorsement and an “agreed amount” clause in an amount equal to 100% of the full replacement cost of such property, (ii) maintain all such workers’ compensation or similar insurance as may be required by law and (iii) maintain, in amounts and with deductibles equal to those generally maintained by businesses engaged in similar activities in similar geographic areas, general public liability insurance against claims of bodily injury, death or property damage occurring, on, in or about the properties of the Guarantor; business interruption insurance; and product liability insurance.
10.2. Insurance Proceeds . The proceeds of any casualty insurance in respect of any casualty loss of any of the Collateral shall, subject to the rights, if any, of other parties with an interest having priority in the property covered thereby, (i) so long as no Event of Default has occurred and is continuing, be disbursed to the Guarantor for direct application by the Guarantor to the repair or replacement of the Guarantor’s property so damaged or destroyed, with any excess proceeds to be retained by the Guarantor, and (ii) if an Event of Default has occurred and is continuing, be distributed to the Agent to be held by the Agent as cash collateral for the Obligations. The Agent may, at its sole option, disburse from time to time all or any part of such proceeds so held as cash collateral, upon such terms and conditions as the Agent may reasonably prescribe, for direct application by the Guarantor solely to the repair or replacement of the Guarantor’s property so damaged or destroyed, or the Agent may apply all or any part of such proceeds to the Obligations.
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10.3. Continuation of Insurance . All policies of insurance shall provide for at least thirty (30) days prior written cancellation notice to the Agent. In the event of failure by the Guarantor to provide and maintain insurance as herein provided, the Agent may, at its option, provide such insurance and charge the amount thereof to the Guarantor. The Guarantor shall furnish the Agent with certificates of insurance and policies evidencing compliance with the foregoing insurance provision.
11. Collateral Protection Expenses: Preservation of Collateral .
11.1. Expenses Incurred by Agent . In the Agent’s discretion, if the Guarantor fails to do so, the Agent may discharge taxes and other encumbrances at any time levied or placed on any of the Collateral, make repairs thereto, maintain any of the Collateral, and pay any necessary filing fees or insurance premiums. The Guarantor agrees to reimburse the Agent on demand for all expenditures so made. The Agent shall have no obligation to the Guarantor to make any such expenditures, nor shall the making thereof be construed as a waiver or cure of any Default or Event of Default.
11.2. Agent’s Obligations and Duties . Anything herein to the contrary notwithstanding, the Guarantor shall remain obligated and liable under each contract or agreement comprised in the Collateral to be observed or performed by the Guarantor thereunder. The Agent shall not have any obligation or liability under any such contract or agreement by reason of, or arising out of, this Agreement or the receipt by the Agent of any payment relating to any of the Collateral, nor shall the Agent be obligated in any manner to perform any of the obligations of the Guarantor under, or pursuant to, any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment received by the Agent in respect of the Collateral or as to the sufficiency of any performance by any party under any such contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to the Agent or to which the Agent may be entitled at any time or times. The Agent’s sole duty with respect to the custody, safe keeping and physical preservation of the Collateral in its possession, under §9-207 of the Uniform Commercial Code of the State or otherwise, shall be to deal with such Collateral in the same manner as the Agent deals with similar property for its own account.
12. Securities and Deposits . The Agent may at any time following the occurrence and during the continuance of an Event of Default, at its option, transfer to itself or any nominee any securities constituting Collateral, receive any income thereon and hold such income as additional Collateral or apply it to the Obligations. Whether or not any Obligations are due, the Agent may following the occurrence and during the continuance of an Event of Default demand, sue for, collect, or make any settlement or compromise which it deems desirable with respect to the Collateral. Regardless of the adequacy of Collateral or any other security for the Obligations, any deposits or other sums at any time credited by or due from the Agent to the Guarantor may at any time during the continuance of an Event of Default be applied to, or set off against, any of the Obligations then due and owing.
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13. Notification to Account Debtors and Other Persons Obligated on Collateral . If an Event of Default shall have occurred and be continuing, the Guarantor shall, at the request and option of the Agent, notify account debtors and other persons obligated on any of the Collateral of the security interest of the Agent in any account, chattel paper, general intangible, instrument or other Collateral and that payment thereof is to be made directly to the Agent or to any financial institution designated by the Agent as the Agent’s agent therefor, and the Agent may itself, if an Event of Default shall have occurred and be continuing, without notice to or demand upon the Guarantor, so notify account debtors and other persons obligated on Collateral, which notice may include the provision to such account debtors and other persons of an accounts receivable letter which, if provided, may be (a) substantially in the form attached hereto as Exhibit B (Agent having required Guarantor to execute an undated accounts receivable letter in the form of Exhibit B attached hereto which Agent agrees to hold and not release unless Agent is permitted to send such letter as provided in this Section 13), or (b) in another form executed by Guarantor upon request of Agent. After the making of such a request or the giving of any such notification, the Guarantor shall hold any proceeds of collection of accounts, chattel paper, general intangibles, instruments and other Collateral received by the Guarantor as trustee for the Agent without commingling the same with other funds of the Guarantor and shall turn the same over to the Agent in the identical form received, together with any necessary endorsements or assignments. The Agent shall apply the proceeds of collection of accounts, chattel paper, general intangibles, instruments and other Collateral received by the Agent to the Obligations, such proceeds to be immediately credited after final payment in cash or other immediately available funds of the items giving rise to them.
14. Power of Attorney .
14.1. Appointment and Powers of Agent . The Guarantor hereby irrevocably constitutes and appoints the Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Guarantor or in the Agent’s own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or useful to accomplish the purposes of this Agreement and, without limiting the generality of the foregoing, hereby gives said attorneys the power and right, on behalf of the Guarantor, without notice to or assent by the Guarantor, to do the following:
(a) upon the occurrence and during the continuance of an Event of Default, generally to sell, transfer, pledge, make any agreement with respect to or otherwise dispose of or deal with any of the Collateral in such manner as is consistent with the Uniform Commercial Code of the State and as fully and completely as though the Agent were the absolute owner thereof for all purposes, and to do, at the Guarantor’s expense, at any time, or from time to time, all acts and things which the Lender deems necessary or useful to protect, preserve or realize upon the Collateral and the Agent’s security interest therein, in order to effect the intent of this Agreement, all no less fully and effectively as the Guarantor might do, including, without limitation, (i) the filing and prosecuting of registration and transfer applications with the appropriate federal, state or local agencies or authorities with respect to trademarks, copyrights and patentable inventions and processes, (ii) upon written notice to the Guarantor, the exercise of voting rights with respect to voting securities, which rights may be exercised, if the Agent so elects, with a view to causing the liquidation of assets of the issuer of any such securities and (iii) the execution, delivery and recording, in connection with any sale or other disposition of any Collateral, of the endorsements, assignments or other instruments of conveyance or transfer with respect to such Collateral; and
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(b) to the extent that the Guarantor’s authorization given in §3 is not sufficient, to file such financing statements with respect hereto, with or without the Guarantor’s signature, or a photocopy of this Agreement in substitution for a financing statement, as the Agent may deem appropriate and to execute in the Guarantor’s name such financing statements and amendments thereto and continuation statements which may require the Guarantor’s signature.
14.2. Ratification by Guarantor . To the extent permitted by law, the Guarantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and is irrevocable.
14.3. No Duty on Agent . The powers conferred on the Agent hereunder are solely to protect its interests in the Collateral and shall not impose any duty upon it to exercise any such powers. The Agent shall be accountable only for the amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to the Guarantor for any act or failure to act, except for the Agent’s own gross negligence or willful misconduct.
15. Rights and Remedies . If an Event of Default shall have occurred and be continuing, the Agent, without any other notice to or demand upon the Guarantor, shall have in any jurisdiction in which enforcement hereof is sought, in addition to all other rights and remedies, the rights and remedies of a secured party under the Uniform Commercial Code of the State and of such jurisdiction and any additional rights and remedies as may be provided to a secured party in any jurisdiction in which Collateral is located, including, without limitation, the right to take possession of the Collateral, and for that purpose the Agent may, so far as the Guarantor can give authority therefor, enter upon any premises on which the Collateral may be situated and remove the same therefrom. The Agent may in its discretion require the Guarantor to assemble all or any part of the Collateral at such location or locations within the jurisdiction(s) of the Guarantor’s principal office(s) or at such other locations as the Agent may reasonably designate. Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Agent shall give to the Guarantor at least ten (10) Business Days prior written notice of the time and place of any public sale of Collateral or of the time after which any private sale or any other intended disposition is to be made. The Guarantor hereby acknowledges that ten (10) Business Days prior written notice of such sale or sales shall be reasonable notice. In addition, the Guarantor waives any and all rights that it may have to a judicial hearing in advance of the enforcement of any of the Agent’s rights and remedies hereunder, including, without limitation, its right following an Event of Default to take immediate possession of the Collateral and to exercise its rights and remedies with respect thereto.
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16. Standards for Exercising Rights and Remedies . To the extent that applicable law imposes duties on the Agent to exercise remedies in a commercially reasonable manner, the Guarantor acknowledges and agrees that it is not commercially unreasonable for the Agent (a) to fail to incur expenses reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to fail to complete raw material or work in process into finished goods or other finished products for disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against account debtors or other persons obligated on Collateral or to fail to remove liens or encumbrances on or any adverse claims against Collateral, (d) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other persons, whether or not in the same business as the Guarantor, for expressions of interest in acquiring all, or any portion of, the Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (h) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim disposition warranties, (k) to purchase insurance or credit enhancements to insure the Agent against risks of loss, collection or disposition of Collateral or to provide to the Agent a guaranteed return from the collection or disposition of Collateral, or (l) to the extent deemed appropriate by the Agent, to obtain the services of brokers, investment bankers, consultants and other professionals to assist the Agent in the collection, or disposition of, any of the Collateral. The Guarantor acknowledges that the purpose of this §16 is to provide non-exhaustive indications of what actions or omissions by the Agent would fulfill the Agent’s duties under the Uniform Commercial Code of the State or any other relevant jurisdiction in the Agent’s exercise of remedies against the Collateral and that other actions or omissions by the Agent shall not be deemed to fail to fulfill such duties solely on account of not being indicated in this §16. Without limitation upon the foregoing, nothing contained in this §16 shall be construed to grant any rights to the Guarantor or to impose any duties on the Agent that would not have been granted or imposed by this Agreement or by applicable law in the absence of this §16.
17. No Waiver by Agent, etc . The Agent shall not be deemed to have waived any of its rights and remedies in respect of the Obligations or the Collateral unless such waiver shall be in writing and signed by the Agent. No delay or omission on the part of the Agent in exercising any right or remedy shall operate as a waiver of such right or remedy or any other right or remedy. A waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion. All rights and remedies of the Agent with respect to the Obligations or the Collateral, whether evidenced hereby or by any other instrument or papers, shall be cumulative and may be exercised singularly, alternatively, successively or concurrently at such time or at such times as the Agent deems expedient.
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18. Suretyship Waivers by Guarantor . Except as may be otherwise specifically provided in the Credit Agreement, the Guarantor waives demand, notice, protest, notice of acceptance of this Agreement, notice of loans made, credit extended, Collateral received or delivered or other action taken in reliance hereon and all other demands and notices of any description. With respect to both the Obligations and the Collateral, the Guarantor assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of or failure to perfect any security interest in any Collateral, to the addition or release of any party or person primarily or secondarily liable, to the acceptance of partial payment thereon and the settlement, compromising or adjusting of any thereof, all in such manner and at such time or times as the Agent may deem advisable. The Agent shall have no duty as to the collection or protection of the Collateral or any income therefrom, the preservation of rights against prior parties, or the preservation of any rights pertaining thereto beyond the safe custody thereof as set forth in Section 11.2. The Guarantor further waives any and all other suretyship defenses.
19. Marshalling . The Agent shall not be required to marshal any present or future collateral security (including but not limited to the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of its rights and remedies hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising. To the extent that it lawfully may, the Guarantor hereby agrees that it will not invoke any law relating to the marshalling of collateral which might cause delay in or impede the enforcement of the Agent’s rights and remedies under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, the Guarantor hereby irrevocably waives the benefits of all such laws.
20. Proceeds of Dispositions; Expenses . The Guarantor shall pay to the Agent on demand amounts equal to any and all reasonable expenses, including, without limitation, reasonable attorneys’ fees and disbursements, incurred or paid by the Agent in protecting, preserving or enforcing the Agent’s rights and remedies under, or in respect of, any of the Obligations or any of the Collateral. After deducting all of said expenses, the residue of any proceeds of collection or sale or other disposition of Collateral shall, to the extent actually received in cash, be applied to the payment of the Obligations in such order or preference as the Agent may determine or in such order or preference as is provided in the Credit Agreement, proper allowance and provision being made for any Obligations not then due. Upon the final payment and satisfaction in full of all of the Obligations and after making any payments required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the Uniform Commercial Code of the State, any excess shall be returned to the Guarantor. In the absence of final payment and satisfaction in full of all of the Obligations, the Guarantor shall remain liable for any deficiency.
21. Overdue Amounts . Until paid, all amounts which become due and payable by the Guarantor hereunder shall be a debt secured by the Collateral and if not otherwise paid within any applicable grace period after the same becomes due shall bear, whether before or after judgment, interest at the rate of interest for overdue principal set forth in the Credit Agreement.
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22. Governing Law; Consent to Jurisdiction . THIS AGREEMENT IS INTENDED TO TAKE EFFECT AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT. The Guarantor agrees that any action or claim arising out of any dispute in connection with this Agreement, any rights or obligations hereunder or the performance or enforcement of such rights or obligations may be brought in the courts of the State of Connecticut or any federal court sitting therein and consents to the non-exclusive jurisdiction of such court and to service of process in any such suit being made upon the Guarantor by certified or registered mail at the address specified in the Credit Agreement. The Guarantor hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit is brought in an inconvenient forum.
23. Waiver of Jury Trial . EACH PARTY HERETO WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OR ENFORCEMENT OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Guarantor waives any right which it may have to claim or recover in any litigation referred to in the preceding sentence any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages. The Guarantor (i) certifies that neither the Agent nor any representative, agent or attorney of the Agent has represented, expressly or otherwise, that the Agent would not, in the event of litigation, seek to enforce the foregoing waivers or other waivers contained in this Agreement and (ii) acknowledges that, in entering into the Credit Agreement and the other Loan Documents to which the Agent is a party, the Agent is relying upon, among other things, the waivers and certifications contained in this Section 23.
24. Miscellaneous . The headings of each section of this Agreement are for convenience only and shall not define or limit the provisions thereof. This Agreement and all rights and obligations hereunder shall be binding upon the Guarantor and its successors and assigns, and shall inure to the benefit of the Agent and its successors and assigns permitted pursuant to the Credit Agreement. If any term of this Agreement shall be held to be invalid, illegal or unenforceable, the validity of all other terms hereof shall in no way be affected thereby, and this Agreement shall be construed and be enforceable as if such invalid, illegal or unenforceable term had not been included herein. The Guarantor acknowledges receipt of a copy of this Agreement.
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25. PREJUDGMENT REMEDY WAIVER .
THE GUARANTOR HEREBY REPRESENTS, WARRANTS AND ACKNOWLEDGES THAT THE FINANCING EVIDENCED HEREBY IS A COMMERCIAL TRANSACTION WITHIN THE MEANING OF CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED. THE GUARANTOR HEREBY WAIVES ITS RIGHT TO NOTICE AND PRIOR COURT HEARING OR COURT ORDER UNDER CONNECTICUT GENERAL STATUTES SECTIONS 52-278a ET . SEQ . AS AMENDED OR UNDER ANY OTHER STATE OR FEDERAL LAW WITH RESPECT TO ANY AND ALL PREJUDGMENT REMEDIES THE AGENT MAY EMPLOY TO ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS. MORE SPECIFICALLY, THE GUARANTOR ACKNOWLEDGES THAT UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT THE AGENT’S ATTORNEY MAY, PURSUANT TO, AND IN ACCORDANCE WITH, CONN. GEN. STAT. §52-278f, ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT SECURING A COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER. THE GUARANTOR ACKNOWLEDGES AND RESERVES ITS RIGHT TO NOTICE AND A HEARING SUBSEQUENT TO THE ISSUANCE OF A WRIT FOR PREJUDGMENT REMEDY AS AFORESAID AND THE AGENT ACKNOWLEDGES THE GUARANTOR’S RIGHT TO SAID HEARING SUBSEQUENT TO THE ISSUANCE OF SAID WRIT. THE GUARANTOR FURTHER WAIVES ITS RIGHTS TO REQUEST THAT THE AGENT POST A BOND, WITH OR WITHOUT SURETY, TO PROTECT GUARANTOR AGAINST DAMAGES THAT MAY BE CAUSED BY ANY PREJUDGMENT REMEDY SOUGHT OR OBTAINED BY THE AGENT.
26. Amendments . Neither this Agreement nor any term hereof may be amended, waived, discharged or terminated, except by a written instrument signed by the Guarantor and the Agent.
27. Electronic Self-Help Authorization . Upon and during the continuance of an Event of Default, the Agent shall have, in addition to all other rights and remedies contained in this Agreement, (which the Guarantor, and, by becoming bound by the Obligations or this Agreement, all other obligors, guarantors and any new debtors accept and agree upon), the right to locate, disable or to take possession of the Collateral by electronic, digital, magnetic or wireless optical electromagnetic or similar means after giving any notices required under applicable law.
28. Termination . At such time as all of the Obligations (other than contingent indemnification obligations for which no claim has been asserted) have been finally paid and satisfied in full and the Commitment has been irrevocably terminated, this Agreement shall terminate and Agent shall, upon written request and at the expense of Guarantor, execute and deliver to Guarantor all documents and other instruments as may be necessary or proper to evidence the termination of Agent’s security interest in the Collateral and Agent shall return to Guarantor any Collateral then in Agent’s possession.
[Signature page follows]
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IN WITNESS WHEREOF, intending to be legally bound, the Guarantor has caused this Agreement to be duly executed as of the date first above written.
LYDALL INTERNATIONAL, INC. | |||
By: | /S/ Dale G. Barnhart | ||
Name: Dale G. Barnhart | |||
Title: President |
Accepted:
BANK OF AMERICA, N.A., as Administrative Agent
By: | /S/ Christopher T. Phelan | |
Name: | Christopher T. Phelan | |
Title: | Senior Vice President |
[Signature Page to BOA Lydall International Amended and Restated Security Agreement]
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF CONNECTICUT CONNECTICUT | ) | |||
) | ss: | MANCHESTER | ||
COUNTY OF HARTFORD HARTFORD | ) |
Before me, the undersigned, personally appeared Dale G. Barnhart, to me known personally, and who, being by me duly sworn, deposes and says that he is the President of Lydall International, Inc., and that said instrument was signed and sealed on behalf of said company by authority of its Board of Directors, and said President acknowledged said instrument to be his free act and deed as such Officer and the free act and deed of said company on this 14th day of February, 2014.
/s/ Kathleen Carroll | |
[SEAL] | Notary Public/Commissioner of the Superior Court |
My commission expires: 06/30/14 |
specialty engineered products and materials AUTOMOTIVE FILTRATION & ENGINEERED MATERIALS LIFE SCIENCES Thermal/Acoustical Metals Thermal/Acoustical Fibers Performance Materials Vital Fluids SPECIALTY ENGINEERED PRODUCTS AND MATERIALS Industrial Filtration THIS DOCUMENT, OR AN EMBODIMENT OF IT IN ANY MEDIA, DISCLOSES INFORMATION WHICH IS PROPRIETARY, IS THE PROPERTY OF LYDALL, INC . AND/OR ITS AFFILIATE (COLLECTIVELY, “LYDALL”), IS AN UNPUBLISHED WORK PROTECTED UNDER APPLICABLE COPYRIGHT LAWS AND IS DELIVERED ON THE EXPRESS CONDITION THAT IT IS NOT TO BE USED, DISCLOSED, OR REPRODUCED, IN WHOLE OR IN PART (INCLUDING REPRODUCTION AS A DERIVATIVE WORK), OR USED FOR MANUFACTURE FOR ANYONE OTHER THAN LYDALL WITHOUT ITS WRITTEN CONSENT . NO RIGHT IS GRANTED TO DISCLOSE OR SO USE ANY INFORMATION CONTAINED HEREIN . ALL RIGHTS RESERVED . © LYDALL, INC . Investor Conference Call Acquisition of Andrew Filtration February 21, 2014
USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE. 2 Forward - looking Statements This presentation contains “forward - looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Any statements contained in this press release that are not statements of historical fact, including statements regarding margin and working capital improvement results from application of Six Sigma principles, statements regarding anticipated cost synergies by 2016, statements regarding anticipated transaction expenses, and statements about the expected impact of the acquisition on Lydall’s future financial and operational performance and positioning may be deemed to be forward - looking statements . All such forward - looking statements are intended to provide management’s current expectations for the future operating and financial performance of the Company based on current expectations and assumptions relating to the Company’s business, the economy and other future conditions. Forward - looking statements generally can be identified through the use of the words such as: “believes ,” “anticipates,” “may,” “should,” “will,” “plans ,” “projects,” “expects,” “estimates,” “forecasts,” “signs,” “predicts ,” “targets,” “prospects ,” “ strategy,” “signs,” and other words of similar meaning in connection with the discussion of future operating or financial performance. Because forward - looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances that are difficult to predict. Such risks and uncertainties include, among others, worldwide economic cycles that affect the markets which the businesses serve which could have an effect on demand for the Company’s products and impact the Company’s profitability; challenges encountered by Lydall in the integration of the acquired business; disruptions in the global credit and financial markets, including diminished liquidity and credit availability; swings in consumer confidence and spending; unstable economic growth; raw material pricing and supply issues; fluctuations in unemployment rates; and increases in fuel prices, which could cause economic instability and could have a negative impact on the Company’s results of operations and financial condition. Accordingly , the Company’s actual results may differ materially from those contemplated by these forward - looking statements. Investors, therefore, are cautioned against relying on any of these forward - looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Additional information regarding the factors that may cause actual results to differ materially from these forward - looking statements is available in our filings with the Securities and Exchange Commission, including the risks and uncertainties identified in Part I, Item 1A - Risk Factors of Lydall’s Annual Report on Form 10 - K for the year ended December 31, 2012. These forward - looking statements speak only as of the date of this presentation, and Lydall does not assume any obligation to update or revise any forward - looking statement made in this presentation or that may, from time to time, be made by or on behalf of the Company.
USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE. Transaction Details ▪ Industrial filtration businesses (Andrew Filtration) of Andrew Industries Limited, acquired for $83 million in cash ▪ Business performance of Andrew Filtration for the 12 months ended December 31, 2013: Revenue ~$ 127 million, EBITDA ~$ 14 million, excluding non - recurring items 1 ▪ Lydall expects to leverage its operating discipline and support functions to generate anticipated annual cost savings of approximately $4 million by 2016 ▪ Lydall’s financial results for the Fourth Quarter 2013 will include approximately $1 million of transaction expenses and it is estimated that approximately $3 million of transaction expenses will be incurred in the First Quarter 2014 ▪ Transaction was financed through a combination of cash - on - hand and $60 million of borrowings from the Company’s recently expanded $100 million revolving credit facility ▪ New facility offers lower borrowing rates, more favorable financial covenants, and a $50 million accordion 3 Acquisition is expected to be accretive to Lydall’s 2014 full - year earnings and free cash flow, inclusive of transaction expenses, the effect of inventory step - up and incremental amortization of intangible assets 1 Amounts are unaudited, excluded non - recurring EBITDA items include management and royalty fees and income from insurance recover y
USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE. Overview of Andrew Filtration 4 Leading Brands Company Overview ▪ Leading global manufacturer and supplier of high quality non - woven felt filtration media and filter bags used primarily in industrial air filtration applications ▪ Manufacturing operations located in: - United States (2 locations) - United Kingdom (4 locations) - China (3 locations) ▪ Approximately 500 employees Asia 24% Europe 22% North America 54% Sales Distribution by Geography Products Industrial air filter bags & needle felts ~$127 million Industrial air filter bags
USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE. Strategic Highlights 5 Key Highlights Comments Adjacent to existing products / markets ▪ Establishes leading position in industrial air filtration segment ▪ Strengthens Lydall’s position as an industry - leading, global provider of filtration and engineered materials Deepens f ocus on filtration & filtration media ▪ Andrew Filtration has leading brands in the industrial air filtration segment ▪ Market growth driven by stricter environmental regulation and developing country industrialization Provides complementary / new technologies ▪ Needle - punch non - woven technology complementary to Thermal / Acoustical Fibers and Performance Materials segments ▪ Chemical impregnation lines enhance Performance Materials’ ability to serve the Fluid Power & Transport segment ▪ Membrane lamination capability and expertise Meaningful scale ▪ Increases Lydall’s revenue and EBITDA by approximately one - third ▪ Lydall’s filtration and engineered materials businesses are expected to contribute approximately 50 percent of consolidated revenue Expands global footprint ▪ Andrew Filtration has s trong presence in US, UK, and China ▪ Combined footprint provides diversification and a platform for all businesses to leverage access to new markets Accretive to shareholders ▪ Expected to be accretive to Lydall’s 2014 full - year earnings and free cash flow, inclusive of transaction expenses, the effect of inventory step - up and incremental amortization of intangible assets
USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE. New Segment Reporting Structure Thermal/Acoustical Metals Fabricated thermal barriers for vehicles Global Automotive Life Sciences Thermal/Acoustical Fibers Fabricated acoustical barriers for vehicles Primarily North America Global Primarily North America Global Performance Materials Life Sciences Vital Fluids Industrial Filtration Filtration and insulation media, Life sciences filtration media Industrial air filtration media and products Blood filtration, Blood transfusion, Cell therapy and Bio/ Pharma products Filtration & Engineered Materials New reporting segment Acquisition will be reported in separate reporting segment named Industrial Filtration 6
USE OR DISCLOSURE OF INFORMATION CONTAINED ON THIS SHEET IS SUBJECT TO THE RESTRICTIONS ON THE TITLE SLIDE. Closing Remarks and Q&A 7 For further information: David D. Glenn Director of Business Development and Investor Relations Telephone 860 - 646 - 1233 Facsimile 860 - 646 - 4917 info@lydall.com www.lydall.com