UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 29, 2012
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 1-8183
SUPREME INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware |
|
75-1670945 |
(State or other jurisdiction of incorporation) |
|
(I.R.S. Employer Identification Number) |
2581 E. Kercher Road Goshen, Indiana |
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46528 |
(Address of principal executive office) |
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(Zip Code) |
Registrants telephone number, including area code: (574) 642-3070
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class: |
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Name of each exchange on which registered: |
Class A Common Stock ($.10 Par Value) |
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NYSE MKT |
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No £
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer o |
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Accelerated filer o |
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Non-accelerated filer o |
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Smaller reporting company x |
(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes o No x
The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of the last business day of the registrants most recently completed second fiscal quarter, based on the last closing sale price of $3.91 per share for the common stock on the NYSE MKT on such date, was approximately $46,948,258.
Indicate the number of shares outstanding of each of the registrants classes of common stock as of the latest practicable date.
Class |
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Outstanding at March 15, 2013 |
Class A Common Stock ($.10 Par Value) |
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13,557,749 shares |
Class B Common Stock ($.10 Par Value) |
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1,716,937 shares |
Documents incorporated by reference
Listed below are documents, parts of which are incorporated herein by reference, and the part of this report into which the document is incorporated:
Portions of the Proxy Statement for the 2013 Annual Meeting of Stockholders Part III
History
Supreme Industries, Inc., a Delaware corporation (the Company, Supreme or we), is one of the nations leading manufacturers of specialized vehicles including truck bodies, buses, and armored and specialty vehicles. The Company was originally incorporated in 1979.
In January of 1984, Supreme Corporation, the Companys wholly-owned operating subsidiary, was formed to acquire a company engaged in the business of manufacturing, selling, and repairing specialized truck bodies, buses, and related equipment.
During 2012, several legal entity restructuring transactions occurred as a result of which Supreme Corporation, a Texas corporation, became the Companys principal subsidiary. As part of these restructuring transactions, several operating and real estate entities became wholly-owned subsidiaries of Supreme Corporation. This corporate restructuring was undertaken to provide the Company a more effective structure for purposes of efficient management and measurement of business operations.
Financial Information about Operating Segments
The Company has two operating segments specialized vehicles and fiberglass products. The fiberglass products segment does not meet the quantitative thresholds for separate disclosure. See segment information in Note 1 - Nature of Operations and Accounting Policies, of the Notes to Consolidated Financial Statements (Item 8).
General Description of the Companys Business
Supreme competes in two core areas of the specialty vehicle market, truck bodies and buses. Supreme manufactures a truck body or bus body that is attached to a truck chassis. The truck chassis, which consists of an engine, drivetrain, a frame with wheels, and in some cases a cab, is manufactured by third parties which are major automotive or truck companies. Such companies typically do not build specialized truck bodies. Supreme is the only major manufacturer that produces both truck and bus bodies. Some examples of specialized vehicles that are not manufactured by Supreme are dump bodies, utility bodies, and garbage packers.
Supreme offers a wide range of truck products with prices that range from $4,000 to more than $100,000. Supremes truck bodies are offered in aluminum, fiberglass reinforced plywood (FRP), FiberPanel®, SignaturePlate, or molded fiberglass construction. Most of our products are attached to light-duty truck chassis and medium-duty chassis. Supreme integrates a wide range of options into its truck bodies including liftgates, cargo-handling equipment, customized doors, special bumpers, ladder racks, and refrigeration equipment. Supreme is primarily a build-to-order operation with very limited production occurring in anticipation of pending orders.
The following table shows net sales contributed by each of the Companys continuing operation product categories:
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2012 |
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2011 |
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2010 |
| |||
Specialized vehicles: |
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|
|
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|
|
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Trucks |
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$ |
211,971,626 |
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$ |
218,927,753 |
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$ |
122,489,740 |
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Buses |
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55,025,147 |
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60,640,186 |
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69,951,326 |
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Armored vehicles |
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16,180,244 |
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18,505,470 |
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24,860,607 |
| |||
|
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283,177,017 |
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298,073,409 |
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217,301,673 |
| |||
Fiberglass products |
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2,963,095 |
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2,287,280 |
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3,848,426 |
| |||
|
|
$ |
286,140,112 |
|
$ |
300,360,689 |
|
$ |
221,150,099 |
|
The following is a brief summary of Supremes products:
Signature Van bodies. Supremes Signature Van bodies range from 10 to 28 feet in length with exterior walls assembled from one of several material options including pre-painted aluminum, FRP panels, FiberPanels®, or SignaturePlate. Additional features include molded composite front and side corners, LED marker lights, sealed wiring harnesses, hardwood or pine flooring, and various door configurations to accommodate end-user loading and unloading requirements. This product is adaptable for a diverse range of uses in dry-freight transportation.
Iner-City® cutaway van bodies. An ideal route truck for a variety of commercial applications, the Iner-City bodies are manufactured on cutaway chassis which allow access from the cab to the cargo area. Borrowing many design elements from Supremes larger van body, the Iner-City is shorter in length (10 to 18 feet) than a typical van body.
Spartan service bodies. Built on the cutaway chassis out of durable FRP, the Spartan Service Body is a virtual workshop on wheels. In lengths from 10 to 14 feet, the Spartans selection of compartments, shelves, doors, and pre-designed options provides job-site protection from the weather while offering a secure lockable workspace.
Spartan cargo vans. Built on a cutaway chassis and constructed of FRP, the Spartan Cargo Van provides the smooth maneuverability of a commercial van with the full-height and spacious cargo area of a truck body. In lengths of 10 to 14 feet and available with a variety of pre-designed options, the Spartan Cargo Van is a bridge product for those moving up from a traditional cargo van into the truck body category.
Kold King® insulated van bodies. Kold King insulated bodies, in lengths of up to 28 feet, provide versatility and dependability for temperature controlled applications. Flexible for either hand-load or pallet-load requirements, they are ideal for multi-stop distribution of both fresh and frozen products.
Stake bodies. Stake bodies are flatbeds with various configurations of removable sides. The stake body is utilized for a broad range of agricultural and construction industries transportation needs.
Armored SUVs. Supremes armored SUV products offer the same outside appearance and interior as a stock model SUV, but with armored protection against hostile fire. These protective vehicles are used both abroad by governmental agencies and for various domestic applications.
Armored trucks and specialty vehicles. Supreme is one of the largest makers of cash-in-transit vehicles as well as SWAT rapid deployment vehicles, prisoner transport vehicles, and a variety of other security vehicles.
Shuttle buses. Shuttle buses (Senator and Candidate) have seating capacities for 12 to 29 people and are offered with a variety of seating arrangements and with options such as wheelchair lifts, custom interiors, and special exterior paint schemes. The shuttle bus line features an aerodynamic exterior design and is intended for use by hotels, nursing homes, car leasing companies, and airport-related users.
Mid-size buses. Supremes mid-size buses (President and Ambassador) are offered in lengths of up to 31 feet with capacities of up to 35 passengers. This product serves the public transit and tour markets as well as end users such as universities and various sport franchises.
Trolleys. Supremes trolley line is similar in size to the mid-size bus line but resembles a San Francisco trolley car. Supreme is a leading manufacturer of this product which is marketed to resort areas, theme parks, and cities desiring unique transportation vehicles.
Kold King®, Iner-City®, Spartan, and Fuel Shark are trade names used by Supreme in its marketing of truck bodies and buses. Kold King®, Iner-City®, and FiberPanel® are trademarks registered in the U.S. Patent and Trademark Office.
Manufacturing
Supremes manufacturing facilities are located in Goshen and Ligonier, Indiana; Griffin, Georgia; Cleburne, Texas; Moreno Valley, California; and Jonestown, Pennsylvania.
Supreme builds specialized vehicle bodies and installs other equipment on truck chassis, most of which are provided by converter pool agreements or are owned by dealers or end-users. These truck bodies are built on an assembly line from engineered structural components such as floors, roofs, and wall panels. These components are manufactured from Supremes proprietary designs and are installed on the truck chassis. Supreme then installs optional equipment and applies any special finishes that the customer has specified. Throughout the manufacturing and installation process, Supreme conducts quality control procedures to ensure that the products meet its customers specifications. Supremes products are generally produced to firm orders and are designed and engineered by Supreme. Order levels will vary depending upon price, competition, prevailing economic conditions, and other factors.
The Company manufactures its own fiberglass reinforced plywood and has extensive metal bending capabilities. These component manufacturing facilities are located in Goshen and Ligonier, Indiana.
Supreme provides limited warranties against construction defects in its products. These warranties generally provide for the replacement or repair of defective parts or workmanship for periods of up to five years following the date of retail sale.
We purchase raw materials and component parts from a variety of sources. Although we generally do not enter into long-term supply contracts, management believes that we have good relationships with our primary suppliers. In recent years prices have fluctuated significantly, but we have experienced no material adverse problems in obtaining adequate supplies of raw materials and component parts to meet the requirements of our production schedules. Management believes that the materials used in the production of our products are available at competitive prices from an adequate number of alternative suppliers. Accordingly, management does not believe that the loss of a single supplier would have a material adverse effect on our business.
Marketing
Supreme sells its products to commercial dealers/distributors, fleet leasing companies, or directly to end-users. Products purchased by a dealer from Supreme are sold by the dealer/distributor to its own customers.
Supremes dealer/distributor network consists of approximately 25 bus distributors, a limited number of truck equipment distributors, and approximately 1,000 commercial dealers. Management believes that this large network, coupled with Supremes geographically-dispersed plant and distribution sites, gives Supreme a marketing advantage over its competitors. Supreme generally delivers its products within 4 to 8 weeks after the receipt of orders.
Approximately 75 employees are engaged in direct sales. Supreme engages in direct advertising in trade publications, trade shows, and cooperative advertising campaigns with distributors.
Trademarks
The Company owns and maintains trademarks that are used in marketing specialized products manufactured by Supreme. Management believes that these trademarks have significant customer goodwill. For this reason, management anticipates renewing each trademark discussed above for an additional ten-year period prior to such trademarks expiration.
Working Capital
The Company utilizes its revolving line of credit to finance its accounts receivable and inventories. The Company believes that its days sales outstanding and its days inventories on hand are within normal industry levels. The Company had working capital of $38.6 million and $35.4 million at December 29, 2012, and December 31, 2011, respectively.
Major Customers
No single customer, or group of customers, accounted for 10% or greater of the Companys consolidated net sales for the fiscal years ended in 2012 and 2010. During 2011, one of our customers (Penske) accounted for approximately 20% of consolidated net sales. The Companys export sales are minimal. No single customer, or group of customers, accounted for 10% or greater of the Companys total trade accounts receivable as of the fiscal year ended in 2012 and 2011.
Competitive Conditions
The highly competitive nature of the specialized vehicle industry presents a number of challenges. With only a few national competitors, the Company often competes with smaller, regional companies. As a result of this broad competition, the Company is often faced with competitive pricing pressures. Other competitive factors include quality of product, lead times, geographic proximity to customers, and the ability to manufacture a product customized to customer specifications.
During favorable business cycles, the industry tends to see an increase in smaller, regional competitors, and then a similar decrease during times of challenging economic pressures. With its national presence and diverse product offerings, the Company believes that it is well positioned to meet the competitive challenges presented.
Governmental Regulation
The Companys operations are subject to a variety of federal, state, and local environmental and health and safety statutes and regulations including those related to emissions to the air, discharges to water, treatment, storage, and disposal of water, and remediation of contaminated sites. Additionally, the Companys products are subject to a variety of federal, state, and local safety statutes and regulations. From time to time, the Company has received notices of noncompliance with respect to our operations and products. These notices have typically been resolved by investigating the alleged noncompliance and correcting any noncompliant conditions.
Cyclicality and Seasonality of Business
The Companys business can be cyclical due to the normal replacement cycle particularly of its truck products (historically approximately seven years) being subject to customers delaying purchases due to adverse changes in economic conditions and other long range factors that can affect the transportation industry. Seasonality arises due to the Company typically participating in bids for large fleet contracts. If successful, the fleet orders generally require shipment of the truck bodies in the first and second quarters. Additionally, our business depends on various factors that are particularly sensitive to general economic conditions and business cycles including: corporate profitability; interest rates; fuel costs; changes in government regulations (i.e. fuel standards); customer preferences; industrial, commercial, and consumer spending patterns; and availability of truck chassis.
Employees
As of December 29, 2012 and December 31, 2011, the Company employed approximately 1,500 and 1,700 employees, respectively, none of whom are represented by a collective bargaining unit. The Company considers its relations with its employees to be favorable.
Backlog
The Companys backlog of firm orders was $67.9 million at December 29, 2012 compared to $99.9 million at December 31, 2011.
Any investment in our Common Stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below and the other information included in this Form 10-K before purchasing our Common Stock. Although the risks described below are the risks that we believe are material, they are not the only risks relating to our business and our Common Stock. Additional risks and uncertainties, including those that are not yet identified or that we currently believe are immaterial, may also adversely affect our business, financial condition, or results of operations. If any of the events described below occur, our business and financial results could be materially and adversely affected. The market price of our Common Stock could decline due to any of these risks, perhaps significantly, and you could lose all or part of your investment.
A lack of credit and/or limited financing availability to the Company, its vendors, dealers, or end users could adversely affect our business.
The Companys liquidity and financial condition could be materially and adversely affected if, under its current bank credit agreement, the Companys ability to borrow money from its existing lender to finance its operations is reduced or eliminated. Similar adverse effects may also result if the Company realizes lessened credit availability from trade creditors. Additionally, many of our customers require the availability of financing to facilitate the purchase of our products. As a result, a continuing period of reduced credit availability in the marketplace could have adverse effects on the Companys business.
Increases in the price and demand for raw materials could lower our margins and profitability.
Supreme generally does not have long-term raw material contracts and is dependent upon suppliers of steel, aluminum, wood products, and fiberglass materials, among others, for its manufacturing operations. Consequently, our ability to produce and deliver our products could be affected by disruptions encountered by our raw material suppliers or freight carriers. Additionally, competitive market conditions may prevent the Company from implementing price increases to offset raw material cost increases. As a result the Companys gross margin could be adversely affected.
Volatility in the supply of vehicle chassis and other vehicle components could adversely affect our business.
With the exception of some bus and armored products, the Company generally does not purchase vehicle chassis for its inventory. The Company accepts shipments of vehicle chassis owned by dealers or end-users for the purpose of installing and/or manufacturing its specialized truck bodies and buses on such chassis. Historically, General Motors Corp. (GM) and Ford Motor Company (Ford) have been the primary suppliers of chassis. In the event of a disruption in supply from one major supplier, the Company would attempt to use another major supplier, but there can be no assurance that this attempt would be successful. Nevertheless, in the event of chassis supply disruptions, there could be unforeseen consequences that may have a significant adverse effect on the Companys business operations.
The Company also faces risk relative to finance and storage charges for maintaining excess consigned chassis inventory from GM and Ford. Under these consigned inventory agreements, if a chassis is not delivered to a customer within a specified time frame, the Company is required to pay finance or storage charges on such chassis.
We compete in the highly competitive specialized vehicle industry which may impact our financial results.
The competitive nature of the specialized vehicle industry creates a number of challenges for the Company. Important factors include product pricing, quality of product, lead times, geographic proximity to customers, and the ability to manufacture a product customized to customer specifications. Specialized vehicles are produced by a number of smaller, regional companies which create product pricing pressures that could adversely impact the Companys profits. Chassis manufacturers have not generally shown an interest in manufacturing specialized vehicles, including truck bodies and buses, because such manufacturers highly-automated assembly line operations do not lend themselves to the efficient production of a wide variety of highly-specialized vehicles with various options and equipment.
We have potential exposure to environmental and health and safety liabilities which may increase costs and lower profitability.
Our operations are subject to a variety of federal, state, and local environmental and health and safety statutes and regulations, including those relating to emissions to the air, discharges to water, treatment, storage, and disposal of waste, and remediation of contaminated sites. In certain cases, these requirements may limit the productive capacity of our operations.
Certain laws, including the Federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, have imposed strict and, under certain circumstances, joint and several liability for costs to remediate contaminated sites upon designated responsible parties including site owners or operators and persons who dispose of wastes at, or transport wastes to, such sites.
From time to time, we have received notices of noncompliance with respect to our operations. These notices have typically been resolved by investigating the alleged noncompliance and correcting any non-compliant conditions. New environmental requirements, more aggressive enforcement of existing ones, or discovery of presently unknown conditions could require material expenditures or result in liabilities which could limit expansion or otherwise have a material adverse effect on our business, financial condition, and operating cash flows.
A product defect claim in excess of our insurance coverage, or for which we have no insurance, or an inability to acquire or maintain insurance at commercially reasonable rates, could have a materially adverse effect upon our business.
We face an inherent risk of exposure to product liability, product recall, and other product defect related claims, if the use of our current or formerly manufactured products result, or are alleged to result, in personal injury and/or property damage, or if a significant number of our products must be recalled, or if a product defect results in the Company having to refund the purchase price of a substantial number of vehicles. If we manufacture a defective product, we may experience material losses and we may incur significant costs to defend product defect claims. We could also incur damages and significant costs in correcting any defects, lost sales, and suffer damage to our reputation. We may not have insurance coverage for certain types of claims or our insurance coverage may not be adequate for liabilities we could incur and may not continue to be available on terms acceptable to us.
Our manufacturers warranties expose us to potentially significant claims.
We are subject to product warranty claims in the ordinary course of our business. If we manufacture poor quality products or receive defective materials, we may incur unforeseen costs in excess of what we have reserved in our financial statements. These costs could have a material adverse effect on our business and operating cash flows.
We depend on the services of our key executives. Any loss of our key executives could have a material adverse effect on our operations.
Our ability to compete successfully and implement our business strategy depends on the efforts of our senior management personnel. The loss of the services of any one or more of these individuals could have a material adverse effect on our business. We do not maintain key-man life insurance policies on any of our executives. If we were unable to attract qualified personnel to our management, our existing management resources could become strained, which may harm our business and our ability to implement our strategies.
Our relatively low trading volumes may limit our stockholders abilities to buy or sell their shares.
Our Class A Common Stock has experienced, and may continue to experience, price volatility and low trading volumes. Overall market conditions, and other risk factors described herein, may cause the market price of our Class A Common Stock to fall. Our high and low sales prices for the twelve month period ended December 29, 2012 were $4.66 and $2.42, respectively. Our Class A Common Stock is listed on the NYSE MKT exchange under the symbol STS. However, daily trading volumes for our Class A Common Stock are, and may continue to be, relatively small compared to many other publicly-traded securities. For example, during the twelve month period ended December 29, 2012, our daily trading volume has been as low as zero. It may be difficult for you to buy or sell shares in the public market at any given time at prevailing prices, and the price of our Class A Common Stock may, therefore, be volatile.
Our officers and directors own a large percentage of our common stock. They may vote their shares in ways with which you disagree.
As of March 15, 2013, our officers and directors as a group beneficially owned 23.5% of our Class A Common Stock and 89.2% of our Class B Common Stock. As a result, they will continue to be able to exercise significant influence, and in most cases, control, over matters requiring stockholder approval, including the election of directors, changes to our charter documents, and significant corporate transactions. This concentration of ownership makes it unlikely that any other holder or group of holders of our Class A Common Stock will be able to affect the way we are managed or the direction of our business.
Our split classes of stock may make it more difficult or expensive for a third party to acquire the Company which may adversely affect our stock price.
Our outstanding Common Stock is split into two classes. The Class A Common Stock is listed on the NYSE MKT exchange, and the holders thereof are entitled to elect two members of the Companys Board of Directors. The majority (89.2%) of the Class B Common Stock is owned or controlled by the Companys officers and directors and is entitled to elect the remaining six members of the Companys Board of Directors. The continuing ability of the holders of our Class B Common Stock to elect a majority of the members of the Companys Board of Directors will make it difficult for another company to acquire us and for Class A shareholders to receive any related take-over premium (unless the controlling group approves the sale).
The shuttle bus industry is highly competitive.
The shuttle bus industry is highly competitive; we routinely face competition from multiple companies for state and municipal bid contracts, as well as retail sales. The recent competitive environment in the bus industry has resulted in increased discounting, which effectively lowers unit sales prices. Sustained or increasing competitive pressures could have a material adverse effect on our results of operations. There can be no assurance that we will be able to reduce the cost of our products to remain competitive or that existing or new competitors will not develop products that are superior to ours or that achieve better consumer acceptance, thereby adversely affecting our market share, sales volume, and profit margins.
Our internal controls provide only reasonable assurance that objectives are met. Failure of one or more of these controls could adversely affect the Company.
While the Company believes that its control systems are effective, there are inherent limitations in all control systems, and misstatements due to error or fraud may occur and not be detected. The Company continues to take action to comply with the internal controls, disclosure controls, and other requirements of the Sarbanes-Oxley Act of 2002. Management, including our Interim Chief Executive Officer and Chief Financial Officer, cannot guarantee that our internal controls and disclosure controls will prevent all possible errors or all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be relative to their costs. Because of the inherent limitations in all control
systems, no system of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Further, controls can be circumvented by individual acts of some persons, by collusion of two or more persons, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may be inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Ability to sell idle facilities.
We currently own facilities which have been idle for a period of time and are currently being marketed for sale (see Item 2. Properties). Although management has exercised its best judgment to reflect accurate current market values of these properties in the Companys financial statements, there cannot be, due to current adverse market conditions, any assurance that these properties can be sold for these values anytime in the near future.
(See other risk factors listed under the caption: Forward-Looking Statements).
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
Set forth below is a brief summary of the properties which are owned or leased by the Company.
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Square |
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Owned or |
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Footage |
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Leased |
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Operating Segment |
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Manufacturing of Products |
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Goshen, Indiana |
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521,135 |
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Owned |
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Specialized Vehicles |
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Jonestown, Pennsylvania |
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424,416 |
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Owned |
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Specialized Vehicles |
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Griffin, Georgia |
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191,779 |
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Owned |
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Specialized Vehicles |
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Cleburne, Texas |
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177,035 |
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Owned |
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Specialized Vehicles |
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Moreno Valley, California |
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103,200 |
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Owned |
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Specialized Vehicles |
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1,417,565 |
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|
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Manufacturing of Component Parts |
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Ligonier, Indiana |
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52,142 |
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Owned |
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Fiberglass Products |
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52,142 |
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Service/Sales Facilities |
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Harrisville, Rhode Island |
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20,000 |
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Owned |
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Specialized Vehicles |
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Colorado Springs, Colorado |
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950 |
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Leased |
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Specialized Vehicles |
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20,950 |
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Properties Held for Sale |
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Wilson, North Carolina |
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113,694 |
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Owned |
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Not Applicable |
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White Pigeon, Michigan |
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74,802 |
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Owned |
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Not Applicable |
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Goshen, Indiana |
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57,570 |
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Owned |
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Not Applicable |
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St. Louis, Missouri |
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4,800 |
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Owned |
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Not Applicable |
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250,866 |
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Corporate Office Building |
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Goshen, Indiana |
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26,000 |
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Owned |
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Not Applicable |
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|
|
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|
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Total square footage |
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1,767,523 |
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In an effort to manage its capacity utilization and control its assets, the Company had previously ceased operations at a number of facilities during and prior to 2011. The White Pigeon, Michigan facility is being leased to an unrelated business and is classified as property, plant, and equipment as of December 29, 2012. A portion of the Wilson, North Carolina facility is currently being leased to an unrelated business. The remaining properties are classified as assets held for sale and are each being aggressively marketed for sale. The Company has a signed purchase agreement for the Goshen, Indiana property classified as held for sale, which is expected to close on March 29, 2013 and is expected to result in a nominal gain on the sale. The facilities owned or leased by the Company are well maintained, in good condition, and adequate for their intended purposes.
The Company is subject to various investigations, claims, and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities. Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved unfavorably to the Company. The Company establishes accruals for matters that are probable and reasonably estimable.
In October of 2011, the Company was named a defendant in a personal injury suit (Paul Gendrolis and Katherine Gendrolis v. Saxon Fleet Sales, Kolstad Company, and Supreme Industries, Inc.) which was filed in the United States District Court, District of Massachusetts. The complaint seeks $10 million in damages based on allegations that a truck body manufactured by the Company contained an improperly installed plate or lip, which caused Paul Gendrolis to trip and become injured. Claims alleged against the Company include negligence, breach of warranty, breach of consumer protection laws, and loss of consortium. Due to the inherent risk of litigation, the outcome of this case is uncertain and unpredictable. The Company is vigorously defending this matter. The Company has insurance coverage for personal injury claims with the Companys self-insurance deductible being $250,000.
In February of 2012, the Company was named a defendant in a claim that a fleet of buses manufactured by the Company was defective (King County v. Supreme Corporation) which was filed in Superior Court in King County, Washington. The complaint seeks a sum of approximately $7 million which the plaintiff alleges was paid for the fleet, costs of investigation and repairs, and incidental and consequential damages. These allegations against the Company include breach of contract, breach of implied warranties of fitness and merchantability, and a request for declaratory judgment on the issue of revocation of acceptance of the fleet. Due to the inherent risk of litigation, the outcome of this case is uncertain and unpredictable. The Company is vigorously defending this matter.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES.
The Companys Class A Common Stock is traded on the NYSE MKT exchange (ticker symbol STS). The number of record holders of the Class A Common Stock as of March 15, 2013 was approximately 236. Due to the number of shares held in nominee or street name, it is likely that there are substantially more than 236 beneficial owners of the Companys Class A Common Stock.
The Companys Class A Common Stock closed at a price of $3.98 per share on the NYSE MKT exchange on March 15, 2013 on which date there were 13,557,749 shares of Class A Common Stock outstanding. High and low sales prices of the Class A Common Stock for the two-year periods ended December 29, 2012 and December 31, 2011 were:
|
|
2012 |
|
2011 |
| ||||||||
|
|
High |
|
Low |
|
High |
|
Low |
| ||||
1st Quarter |
|
$ |
3.25 |
|
$ |
2.42 |
|
$ |
3.55 |
|
$ |
2.01 |
|
2nd Quarter |
|
4.57 |
|
3.01 |
|
3.60 |
|
2.10 |
| ||||
3rd Quarter |
|
4.66 |
|
3.65 |
|
3.55 |
|
1.90 |
| ||||
4th Quarter |
|
4.00 |
|
3.22 |
|
2.95 |
|
1.71 |
| ||||
All of the 1,716,937 outstanding shares of the Companys Class B Common Stock were held by a total of 13 persons as of March 15, 2013. There is no established trading market for the Class B Common Stock. The Class B Common Stock is freely convertible on a one-for-one basis into an equal number of shares of Class A Common Stock, and ownership of the Class B Common Stock is deemed to be beneficial ownership of the Class A Common Stock under Rule 13d-3(d) (1) promulgated under the Securities Exchange Act of 1934.
The Company did not declare or pay any cash or stock dividends during the years ended December 29, 2012 or December 31, 2011. Future dividend payments will necessarily be subject to business conditions, the Companys financial position, and requirements for working capital, property, plant and equipment expenditures, and other corporate purposes.
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data has been derived from our consolidated financial statements. The data set forth below should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and notes thereto.
All per share data for 2008 has been adjusted to reflect the two percent (2%) and six percent (6%) common stock dividends declared and paid during 2008.
|
|
For Fiscal Years Ended |
| |||||||||||||
|
|
2012 |
|
2011 (b) |
|
2010 (b) |
|
2009 (b) |
|
2008 |
| |||||
Consolidated Statement of Continuing Operations Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
286.1 |
|
$ |
300.4 |
|
$ |
221.2 |
|
$ |
183.9 |
|
$ |
250.6 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Income (loss) from continuing operations |
|
11.8 |
|
1.7 |
|
(8.8 |
) |
(6.0 |
) |
(1.7 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Income (loss) from continuing operations per share: |
|
|
|
|
|
|
|
|
|
|
| |||||
Basic earnings (loss) per share |
|
0.78 |
|
0.11 |
|
(0.62 |
) |
(0.43 |
) |
(0.13 |
) | |||||
Diluted earnings (loss) per share |
|
0.77 |
|
0.11 |
|
(0.62 |
) |
(0.43 |
) |
(0.13 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash dividends per common share |
|
|
|
|
|
|
|
|
|
0.18 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Consolidated Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
|
| |||||
(in millions) |
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Working capital (a) |
|
$ |
38.6 |
|
$ |
35.4 |
|
$ |
19.1 |
|
$ |
22.4 |
|
$ |
60.3 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total assets |
|
105.1 |
|
104.7 |
|
101.1 |
|
109.2 |
|
125.5 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total debt |
|
14.1 |
|
15.9 |
|
26.6 |
|
27.3 |
|
33.6 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Stockholders equity |
|
67.2 |
|
54.9 |
|
51.5 |
|
62.3 |
|
70.4 |
|
(a) During the third quarter of 2009, the Company reclassified its revolving line of credit from long-term to current ($25.6 million at December 26, 2009). During the third quarter of 2011, the Company reclassified its revolving line of credit from current to long-term ($11.7 million at December 31, 2011). See Note 6 of the Notes to Consolidated Financial Statements for additional information regarding debt and related matters.
(b) The above results reflect certain immaterial revisions as discussed in Note 1 to Consolidated Financial Statements in Item 8.
ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Company Overview
Established in 1974 as a truck body manufacturer, Supreme Industries, Inc., through its wholly-owned subsidiary Supreme Corporation, is one of the nations leading manufacturers of specialized vehicles. The Company engages principally in the production and sale of customized truck bodies, buses, and other specialty vehicles. Building on its expertise in providing both cargo and passenger transportation solutions, the Companys specialty vehicle offerings include products such as customized armored vehicles and homeland response vehicles.
The Company utilizes a nationwide direct sales and distribution network consisting of approximately 25 bus distributors, a limited number of truck equipment distributors, and approximately 1,000 commercial truck dealers. The Companys manufacturing and service facilities are located in seven states across the continental United States allowing us to meet the needs of customers across all of North America. Additionally, the Companys favorable customer relations, strong brand recognition, extensive product offerings, bailment chassis arrangements, and product innovation competitively positions Supreme with a strategic footprint in the markets it serves.
The Company and its product offerings are affected by various factors which include, but are not limited to, economic conditions, interest rate fluctuations, volatility in the supply chain of vehicle chassis, and the availability of credit and financing to the Company, our vendors, dealers, distributors, or end users. The Companys business is also affected by the availability and costs of certain raw materials that serve as significant components of its product offerings. The Companys risk factors are disclosed in Item 1A Risk Factors of this document.
Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and related notes (see Note 1 Basis of Presentation) thereto located in Item 8 of this document, and pertain to continuing operations unless otherwise noted.
Overview
Throughout 2012, Supreme continued to successfully implement a strategy of concentrating on sales and markets that meet or exceed our profit margin criteria. By enhancing manufacturing efficiencies, improving pricing disciplines, and better managing operating costs, we believe we can produce sustainable profits into the future. Consolidated sales were $286.1 million in 2012, compared with $300.4 million in 2011, a decline of 4.7%. Gross profit increased 34% to $43.5 million from the $32.5 million reported in last years comparable period. As a percentage of sales, gross margin increased 4.4 percentage points to 15.2% from 10.8% in 2011, and represented the highest gross margin percentage generated by the Company since 1998. The Company reported full-year income from continuing operations of $11.8 million, or $0.77 per diluted share, compared with last years income from continuing operations of $1.7 million, or $0.11 per diluted share.
Our sales backlog at the end of 2012 totaled $67.9 million compared with $99.9 million a year ago. While 32% lower than the prior-year period, we expect our backlog to yield a more favorable gross margin percentage than the higher backlog of a year ago. Additionally, the prior year backlog included initial orders for the 2012 fleet season. As of the end of 2012, the 2013 fleet orders had not yet been awarded.
Working capital was $38.6 million at December 29, 2012, up from $35.4 million at December 31, 2011. Total debt declined to $14.1 million at year end, compared with $15.9 million a year ago. This reduction was achieved even after investing over $7.1 million in facilities and equipment to enhance efficiencies and $6.1 million to exercise certain facility lease purchase options during the year. Stockholders equity increased 22% to $67.2 million, or $4.41 per share, at December 29, 2012, compared with $54.9 million, or $3.71 per share, at December 31, 2011. On December 19, 2012, the Company entered into a five-year revised (cash-flow based) credit agreement increasing its line of credit to $45 million with notably improved liquidity, availability and interest rate pricing.
During 2012, the Company made several key strategic decisions to improve results including upgrading key management positions, upgrading the Indiana truck and bus facilities, improving pricing disciplines, and exercising two facility lease purchase options. As we continue to manage the Company for profitable growth, our key areas of ongoing focus include:
· Improving the buying experience for our customers by incorporating their product improvement ideas;
· Improving our material procurement sourcing processes nationwide;
· Making strategic improvements in select facilities to enhance productivity;
· Continuing our product development initiatives related to both new and existing products; and
· Ongoing product line rationalization to improve gross margins and remain focused on our core truck, bus, and armored products.
We continue to aggressively review all aspects of our business by means of a continuous improvement culture to ensure the ongoing growth and strength of the Company. The Company expects to benefit and leverage the strong foundation built in 2012 to make further improvements in its future financial performance.
Comparison of 2012 with 2011
Net Sales
Net sales for the year ended December 29, 2012 decreased $14.2 million, or 4.7%, to $286.1 million as compared with $300.4 million for the year ended December 31, 2011. The following table presents the components of net sales and the changes from 2012 to 2011:
($000s omitted) |
|
2012 |
|
2011 |
|
Change |
| |||||
Specialized vehicles: |
|
|
|
|
|
|
|
|
| |||
Trucks |
|
$ |
211,972 |
|
$ |
218,928 |
|
$ |
(6,956 |
) |
(3.2 |
)% |
Buses |
|
55,025 |
|
60,640 |
|
(5,615 |
) |
(9.3 |
) | |||
Armored vehicles |
|
16,180 |
|
18,506 |
|
(2,326 |
) |
(12.6 |
) | |||
|
|
283,177 |
|
298,074 |
|
(14,897 |
) |
(5.0 |
) | |||
Fiberglass products |
|
2,963 |
|
2,287 |
|
676 |
|
29.6 |
| |||
|
|
$ |
286,140 |
|
$ |
300,361 |
|
$ |
(14,221 |
) |
(4.7 |
)% |
Truck division sales decreased by $7.0 million, or 3.2%, for the year primarily due to fewer orders from certain large national fleet customers and our decision to decline sales that do not meet our target margins. The Company leveraged an improved retail market in 2012 by creating and utilizing greater flexibility in our manufacturing processes resulting in efficiency improvements, higher-quality products, and improved on-time delivery.
Bus division sales decreased $5.6 million, or 9.3%, as the core market continued to feel the effects of tightened municipal and state budgets that caused intense competition leading to increased discounting and reduced margins. We are addressing the issue by revising our production processes and material sourcing to drive greater efficiency and lower cost and by continuing to investigate niche markets that will help us better balance the business between public and private sector.
Armored division sales decreased $2.3 million, or 12.6%, as a result of lower government procurements, including our business with the U.S. Department of State to produce armored SUVs for embassies abroad. Using existing products and capabilities as a foundation, we continue to look for opportunities to expand product offerings and our customer base for these specialty products.
The Fiberglass division sells fiberglass reinforced plywood to Supreme for use in the production of certain of its truck bodies and to third parties. The increase of $0.7 million, or 29.6%, was due to higher sales to third parties in 2012.
Cost of sales and gross profit
Gross profit increased by $11.0 million, or 34%, to $43.5 million for the year ended December 29, 2012 as compared with $32.5 million for the year ended December 29, 2011. The following presents the components of cost of sales and the changes from 2012 to 2011:
Material Material cost as a percentage of net sales decreased by 3.9% for the year ended December 29, 2012 as compared with 2011. The decrease in the material percentage was due in part to a favorable product mix and our focus on improved product pricing. Although commodity raw material prices seem to have stabilized, the potential for future increases remains an ongoing concern for certain commodities including aluminum, steel, and wood products. The Company closely monitors the markets for its major commodities to identify raw material cost escalations and attempts to pass-through cost increases as markets will allow by having material adjustment clauses in most key customer contracts.
Direct Labor Direct labor as a percentage of net sales decreased by 0.8% for the year ended December 29, 2012 as compared with 2011 due to improved efficiencies achieved at certain locations resulting from the use of real time metrics on labor utilization and manufacturing redesign initiatives for more efficient production flow.
Overhead Manufacturing overhead as a percentage of net sales increased by 0.5% for the year ended December 29, 2012 as compared with 2011 due to the fixed nature of certain overhead expenses that do not fluctuate with sales volume changes. For the year ended December 29, 2012, the dollars spent on overhead decreased approximately $0.5 million when compared with 2011 with reductions in warranty, workers compensation claims, and group health claims. The Company implemented design changes to its group health insurance plan and has provided participants with more consumer-driven tools with the goal of improving the overall health and cost consciousness of its workforce.
Delivery Delivery as a percentage of net sales decreased by 0.2% for the year ended December 29, 2012 as compared with 2011.
Selling, general and administrative expenses
Selling, general and administrative (G&A) expenses increased by $4.6 million, or 17%, to $32.2 million for the year ended December 29, 2012 as compared with $27.6 million for the year ended December 31, 2011. The following table presents selling and G&A expenses as a percentage of net sales and the changes from 2012 to 2011:
($000s omitted) |
|
2012 |
|
2011 |
|
Change |
| |||||||||
Selling expenses |
|
$ |
10,499 |
|
3.7 |
% |
$ |
9,484 |
|
3.2 |
% |
$ |
1,015 |
|
0.5 |
% |
G&A expenses |
|
21,720 |
|
7.6 |
|
18,170 |
|
6.0 |
|
3,550 |
|
1.6 |
| |||
Total |
|
$ |
32,219 |
|
11.3 |
% |
$ |
27,654 |
|
9.2 |
% |
$ |
4,565 |
|
2.1 |
% |
Selling expenses Selling expenses increased $1.0 million year over year. As a percentage of net sales, selling expenses increased 0.5% for the year ended December 29, 2012 as compared with 2011 which was primarily attributable to a change in the sales commission structure which is now more closely aligned with profit contribution versus gross sales volume.
G&A expenses G&A expenses increased $3.6 million year over year. As a percentage of net sales, G&A expenses increased 1.6% for the year ended December 29, 2012 as compared with 2011. The increase was the result of several factors including strategic additions to the senior management team, profit-based incentive compensation plans, severance expenses related to exiting management personnel in early 2012, and legal fees, as well as expenses associated with the implementation of a perpetual inventory management system.
Legal settlement and related costs
On January 21, 2009, The Armored Group (TAG) filed a complaint against the Company alleging breach of oral contract, unjust enrichment, and other claims. Due to the inherent nature of litigation, and the uncertainty surrounding the ultimate outcome of this case, on May 25, 2011, the Company and TAG signed a Civil Settlement Agreement under the terms of which this lawsuit was dismissed, and the Company agreed to pay $3.3 million including $1.1 million in cash and $2.2 million in stock. The legal settlement and related costs were $2.2 million for the year ended December 31, 2011. There were no associated costs for the year ended December 29, 2012.
Other income
For the year ended December 29, 2012, other income was $1.2 million, or 0.4% of net sales, as compared with other income of $0.9 million, or 0.3% of net sales, for the year ended December 31, 2011. Other income consisted of rental income, gain on the sale of assets, and other miscellaneous income received by the Company. During the first quarter of 2012, the Company realized a gain of approximately $0.3 million on the sale of real estate.
Interest expense
Interest expense was $1.0 million, or 0.3% of net sales, for the year ended December 29, 2012 as compared with $2.2 million, or 0.7% of net sales, for the year ended December 31, 2011. The decline in interest expense resulted from a combination of lower average bank borrowings and lower (performance-based) borrowing rates during the periods. Additionally, interest expense in 2011 included approximately $0.8 million of charges resulting from the write off of capitalized bank fees related to the Companys previous bank credit agreement. The effective interest rate on bank borrowings was 2.7% at December 29, 2012.
Income taxes
At December 31, 2011, the Company maintained a valuation allowance against its net deferred tax assets of $4.6 million due to uncertainty of the utilization of such assets. At December 31, 2011, the Company had net operating loss carryforwards totaling $6.5 million for federal tax purposes and approximately $22 million for state tax purposes. Additionally, the Company had research and experiment credits totaling $0.3 million for federal tax purposes and $0.5 million for state tax purposes. During 2012, the Company generated taxable income sufficient to realize the benefit of all its federal net operating loss carryforwards and a portion of its state net operating loss carryforwards. Given the income generated in 2012, the valuation allowances were reversed which result in a nominal effective tax rate. The Companys effective tax rate for the year ending December 29, 2012 was 5.9%, substantially lower than statutory rates. For the year ended December 31, 2011, the income tax benefit of $0.4 million resulted from expiring state statutes related to uncertain tax positions. Beginning with the first quarter of 2013, the Company expects to recognize income taxes at normalized rates.
Income from continuing operations
Net income from continuing operations increased by $10.1 million to $11.8 million, or 4.1% of net sales, for the year ended December 29, 2012 from $1.7 million, or 0.6% of net sales, for the year ended December 31, 2011. As noted earlier, net income improved significantly, despite lower sales, due to a margin-focused sales strategy, favorable product mix, and efficiency improvements at our manufacturing plants.
Discontinued operations
In December of 2010, the Company decided to discontinue its Oregon operations. Discontinued operations include the operating results as well as impairment charges for related buildings and equipment. Accordingly, the Company has reclassified the prior period results as discontinued operations. The Oregon operations were ceased in the first quarter of 2011 due to the Companys decision to exit this unprofitable geographic region. The after-tax loss from the discontinued operations related to our Oregon operations was $0.9 million in 2011.
Basic and diluted income (loss) per share
The following table presents basic and diluted income (loss) per share and the changes from 2012 to 2011:
|
|
2012 |
|
2011 |
|
Change |
| |||
Basic income (loss) per share: |
|
|
|
|
|
|
| |||
Income from continuing operations |
|
$ |
0.78 |
|
$ |
0.11 |
|
$ |
0.67 |
|
Loss from discontinued operations |
|
|
|
(0.06 |
) |
0.06 |
| |||
Net income per basic share |
|
$ |
0.78 |
|
$ |
0.05 |
|
$ |
0.73 |
|
|
|
|
|
|
|
|
| |||
Diluted income (loss) per share: |
|
|
|
|
|
|
| |||
Income from continuing operations |
|
$ |
0.77 |
|
$ |
0.11 |
|
$ |
0.66 |
|
Loss from discontinued operations |
|
|
|
(0.06 |
) |
0.06 |
| |||
Net income per diluted share |
|
$ |
0.77 |
|
$ |
0.05 |
|
$ |
0.72 |
|
Comparison of 2011 with 2010
Net Sales
Net sales for the year ended December 31, 2011 increased $79.2 million, or 35.8%, to $300.4 million as compared with $221.2 million for the year ended December 25, 2010. The following table presents the components of net sales and the changes from 2011 to 2010:
($000s omitted) |
|
2011 |
|
2010 |
|
Change |
| |||||
Specialized vehicles: |
|
|
|
|
|
|
|
|
| |||
Trucks |
|
$ |
218,928 |
|
$ |
122,490 |
|
$ |
96,438 |
|
78.7 |
% |
Buses |
|
60,640 |
|
69,951 |
|
(9,311 |
) |
(13.3 |
) | |||
Armored vehicles |
|
18,506 |
|
24,861 |
|
(6,355 |
) |
(25.6 |
) | |||
|
|
298,074 |
|
217,302 |
|
80,772 |
|
37.2 |
| |||
Fiberglass products |
|
2,287 |
|
3,848 |
|
(1,561 |
) |
(40.6 |
) | |||
|
|
$ |
300,361 |
|
$ |
221,150 |
|
$ |
79,211 |
|
35.8 |
% |
Truck division sales increased by $96.4 million, or 78.7%, for the year primarily due to higher levels of fleet orders shipped during the first half of 2011 and an improved retail market.
Bus division sales decreased $9.3 million, or 13.3%, as the core market of state and municipal governments remained soft.
Armored division sales decreased $6.4 million, or 25.6%, as a result of less demand for products purchased by the US Department of State and lower cash-in-transit vehicle demand in 2011.
Fiberglass products division sales decreased $1.6 million, or 40.6%, primarily due to the restructuring of the division.
Cost of sales and gross profit
Gross profit increased by $14.2 million, or 78.0%, to $32.5 million for the year ended December 31, 2011 as compared with $18.2 million for the year ended December 25, 2010. The following presents the components of cost of sales and the changes from 2011 to 2010:
Material Material cost as a percentage of net sales increased by 3.0% for the year ended December 31, 2011 as compared with 2010. The increase in the material percentage was significantly impacted by the escalation in the cost of raw materials as well as changes in product mix reflecting an increase in higher material percentage fleet business and a decrease in armored product which has a lower material percentage.
Direct Labor Direct labor as a percentage of net sales decreased by 1.6% for the year ended December 31, 2011 as compared with 2010 due to improved efficiencies achieved at certain locations resulting from the use of real time metrics on labor utilization and product redesign initiatives for more efficient production.
Overhead Manufacturing overhead as a percentage of net sales decreased by 3.7% for the year ended December 31, 2011 as compared with 2010 due to the fixed nature of certain overhead expenses that do not fluctuate with sales volume changes. Additionally, group health insurance costs were considerably lower than in 2010 when the Company experienced several costly medical claims.
Delivery Delivery as a percentage of net sales decreased by 0.3% for the year ended December 31, 2011 as compared with 2010.
Selling, general and administrative expenses
Selling, general and administrative (G&A) expenses increased by $5.3 million, or 24%, to $27.7 million for the year ended December 31, 2011 as compared with $22.4 million for the year ended December 25, 2010. The following table presents selling and G&A expenses as a percentage of net sales and the changes from 2011 to 2010:
($000s omitted) |
|
2011 |
|
2010 |
|
Change |
| |||||||||
Selling expenses |
|
$ |
9,484 |
|
3.2 |
% |
$ |
8,000 |
|
3.6 |
% |
$ |
1,484 |
|
(0.4 |
)% |
G&A expenses |
|
18,170 |
|
6.0 |
|
14,374 |
|
6.5 |
|
3,796 |
|
(0.5 |
) | |||
Total |
|
$ |
27,654 |
|
9.2 |
% |
$ |
22,374 |
|
10.1 |
% |
$ |
5,280 |
|
(0.9 |
)% |
Selling expenses Selling expenses increased $1.5 million year over year. As a percentage of net sales, however, selling expenses decreased 0.4% for the year ended December 31, 2011 as compared with 2010. The increase in dollars for the period was primarily attributable to higher commission-related expenses due to a 36% increase in the net sales volume and higher costs associated with more proactive marketing programs to promote the Companys products. During the economic downturn, the Company cut back in the area of marketing expenditures on advertising, product literature, and personnel.
G&A expenses G&A expenses increased $3.8 million year over year. As a percentage of net sales, however, G&A expenses decreased 0.5% for the year ended December 31, 2011 as compared with 2010. The increase in dollars was primarily attributable to a variety of restructuring and profit improvement initiatives including the costs to engage consulting firms supporting these efforts. These types of expenses totaled approximately $1.2 million for the year ended December 31, 2011. Additionally, as a result of changes in senior management, payroll and related benefits increased in the 2011 period compared to the 2010 period.
Legal settlement and related costs
On January 21, 2009, The Armored Group (TAG) filed a complaint against the Company alleging breach of oral contract, unjust enrichment, and other claims. Due to the inherent nature of litigation, and the uncertainty surrounding the ultimate outcome of this case, on May 25, 2011, the Company and TAG signed a Civil Settlement Agreement under the terms of which this lawsuit was dismissed and the Company agreed to pay $3.3 million including $1.1 million in cash and $2.2 million in stock. The Company settled a lawsuit during the second quarter of 2011. The legal settlement and related costs were $2.2 million for the year ended December 31, 2011 as compared with $2.3 million for the year ended December 25, 2010.
Impairment of assets held for sale
During the fourth quarter of 2010 the Company recorded an impairment charge of $1.1 million, or 0.5% of net sales. The Company reduced the selling prices of certain assets held for sale to reflect prevailing market conditions and maximize the opportunity to sell these properties and improve cash flow. However, market conditions in certain areas of the country for industrial real estate remain depressed and could have an adverse effect on the timing of sales, and ultimate prices received, for certain of the properties. There were no asset impairments recognized during 2011. (See Risk Factors and the Financial Statements.)
Other income
For the year ended December 31, 2011, other income was $0.9 million, or 0.3% of net sales, as compared with other income of $0.6 million, or 0.3% of net sales, for the year ended December 25, 2010. Other income consisted of rental income, gain on the sale of assets, and other miscellaneous income received by the Company. During the second quarter of 2011, the Company realized a gain of approximately $0.3 million on the sale of its aircraft.
Interest expense
Interest expense was $2.2 million, or 0.7% of net sales, for the year ended December 31, 2011 as compared with $1.4 million, or 0.6% of net sales, for the year ended December 25, 2010. The increase in interest expense for 2011 included approximately $0.8 million of charges resulting from the accelerated amortization of capitalized bank refinancing fees related to the Companys previous credit agreement.
Income taxes
For the year ended December 31, 2011, the income tax benefit of $0.4 million resulted from expiring state statutes related to uncertain tax positions. At December 31, 2011, the Company had net operating loss carryforwards totaling $6.5 million for federal tax purposes and approximately $22 million for state tax purposes. Additionally, the Company had research and experiment credits totaling $0.3 million for federal tax purposes and $0.5 million for state tax purposes. Given the accumulated net operating tax losses, it was more likely than not that these deferred tax assets will not be realized. Accordingly, after consideration of all positive and negative factors the Company provided a valuation allowance for the deferred tax assets net of the deferred tax liabilities expected. The valuation allowance did not impact the Companys ability to utilize its net operating loss carryforwards to offset taxable earnings in the future. For the year ended December 25, 2010, the Company recorded income tax expense of $0.5 million which was the result of a valuation allowance that was recorded against the Companys net deferred tax asset position.
Income (loss) from continuing operations
Net income from continuing operations increased by $10.5 million to $1.7 million, or 0.6% of net sales, for the year ended December 31, 2011 from a net loss of $8.8 million, or -4.0% of net sales, for the year ended December 25, 2010.
Discontinued operations
Discontinued operations include the operating results as well as impairment charges for related buildings and equipment. The Company decided to discontinue its Oregon operations in December of 2010 and in the fourth quarter of 2009 to discontinue its Silver Crown luxury motorhome business. Accordingly, the Company has reclassified the prior period results for these two operations as discontinued operations. The Oregon operations were ceased in the first quarter of 2011 due to the Companys decision to exit this unprofitable geographic region. The after-tax loss from the discontinued operations related to our Oregon operations was $0.9 million in 2011 and $1.7 million in 2010. The Silver Crown operations were terminated as a result of the unprecedented tight credit markets caused by the severe economic recession which led to a significant reduction of new motorhome orders and the cancellation of existing orders. The after tax loss from discontinued operations related to our Silver Crown recreational vehicle division was $1.2 million in 2010.
Basic and diluted income (loss) per share
The following table presents basic and diluted income (loss) per share and the changes from 2011 to 2010:
|
|
2011 |
|
2010 |
|
Change |
| |||
Basic and diluted net income (loss) per share: |
|
|
|
|
|
|
| |||
Income (loss) from continuing operations |
|
$ |
0.11 |
|
$ |
(0.62 |
) |
$ |
0.73 |
|
Income (loss) from discontinued operations |
|
(0.06 |
) |
(0.20 |
) |
0.14 |
| |||
Net income (loss) |
|
$ |
0.05 |
|
$ |
(0.82 |
) |
$ |
0.87 |
|
Liquidity and Capital Resources
Cash Flows
The Companys primary sources of liquidity have been cash flows from operating activities and borrowings under its credit agreements. Principal uses of cash have been to support working capital needs, meet debt service requirements, and fund capital expenditures.
Operating activities
Cash flows from operations represent the net income earned or the net loss sustained in the reported periods adjusted for non-cash charges and changes in operating assets and liabilities. Net cash from operating activities totaled $12.4 million for the year ended December 29, 2012 as compared with $14.5 million for the year ended December 31, 2011. Net cash from operating activities was favorably impacted by a $5.8 million decrease in inventories and a $3.2 million decrease in accounts receivable, primarily due to decreased business activity at the end of December 2012 as compared to the same period in the prior year. This was offset by a $9.5 million decrease in trade accounts payable resulting from a decrease in inventories and cash flow management.
Net cash from operating activities totaled $14.5 million for the year ended December 31, 2011 as compared with $1.3 million for the year ended December 25, 2010. Cash from operating activities was favorably impacted by a $9.9 million increase in trade accounts payable resulting from the successful negotiation of extended payment terms with key trade suppliers. This was partially offset by a $2.5 million increase in accounts receivable due to the higher sales volume and an increase in inventories totaling $0.9 million. The Companys cash flow cycle improved year over year mainly due to improved accounts receivable collections, accelerated inventory turns, and the extended vendor payment terms.
Investing activities
Cash used by investing activities was $10.9 million for the year ended December 29, 2012 as compared with $1.9 million for the year ended December 31, 2011. During 2012, the Companys capital expenditures totaled $13.2 million and included $5.4 million used to exercise purchase options for leased facilities in Indiana and Georgia, and $0.7 million used to exercise the purchase option for a leased facility in California, which was previously accounted for as a financing (capital lease) transaction. Investing activities provided cash of $4.2 million in 2012 as a result of net proceeds from the sale of facilities in Woodburn, Oregon; Apopka, Florida; Streetsboro, Ohio; and Ligonier, Indiana which were previously included in assets held for sale. Additionally, the Companys wholly-owned captive insurance subsidiary purchased short-term investments of $2.0 million during 2012.
Cash used by investing activities was $1.9 million for the year ended December 31, 2011 as compared with $0.8 million for the year ended December 25, 2010. During 2011, the Companys capital expenditures totaled $2.8 million consisting primarily of capital investments in our Pennsylvania and Indiana facilities partially offset by $0.6 million received from the sale of property, plant, and equipment.
Financing activities
Financing activities used $1.6 million of cash for the year ended December 29, 2012 as compared with cash used of $13.5 million for the year ended December 31, 2011. Net long-term debt payments consisted of net borrowings from the Companys revolving line of credit of $2.4 million which were offset by the $3.0 million net payoff of a capital lease obligation under a sale and leaseback transaction, and the $0.7 million early payoff of obligations under industrial revenue bonds. Additionally, debt refinancing activities during 2012 unfavorably impacted cash flow by approximately $0.4 million.
Financing activities used $13.5 million of cash for the year ended December 31, 2011 as compared with cash used of $0.7 million for the year ended December 25, 2010. The Company paid down its revolving line of credit by $13.9 million during 2011. This was partially offset by approximately $2.9 million of net proceeds from a sale-leaseback transaction involving our California manufacturing facility as described in Note 6 of the Notes to Consolidated Financial Statements. Additionally, debt refinancing activities during 2011 unfavorably impacted cash flow by approximately $2.4 million.
Capital Resources
Revolving Line of Credit
On October 18, 2010, the Company entered into an Amended and Restated Credit Agreement with JPMorgan Chase Bank (JPMC) which was effective as of September 30, 2010 and provided the Company with a revolving line of credit of up to $30.0 million through December 31, 2011. Interest on outstanding borrowings under the revolving line of credit was based on the JPMC prime rate or certain basis points above LIBOR depending on the pricing option selected and the Companys leverage ratio (an effective rate of 5.09% at December 25, 2010).
On September 14, 2011, the Company entered into a Credit Agreement (the 2011 Credit Agreement) with Wells Fargo. The 2011 Credit Agreement provides the Company a revolving line of credit of up to $45.0 million subject to a monthly borrowing base calculation. The term of this revolving line of credit was for a period ending on September 14, 2015. Upon the occurrence of certain events of default or the failure to maintain the defined minimum percentage of availability, the Company was required to comply with two financial covenants. These financial covenants consisted of a minimum fixed charge coverage ratio and limitations on annual capital expenditures. No events of default existed, and the Companys availability was in excess of the required amount as of December 31, 2011.
The loan proceeds received in conjunction with the 2011 Credit Agreement were used to repay in full all of the obligations owed to JPMC under that certain Amended and Restated Credit Agreement dated as of September 30, 2010.
As of December 31, 2011, the outstanding balance under the 2011 Credit Agreement was approximately $11.7 million, and the Company had unused credit capacity of approximately $12.3 million. Interest on outstanding borrowings under the 2011 Credit Agreement was based on the Wells Fargo prime rate, or LIBOR, depending on the pricing option selected and the Companys leverage ratio which resulted in an effective rate of 3.04% at December 31, 2011.
On December 19, 2012, the Company entered into a revised Credit Agreement (the 2012 Credit Agreement) with Wells Fargo. The 2012 Credit Agreement provides to the Company a revolving line of credit of up to $45.0 million. The five-year term of this revolving line of credit expires on December 19, 2017. The revolving line of credit bears interest at (i) LIBOR plus a margin which varies from 1.50% to 2.50% based upon a leverage ratio of total indebtedness to trailing four quarter EBITDA or (ii) the higher of (a) the prime rate and (b) the federal funds rate plus 0.50% plus a margin which varies from 0.50% to 1.50% based upon the debt to EBITDA leverage ratio.
Pursuant to the terms of the 2012 Credit Agreement, the Company and one or more lenders (if there are additional lenders other than the initial lender) intend to establish a secured term loan facility secured by real property and improvements and an aggregate original principal amount of at least $10.0 million. If the parties to the Credit Agreement do not establish the secured term loan facility before March 29, 2013, then the revolving credit commitment shall be permanently reduced by $10.0 million effective as of March 29, 2013. The Company expects to establish the secured term loan facility by March 29, 2013.
A portion of the amounts received under the 2012 Credit Agreement has been used to repay in full all of the obligations of the Company and certain of the guarantors owing to Wells Fargo under the 2011 Credit Agreement.
A portion of the amounts received under the 2012 Credit Agreement has been used to exercise a lease option to purchase certain real estate and improvements located in the State of California which the Companys wholly-owned operating subsidiary had previously leased under a Lease Agreement, dated May 12, 2011, from BFG2011 Limited Liability Company (BFG). The option purchase price was $4.1 million. The Companys wholly-owned operating subsidiary held a 35.48% interest in BFG. Messrs. William J. Barrett, Edward T. Flynn, and Herbert M. Gardner, all of whom are directors of the Company, held a combined ownership interest in BFG in the amount of 64.52%.
A portion of the amounts received in conjunction with the 2012 Credit Agreement has been used to exercise lease options to purchase certain real estate and improvements located in the States of Indiana and Georgia which the Companys wholly-owned operating subsidiary had previously leased under two separate Lease Agreements, both dated July 25, 1988, from G-2 Ltd. (G-2). The option purchase prices were $3.6 million and $1.8 million for the Indiana and Georgia properties, respectively. The Companys wholly-owned operating subsidiary was the general partner of G-2 holding a one percent interest. Messrs. Barrett, Robert J. Campbell, and Gardner, all of whom are directors of the Company, each held ownership interests in G-2 in the amount of 12.375%, respectively.
As of December 29, 2012, the outstanding balance under the 2012 Credit Agreement was approximately $14.1 million, and the Company had unused credit capacity of approximately $30.9 million. Interest on outstanding borrowings under the 2012 Credit Agreement was based on the Wells Fargo prime rate, or LIBOR, depending on the pricing option selected and the Companys leverage ratio, as defined in the 2012 Credit Agreement, resulting in an effective rate of 2.66% at December 29, 2012. Pursuant to the 2012 Credit Agreement, the financial covenants include a consolidated total leverage ratio, a consolidated fixed charge coverage ratio, and a limitation on annual capital expenditures. As of December 29, 2012, the Company was in compliance with all three financial covenants.
Other Long-Term Debt
In May of 2011, the Companys wholly-owned operating subsidiary entered into a sale-leaseback transaction with BFG to sell its California manufacturing facility (the California Real Estate) and utilize the proceeds to pay down certain obligations to JPMC. The facility was then leased back to the Companys wholly-owned operating subsidiary.
The transaction provided the Company with $4,100,000 comprised of the following amounts: (a) a $100,000 cash down payment, (b) $3,000,000 paid in cash at the closing, (c) a grant to the Companys wholly-owned operating subsidiary of the 35.48% equity interest in BFG valued at $495,000 (included in other assets on the October 1, 2011 balance sheet), and (d) a credit in the amount of $505,000 based on the lack of brokerage commissions and the nature of the transaction. The Companys wholly-owned operating subsidiary paid the closing costs associated with the transaction including the escrow fees, transfer taxes, title policies, and other transaction costs.
Concurrently with the closing of the sale of the California Real Estate to BFG, the Companys wholly-owned operating subsidiary leased from BFG the California Real Estate (the Sale Leaseback Transaction) for a term of 20 years. The base rent for the first five years of the term was $24,000 per month. The lease was a triple net lease, and the Companys wholly-owned operating subsidiary was responsible for payment of all costs relating to the leased premises, including state income taxes on rental income received. The Companys wholly-owned operating subsidiary had a purchase option and right of first refusal with respect to the California Real Estate through April 30, 2016. In addition, the Companys wholly-owned operating subsidiary had a one-time right of first offer with respect to the California Real Estate that continued until the expiration of the term of the Lease. In connection with the Sale Leaseback Transaction, the Company received an independent appraisal, and a fairness opinion issued by a third party valuation consultant stating that the proposed transactions were fair from a financial point of view to the Company and its stockholders.
A portion of the amounts received under the 2012 Credit Agreement has been used to terminate the lease by exercising the option to purchase. The option purchase price was $4.1 million.
The outstanding principal amount under the 2011 Credit Agreement as of December 31, 2011 was $3.5 million at an interest rate of 5.5%. Of this amount, $0.1 million and $3.4 million were included in current maturities of long term debt and long term debt, respectively, in the accompanying balance sheet at December 31, 2011.
Summary of Liquidity and Capital Resources
The Companys primary capital needs are for working capital demands, to meet its debt service obligations, and finance capital expenditure requirements. Cash generated from operations, and borrowings available under our 2012 Credit Agreement, are expected to be sufficient to finance the known and/or foreseeable liquidity and capital needs of the Company for at least the next 12 months based on our current cash flow budgets and forecasts of our liquidity needs.
Contractual Obligations
The Companys fixed, noncancelable obligations as of December 29, 2012 were as follows:
|
|
Payments due by period |
| |||||||||||||
|
|
|
|
Less than |
|
1-3 |
|
3-5 |
|
More than |
| |||||
|
|
Total |
|
1 Year |
|
Years |
|
Years |
|
5 Years |
| |||||
Debt (a) |
|
$ |
14,105,997 |
|
$ |
16,934 |
|
$ |
|
|
$ |
14,089,063 |
|
$ |
|
|
Operating leases (b) |
|
102,250 |
|
39,250 |
|
54,000 |
|
9,000 |
|
|
| |||||
Total |
|
$ |
14,208,247 |
|
$ |
56,184 |
|
$ |
54,000 |
|
$ |
14,098,063 |
|
$ |
|
|
(a) Amounts are included on the Consolidated Balance Sheets. See Note 6 of the Notes to Consolidated Financial Statements for additional information regarding debt and related matters.
(b) See Note 10 of the Notes to Consolidated Financial Statements for additional information regarding property leases.
The Companys historical practice has been to exclude the interest payments from the contractual obligations table due to the variability of its interest rates and the variability in its revolving line of credit which represented 99% of its debt obligations at December 29, 2012.
Critical Accounting Policies and Estimates
Managements discussion and analysis of its financial position and results of operations are based upon the Companys consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities. The Companys significant accounting policies are discussed in Note 1 of the Notes to Consolidated Financial Statements. In managements opinion, the Companys critical accounting policies include revenue recognition, allowance for doubtful accounts, excess and obsolete inventories, inventory relief, fair value of assets held for sale, accrued insurance, and accrued warranty.
Revenue Recognition - The Company generally recognizes revenue when products are shipped to the customer. Revenue on certain customer requested bill and hold transactions is recognized after the customer is notified that the products have been completed according to customer specifications, have passed all of the Companys quality control inspections, and are ready for delivery based on established delivery terms.
Allowance for Doubtful Accounts - The Company maintains an allowance for doubtful accounts which is determined by management based on the Companys historical losses, specific customer circumstances, and general economic conditions. Periodically, management reviews accounts receivable and adjusts the allowance based on current circumstances and charges off uncollectible receivables against the allowance when all attempts to collect the receivable have failed.
Excess and Obsolete Inventories - The Company must make estimates regarding the future use of raw materials and finished products and provide for obsolete or slow-moving inventories. Periodically, management reviews inventories and adjusts the excess and obsolete reserves based on product life cycles, product demand, and/or market conditions.
Inventory Relief - For monthly and quarterly financial reporting, cost of sales is recorded and inventories are relieved by the use of standard bills of material adjusted for scrap and other estimated factors affecting inventory relief. Because of our large and diverse product line and the customized nature of each order, it is difficult to place full reliance on the bills of material for accurate relief of inventories. Although the Company continues to refine the process of creating accurate bills of materials, manual adjustments (which are based on estimates) are necessary in an effort to assure correct relief of inventories for products sold. The calculations to estimate costs not captured in the bill of materials take into account the customized nature of products, historical inventory relief percentages, scrap variances, and other factors which could impact inventory cost relief.
The accuracy of the inventory relief is not fully known until physical inventories are conducted at each of the Companys locations. We conduct semi-annual physical inventories at a majority of locations and schedule them in a manner that provides coverage in each of our calendar quarters. As of December 29, 2012, the Company reported inventories of $32.3 million, 100% of which was subject to a physical inventory during the fourth quarter. We have invested significant resources in our continuing effort to improve the physical inventory process and accuracy of our inventory accounting system.
Fair Value of Assets Held for Sale - The Company evaluates the carrying value of property held for sale whenever events or changes in circumstances indicate that a propertys carrying amount may not be recoverable. Such circumstances could include, but are not limited to: (1) a significant decrease in the market value of an asset, or (2) a significant adverse change in the extent or manner in which an asset is used. The Company measures the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected future net cash flows be less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds its fair value. The Company estimates the fair value of its properties held for sale based on appraisals and other current market data.
Accrued Insurance - The Company has a self-insured retention against product liability claims with insurance coverage over and above the retention. The Company is also self-insured for a portion of its employee medical benefits and workers compensation. Product liability claims are routinely reviewed by the Companys insurance carrier, and management routinely reviews other self-insurance risks for purposes of establishing ultimate loss estimates. In addition, management must determine estimated liability for claims incurred but not reported. Such estimates, and any subsequent changes in estimates, may result in adjustments to our operating results in the future.
Accrued Warranty - The Company provides limited warranties for periods of up to five years from the date of retail sale. Estimated warranty costs are accrued at the time of sale and are based upon historical experience.
Forward-Looking Statements
This report contains forward-looking statements, other than historical facts, which reflect the view of management with respect to future events. When used in this report, words such as believe, expect, anticipate, estimate, intend, and similar expressions, as they relate to the Company or its plans or operations, identify forward-looking statements. Such forward-looking statements are based on assumptions made by, and information currently available to, management. Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that the expectations reflected in such forward-looking statements are reasonable, and it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from such expectations include, without limitation, an economic slowdown in the specialized vehicle industry, restrictions on financing imposed by the Companys primary lender or major chassis suppliers, limitations on the availability of chassis on which the Companys product is dependent, availability of raw materials, raw material cost increases, and severe interest rate increases. Furthermore, the Company can provide no assurance that such raw material cost increases can be passed on to its customers through implementation of price increases for the Companys products. The forward-looking statements contained herein reflect the current view of management with respect to future events and are subject to those factors and other risks, uncertainties, and assumptions relating to the operations, results of operations, cash flows, and financial position of the Company. The Company assumes no obligation to update the forward-looking statements or to update the reasons actual results could differ from those contemplated by such forward-looking statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Index to Financial Statements
|
Page | |||
|
1. |
Financial Statements: |
| |
|
| |||
|
Report of Crowe Horwath LLP, Independent Registered Public Accounting Firm |
22 | ||
|
|
| ||
|
Consolidated Balance Sheets as of December 29, 2012 and December 31, 2011 |
23 | ||
|
|
| ||
|
24 | |||
|
|
| ||
|
25 | |||
|
|
| ||
|
26 | |||
|
|
| ||
|
27 - 42 | |||
|
| |||
|
2. |
Financial Statement Schedule: |
| |
|
| |||
|
43 | |||
|
| |||
|
All other schedules are omitted because they are not applicable. |
| ||
|
| |||
|
3. |
Supplementary Data |
| |
|
| |||
|
43 | |||
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Supreme Industries, Inc.
We have audited the accompanying consolidated balance sheets of Supreme Industries, Inc. and subsidiaries as of December 29, 2012 and December 31, 2011, and the related consolidated statements of comprehensive income, stockholders equity, and cash flows for each of the three years in the period ended December 29, 2012. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule, Schedule II Valuation and Qualifying Accounts. These financial statements and financial statement schedule are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Supreme Industries, Inc. and subsidiaries as of December 29, 2012 and December 31, 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 29, 2012, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
|
/s/ Crowe Horwath LLP |
|
|
South Bend, Indiana |
|
March 22, 2013 |
|
Supreme Industries, Inc. And Subsidiaries
December 29, 2012 and December 31, 2011
|
|
2012 |
|
2011 |
| ||
ASSETS |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
|
$ |
59,056 |
|
$ |
106,833 |
|
Investments |
|
2,887,172 |
|
924,016 |
| ||
Accounts receivable, net of allowance for doubtful accounts of $100,000 in 2012 and $200,000 in 2011 |
|
18,781,735 |
|
22,040,297 |
| ||
Refundable income taxes |
|
526,817 |
|
629,162 |
| ||
Inventories |
|
32,308,931 |
|
38,134,862 |
| ||
Deferred income taxes |
|
2,298,181 |
|
|
| ||
Assets held for sale |
|
2,149,760 |
|
5,206,206 |
| ||
Other current assets |
|
1,995,634 |
|
2,468,211 |
| ||
Total current assets |
|
61,007,286 |
|
69,509,587 |
| ||
|
|
|
|
|
| ||
Property, plant and equipment, net |
|
42,937,988 |
|
33,530,057 |
| ||
|
|
|
|
|
| ||
Other assets |
|
1,142,809 |
|
1,683,718 |
| ||
Total assets |
|
$ |
105,088,083 |
|
$ |
104,723,362 |
|
|
|
|
|
|
| ||
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
| ||
|
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Current maturities of long-term debt |
|
$ |
16,934 |
|
$ |
246,192 |
|
Trade accounts payable |
|
11,936,544 |
|
21,424,434 |
| ||
Accrued wages and benefits |
|
2,642,433 |
|
2,888,684 |
| ||
Accrued self-insurance |
|
2,430,674 |
|
2,307,368 |
| ||
Customer deposits |
|
1,428,997 |
|
2,410,975 |
| ||
Accrued warranty |
|
1,609,000 |
|
1,588,000 |
| ||
Accrued income taxes |
|
519,611 |
|
719,611 |
| ||
Other accrued liabilities |
|
1,779,215 |
|
2,502,284 |
| ||
Total current liabilities |
|
22,363,408 |
|
34,087,548 |
| ||
|
|
|
|
|
| ||
Long-term debt |
|
14,089,063 |
|
15,702,467 |
| ||
|
|
|
|
|
| ||
Deferred income taxes |
|
1,472,730 |
|
|
| ||
Total liabilities |
|
37,925,201 |
|
49,790,015 |
| ||
|
|
|
|
|
| ||
Commitments and contingencies (Note 10) |
|
|
|
|
| ||
|
|
|
|
|
| ||
Stockholders equity: |
|
|
|
|
| ||
Preferred Stock, $1 par value; authorized 1,000,000 shares, none issued |
|
|
|
|
| ||
Class A Common Stock, $.10 par value; authorized 20,000,000 shares, issued 15,417,656 shares in 2012 and 15,330,614 in 2011 |
|
1,541,766 |
|
1,533,061 |
| ||
Class B Common Stock, convertible into Class A Common Stock on a one-for-one basis, $.10 par value; authorized 5,000,000 shares, issued 1,716,937 shares in 2012 and 2011 |
|
171,694 |
|
171,694 |
| ||
Additional paid-in capital |
|
68,953,487 |
|
71,463,799 |
| ||
Retained earnings |
|
12,154,745 |
|
321,760 |
| ||
Treasury stock, Class A Common Stock, at cost, 1,893,446 shares in 2012 and 2,243,446 in 2011 |
|
(15,668,055 |
) |
(18,564,266 |
) | ||
Accumulated other comprehensive income |
|
9,245 |
|
7,299 |
| ||
Total stockholders equity |
|
67,162,882 |
|
54,933,347 |
| ||
|
|
|
|
|
| ||
Total liabilities and stockholders equity |
|
$ |
105,088,083 |
|
$ |
104,723,362 |
|
See accompanying notes to consolidated financial statements.
Supreme Industries, Inc. And Subsidiaries
Consolidated Statements of Comprehensive Income
for the years ended December 29, 2012, December 31, 2011 and December 25, 2010
|
|
2012 |
|
2011 |
|
2010 |
| |||
|
|
|
|
|
|
|
| |||
Net sales |
|
$ |
286,140,112 |
|
$ |
300,360,689 |
|
$ |
221,150,099 |
|
Cost of sales |
|
242,644,088 |
|
267,865,673 |
|
202,908,621 |
| |||
Gross profit |
|
43,496,024 |
|
32,495,016 |
|
18,241,478 |
| |||
|
|
|
|
|
|
|
| |||
Selling, general and administrative expenses |
|
32,219,061 |
|
27,653,505 |
|
22,373,603 |
| |||
Legal settlement and related costs |
|
|
|
2,182,091 |
|
2,316,786 |
| |||
Impairment of assets held for sale |
|
|
|
|
|
1,079,807 |
| |||
Other income |
|
(1,217,057 |
) |
(850,420 |
) |
(614,578 |
) | |||
Operating income (loss) |
|
12,494,020 |
|
3,509,840 |
|
(6,914,140 |
) | |||
|
|
|
|
|
|
|
| |||
Interest expense |
|
971,225 |
|
2,243,249 |
|
1,387,506 |
| |||
Income (loss) from continuing operations before income taxes |
|
11,522,795 |
|
1,266,591 |
|
(8,301,646 |
) | |||
|
|
|
|
|
|
|
| |||
Income tax (benefit) expense |
|
(310,190 |
) |
(401,000 |
) |
499,625 |
| |||
Income (loss) from continuing operations |
|
11,832,985 |
|
1,667,591 |
|
(8,801,271 |
) | |||
|
|
|
|
|
|
|
| |||
Discontinued operations |
|
|
|
|
|
|
| |||
Operating loss of discontinued Oregon operations, net of tax |
|
|
|
(876,920 |
) |
(1,657,676 |
) | |||
Operating loss of discontinued motorhome operations, net of tax |
|
|
|
|
|
(1,239,113 |
) | |||
Net income (loss) |
|
11,832,985 |
|
790,671 |
|
(11,698,060 |
) | |||
|
|
|
|
|
|
|
| |||
Other comprehensive income |
|
1,946 |
|
7,088 |
|
276,786 |
| |||
Total comprehensive income (loss) |
|
$ |
11,834,931 |
|
$ |
797,759 |
|
$ |
(11,421,274 |
) |
|
|
|
|
|
|
|
| |||
Basic income (loss) per share: |
|
|
|
|
|
|
| |||
Income (loss) from continuing operations |
|
$ |
0.78 |
|
$ |
0.11 |
|
$ |
(0.62 |
) |
Loss from discontinued operations |
|
|
|
(0.06 |
) |
(0.20 |
) | |||
Net income (loss) |
|
$ |
0.78 |
|
$ |
0.05 |
|
$ |
(0.82 |
) |
|
|
|
|
|
|
|
| |||
Diluted income (loss) per share: |
|
|
|
|
|
|
| |||
Income (loss) from continuing operations |
|
$ |
0.77 |
|
$ |
0.11 |
|
$ |
(0.62 |
) |
Loss from discontinued operations |
|
|
|
(0.06 |
) |
(0.20 |
) | |||
Net income (loss) |
|
$ |
0.77 |
|
$ |
0.05 |
|
$ |
(0.82 |
) |
|
|
|
|
|
|
|
| |||
Shares used in the computation of income (loss) per share: |
|
|
|
|
|
|
| |||
Basic |
|
15,194,823 |
|
14,808,171 |
|
14,305,866 |
| |||
Diluted |
|
15,440,484 |
|
15,030,772 |
|
14,305,866 |
|
See accompanying notes to consolidated financial statements
Supreme Industries, Inc. And Subsidiaries
Consolidated Statements of Stockholders Equity
for the years ended December 29, 2012, December 31, 2011 and December 25, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
Total |
| |||||||
|
|
Class A Common Stock |
|
Class B Common Stock |
|
Additional |
|
Retained |
|
Treasury |
|
Comprehensive |
|
Stockholders |
| |||||||||||
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Paid-In Capital |
|
Earnings |
|
Stock |
|
Income (Loss) |
|
Equity |
| |||||||
Balance, December 26, 2009 |
|
14,704,399 |
|
$ |
1,470,440 |
|
2,161,058 |
|
$ |
216,106 |
|
$ |
71,185,093 |
|
$ |
11,450,213 |
|
$ |
(21,771,537 |
) |
$ |
(276,575 |
) |
$ |
62,273,740 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
(11,698,060 |
) |
|
|
|
|
(11,698,060 |
) | |||||||
Unrealized gain on hedge activity, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
248,000 |
|
248,000 |
| |||||||
Unrealized holding gain on investments, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,786 |
|
28,786 |
| |||||||
Exercise of stock options |
|
1,766 |
|
177 |
|
|
|
|
|
2,323 |
|
|
|
|
|
|
|
2,500 |
| |||||||
Issuance of 22,220 shares of treasury stock |
|
|
|
|
|
|
|
|
|
|
|
(133,764 |
) |
183,759 |
|
|
|
49,995 |
| |||||||
Issuance of restricted stock |
|
87,152 |
|
8,715 |
|
|
|
|
|
435,181 |
|
|
|
|
|
|
|
443,896 |
| |||||||
Conversion of Class B shares to Class A shares |
|
444,121 |
|
44,412 |
|
(444,121 |
) |
(44,412 |
) |
|
|
|
|
|
|
|
|
|
| |||||||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
102,943 |
|
|
|
|
|
|
|
102,943 |
| |||||||
Balance, December 25, 2010 |
|
15,237,438 |
|
1,523,744 |
|
1,716,937 |
|
171,694 |
|
71,725,540 |
|
(381,611 |
) |
(21,587,778 |
) |
211 |
|
51,451,800 |
| |||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
790,671 |
|
|
|
|
|
790,671 |
| |||||||
Unrealized holding gain on investments, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,088 |
|
7,088 |
| |||||||
Exercise of stock options |
|
26,920 |
|
2,692 |
|
|
|
|
|
45,893 |
|
|
|
|
|
|
|
48,585 |
| |||||||
Issuance of 350,000 shares of treasury stock |
|
|
|
|
|
|
|
|
|
(712,212 |
) |
|
|
2,896,212 |
|
|
|
2,184,000 |
| |||||||
Issuance of 41,672 shares of common stock |
|
41,672 |
|
4,167 |
|
|
|
|
|
115,833 |
|
|
|
|
|
|
|
120,000 |
| |||||||
Issuance of 15,384 shares of treasury stock |
|
|
|
|
|
|
|
|
|
|
|
(87,300 |
) |
127,300 |
|
|
|
40,000 |
| |||||||
Issuance of restricted stock |
|
24,584 |
|
2,458 |
|
|
|
|
|
81,546 |
|
|
|
|
|
|
|
84,004 |
| |||||||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
207,199 |
|
|
|
|
|
|
|
207,199 |
| |||||||
Balance, December 31, 2011 |
|
15,330,614 |
|
1,533,061 |
|
1,716,937 |
|
171,694 |
|
71,463,799 |
|
321,760 |
|
(18,564,266 |
) |
7,299 |
|
54,933,347 |
| |||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
11,832,985 |
|
|
|
|
|
11,832,985 |
| |||||||
Unrealized holding gain on investments, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,946 |
|
1,946 |
| |||||||
Issuance of 350,000 shares of treasury stock |
|
|
|
|
|
|
|
|
|
(2,896,211 |
) |
|
|
2,896,211 |
|
|
|
|
| |||||||
Exercise of stock options |
|
58,804 |
|
5,881 |
|
|
|
|
|
94,528 |
|
|
|
|
|
|
|
100,409 |
| |||||||
Stock-based compensation |
|
28,238 |
|
2,824 |
|
|
|
|
|
291,371 |
|
|
|
|
|
|
|
294,195 |
| |||||||
Balance, December 29, 2012 |
|
15,417,656 |
|
$ |
1,541,766 |
|
1,716,937 |
|
$ |
171,694 |
|
$ |
68,953,487 |
|
$ |
12,154,745 |
|
$ |
(15,668,055 |
) |
$ |
9,245 |
|
$ |
67,162,882 |
|
See accompanying notes to consolidated financial statements.
Supreme Industries, Inc. And Subsidiaries
Consolidated Statements of Cash Flows
for the years ended December 29, 2012, December 31, 2011 and December 25, 2010
|
|
2012 |
|
2011 |
|
2010 |
| |||
Cash flows from operating activities: |
|
|
|
|
|
|
| |||
Net income (loss) |
|
$ |
11,832,985 |
|
$ |
790,671 |
|
$ |
(11,698,060 |
) |
Adjustments to reconcile net income (loss) to net cash from operating activities: |
|
|
|
|
|
|
| |||
Depreciation |
|
2,921,624 |
|
3,030,790 |
|
3,706,246 |
| |||
Impairment charges |
|
|
|
|
|
1,839,846 |
| |||
Treasury stock issued for legal settlement |
|
|
|
2,184,000 |
|
|
| |||
Amortization and write-off of debt issuance costs |
|
392,518 |
|
1,224,954 |
|
|
| |||
Provision for losses on doubtful receivables |
|
30,034 |
|
151,915 |
|
52,422 |
| |||
Deferred income taxes |
|
(825,451 |
) |
|
|
413,140 |
| |||
Stock-based compensation expense |
|
294,195 |
|
451,203 |
|
596,834 |
| |||
Gain on sale of property, plant, and equipment, net |
|
(353,007 |
) |
(191,108 |
) |
(11,618 |
) | |||
Changes in operating assets and liabilities |
|
|
|
|
|
|
| |||
Accounts receivable |
|
3,228,527 |
|
(2,514,944 |
) |
1,091,452 |
| |||
Inventories |
|
5,825,931 |
|
(907,713 |
) |
(3,692,509 |
) | |||
Other current assets |
|
574,922 |
|
(228,056 |
) |
4,361,804 |
| |||
Trade accounts payable |
|
(9,487,890 |
) |
9,852,532 |
|
1,665,473 |
| |||
Other current liabilities |
|
(2,005,044 |
) |
625,599 |
|
3,012,112 |
| |||
|
|
|
|
|
|
|
| |||
Net cash from operating activities |
|
12,429,344 |
|
14,469,843 |
|
1,337,142 |
| |||
|
|
|
|
|
|
|
| |||
Cash flows from investing activities: |
|
|
|
|
|
|
| |||
Proceeds from sale of property, plant, and equipment |
|
4,239,153 |
|
579,400 |
|
645,349 |
| |||
Additions to property, plant and equipment |
|
(13,159,255 |
) |
(2,766,344 |
) |
(1,949,753 |
) | |||
Proceeds from sale of investments |
|
|
|
304,755 |
|
1,470,067 |
| |||
Purchases of investments |
|
(1,963,156 |
) |
(12,852 |
) |
(989,928 |
) | |||
Decrease in other assets |
|
29,878 |
|
8,746 |
|
8,746 |
| |||
|
|
|
|
|
|
|
| |||
Net cash from investing activities |
|
(10,853,380 |
) |
(1,886,295 |
) |
(815,519 |
) | |||
|
|
|
|
|
|
|
| |||
Cash flows from financing activities: |
|
|
|
|
|
|
| |||
Proceeds from revolving line of credit and other long-term debt |
|
295,080,663 |
|
121,630,314 |
|
70,426,152 |
| |||
Repayments of revolving line of credit and other long-term debt |
|
(296,428,325 |
) |
(132,821,867 |
) |
(71,122,639 |
) | |||
Debt issuance costs |
|
(376,488 |
) |
(2,383,794 |
) |
|
| |||
Proceeds from exercise of stock options |
|
100,409 |
|
48,585 |
|
2,500 |
| |||
|
|
|
|
|
|
|
| |||
Net cash from financing activities |
|
(1,623,741 |
) |
(13,526,762 |
) |
(693,987 |
) | |||
|
|
|
|
|
|
|
| |||
Change in cash and cash equivalents |
|
(47,777 |
) |
(943,214 |
) |
(172,364 |
) | |||
|
|
|
|
|
|
|
| |||
Cash and cash equivalents, beginning of year |
|
106,833 |
|
1,050,047 |
|
1,222,411 |
| |||
|
|
|
|
|
|
|
| |||
Cash and cash equivalents, end of year |
|
$ |
59,056 |
|
$ |
106,833 |
|
$ |
1,050,047 |
|
|
|
|
|
|
|
|
| |||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
| |||
Cash paid (received) during the year for: |
|
|
|
|
|
|
| |||
Interest, net |
|
$ |
792,810 |
|
$ |
1,363,223 |
|
$ |
1,485,860 |
|
Income taxes, net |
|
1,264,905 |
|
(50,133 |
) |
(4,499,054 |
) |
See accompanying notes to consolidated financial statements.
Supreme Industries, Inc. And Subsidiaries
Notes to Consolidated Financial Statements
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES.
Supreme Industries, Inc. and its subsidiaries (collectively the Company) manufacture specialized vehicles including truck bodies, buses, and armored vehicles. The Companys core products include cutaway and dry-freight van bodies, refrigerated units, stake bodies, and other specialized vehicles including shuttle buses. At December 29, 2012, the Company operated at eight manufacturing, distribution, and component manufacturing locations. The Companys customers are located principally in the United States of America.
Revised Financial Statements - As disclosed in the Companys quarterly report on Form 10-Q for the period ended June 30, 2012, as a result of its recent implementation of a perpetual inventory system, the Company determined that certain of its previously filed financial statements contained errors related to revenue recognition whereby beginning in the third quarter of 2009 and continuing through the first quarter of 2012 revenue at the Texas armored division plant was inappropriately recognized prior to the product being delivered to a customer due to an irregularity. The Company concluded that the errors were isolated to this one location and were not material. In order to assess materiality with respect to the errors, the Company considered Staff Accounting Bulletin (SAB) 99, Materiality and SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, and determined that the impact of the errors on prior period consolidated financial statements was immaterial. Accordingly, the Companys consolidated balance sheet as of December 31, 2011, and the consolidated statements of comprehensive income for the years ended December 31, 2011 and December 25, 2010, were revised and reflect the correction of these immaterial errors. Correction of the errors in the Companys consolidated balance sheet as of December 31, 2011 resulted in an increase in inventories of approximately $2,102,000, a decrease in accounts receivable of approximately $2,102,000, an increase in customer deposits of approximately $377,000, and a decrease to retained earnings of approximately $377,000. The following table summarizes the impact on the Companys consolidated statements of comprehensive income:
|
|
Year Ended |
|
Year Ended |
| ||||||||
|
|
December 31, 2011 |
|
December 25, 2010 |
| ||||||||
|
|
As Reported |
|
As Revised |
|
As Reported |
|
As Revised |
| ||||
Net sales |
|
$ |
300,807,958 |
|
$ |
300,360,689 |
|
$ |
220,888,586 |
|
$ |
221,150,099 |
|
Net income (loss) |
|
$ |
686,938 |
|
$ |
790,671 |
|
$ |
(11,529,081 |
) |
$ |
(11,698,060 |
) |
The following is a summary of the significant accounting policies used in the preparation of the accompanying consolidated financial statements:
Principles of Consolidation - The accompanying consolidated financial statements include the accounts of Supreme Industries, Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
Fiscal Year End - The Companys fiscal year ends the last Saturday in December. The fiscal years ended December 29, 2012 and December 25, 2010 each contained 52 weeks. The fiscal year ended December 31, 2011 contained 53 weeks.
Use of Estimates in the Preparation of Financial Statements - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include but are not limited to, inventory relief and valuation, accrued warranties and income taxes.
Revenue Recognition - The production of specialized truck bodies, buses, and armored vehicles starts when an order is received from the customer, and revenue is recognized when the unit is shipped to the customer. Revenue on certain customer-requested bill and hold transactions is recognized subsequent to when the customer is notified that the products have been completed according to customer specifications, have passed all of the Companys quality control inspections, and are ready for delivery based upon established delivery terms. Net sales are net of cash discounts which the Company offers its customers in the ordinary course of business.
Supreme Industries, Inc. And Subsidiaries
Notes to Consolidated Financial Statements, Continued
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued
Concentration of Credit Risk - Concentration of credit risk is limited due to the large number of customers and their dispersion among many different industries and geographic regions. The Companys export sales are minimal. No single customer, or group of customers, accounted for 10% or greater of the Companys consolidated net sales for the fiscal years ended in 2012 and 2010. During 2011, one of the Companys customers accounted for approximately 20% of consolidated net sales. No single customer, or group of customers, accounted for 10% or greater of the Companys total trade accounts receivable as of December 29, 2012 and December 31, 2011.
Financial Instruments and Fair Values - The Company has utilized interest rate swap agreements to reduce the impact of changes in interest rates on certain of its floating rate debt. The swap agreements are contracts to exchange the debt obligations LIBOR floating rate (exclusive of the applicable spread) for fixed rate interest payments over the term of the swap agreement without exchange of the underlying notional amounts. The notional amounts of the interest rate swap agreements are used to measure interest to be paid or received and do not represent the amount of exposure of credit loss. The differential paid or received under interest rate swap agreements is recognized as an adjustment to interest expense.
At December 27, 2008, the Company had an interest rate swap agreement outstanding with a notional amount of $15.0 million. The interest rate swap agreement provided a 4.71% fixed interest rate and was scheduled to mature on July 28, 2010. The interest rate swap agreement was designated and qualified as a cash flow hedging instrument. It was fully effective, resulting in no net gain or loss recorded in the consolidated statements of comprehensive income.
Effective December 23, 2009, the Company terminated its interest rate swap arrangement and paid $375,000, the fair value of the swap on such date. As the terminated swap arrangement was no longer an effective hedge against changes in interest rates, the swap was de-designated. The Company amortized the loss on the swap included in other comprehensive income as of the date of the de-designation utilizing the straight-line method over the remaining life of the swap which matured on July 28, 2010.
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The hierarchy is as follows:
Level 1: Quoted prices (unadjusted) or identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a companys own assumptions about the assumptions that market participants would use in pricing an asset or liability.
The carrying amounts of cash and cash equivalents, accounts receivable, and trade accounts payable approximated fair value as of December 29, 2012 and December 31, 2011 because of the relatively short maturities of these financial instruments. The carrying amount of long-term debt, including current maturities, approximated fair value as of December 29, 2012 and December 31, 2011, based upon terms and conditions available to the Company at those dates in comparison to the terms and conditions of its outstanding long-term debt.
Cash and Cash Equivalents - The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.
Investments - The Company categorizes its investments as trading, available-for-sale, or held-to-maturity. The Companys investments are comprised of available-for-sale securities and are carried at fair value with unrealized gains and losses, net of applicable income taxes, recorded within accumulated other comprehensive income (loss). The Company determined fair values of investments available for-sale by obtaining quoted prices on nationally recognized securities exchanges (Level 1
Supreme Industries, Inc. And Subsidiaries
Notes to Consolidated Financial Statements, Continued
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued
inputs). Dividend and interest income are accrued as earned. The Company reviews its investments quarterly for declines in market value that are other than temporary.
Accounts Receivable - The Company accounts for trade receivables based on the amounts billed to customers. Past due receivables are determined based on contractual terms. The Company does not accrue interest on any of its trade receivables.
Allowance for Doubtful Accounts - The allowance for doubtful accounts is determined by management based on the Companys historical losses, specific customer circumstances, and general economic conditions. Periodically, management reviews accounts receivable and adjusts the allowance based on current circumstances and charges off uncollectible receivables against the allowance when all attempts to collect the receivable have failed.
Inventories - Inventories are stated at the lower of cost or market with cost determined using the first-in, first-out method.
Assets Held For Sale - The Company previously made the decision to cease operations at a number of its facilities and is actively pursuing their sales. The Company evaluates the carrying value of property held for sale whenever events or changes in circumstances indicate that a propertys carrying amount may not be recoverable. Such circumstances could include, but are not limited to: (1) a significant decrease in the market value of an asset, or (2) a significant adverse change in the extent or manner in which an asset is used. The Company measures the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected future net cash flows be less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds its fair value. The Company estimated the fair value of its properties held for sale based on appraisals and other current market data. During the year ended 2010, the Company recorded non-cash charges to reflect impairment of certain assets held for sale totaling $1.8 million. The impairment charges, classified in impairment of assets held for sale and discontinued operations, represented managements best estimate of the fair value of the assets based on current market conditions. During the year ended December 29, 2012, the Company sold certain assets held for sale and recorded a net gain of $0.3 million. As of December 29, 2012 the following locations were held for sale: Wilson, North Carolina; one facility in Goshen, Indiana; and St. Louis, Missouri. The Company has a signed purchase agreement for the Goshen, Indiana property classified as held for sale, which is expected to close on March 29, 2013. As of December 31, 2011 the following locations were held for sale: Woodburn, Oregon; Wilson, North Carolina; one facility in Ligonier, Indiana; Streetsboro, Ohio; Apopka, Florida; and St. Louis, Missouri.
Property, Plant and Equipment - Property, plant and equipment are recorded at cost. For financial reporting purposes, depreciation is provided based on the straight-line method over the estimated useful lives of the assets. The useful life of each class of property is as follows: land improvements (22 years); buildings (40 years); and machinery and equipment (3 to 10 years). For financial reporting purposes, leasehold improvements are amortized using the straight-line method over the lesser of the useful life of the asset or term of the lease, except for the leasehold improvements associated with the leased facilities in Goshen, Indiana, and Griffin, Georgia, which were leased from a related party (a partnership whose partners included four directors/stockholders of the Company). These related party leases included a provision whereby upon termination of the leases, the lessor was obligated to pay the lessee a cash payment equal to the unamortized balance of any leasehold improvements. Accordingly, leasehold improvements to these leased facilities were amortized over the useful life of the asset (15 to 40 years). The Company exercised its option to purchase these leased facilities during 2012. Upon sale or other disposition of assets, the cost and related accumulated depreciation and amortization are removed from the accounts, and any resulting gain or loss is reflected in operations (included in other income in the consolidated statements of comprehensive income). Expenditures for repairs and maintenance are charged to operations as incurred. Betterments and major renewals are capitalized and recorded in the appropriate asset accounts.
Supreme Industries, Inc. And Subsidiaries
Notes to Consolidated Financial Statements, Continued
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Continued
Evaluation of Impairment of Long-Lived Assets - The Company evaluates the carrying value of long-lived assets whenever significant events or changes in circumstances indicate the carrying value of these assets may be impaired. The Company evaluates potential impairment of long-lived assets by comparing the carrying value of the assets to the expected net future cash inflows resulting from use of the assets. The Company determined there were no such impairments in 2012 and 2011. As discussed above, during the year ended 2010, the Company recorded non-cash charges to reflect impairment of certain real estate and equipment totaling $1.8 million. The impairment charges, classified in impairment of assets held for sale and discontinued operations, represented managements best estimate of the fair value of the long-lived assets based on current market conditions.
Stock-Based Compensation - The Company records all stock-based payments to employees, including grants of employee stock options, in the consolidated statements of comprehensive income based on their fair values at the date of grant.
Restricted stock awards are valued based upon the closing market price of the Companys stock on the date of grant. The Company currently uses the Black-Scholes option pricing model to determine the fair value of stock options. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by stock price as well as assumptions regarding a number of complex and subjective variables. These variables include expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate, and expected dividends.
Compensation expense (net of estimated forfeitures) relative to stock-based awards (see Note 8), included in the consolidated statements of comprehensive income for the years ended December 29, 2012, December 31, 2011, and December 25, 2010, was $294,195, $451,203 and $596,834, respectively. The weighted-average assumptions utilized in the determination of stock compensation expense relating to stock options were as follows:
|
|
2010 |
|
Risk free interest rate |
|
1.90 |
% |
Expected life |
|
7.0 years |
|
Expected volatility |
|
48.82 |
% |
Expected dividends |
|
|
% |
There were no stock options issued during the years ended December 29, 2012 and December 31, 2011.
The risk-free interest rate is determined based on observed U.S. Treasury yields in effect at the time of grant for maturities equivalent to the expected life of the option. The expected life of the option (estimated average period of time the option will be outstanding) is estimated based on the historical exercise behavior of employees with executives displaying somewhat longer holding periods than other employees. Expected volatility is based on historical volatility measured daily for a time period equal to the expected life of the option ending on the day of grant. The expected dividend yield is estimated based on the dividend yield at the time of grant as adjusted for expected dividend increases and historical payout policy.
Warranty - The Company provides limited product warranties for periods of up to five years from the date of retail sale. Estimated warranty costs are provided at the time of sale and are based upon historical experience. Warranty activity for the years ended December 29, 2012, December 31, 2011, and December 25, 2010 is as follows:
|
|
2012 |
|
2011 |
|
2010 |
| |||
Accrued warranty, beginning of year |
|
$ |
1,588,000 |
|
$ |
1,636,000 |
|
$ |
1,377,000 |
|
Warranty expense |
|
1,361,626 |
|
1,757,367 |
|
2,405,774 |
| |||
Warranty claims paid |
|
(1,340,626 |
) |
(1,805,367 |
) |
(2,146,774 |
) | |||
Accrued warranty, end of year |
|
$ |
1,609,000 |
|
$ |
1,588,000 |
|
$ |
1,636,000 |
|
Supreme Industries, Inc. And Subsidiaries
Notes to Consolidated Financial Statements, Continued
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES, Concluded
Income Taxes - Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Earnings (Loss) Per Share - Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.
Diluted earnings per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding plus the dilutive effect of stock options and restricted stock awards. The stock options and restricted stock awards were not included in the 2010 computation of diluted earnings per share since their effect would have been anti-dilutive.
Comprehensive Income (Loss) - Other comprehensive income (loss) refers to revenues, expenses, gains, and losses that, under generally accepted accounting principles, are included in comprehensive income (loss) but are excluded from net income (loss) since these amounts are recorded directly as an adjustment to stockholders equity. The Companys other comprehensive income (loss) is comprised of unrealized gains and losses on hedge activities and available-for-sale securities, net of tax.
Segment Information - The Companys principal business is manufacturing specialized vehicles. Management has not separately organized the business beyond specialized vehicles (includes three categories of products) and manufacturing processes. The fiberglass manufacturing subsidiary constitutes a segment, however this segment does not meet the quantitative thresholds for separate disclosure. The fiberglass manufacturing subsidiarys revenues are less than ten percent of consolidated revenues, the absolute amount of its net income (loss) is less than ten percent of the absolute amount of consolidated net income (loss), and finally, its assets are less than ten percent of consolidated assets.
Net sales from continuing operations consist of the following:
|
|
2012 |
|
2011 |
|
2010 |
| |||
Specialized vehicles: |
|
|
|
|
|
|
| |||
Trucks |
|
$ |
211,971,626 |
|
$ |
218,927,753 |
|
$ |
122,489,740 |
|
Buses |
|
55,025,147 |
|
60,640,186 |
|
69,951,326 |
| |||
Armored vehicles |
|
16,180,244 |
|
18,505,470 |
|
24,860,607 |
| |||
|
|
283,177,017 |
|
298,073,409 |
|
217,301,673 |
| |||
Fiberglass products |
|
2,963,095 |
|
2,287,280 |
|
3,848,426 |
| |||
|
|
$ |
286,140,112 |
|
$ |
300,360,689 |
|
$ |
221,150,099 |
|
2. DISCONTINUED OPERATIONS.
Effective December 25, 2010, the Company decided to cease operations at its Woodburn, Oregon manufacturing facility. The Oregon operations were discontinued due to the Companys decision to exit this unprofitable geographic region. The Oregon facility and equipment were classified as held for sale as of December 31, 2011 and December 25, 2010, and an asset impairment charge of approximately $277,000 was taken during the year ended December 25, 2010. The facility and equipment were sold on August 31, 2012 at an insignificant loss.
Supreme Industries, Inc. And Subsidiaries
Notes to Consolidated Financial Statements, Continued
2. DISCONTINUED OPERATIONS, Concluded
The 2011 and 2010 operating results for the Woodburn, Oregon location are classified as discontinued operations, and prior years operating results have been reclassified to discontinued operations as follows:
|
|
2011 |
|
2010 |
| ||
Net sales |
|
$ |
3,372,508 |
|
$ |
7,755,977 |
|
Pretax loss from operations |
|
(876,920 |
) |
(1,657,676 |
) | ||
Net loss |
|
(876,920 |
) |
(1,657,676 |
) | ||
In the fourth quarter of 2009, the Company terminated its Silver Crown luxury motorhome product line. This decision was triggered by a significant reduction of new motorhome sales orders and the cancellation of existing sales orders due to the extremely tight credit markets caused by the economic recession. The Company decided to exit the motorhome product line as part of a plan to focus on core truck, bus and armored products and to reduce overall fixed costs.
The Silver Crown facility in White Pigeon, Michigan was classified as held for sale as of December 25, 2010, and an asset impairment charge of approximately $483,000 was taken during the year ended December 25, 2010. There were also additional losses incurred in 2010 relating to the wind down of the operations which are reflected in the statements of comprehensive income. During 2011, the Company entered into a lease agreement with an unrelated party and subsequently reclassified the facility from assets held for sale to property, plant, and equipment.
The operating results for the Silver Crown division are classified as discontinued operations as follows:
|
|
2010 |
| |
Net Sales |
|
$ |
1,967,884 |
|
Pretax loss from operations |
|
(1,239,113 |
) | |
Net loss |
|
(1,239,113 |
) | |
3. INVESTMENTS.
Investment securities consist of the following:
|
|
2012 |
|
2011 |
| ||
Intermediate bond fund-cost |
|
$ |
2,877,927 |
|
$ |
916,717 |
|
Unrealized gains |
|
9,245 |
|
7,299 |
| ||
Intermediate bond fund-fair value |
|
$ |
2,887,172 |
|
$ |
924,016 |
|
There were no sales of securities during 2012. Sales of securities were $304,755 and $1,470,067 during 2011 and 2010, respectively, and resulted in gains/(losses) of $(8,787) and $3,344, respectively. Investment income (included in other income) consisted of dividend income and aggregated $10,197, $12,852, and $36,536 for the years ended 2012, 2011, and 2010 respectively.
4. INVENTORIES.
Inventories consist of the following:
|
|
2012 |
|
2011 |
| ||
Raw materials |
|
$ |
21,557,053 |
|
$ |
22,193,744 |
|
Work-in-progress |
|
3,654,801 |
|
6,748,162 |
| ||
Finished goods |
|
7,097,077 |
|
9,192,956 |
| ||
|
|
|
|
|
| ||
Total |
|
$ |
32,308,931 |
|
$ |
38,134,862 |
|
Supreme Industries, Inc. And Subsidiaries
Notes to Consolidated Financial Statements, Continued
5. PROPERTY, PLANT AND EQUIPMENT.
Property, plant and equipment consist of the following:
|
|
2012 |
|
2011 |
| ||
Land |
|
$ |
4,144,158 |
|
$ |
3,819,321 |
|
Land improvements |
|
6,442,647 |
|
5,725,384 |
| ||
Buildings |
|
40,084,004 |
|
24,746,172 |
| ||
Leasehold improvements (See Note 6) |
|
|
|
6,891,079 |
| ||
Machinery and equipment |
|
42,124,850 |
|
40,596,930 |
| ||
|
|
92,795,659 |
|
81,778,886 |
| ||
Less, Accumulated depreciation and amortization |
|
49,857,671 |
|
48,248,829 |
| ||
|
|
|
|
|
| ||
Property, plant and equipment, net |
|
$ |
42,937,988 |
|
$ |
33,530,057 |
|
6. LONG-TERM DEBT.
Long-term debt consists of the following:
|
|
2012 |
|
2011 |
| ||
Revolving line of credit |
|
$ |
14,089,063 |
|
$ |
11,653,460 |
|
|
|
|
|
|
| ||
Capital lease obligation under a sale / leaseback transaction, fixed rate of 5.5%, payable in monthly installments, collateralized by real estate |
|
|
|
3,528,374 |
| ||
|
|
|
|
|
| ||
Obligation under industrial development revenue bonds, variable rates, collateralized by real estate |
|
|
|
700,000 |
| ||
|
|
|
|
|
| ||
Term loan, payable in monthly installments including interest at a fixed rate of 2.75%, with final maturity in May 2013, collateralized by specific equipment |
|
16,934 |
|
66,825 |
| ||
|
|
|
|
|
| ||
Total |
|
14,105,997 |
|
15,948,659 |
| ||
|
|
|
|
|
| ||
Less, current maturities |
|
16,934 |
|
246,192 |
| ||
Long-term debt |
|
$ |
14,089,063 |
|
$ |
15,702,467 |
|
Revolving Line of Credit
On October 18, 2010, Supreme Industries, Inc. entered into an Amended and Restated Credit Agreement with JPMorgan Chase Bank (JPMC) which agreement was effective as of September 30, 2010. Under the terms of the agreement, JPMC agreed to provide the Company with a revolving line of credit of up to $30.0 million through December 31, 2011. Interest on outstanding borrowings under the revolving line of credit was based on the JPMC prime rate or certain basis points above LIBOR depending on the pricing option selected and the Companys leverage ratio, as defined.
On September 14, 2011, Supreme Industries, Inc., as Parent (the Parent), Supreme Indiana Operations, Inc. (Supreme Indiana), and certain of its subsidiaries who are signatories to the Credit Agreement (collectively, the 2011 Borrowers) entered into a Credit Agreement (the 2011 Credit Agreement) with Wells Fargo.
Supreme Industries, Inc. And Subsidiaries
Notes to Consolidated Financial Statements, Continued
6. LONG-TERM DEBT, Continued
Under the terms of the 2011 Credit Agreement, Wells Fargo agreed to provide to the 2011 Borrowers a revolving line of credit of up to $45.0 million, subject to a monthly borrowing base calculation. The term of this revolving line of credit was for a period ending on September 14, 2015. Upon the occurrence of certain events of default or the failure to maintain the defined minimum percentage of availability, the Company was required to comply with two financial covenants. These financial covenants consisted of a minimum fixed charge coverage ratio and limitations on annual capital expenditures. No events of default existed, and the Companys availability was in excess of the required amount as of December 31, 2011.
The loan proceeds received in conjunction with the 2011 Credit Agreement were used to repay in full all of the obligations of Borrowers owing to JPMC under a certain Amended and Restated Credit Agreement dated as of September 30, 2010.
In connection with the 2011 Credit Agreement, certain mortgages and deeds of trust covering real property were given as collateral to secure the revolving line of credit. As additional collateral for the repayment of the revolving line of credit, the 2011 Borrowers, and certain additional subsidiaries, signed and delivered to Wells Fargo a Security Agreement, dated as of September 14, 2011, granting to Wells Fargo security interests in all personal property owned by them.
On September 14, 2011, in connection with the 2011 Credit Agreement, Parent and certain of its subsidiaries (collectively, the 2011 Guarantors) entered into a General Continuing Guaranty in favor of Wells Fargo whereby the 2011 Guarantors agreed to guarantee the obligations of the 2011 Borrowers owing under the 2011 Credit Agreement.
As of December 31, 2011, the outstanding balance under the 2011 Credit Agreement was approximately $11.7 million, and the Company had unused credit capacity of approximately $12.3 million. Interest on outstanding borrowings under the 2011 Credit Agreement was based on the Wells Fargo prime rate, or LIBOR, depending on the pricing option selected and the Companys leverage ratio, resulting in an effective rate of 3.04% at December 31, 2011.
In conjunction with the 2011 Credit Agreement, the Company incurred approximately $1.0 million of additional deferred financing costs which were capitalized and are being amortized over the term of the facility. The net book value of deferred financing costs associated with the JPMC credit agreement was written off in the amount of $0.8 million in the third quarter of 2011.
On December 19, 2012, Supreme Industries, Inc. (the 2012 Borrower) entered into a revised Credit Agreement (the 2012 Credit Agreement) with Wells Fargo (the Lender and the Administrative Agent).
In addition, on December 19, 2012, in connection with the 2012 Credit Agreement, Supreme Indiana and certain other subsidiaries of the 2012 Borrower (collectively, the 2012 Guarantors) entered into a Subsidiary Guaranty Agreement in favor of Lender whereby the 2012 Guarantors agreed to guarantee the obligations of the 2012 Borrower owing under the 2012 Credit Agreement (the Subsidiary Guaranty Agreement).
Under the terms of the 2012 Credit Agreement, Lender agrees to provide to the 2012 Borrower a revolving line of credit of up to $45.0 million. The term of this revolving line of credit is for a period ending on December 19, 2017. The revolving line of credit bears interest at (i) LIBOR plus a margin which varies from 1.50% to 2.50% based upon a leverage ratio of total indebtedness to trailing four quarter EBITDA or (ii) the higher of (a) the prime rate and (b) the federal funds rate plus 0.50% plus a margin which varies from 0.50% to 1.50% based upon the debt to EBITDA leverage ratio.
Pursuant to the terms of the 2012 Credit Agreement, the 2012 Borrower, Administrative Agent, and one or more Lenders (if there are additional lenders other than the initial Lender) intend to establish a secured term loan facility which (i) must be secured by real property and improvements reasonably satisfactory to Administrative Agent, and (ii) must provide, pursuant to documentation in form and substance reasonably satisfactory to Administrative Agent, for one or more term loan commitments to make one or more term loans in an aggregate original principal amount of at least $10.0 million. If the parties to the 2012 Credit Agreement do not establish the secured term loan facility before March 29, 2013, then the revolving credit commitment shall be permanently reduced by $10.0 million effective as of March 29, 2013. The Company expects to establish the secured term loan facility by March 29, 2013.
A portion of the amounts received in conjunction with the 2012 Credit Agreement were used to repay in full all of the obligations of the 2011 Borrower and certain of the 2011 Guarantors owing to Wells Fargo under the 2011 Credit Agreement.
Supreme Industries, Inc. And Subsidiaries
Notes to Consolidated Financial Statements, Continued
6. LONG-TERM DEBT, Continued
A portion of the amounts received in conjunction with the 2012 Credit Agreement were used to terminate a lease by exercising an option on December 19, 2012 to purchase certain real estate and improvements located in the State of California which a subsidiary of Borrower had previously leased under a Lease Agreement, dated May 12, 2011, from BFG2011 Limited Liability Company, a New Jersey limited liability company (BFG). The option purchase price was $4.1 million. Supreme Indiana held a 35.48% interest in BFG. Messrs. William J. Barrett, Edward T. Flynn, and Herbert M. Gardner, all of whom are directors of the Company, held a combined ownership interest in BFG in the amount of 64.52% (see Other Long-Term Debt).
A portion of the amounts received in conjunction with the 2012 Credit Agreement were used to terminate a lease by exercising options on December 19, 2012 to purchase certain real estate and improvements located in the States of Indiana and Georgia which a subsidiary of the Company had previously leased under two separate Lease Agreements, both dated July 25, 1988, from G-2 Ltd., a Texas limited partnership (G-2). The option purchase prices were $3.6 million and $1.8 million for the Indiana and Georgia properties, respectively. Supreme Indiana was the general partner of G-2 holding a one percent interest. Messrs. Barrett, Robert J. Campbell, and Gardner, all of whom are directors of the Company, each held ownership interests in G-2 in the amount of 12.375%, respectively.
The Companys cash management system and revolving line of credit are designed to maintain zero cash balances and, accordingly, checks outstanding in excess of bank balances are classified as additional borrowings under the revolving line of credit. Checks outstanding in excess of bank balances were $0.4 million and $0.2 million at December 29, 2012 and December 31, 2011. The revolving line of credit also requires a quarterly commitment fee ranging from 0.20% to 0.50% per annum depending on the Companys financial ratios and based upon the average daily unused portion.
Outstanding letters of credit related to the Companys workers compensation insurance policies, aggregated $3.1 million and $3.5 million at December 29, 2012 and December 31, 2011. Under separate agreements, the Company had irrevocable letters of credit aggregating $0.9 million at December 31, 2011 in favor of bond trustees as a credit enhancement for bondholders of two industrial development revenue bonds.
Maturities of long-term debt for each of the next five years are as follows: 2013-$16,934; and 2017-$14,089,063.
Other Long-Term Debt
On March 24, 2011, Supreme Indiana entered into an Option Agreement (the Option Agreement) pursuant to which Supreme Indiana granted Barrett Gardner Associates, Inc. (Barrett Gardner), an entity which is owned by Messrs. William J. Barrett and Herbert M. Gardner, each a director of the Company, the right to purchase the Companys California manufacturing facility (the California Real Estate). This transaction was required by the Companys former bank as a condition of the former credit agreement. On May 12, 2011, Barrett Gardner assigned the Option Agreement to BFG2011 Limited Liability Company (a related party) (Purchaser). Then, Purchaser exercised its rights under the Option Agreement and purchased the California Real Estate following which it leased such California Real Estate back to Supreme Indiana. As part of the purchase price of the sale segment of the sale\leaseback transaction, Supreme Indiana received a 35.48% ownership interest (4,950 Common Units) in Purchaser, and Messrs. William J. Barrett, Herbert M. Gardner, and Edward L. Flynn (together) contributed $900,000 in cash for a (combined) 64.52% ownership interest in Purchaser (9,000 Preferred Units).
In accordance with the Option Agreement, Supreme Indiana and Purchaser entered into a Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate dated May 3, 2011 (as amended by that certain Amendment to Escrow Instructions dated as of the closing date, the Purchase Agreement) in which Purchaser agreed to purchase the California Real Estate for $4,100,000 comprised of the following amounts: (a) a $100,000 deposit made pursuant to the Option Agreement, (b) $3,000,000 paid in cash at the closing, (c) a grant to Supreme Indiana of the 34% equity interest in Purchaser described above valued at $495,000 (included in other assets on the October 1, 2011 balance sheet), and (d) a credit in the amount of $505,000 based on the lack of brokerage commissions and the nature of the transaction. Supreme Indiana paid the closing costs associated with the transaction including the escrow fees, transfer taxes, title policies, and other transaction costs. Supreme Indiana has provided Purchaser with an agreement to indemnify Purchaser from losses, damages, and claims arising from the condition of the California Real Estate at closing and a breach by Supreme Indiana of its representations and warranties. Supreme Indianas indemnity obligations survive the closing of the sale.
Supreme Industries, Inc. And Subsidiaries
Notes to Consolidated Financial Statements, Continued
6. LONG-TERM DEBT, Concluded
Concurrently with the closing of the sale of the California Real Estate to Purchaser, Supreme Indiana leased from Purchaser the California Real Estate (the Sale Leaseback Transaction) for a term of twenty years pursuant to that certain Air Commercial Real Estate Association Standard Industrial/Commercial Single-Tenant Lease dated as of the closing date (the Lease). The base rent for the first five years of the term was $24,000 per month. The Lease was a triple net lease, and Supreme Indiana was responsible for payment of all costs relating to the leased premises, including state income taxes on rental income received. Supreme Indiana had a purchase option and right of first refusal with respect to the California Real Estate through April 30, 2016. In addition, Supreme Indiana had a one-time right of first offer with respect to the California Real Estate that continued until the expiration of the term of the Lease. In connection with the Sale Leaseback Transaction, the Company received a fairness opinion issued by a third party valuation consultant stating that the proposed transactions were fair from a financial point of view to the Company (and its stockholders).
Due to the Companys continuing involvement in the California Real Estate, the Sale Leaseback Transaction was not recognized as a sale of the property. It was instead being accounted for as a financing transaction, and the Company had recorded the receipt of cash, the equity interest in the Purchaser, and the related obligation.
A portion of the amounts received in conjunction with the 2012 Credit Agreement has been used to terminate the lease by exercising an option to purchase. The option purchase price was $4.1 million.
The outstanding principal amount of the obligation as of December 31, 2011 was $3.5 million, at an interest rate of 5.5%. Of this amount, $0.1 million and $3.4 million were included in current maturities of long term debt and long term debt, respectively, in the accompanying balance sheet at December 31, 2011.
7. RETIREMENT PLAN.
The Company maintains a defined contribution plan which covers substantially all employees of the Company who have reached the age of twenty-one years and have completed thirty days of credited service. The plan provides that eligible employees can contribute from one to fifteen percent of their annual compensation. The Company formerly maintained a policy to match thirty percent of each employees contributions up to seven percent of the employees compensation. Effective September 1, 2008, however, the Company temporarily suspended this contribution match. Effective July 30, 2012, the Company reinstated its matching contribution at fifty percent of each employees contributions up to four percent of the employees compensation. The Board of Directors may reinstate, increase, or decrease the Companys contribution as business conditions permit. Expense for this plan was $184,275 for the year ended 2012. There was no expense related to the plan for the years ended 2011 and 2010.
8. STOCKHOLDERS EQUITY.
Preferred Stock
The Company is authorized to issue 1,000,000 shares of preferred stock ($1 par value) of which none have been issued. The Board of Directors is vested with the authority to determine and state the designations and relative preferences, limitations, voting rights, if any, and other rights of the preferred shares.
Common Stock
No dividends were declared or paid during the years ended December 29, 2012 or December 31, 2011.
Convertible Class B Common Stock
Class B Common Stock is convertible into Class A Common Stock on a one-for-one basis. Holders of Class A Common Stock are entitled to elect one-third of the Board of Directors rounded to the lowest whole number. Holders of Class B Common Stock elect the remainder of the directors.
Supreme Industries, Inc. And Subsidiaries
Notes to Consolidated Financial Statements, Continued
8. STOCKHOLDERS EQUITY, Continued
Stock Options
On October 29, 1998, the Companys Board of Directors approved, and the Companys stockholders subsequently ratified, the 1998 Stock Option Plan under which 886,469 shares of Class A Common Stock were reserved for grant. This plan expired on October 29, 2008. On January 31, 2001, the Companys Board of Directors approved, and the Companys stockholders subsequently ratified, the 2001 Stock Option Plan under which 891,990 shares of Class A Common Stock were reserved for grant. This plan expired on January 31, 2011. On January 23, 2004, the Companys Board of Directors approved, and the Companys stockholders subsequently ratified, the 2004 Stock Option Plan, as amended, under which 1,297,440 shares of Class A Common Stock were reserved for grant. Under the terms of the stock option plans, both incentive stock options and non-statutory stock options can be granted by a specially designated Stock Awards Committee. The Amended and Restated 2004 Stock Option Plan also allows for awards of common stock including restricted stock awards. Options granted under the stock option plans generally vest and become exercisable in annual installments of 33 1/3% beginning on the first anniversary date, and the options expire five or seven years after the date of grant. The Company generally issues new shares to satisfy stock option exercises.
2012 Long-Term Incentive Plan
On May 23, 2012, the Company held its annual meeting of stockholders at which the Companys stockholders approved the 2012 Long-Term Incentive Plan (the Plan) which had previously been approved by the Board of Directors and recommended to the stockholders. The Plan is effective until May 23, 2022; provided, however, any awards issued prior to the Plans termination will remain outstanding in accordance with their terms. The Plan authorizes the issuance of 1,000,000 shares of the Companys Class A Common Stock with certain officers being limited to receiving grants of 100,000 shares in any one year. Employees, contractors and non-employee directors of the Company and its subsidiaries are eligible to receive awards under the Plan. The following types of awards may be granted under the Plan; (1) stock options (incentive and non-qualified), (2) stock appreciation rights, (3) restricted stock and restricted stock units, (4) dividend equivalent rights, (5) performance awards based on achieving specified performance goals, and (6) other awards.
The following table summarizes stock option activity:
|
|
|
|
Weighted - Average |
|
|
|
Options |
|
Exercise Price |
|
Outstanding, December 26, 2009 |
|
1,246,082 |
|
5.00 |
|
Granted |
|
335,200 |
|
2.24 |
|
Exercised |
|
(1,766 |
) |
1.42 |
|
Expired |
|
(368,314 |
) |
6.33 |
|
Forfeited |
|
(6,487 |
) |
6.15 |
|
Outstanding, December 25, 2010 |
|
1,204,715 |
|
3.83 |
|
Granted |
|
|
|
|
|
Exercised |
|
(32,726 |
) |
1.48 |
|
Expired |
|
(7,385 |
) |
7.14 |
|
Forfeited |
|
(7,983 |
) |
1.51 |
|
Outstanding, December 31, 2011 |
|
1,156,621 |
|
3.90 |
|
Granted |
|
|
|
|
|
Exercised |
|
(58,804 |
) |
1.71 |
|
Expired |
|
(12,974 |
) |
6.15 |
|
Forfeited |
|
(125,035 |
) |
4.34 |
|
Outstanding, December 29, 2012 |
|
959,808 |
|
3.93 |
|
The weighted-average grant-date fair values of options granted during the fiscal year ended 2010 was $1.16. The total intrinsic value of options exercised during the fiscal years ended 2012, 2011 and 2010 approximated $117,975, $47,152 and $3,323, respectively. Total unrecognized compensation expense related to all share-based awards outstanding at December 29, 2012, is approximately $95,516 and is to be recorded over a weighted-average contractual life of 0.74 years.
Supreme Industries, Inc. And Subsidiaries
Notes to Consolidated Financial Statements, Continued
8. STOCKHOLDERS EQUITY, Concluded
Information about stock options outstanding and exercisable at December 29, 2012 is as follows:
|
|
Outstanding |
|
Exercisable |
| ||||||
|
|
|
|
Weighted - |
|
|
|
|
|
|
|
|
|
|
|
Average |
|
Weighted - |
|
|
|
Weighted - |
|
|
|
|
|
Remaining |
|
Average |
|
|
|
Average |
|
Range of |
|
Number |
|
Contractual |
|
Exercise |
|
Number |
|
Exercise |
|
Exercise Prices |
|
Outstanding |
|
Life in Years |
|
Price |
|
Exercisable |
|
Price |
|
|
|
|
|
|
|
|
|
|
|
|
|
6.52 - 7.17 |
|
270,300 |
|
0.34 |
|
6.60 |
|
270,300 |
|
6.60 |
|
5.78 - 6.36 |
|
85,240 |
|
1.33 |
|
6.00 |
|
85,240 |
|
6.00 |
|
5.73 |
|
6,487 |
|
2.05 |
|
5.73 |
|
6,487 |
|
5.73 |
|
4.72 - 5.34 |
|
96,795 |
|
2.35 |
|
4.99 |
|
96,795 |
|
4.99 |
|
1.41 - 1.42 |
|
83,118 |
|
2.83 |
|
1.42 |
|
83,118 |
|
1.42 |
|
1.55 - 1.71 |
|
140,334 |
|
3.49 |
|
1.57 |
|
140,334 |
|
1.57 |
|
2.67 |
|
10,000 |
|
4.18 |
|
2.67 |
|
6,667 |
|
2.67 |
|
2.23 - 2.45 |
|
267,534 |
|
4.66 |
|
2.21 |
|
174,800 |
|
2.26 |
|
|
|
959,808 |
|
2.56 |
|
3.93 |
|
863,741 |
|
4.13 |
|
At December 29, 2012 and December 31, 2011, the aggregate intrinsic value of options exercisable approximated $635,280 and $269,841, respectively. The intrinsic value of all options outstanding at December 29, 2012 and December 31, 2011 was approximately $739,586 and $369,906, respectively.
At December 29, 2012 and December 31, 2011, there were exercisable options outstanding to purchase 863,741 and 920,487 shares at weighted average exercise prices of $4.13 and $4.36.
As of December 29, 2012, 1,132,179 shares were reserved for the granting of future share-based awards compared to 23,238 shares at December 31, 2011.
9. INCOME TAXES.
Federal and State income tax expense (benefit) from continuing operations consist of the following:
|
|
2012 |
|
2011 |
|
2010 |
| |||
Federal: |
|
|
|
|
|
|
| |||
Current |
|
$ |
665,615 |
|
$ |
(91,975 |
) |
$ |
|
|
Deferred |
|
372,886 |
|
|
|
(586,045 |
) | |||
|
|
1,038,501 |
|
(91,975 |
) |
(586,045 |
) | |||
|
|
|
|
|
|
|
| |||
State: |
|
|
|
|
|
|
| |||
Current |
|
(150,354 |
) |
(309,025 |
) |
86,485 |
| |||
Deferred |
|
(1,198,337 |
) |
|
|
999,185 |
| |||
|
|
(1,348,691 |
) |
(309,025 |
) |
1,085,670 |
| |||
Total |
|
$ |
(310,190 |
) |
$ |
(401,000 |
) |
$ |
499,625 |
|
Supreme Industries, Inc. And Subsidiaries
Notes to Consolidated Financial Statements, Continued
9. INCOME TAXES, Continued
Deferred tax assets and deferred tax liabilities were as follows:
|
|
2012 |
|
2011 |
| ||
Deferred tax assets: |
|
|
|
|
| ||
Receivables |
|
$ |
38,500 |
|
$ |
77,000 |
|
Inventories |
|
1,544,285 |
|
762,541 |
| ||
Accrued liabilities |
|
1,560,629 |
|
1,915,898 |
| ||
Federal and State net operating losses and credit carryforwards |
|
1,269,848 |
|
4,233,269 |
| ||
Other |
|
170,050 |
|
41,983 |
| ||
Total deferred tax assets |
|
4,583,312 |
|
7,030,691 |
| ||
|
|
|
|
|
| ||
Deferred tax liabilities: |
|
|
|
|
| ||
Property, plant and equipment |
|
(2,919,247 |
) |
(2,081,866 |
) | ||
Prepaids and other |
|
(838,614 |
) |
(359,651 |
) | ||
Total deferred tax liabilities |
|
(3,757,861 |
) |
(2,441,517 |
) | ||
|
|
|
|
|
| ||
Net deferred income tax assets |
|
825,451 |
|
4,589,174 |
| ||
Valuation allowance |
|
|
|
(4,589,174 |
) | ||
|
|
$ |
825,451 |
|
$ |
|
|
Due to economic conditions in prior years, the Company believed it was more likely than not that the benefit from net deferred tax assets, including federal and state net operating loss and credit carryforwards, would not be realized and, accordingly, a valuation allowance aggregating $4.9 million was established at December 25, 2010. Of this amount, $3.8 million was allocated to continuing operations and $1.1 million was allocated to discontinued operations. As of December 31, 2011 the valuation allowance was $4.6 million. During 2012, the Company determined that based on recent operating results, as well as an assessment of expected future operating results, the realization of its remaining deferred tax assets is more likely than not. As a result, the Company reversed the entire valuation allowance during 2012. The release of the valuation allowance was determined in accordance with the provisions of ASC 740, Income Taxes, which requires an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are realizable.
For the year ending December 29, 2012, the Company realized benefits of $2.5 million from the utilization of federal and state net operating losses generated in previous years. At December 29, 2012, the Company had state tax loss carryforwards of approximately $18 million available to offset future taxable income, expiring in various amounts through December 31, 2031.
A reconciliation of the provision for income taxes from continuing operations to the amount computed by applying the statutory federal income tax rate (35% in 2012 and 34% in 2011 and 2010) to income before income taxes is as follows:
|
|
2012 |
|
2011 |
|
2010 |
| |||
Income taxes at the federal statutory rate |
|
$ |
4,032,979 |
|
$ |
97,219 |
|
$ |
(2,758,079 |
) |
State income taxes, net of federal tax effect |
|
337,042 |
|
60,704 |
|
(227,236 |
) | |||
Tax-exempt underwriting income of wholly- owned small captive insurance subsidiary |
|
|
|
|
|
(404,600 |
) | |||
Domestic production deduction |
|
(304,300 |
) |
|
|
|
| |||
Research and development tax credits |
|
|
|
(147,617 |
) |
(280,153 |
) | |||
Alternative fuel tax credit |
|
|
|
(87,166 |
) |
(25,000 |
) | |||
Stock-based compensation |
|
30,577 |
|
(35,685 |
) |
150,668 |
| |||
Change in valuation allowance |
|
(4,589,176 |
) |
(359,713 |
) |
3,833,625 |
| |||
Other, net |
|
182,688 |
|
71,258 |
|
210,400 |
| |||
Total |
|
$ |
(310,190 |
) |
$ |
(401,000 |
) |
$ |
499,625 |
|
Supreme Industries, Inc. And Subsidiaries
Notes to Consolidated Financial Statements, Continued
9. INCOME TAXES, Concluded
Uncertain Tax Positions
The Company recognizes income tax benefits only when it is more likely than not that the tax position will be allowed upon examination by taxing authorities, which is presumed to occur. The amount of such tax benefit recorded is the largest amount that is more likely than not to be allowed. A reconciliation of the change in the unrecognized tax benefits for the three years ended December 29, 2012 is as follows:
Unrecognized tax benefits at December 26, 2009 |
|
$ |
1,005,258 |
|
Gross increases - tax positions in prior periods |
|
34,796 |
| |
Unrecognized tax benefits at December 25, 2010 |
|
1,040,054 |
| |
Gross increases - tax positions in prior periods |
|
80,558 |
| |
Lapse of statute of limitations |
|
(401,000 |
) | |
Unrecognized tax benefits at December 31, 2011 |
|
719,612 |
| |
Gross increases - tax positions in prior periods |
|
22,430 |
| |
Lapse of statute of limitations |
|
(222,430 |
) | |
Unrecognized tax benefits at December 29, 2012 |
|
$ |
519,612 |
|
The entire balance of approximately $519,612 at December 29, 2012 relates to unrecognized tax positions that, if recognized, would affect the annual effective tax rate. The Company is subject to U.S. federal income tax as well as various state taxes. The Company is no longer subject to examination by federal taxing authorities for the fiscal year ended 2007 and earlier. The Company does not expect the total amount of unrecognized tax benefits to significantly increase or decrease over the next twelve months. Interest and penalties related to income tax matters are recognized in income tax expense. Interest and penalties accrued for, and recognized during, the fiscal years ended 2012, 2011, and 2010 were immaterial.
10. COMMITMENTS AND CONTINGENCIES.
Lease Commitments and Related Party Transactions
The Company leases certain office and manufacturing facilities under operating lease agreements which expire at various dates from November 2013 through April 2016. Previously, certain lease agreements were with related parties for which related party rent expense was approximately $658,000 in 2012 and $683,000 for each of the fiscal years ending 2011 and 2010. The Company exercised its options to purchase these related party leased facilities during 2012, as described in Note 6.
Rent expense under all operating leases aggregated $733,340, $758,834, and $713,615 for the fiscal years ended 2012, 2011, and 2010, respectively.
At December 29, 2012, future minimum rental payments under noncancelable operating leases aggregated $102,250 and are payable as follows: 2013-$39,250; 2014-$27,000; 2015-$27,000; and 2016-$9,000.
Supreme Industries, Inc. And Subsidiaries
Notes to Consolidated Financial Statements, Continued
10. COMMITMENTS AND CONTINGENCIES, Continued
Consigned Inventories
The Company obtains most vehicle chassis for its specialized vehicle products directly from the chassis manufacturers under converter pool agreements. Chassis are obtained from the manufacturers based on orders from customers, and to a lesser extent, for unallocated orders. Although each manufacturers agreement has different terms and conditions, the agreements generally state that the manufacturer will provide a supply of chassis to be maintained from time to time at the Companys various facilities with the condition that the Company will store such chassis and will not move, sell, or otherwise dispose of such chassis except under the terms of the agreement. The manufacturer transfers the chassis to the Company on a restricted basis, retaining the sole authority to authorize commencement of work on the chassis and to make certain other decisions with respect to the chassis including the terms and pricing of sales of the chassis to manufacturers dealers. The manufacturer also does not transfer the certificate of origin to the Company nor permit the Company to sell or transfer the chassis to anyone other than the manufacturer (for ultimate resale to a dealer). Although the Company is party to related finance agreements with General Motors and Ally Bank, the Company has not historically settled, nor expects to in the future settle, any related obligations in cash. Instead, the obligation is settled by General Motors upon reassignment of the chassis to an accepted dealer and the dealer is invoiced for the chassis by General Motors. Accordingly, the Company accounts for the chassis as consigned inventory belonging to the manufacturer. Under these agreements, if the chassis is not delivered to a customer within a specified time frame the Company is required to pay a finance or storage charge on the chassis. At December 29, 2012 and December 31, 2011, chassis inventory, accounted for as consigned inventory to the Company by the manufacturers, aggregated approximately $26.0 million and $22.3 million, respectively. Typically, chassis are converted and delivered to customers within 90 days of the receipt of the chassis by the Company.
Repurchase Commitments
The Company was contingently liable at December 29, 2012, under a repurchase agreement with a certain financial institution providing inventory financing for retailers of its products. Under the arrangement, which is customary in the industry, the Company agrees to repurchase vehicles in the event of default by the retailer. The maximum repurchase liability is the total amount that would be paid upon the default of the Companys independent dealers. The maximum potential repurchase liability, without reduction for the resale value of the repurchased units, was approximately $1.9 million at December 29, 2012 and $4.8 million at December 31, 2011. The risk of loss under the agreement is spread over several retailers. The loss, if any, under the agreement is the difference between the repurchase cost and the resale value of the units. The Company believes that any potential loss under this agreement in effect at December 29, 2012 will not be material.
Self-Insurance
The Company is self-insured for a portion of general liability ($100,000 per occurrence in 2012 and 2011), certain employee health benefits ($200,000 annually per employee with no annual aggregate), and workers compensation in certain states ($250,000 per occurrence with no annual aggregate). The Company accrues for the estimated losses occurring from both asserted and unasserted claims. The estimate of the liability for unasserted claims arising from incurred but not reported claims is based on an analysis of historical claims data.
Ownership Transaction Incentive Plan
On October 25, 2011, the Company approved an Ownership Transaction Incentive Plan (the OTIP). Pursuant to the terms of the OTIP, upon a Change of Control, as defined, certain employees of the Company are entitled to receive a percentage of the difference between the per share value of the total cash proceeds or the per share fair market value of any other consideration received by the Company or the Companys stockholders in connection with a Change of Control minus $2.50 (such amount being the Value) as described below with such amount then being multiplied by the number of outstanding shares of common stock of the Company immediately prior to the Change of Control. The aggregate amount of payments to be made under the OTIP is equal to the number of outstanding shares of common stock immediately prior to the Change of Control multiplied by the sum of (i) 7% multiplied by the Value until the value reaches $5.00, plus (ii) 8% multiplied by the amount of any Value above $5.00 and up to $7.00, plus (iii) 9% multiplied by the amount of any Value above $7.00. For example, if a Change of Control occurs in which the Companys common stock is sold for $9.00 per share, then the aggregate amount of payments to be made is equal to the number of outstanding shares of common stock immediately prior to the
Supreme Industries, Inc. And Subsidiaries
Notes to Consolidated Financial Statements, Concluded
10. COMMITMENTS AND CONTINGENCIES, Concluded
Change of Control multiplied by $0.52 (which is the sum of (i) 7% multiplied by $2.50 (the Value up to $5.00); (ii) 8% multiplied by $2.00 (the Value between $5.00 and $7.00) and (iii) 9% multiplied by $2.00 (the Value over $7.00)). Certain employees are eligible to participate in the OTIP upon a Change of Control. If prior to a Change of Control, any of the current participants in the OTIP resign from the Company or are terminated for Cause, as defined, such participant shall immediately forfeit any rights to receive payment under the OTIP. If prior to a Change of Control, any of the current participants in the OTIP are terminated without Cause, such participants right to receive a percentage of the aggregate amount described above upon a Change of Control shall generally be forfeited six months after the termination without Cause. The OTIP units are accounted for consistent with performance vesting securities and as such no compensation is reflected until the contingent change in control becomes inevitable and an estimate of value can be made.
Other
The Company is subject to various investigations, claims, and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities. Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved unfavorably to the Company. The Company establishes accruals for matters that are probable and reasonably estimable. Management believes that any liability that may ultimately result from the resolution of these matters in excess of accruals and/or amounts provided by insurance coverage will not have a material adverse effect on the consolidated financial position or results of operations of the Company.
In October of 2011, the Company was named a defendant in a personal injury suit (Paul Gendrolis and Katherine Gendrolis v. Saxon Fleet Sales, Kolstad Company, and Supreme Industries, Inc.) which was filed in the United States District Court, District of Massachusetts. The complaint seeks $10 million in damages based on allegations that a truck body manufactured by the Company contained an improperly installed plate or lip, which caused Paul Gendrolis to trip and become injured. Claims alleged against the Company include negligence, breach of warranty, breach of consumer protection laws, and loss of consortium. Due to the inherent risk of litigation, the outcome of this case is uncertain and unpredictable. The Company is vigorously defending this matter. The Company has insurance coverage for personal injury claims with the Companys self-insurance deductible being $250,000.
In February of 2012, the Company was named a defendant in a claim that a fleet of buses manufactured by the Company was defective (King County v. Supreme Corporation) which was filed in Superior Court in King County, Washington. The complaint seeks a sum of approximately $7 million which the plaintiff alleges was paid for the fleet, costs of investigation and repairs, and incidental and consequential damages. These allegations against the Company include breach of contract, breach of implied warranties of fitness and merchantability, and a request for declaratory judgment on the issue of revocation of acceptance of the fleet. Due to the inherent risk of litigation, the outcome of this case is uncertain and unpredictable. The Company is vigorously defending this matter.
SUPREME INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
|
|
|
|
Column C |
|
|
|
|
| ||||
|
|
|
|
Additions |
|
|
|
|
| ||||
|
|
Column B |
|
(Reductions) |
|
|
|
|
| ||||
|
|
Balance |
|
Charged to |
|
|
|
Column E |
| ||||
Column A |
|
Beginning |
|
Costs and |
|
Column D |
|
Balance End |
| ||||
Description |
|
of Period |
|
Expenses |
|
Deductions(1) |
|
of Period |
| ||||
Year ended December 29, 2012: |
|
|
|
|
|
|
|
|
| ||||
Reserves and allowances deducted from asset accounts: |
|
|
|
|
|
|
|
|
| ||||
Allowance for doubtful receivables |
|
$ |
200,000 |
|
$ |
(100,000 |
) |
$ |
|
|
$ |
100,000 |
|
|
|
|
|
|
|
|
|
|
| ||||
Year ended December 31, 2011: |
|
|
|
|
|
|
|
|
| ||||
Reserves and allowances deducted from asset accounts: |
|
|
|
|
|
|
|
|
| ||||
Allowance for doubtful receivables |
|
$ |
100,000 |
|
$ |
152,000 |
|
$ |
52,000 |
|
$ |
200,000 |
|
|
|
|
|
|
|
|
|
|
| ||||
Year ended December 25, 2010: |
|
|
|
|
|
|
|
|
| ||||
Reserves and allowances deducted from asset accounts: |
|
|
|
|
|
|
|
|
| ||||
Allowance for doubtful receivables |
|
$ |
70,000 |
|
$ |
52,000 |
|
$ |
22,000 |
|
$ |
100,000 |
|
(1) Uncollectible accounts written off, net of recoveries.
SUPREME INDUSTRIES, INC. AND SUBSIDIARIES
|
|
First |
|
Second |
|
Third |
|
Fourth |
| ||||
2012 Quarter |
|
|
|
|
|
|
|
|
| ||||
Net sales |
|
$ |
72,166,821 |
|
$ |
84,574,041 |
|
$ |
71,671,126 |
|
$ |
57,728,124 |
|
Gross profit |
|
10,815,717 |
|
13,514,185 |
|
11,573,845 |
|
7,592,277 |
| ||||
Net income |
|
2,481,526 |
|
5,397,391 |
|
3,570,491 |
|
383,577 |
| ||||
Income per share: |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
0.16 |
|
0.36 |
|
0.23 |
|
0.03 |
| ||||
Diluted |
|
0.16 |
|
0.35 |
|
0.23 |
|
0.02 |
| ||||
|
|
First |
|
Second |
|
Third |
|
Fourth |
| ||||
2011 Quarter |
|
|
|
|
|
|
|
|
| ||||
Net sales, continuing operations |
|
$ |
67,384,139 |
|
$ |
94,719,547 |
|
$ |
72,799,593 |
|
$ |
65,457,410 |
|
Gross profit, continuing operations |
|
6,406,953 |
|
8,064,341 |
|
9,281,868 |
|
8,741,854 |
| ||||
Net income (loss), continuing operations |
|
(1,123,560 |
) |
(772,641 |
) |
1,518,712 |
|
2,045,080 |
| ||||
Net loss, discontinued operations |
|
(357,139 |
) |
(334,706 |
) |
(25,984 |
) |
(159,091 |
) | ||||
Net income (loss), consolidated |
|
(1,480,699 |
) |
(1,107,347 |
) |
1,492,728 |
|
1,885,989 |
| ||||
Income (loss) per share, consolidated: |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
(0.10 |
) |
(0.07 |
) |
0.10 |
|
0.13 |
| ||||
Diluted |
|
(0.10 |
) |
(0.07 |
) |
0.10 |
|
0.13 |
| ||||
The consolidated operating results above reflect the net of both continuing and discontinued operations. Additionally, the above results reflect certain immaterial revisions as discussed in Note 1 of the Notes to Consolidated Financial Statements.
ITEM 9. |
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
Not applicable.
ITEM 9A. |
|
Managements Conclusions Regarding Effectiveness of Disclosure Controls and Procedures
As of December 29, 2012, the Company conducted an evaluation, under the supervision and participation of management including the Interim Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures were effective as of December 29, 2012.
Managements Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and Rule 15d-15(f) of the Securities Exchange Act of 1934. Internal control over financial reporting provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
The Companys internal control over financial reporting includes policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Companys assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles; and that the Companys receipts and expenditures are being made only in accordance with authorizations of management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companys assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Management of the Company has assessed the effectiveness of the Companys internal control over financial reporting based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Managements assessment included an evaluation of the design of the Companys internal control over financial reporting and testing of the operational effectiveness of the Companys internal control over financing reporting. Based on this assessment, management has concluded that the Companys internal control over financial reporting was effective as of December 29, 2012.
Changes in Internal Control over Financial Reporting
No change in the Companys internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f) and Rule 15d-15(f)) occurred during the fiscal quarter ended December 29, 2012 that materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.
ITEM 9B. |
|
Not applicable.
ITEM 10. |
|
The information required by Item 10 of Form 10-K is hereby incorporated by reference from the Companys definitive proxy statement which will be filed with the Securities and Exchange Commission in connection with the Companys 2013 annual stockholders meeting.
ITEM 11. |
|
The information required by Item 11 of Form 10-K is hereby incorporated by reference from the Companys definitive proxy statement which will be filed with the Securities and Exchange Commission in connection with the Companys 2013 annual stockholders meeting.
ITEM 12. |
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
The information required by Item 12 of Form 10-K is hereby incorporated by reference from the Companys definitive proxy statement which will be filed with the Securities and Exchange Commission in connection with the Companys 2013 annual stockholders meeting.
ITEM 13. |
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. |
The information required by Item 13 of Form 10-K is hereby incorporated by reference from the Companys definitive proxy statement which will be filed with the Securities and Exchange Commission in connection with the Companys 2013 annual stockholders meeting.
ITEM 14. |
|
The information required by Item 14 of Form 10-K is hereby incorporated by reference from the Companys definitive proxy statement which will be filed with the Securities and Exchange Commission in connection with the Companys 2013 annual stockholders meeting.
ITEM 15. |
|
|
a. The following financial statements and financial statement schedule are included in Item 8 herein: | |
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| |
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1. |
Financial Statements |
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Report of Crowe Horwath LLP, Independent Registered Public Accounting Firm |
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Consolidated Balance Sheets as of December 29, 2012 and December 31, 2011 |
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2. |
Financial Statement Schedule |
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3. |
Exhibits |
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See Index to Exhibits |
Pursuant to the requirements of Section 13 or 15(d) 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.
|
SUPREME INDUSTRIES, INC. | |||
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| |||
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| |||
Date: |
March 22, 2013 |
|
By: |
/s/Matthew W. Long |
|
|
Matthew W. Long, | ||
|
|
Interim Chief Executive Officer and Chief Financial Officer | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Herbert M. Gardner |
|
Chairman of the Board |
|
March 22, 2013 |
Herbert M. Gardner |
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/s/ William J. Barrett |
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Executive Vice President, Secretary, |
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March 22, 2013 |
William J. Barrett |
|
Assistant Treasurer and Director |
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|
/s/ Matthew W. Long |
|
Interim Chief Executive Officer, Chief Financial Officer, |
|
March 22, 2013 |
Matthew W. Long |
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Treasurer, Assistant Secretary (Principal Executive, |
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|
Financial and Accounting Officer) |
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/s/ Robert J. Campbell |
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Director |
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March 22, 2013 |
Robert J. Campbell |
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/s/ Edward L. Flynn |
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Director |
|
March 22, 2013 |
Edward L. Flynn |
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/s/ Arthur J. Gajarsa |
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Director |
|
March 22, 2013 |
Arthur J. Gajarsa |
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/s/ Thomas B. Hogan, Jr. |
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Director |
|
March 22, 2013 |
Thomas B. Hogan, Jr. |
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/s/Mark C. Neilson |
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Director |
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March 22, 2013 |
Mark C. Neilson |
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/s/Wayne A. Whitener |
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Director |
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March 22, 2013 |
Wayne A. Whitener |
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INDEX TO EXHIBITS
Exhibit |
|
Description | |
|
|
|
|
|
3.1 |
|
Certificate of Incorporation of the Company, filed as Exhibit 3(a) to the Companys Registration Statement on Form 8-A, filed with the Commission on September 18, 1989, and incorporated herein by reference. |
|
|
|
|
|
3.2 |
|
Certificate of Amendment of Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on June 10, 1993 filed as Exhibit 3.2 to the Companys annual report on Form 10-K for the fiscal year ended December 31, 1993, and incorporated herein by reference. |
|
|
|
|
|
3.3 |
|
Certificate of Amendment of Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on May 29, 1996 filed as Exhibit 3.3 to the Companys annual report on Form 10-K for the fiscal year ended December 31, 1996, and incorporated herein by reference. |
|
|
|
|
|
3.4 |
|
Second Amended and Restated Bylaws, filed as Exhibit 3.1 to the Companys current report on Form 8-K, filed on February 22, 2011, and incorporated herein by reference. |
|
|
|
|
+ |
10.1 |
|
1998 Stock Option Plan, filed as Exhibit 10.3 to the Companys annual report on Form 10-K for the fiscal year ended December 31, 1998, and incorporated herein by reference. |
|
|
|
|
+ |
10.2 |
|
Amendment No. 1 to the Companys 1998 Stock Option Plan, filed as Exhibit 10.4 to the Companys annual report on Form 10-K for the fiscal year ended December 31, 1999, and incorporated herein by reference. |
|
|
|
|
+ |
10.3 |
|
Amendment No. 2 to the Companys 1998 Stock Option Plan, filed as Exhibit 10.5 to the Companys annual report on Form 10-K for the fiscal year ended December 31, 2000, and incorporated herein by reference. |
|
|
|
|
+ |
10.4 |
|
2001 Stock Option Plan, filed as Exhibit 10.6 to the Companys annual report on Form 10-K for the fiscal year ended December 31, 2001, and incorporated herein by reference. |
|
|
|
|
+ |
10.5 |
|
Amendment No. 1 to the Companys 2001 Stock Option Plan, filed as Exhibit 10.7 to the Companys annual report on Form 10-K for the fiscal year ended December 31, 2001, and incorporated herein by reference. |
|
|
|
|
+ |
10.6 |
|
2004 Stock Option Plan, filed as Exhibit 4.1 to the Companys Registration Statement on Form S-8 effective on August 26, 2004, and incorporated herein by reference. |
|
|
|
|
+ |
10.7 |
|
Amended and Restated 2004 Stock Option Plan filed as Exhibit A to the Companys Revised Definitive Proxy Statement filed on April 5, 2006, and incorporated herein by reference. |
|
|
|
|
+ |
10.8 |
|
Amendment Number One to the Companys Amended and Restated 2004 Stock Option Plan dated October 25, 2006, included in the Companys Definitive Proxy Statement filed on April 2, 2007, and incorporated herein by reference. |
|
|
|
|
+ |
10.9 |
|
Amendment No. Two to the Companys Amended and Restated 2004 Stock Option Plan dated March 28, 2007, included in the Companys Definitive Proxy Statement filed on April 2, 2007, and incorporated herein by reference. |
|
|
|
|
+ |
10.10 |
|
Amendment No. Three to the Companys Amended and Restated 2004 Stock Option Plan dated March 25, 2008, included in the Companys Definitive Proxy Statement filed on April 3, 2008, and incorporated herein by reference. |
|
|
|
|
+ |
10.11 |
|
Amendment No. Four to the Companys Amended and Restated 2004 Stock Option Plan dated August 25, 2009, filed as Exhibit 10.3 to the Companys quarterly report on Form 10-Q for the quarterly period ended September 26, 2009, and incorporated herein by reference. |
|
|
|
|
+ |
10.12 |
|
Form of Supreme Industries, Inc. Director and Officer Indemnification Agreement, filed as Exhibit 10.1 to the Companys Current Report on Form 8-K filed on October 6, 2008, and incorporated herein by reference. |
|
|
|
|
+ |
10.13 |
|
Indemnification Agreement by and among Supreme Industries, Inc. and Kim Korth dated February 16, 2011, filed as Exhibit 10.2 to the Companys Current Report on Form 8-K filed on February 22, 2011, and incorporated herein by reference. |
Exhibit |
|
Description | |
|
|
|
|
+ |
10.14 |
|
Indemnification Agreement by and among Supreme Industries, Inc. and Kim Korth dated September 23, 2011, filed as Exhibit 10.2 to the Companys Current Report on Form 8-K filed on September 29, 2011, and incorporated herein by reference. |
|
|
|
|
+ |
10.15 |
|
Indemnification Agreement by and among Supreme Industries, Inc. and Matthew W. Long dated December 29, 2011, filed as Exhibit 10.2 to the Companys Current Report on Form 8-K filed on January 5, 2012, and incorporated herein by reference. |
|
|
|
|
|
10.16 |
|
Special Vehicle Manufacturer Converters Agreement with General Motors Corporation, effective February 29, 2008, between General Motors Corporation and Supreme Corporation, filed as Exhibit 10.11 to the Companys annual report on Form 10-K for the fiscal year ended December 27, 2008, and incorporated herein by reference. |
|
|
|
|
|
10.17 |
|
Ford Authorized Converter Pool Agreement, effective May 1, 2008, among Ford Motor Company, Supreme Corporation and certain subsidiaries, filed as Exhibit 10.12 to the Companys annual report on Form 10-K for the fiscal year ended December 27, 2008, and incorporated herein by reference. |
|
|
|
|
+ |
10.18 |
|
Credit Agreement by and among Supreme Industries, Inc., Supreme Indiana Operations, Inc. and certain of its subsidiaries identified on the signature pages thereof, and Wells Fargo Capital Finance, LLC, with an effective date of September 14, 2011, filed as Exhibit 10.1 to the Companys Current Report on Form 8-K filed on September 20, 2011, and incorporated herein by reference. |
|
|
|
|
+ |
10.19 |
|
Security Agreement by and among Supreme Industries, Inc., the other loan parties thereto, and Wells Fargo Capital Finance, LLC, with an effective date of September 14, 2011, filed as Exhibit 10.2 to the Companys Current Report on Form 8-K filed on September 20, 2011, and incorporated herein by reference. |
|
|
|
|
+ |
10.20 |
|
General Continuing Guaranty by and among Supreme Industries, Inc. and certain of its subsidiaries identified on the signature pages thereof, in favor of Wells Fargo Capital Finance, LLC, with an effective date of September 14, 2011, filed as Exhibit 10.3 to the Companys Current Report on Form 8-K filed on September 20, 2011, and incorporated herein by reference. |
|
|
|
|
+ |
10.21 |
|
First Amendment to Credit Agreement, dated as of June 29, 2012, between Wells Fargo Capital Finance, LLC and certain Lenders, Supreme Industries, Inc., Supreme Indiana Operations, Inc. and certain of its subsidiaries, filed as Exhibit 10.1 to the Companys Current Report on Form 8-K filed on July 5, 2012, and incorporated herein by reference. |
|
|
|
|
*+ |
10.22 |
|
Credit Agreement by and among Supreme Industries, Inc. and Wells Fargo Bank, National Association, dated as of December 19, 2012. |
|
|
|
|
*+ |
10.23 |
|
Subsidiary Guaranty Agreement dated as of December 19, 2012 by and among certain Subsidiaries of Supreme Industries, Inc., as Guarantors, in favor of Wells Fargo Bank, National Association, as Administrative Agent. |
|
|
|
|
+ |
10.24 |
|
Amended and Restated Employment Contract by and among Supreme Industries, Inc. and Herbert M. Gardner dated to be effective January 1, 2005, filed as Exhibit 10.2 to the Companys Current Report on Form 8-K dated February 10, 2006, and incorporated herein by reference. |
|
|
|
|
+ |
10.25 |
|
Amended and Restated Employment Contract by and among Supreme Industries, Inc. and William J. Barrett dated to be effective January 1, 2005, filed as Exhibit 10.3 to the Companys Current Report on Form 8-K dated February 10, 2006, and incorporated herein by reference. |
|
|
|
|
+ |
10.26 |
|
Employment Contract between Supreme Indiana Operations, Inc. and Robert W. Wilson dated to be effective May 1, 2011, filed as Exhibit 10.5 to the Companys Quarterly Report, Amendment No. 1 on Form 10-Q/A filed on March 26, 2012, and incorporated herein by reference. |
|
|
|
|
+ |
10.27 |
|
Employment Agreement by and among Supreme Industries, Inc., Supreme Indiana Operations, Inc., and Kim Korth dated to be effective February 1, 2011, filed as Exhibit 10.1 to the Companys Current Report on Form 8-K, and incorporated herein by reference. |
Exhibit |
|
Description | |
|
|
|
|
+ |
10.28 |
|
Addendum Number One to Employment Agreement by and among Supreme Industries, Inc., Supreme Indiana Operations, Inc. and Kim Korth, dated to be effective August 1, 2011, filed as Exhibit 10.1 to the Companys Current Report on Form 8-K filed on August 4, 2011, and incorporated herein by reference. |
|
|
|
|
+ |
10.29 |
|
Addendum Number Two to Employment Agreement by and among Supreme Industries, Inc., Supreme Indiana Operations, Inc. and Kim Korth, dated to be effective September 1, 2011, filed as Exhibit 10.1 to the Companys Current Report on Form 8-K filed on September 7, 2011, and incorporated herein by reference. |
|
|
|
|
+ |
10.30 |
|
Employment Agreement by and among Supreme Industries, Inc., Supreme Indiana Operations, Inc. and Kim Korth, dated to be effective September 23, 2011, filed as Exhibit 10.1 to the Companys Current Report on Form 8-K filed on September 29, 2011, and incorporated herein by reference. |
|
|
|
|
+ |
10.31 |
|
Separation Agreement and Release, dated as of May 3, 2012, by and among Supreme Industries, Inc., Supreme Indiana Operations, Inc. and Kim Korth, filed as Exhibit 10.1 to the Companys Current Report on Form 8-K filed on May 9, 2012, and incorporated herein by reference. |
|
|
|
|
+ |
10.31 |
|
Employment Agreement by and between Supreme Industries, Inc. and Matthew W. Long, dated December 29, 2011, filed as Exhibit 10.1 to the Companys Current Report on Form 8-K filed on January 5, 2012, and incorporated herein by reference. |
|
|
|
|
*+ |
10.32 |
|
First Amendment to December 29, 2011 Letter Agreement by and between Supreme Industries, Inc. and Matthew W. Long, dated December 21, 2012. |
|
|
|
|
+ |
10.33 |
|
Ownership Transaction Incentive Plan, filed as Exhibit 10.36 to the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2011, and incorporated herein by referenced. |
|
|
|
|
+ |
10.34 |
|
2012 Long-Term Incentive Plan, filed as Exhibit 10.1 to the Companys Current Report on Form 8-K filed on May 29, 2012, and incorporated herein by reference. |
|
|
|
|
+ |
10.35 |
|
Amendment Number One to Employment Contract between Supreme Industries, Inc. and William J. Barrett, effective June 29, 2012, filed as Exhibit 10.4 to the Companys Form 10-Q for the quarter ended June 30, 2012, and incorporated herein by reference. |
|
|
|
|
+ |
10.36 |
|
Amendment Number One to Employment Contract between Supreme Industries, Inc. and Herbert M. Gardner, effective June 29, 2012, filed as Exhibit 10.5 to the Companys Form 10-Q for the quarter ended June 30, 2012, and incorporated herein by reference. |
|
|
|
|
+ |
10.37 |
|
2012 Supreme Cash and Equity Bonus Plan, filed as Exhibit 10.1 to the Companys Form 10-Q for the quarter ended September 29, 2012, and incorporated herein by reference. |
|
|
|
|
*+ |
10.38 |
|
Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate by and between Supreme Indiana Operations, Inc., Buyer, and BFG2011 Limited Liability Company, Seller dated December 13, 2012. |
|
|
|
|
*+ |
10.39 |
|
Exercise of Option to purchase property owned by G-2, Ltd., located in Indiana dated December 14, 2012. |
|
|
|
|
*+ |
10.40 |
|
Exercise of Option to purchase property owned by G-2, Ltd., located in Georgia dated December 14, 2012. |
|
|
|
|
* |
21.1 |
|
Subsidiaries of the Registrant. |
|
|
|
|
* |
23.1 |
|
Consent of Crowe Horwath LLP, Independent Registered Public Accounting Firm. |
|
|
|
|
* |
31.1 |
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
* |
32.1 |
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
* |
101 |
|
The following financial statements from the Companys Annual Report on Form 10-K for the fiscal year ended December 29, 2012, filed on March 22, 2013, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Statements of Equity, (iv) Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements. |
* Filed herewith.
+ Management contract or compensatory plan or arrangement.
Exhibit 10.22
$45,000,000
CREDIT AGREEMENT
dated as of December 19, 2012,
by and among
SUPREME INDUSTRIES, INC.,
as Borrower,
the Lenders referred to herein,
as Lenders,
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent,
Swingline Lender and Issuing Lender
WELLS FARGO SECURITIES, LLC,
as Sole Lead Arranger and Sole Bookrunner
TABLE OF CONTENTS
|
|
Page |
|
|
|
ARTICLE I |
DEFINITIONS |
1 |
|
|
|
SECTION 1.1 |
Definitions |
1 |
SECTION 1.2 |
Other Definitions and Provisions |
27 |
SECTION 1.3 |
Accounting Terms |
28 |
SECTION 1.4 |
UCC Terms |
28 |
SECTION 1.5 |
Rounding |
28 |
SECTION 1.6 |
References to Agreement and Laws |
28 |
SECTION 1.7 |
Times of Day |
28 |
SECTION 1.8 |
Letter of Credit Amounts |
28 |
SECTION 1.9 |
Guaranty Obligations |
29 |
SECTION 1.10 |
Covenant Compliance Generally |
29 |
|
|
|
ARTICLE II |
REVOLVING CREDIT FACILITY |
29 |
|
|
|
SECTION 2.1 |
Revolving Credit Loans |
29 |
SECTION 2.2 |
Swingline Loans |
29 |
SECTION 2.3 |
Procedure for Advances of Revolving Credit Loans and Swingline Loans |
31 |
SECTION 2.4 |
Repayment and Prepayment of Revolving Credit and Swingline Loans |
31 |
SECTION 2.5 |
Permanent Reduction of the Revolving Credit Commitment |
32 |
SECTION 2.6 |
Termination of Revolving Credit Facility |
33 |
|
|
|
ARTICLE III |
LETTER OF CREDIT FACILITY |
33 |
|
|
|
SECTION 3.1 |
L/C Commitment |
33 |
SECTION 3.2 |
Procedure for Issuance of Letters of Credit |
34 |
SECTION 3.3 |
Commissions and Other Charges |
34 |
SECTION 3.4 |
L/C Participations |
35 |
SECTION 3.5 |
Reimbursement Obligation of the Borrower |
35 |
SECTION 3.6 |
Obligations Absolute |
36 |
SECTION 3.7 |
Effect of Letter of Credit Application |
36 |
|
|
|
ARTICLE IV |
[Reserved] |
37 |
|
|
|
ARTICLE V |
GENERAL LOAN PROVISIONS |
37 |
|
|
|
SECTION 5.1 |
Interest |
37 |
SECTION 5.2 |
Notice and Manner of Conversion or Continuation of Loans |
38 |
SECTION 5.3 |
Fees |
39 |
SECTION 5.4 |
Manner of Payment |
39 |
SECTION 5.5 |
Evidence of Indebtedness |
40 |
TABLE OF CONTENTS
(continued)
|
|
Page |
|
|
|
SECTION 5.6 |
Sharing of Payments by Lenders |
40 |
SECTION 5.7 |
Administrative Agents Clawback |
41 |
SECTION 5.8 |
Changed Circumstances |
42 |
SECTION 5.9 |
Indemnity |
42 |
SECTION 5.10 |
Increased Costs |
43 |
SECTION 5.11 |
Taxes |
44 |
SECTION 5.12 |
Mitigation Obligations; Replacement of Lenders |
47 |
SECTION 5.13 |
Incremental Loans |
48 |
SECTION 5.14 |
Cash Collateral |
51 |
SECTION 5.15 |
Defaulting Lenders |
51 |
|
|
|
ARTICLE VI |
CONDITIONS OF CLOSING AND BORROWING |
54 |
|
|
|
SECTION 6.1 |
Conditions to Closing and Initial Extensions of Credit |
54 |
SECTION 6.2 |
Conditions to All Extensions of Credit |
59 |
|
|
|
ARTICLE VII |
REPRESENTATIONS AND WARRANTIES |
59 |
|
|
|
SECTION 7.1 |
Organization; Power; Qualification |
60 |
SECTION 7.2 |
Ownership |
60 |
SECTION 7.3 |
Authorization; Enforceability |
60 |
SECTION 7.4 |
Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc. |
60 |
SECTION 7.5 |
Compliance with Law; Governmental Approvals |
61 |
SECTION 7.6 |
Tax Returns and Payments |
61 |
SECTION 7.7 |
Intellectual Property Matters |
61 |
SECTION 7.8 |
Environmental Matters |
61 |
SECTION 7.9 |
Employee Benefit Matters |
62 |
SECTION 7.10 |
Margin Stock |
63 |
SECTION 7.11 |
Government Regulation |
63 |
SECTION 7.12 |
Material Contracts |
63 |
SECTION 7.13 |
Employee Relations |
64 |
SECTION 7.14 |
Burdensome Provisions |
64 |
SECTION 7.15 |
Financial Statements |
64 |
SECTION 7.16 |
No Material Adverse Change |
64 |
SECTION 7.17 |
Solvency |
64 |
SECTION 7.18 |
Titles to Properties |
64 |
TABLE OF CONTENTS
(continued)
|
|
Page |
|
|
|
SECTION 7.19 |
Litigation |
64 |
SECTION 7.20 |
Anti-Terrorism; Anti-Money Laundering |
65 |
SECTION 7.21 |
Absence of Defaults |
65 |
SECTION 7.22 |
Senior Indebtedness Status |
65 |
SECTION 7.23 |
Investment Bankers and Similar Fees |
65 |
SECTION 7.24 |
Disclosure |
65 |
|
|
|
ARTICLE VIII |
AFFIRMATIVE COVENANTS |
66 |
|
|
|
SECTION 8.1 |
Financial Statements and Budgets |
66 |
SECTION 8.2 |
Certificates; Other Reports |
67 |
SECTION 8.3 |
Notice of Litigation and Other Matters |
68 |
SECTION 8.4 |
Preservation of Corporate Existence and Related Matters |
69 |
SECTION 8.5 |
Maintenance of Property and Licenses |
69 |
SECTION 8.6 |
Insurance |
70 |
SECTION 8.7 |
Accounting Methods and Financial Records |
70 |
SECTION 8.8 |
Payment of Taxes and Other Obligations |
70 |
SECTION 8.9 |
Compliance with Laws and Approvals |
70 |
SECTION 8.10 |
Environmental Laws |
70 |
SECTION 8.11 |
Compliance with ERISA |
71 |
SECTION 8.12 |
Compliance with Agreements |
71 |
SECTION 8.13 |
Visits and Inspections |
71 |
SECTION 8.14 |
Additional Subsidiaries |
71 |
SECTION 8.15 |
Hedge Agreement |
72 |
SECTION 8.16 |
Use of Proceeds |
72 |
SECTION 8.17 |
[Reserved] |
73 |
SECTION 8.18 |
Corporate Governance |
73 |
SECTION 8.19 |
[Reserved] |
73 |
SECTION 8.20 |
Further Assurances |
73 |
SECTION 8.21 |
Post-Closing Matters |
73 |
SECTION 8.22 |
Pool Units |
73 |
SECTION 8.23 |
Assignable Material Contracts |
73 |
|
|
|
ARTICLE IX |
NEGATIVE COVENANTS |
74 |
|
|
|
SECTION 9.1 |
Indebtedness |
74 |
SECTION 9.2 |
Liens |
76 |
TABLE OF CONTENTS
(continued)
|
|
Page |
|
|
|
SECTION 9.3 |
Investments |
78 |
SECTION 9.4 |
Fundamental Changes |
79 |
SECTION 9.5 |
Asset Dispositions |
80 |
SECTION 9.6 |
Restricted Payments |
82 |
SECTION 9.7 |
Transactions with Affiliates |
83 |
SECTION 9.8 |
Accounting Changes; Organizational Documents |
83 |
SECTION 9.9 |
Payments and Modifications of Subordinated Indebtedness |
83 |
SECTION 9.10 |
No Further Negative Pledges; Restrictive Agreements |
84 |
SECTION 9.11 |
Nature of Business |
85 |
SECTION 9.12 |
Amendments of Other Documents |
85 |
SECTION 9.13 |
Sale Leasebacks |
85 |
SECTION 9.14 |
Capital Expenditures |
85 |
SECTION 9.15 |
Financial Covenants |
85 |
SECTION 9.16 |
[Reserved] |
85 |
SECTION 9.17 |
Disposal of Subsidiary Interests |
85 |
SECTION 9.18 |
Non-Operating Subsidiaries |
85 |
SECTION 9.19 |
Captive Insurance Company |
86 |
SECTION 9.20 |
Demonstration Units |
86 |
|
|
|
ARTICLE X |
DEFAULT AND REMEDIES |
86 |
|
|
|
SECTION 10.1 |
Events of Default |
86 |
SECTION 10.2 |
Remedies |
88 |
SECTION 10.3 |
Rights and Remedies Cumulative; Non-Waiver; etc. |
89 |
SECTION 10.4 |
Crediting of Payments and Proceeds |
90 |
SECTION 10.5 |
Administrative Agent May File Proofs of Claim |
91 |
SECTION 10.6 |
Credit Bidding |
91 |
|
|
|
ARTICLE XI |
THE ADMINISTRATIVE AGENT |
91 |
|
|
|
SECTION 11.1 |
Appointment and Authority |
91 |
SECTION 11.2 |
Rights as a Lender |
92 |
SECTION 11.3 |
Exculpatory Provisions |
92 |
SECTION 11.4 |
Reliance by the Administrative Agent |
93 |
SECTION 11.5 |
Delegation of Duties |
93 |
SECTION 11.6 |
Resignation of Administrative Agent |
94 |
SECTION 11.7 |
Non-Reliance on Administrative Agent and Other Lenders |
95 |
TABLE OF CONTENTS
(continued)
|
|
Page |
|
|
|
SECTION 11.8 |
No Other Duties, etc. |
95 |
SECTION 11.9 |
Collateral and Guaranty Matters |
95 |
SECTION 11.10 |
Secured Hedge Agreements and Secured Cash Management Agreements |
96 |
|
|
|
ARTICLE XII |
MISCELLANEOUS |
96 |
|
|
|
SECTION 12.1 |
Notices |
96 |
SECTION 12.2 |
Amendments, Waivers and Consents |
98 |
SECTION 12.3 |
Expenses; Indemnity |
100 |
SECTION 12.4 |
Right of Setoff |
101 |
SECTION 12.5 |
Governing Law; Jurisdiction, Etc. |
102 |
SECTION 12.6 |
Waiver of Jury Trial |
103 |
SECTION 12.7 |
Reversal of Payments |
105 |
SECTION 12.8 |
Injunctive Relief |
105 |
SECTION 12.9 |
Accounting Matters |
105 |
SECTION 12.10 |
Successors and Assigns; Participations |
105 |
SECTION 12.11 |
Treatment of Certain Information; Confidentiality |
109 |
SECTION 12.12 |
Performance of Duties |
110 |
SECTION 12.13 |
All Powers Coupled with Interest |
110 |
SECTION 12.14 |
Survival |
110 |
SECTION 12.15 |
Titles and Captions |
110 |
SECTION 12.16 |
Severability of Provisions |
110 |
SECTION 12.17 |
Counterparts; Integration; Effectiveness; Electronic Execution |
111 |
SECTION 12.18 |
Term of Agreement |
111 |
SECTION 12.19 |
USA PATRIOT Act |
111 |
SECTION 12.20 |
Independent Effect of Covenants |
111 |
SECTION 12.21 |
Inconsistencies with Other Documents |
111 |
EXHIBITS |
|
|
|
|
Exhibit A-1 |
|
- |
|
Form of Revolving Credit Note |
Exhibit A-2 |
|
- |
|
Form of Swingline Note |
Exhibit B |
|
- |
|
Form of Notice of Borrowing |
Exhibit C |
|
- |
|
Form of Notice of Account Designation |
Exhibit D |
|
- |
|
Form of Notice of Prepayment |
Exhibit E |
|
- |
|
Form of Notice of Conversion/Continuation |
Exhibit F |
|
- |
|
Form of Officers Compliance Certificate |
Exhibit G |
|
- |
|
Form of Assignment and Assumption |
Exhibit H-1 |
|
- |
|
Form of U.S. Tax Compliance Certificate (Non-Partnership Foreign Lenders) |
Exhibit H-2 |
|
- |
|
Form of U.S. Tax Compliance Certificate (Non-Partnership Foreign Participants) |
Exhibit H-3 |
|
- |
|
Form of U.S. Tax Compliance Certificate (Foreign Participant Partnerships) |
Exhibit H-4 |
|
- |
|
Form of U.S. Tax Compliance Certificate (Foreign Lender Partnerships) |
|
|
|
|
|
SCHEDULES |
|
|
|
|
Schedule 1.1A |
|
- |
|
Existing Letters of Credit |
Schedule 1.1B |
|
- |
|
Specified Real Property |
Schedule 7.1 |
|
- |
|
Jurisdictions of Organization and Qualification |
Schedule 7.2 |
|
- |
|
Subsidiaries and Capitalization |
Schedule 7.8 |
|
- |
|
Environmental Matters |
Schedule 7.9 |
|
- |
|
ERISA Plans |
Schedule 7.12 |
|
- |
|
Material Contracts |
Schedule 7.13 |
|
- |
|
Labor and Collective Bargaining Agreements |
Schedule 7.18 |
|
- |
|
Real Property |
Schedule 7.19 |
|
- |
|
Litigation |
Schedule 8.21 |
|
- |
|
Post-Closing Matters |
Schedule 9.1 |
|
- |
|
Existing Indebtedness |
Schedule 9.2 |
|
- |
|
Existing Liens |
Schedule 9.3 |
|
- |
|
Existing Loans, Advances and Investments |
Schedule 9.5 |
|
- |
|
Real Property Held for Sale |
Schedule 9.7 |
|
- |
|
Transactions with Affiliates |
CREDIT AGREEMENT, dated as of December 19, 2012, by and among SUPREME INDUSTRIES, INC., a Delaware corporation, as Borrower, the lenders who are party to this Agreement and the lenders who may become a party to this Agreement pursuant to the terms hereof, as Lenders, and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Administrative Agent for the Lenders.
STATEMENT OF PURPOSE
The Borrower has requested, and subject to the terms and conditions set forth in this Agreement, the Administrative Agent and the Lenders have agreed to extend, certain credit facilities to the Borrower.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, such parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The following terms when used in this Agreement shall have the meanings assigned to them below:
Accession means an accession (as that term is defined in the Code), attached to or otherwise physically united with a Pool Unit after possession of the Pool Unit is delivered to Supreme Indiana.
Accounting Change means any change in accounting principles required by the promulgation of any rule, regulation, pronouncement, or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (or successor thereto or any agency with similar functions).
Administrative Agent means Wells Fargo, in its capacity as Administrative Agent hereunder, and any successor thereto appointed pursuant to Section 11.6.
Administrative Agents Office means the office of the Administrative Agent specified in or determined in accordance with the provisions of Section 12.1(c).
Administrative Questionnaire means an administrative questionnaire in a form supplied by the Administrative Agent.
Affiliate means, with respect to a specified 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.
Agreed Release Amount means, with respect to each Pool Unit, an amount equal to the amount advanced by ALLY to or for the account of Supreme Indiana for the acquisition or obtaining of such Pool Unit, plus accrued, unpaid interest on the unpaid balance of such advance and other customary fees and charges of ALLY specifically related only to such advance.
Agreement means this Credit Agreement.
ALLY means ALLY Financial Inc. and ALLY Bank and their respective successors and assigns, both collectively and individually.
ALLY Advances has the meaning specified therefor in Section 9.1(m).
ALLY Collateral means the ALLY Priority Collateral (as such term is the defined in the ALLY Intercreditor Agreement) and the ALLY Pledged Funds.
ALLY Collateral Account has the meaning ascribed to such term in the ALLY Intercreditor Agreement.
ALLY Documents means the ALLY Loan Agreements and all other instruments, agreements, and other documents evidencing or governing the Indebtedness evidenced by the ALLY Loan Agreements or providing for any guarantee or other right in respect thereof.
ALLY Intercreditor Agreement means that certain Intercreditor Agreement, dated as of even date with the Agreement, among the Credit Parties, ALLY, and the Administrative Agent, the form and substance of which is satisfactory to the Administrative Agent.
ALLY Lien Demonstration Unit has the meaning assigned thereto in Section 9.20.
ALLY Loan Agreements means each ALLY Inventory Loan and Security Agreement (as such term is defined in the ALLY Intercreditor Agreement), whether such arrangement is a loan, financing, bailment, consignment, or other title retention arrangement.
ALLY Pledged Funds means cash (whether or not held in the ALLY Collateral Account) and deposit accounts pledged to ALLY and in which ALLY has a first priority Lien, but excepting the proceeds of Manufacturer Receivables (as such term is defined in the ALLY Intercreditor Agreement).
Applicable Law means all applicable provisions of constitutions, laws, statutes, ordinances, rules, treaties, regulations, permits, licenses, approvals, interpretations and orders of courts or Governmental Authorities and all orders and decrees of all courts and arbitrators.
Applicable Rate means the corresponding percentages per annum as set forth below based on the Consolidated Total Leverage Ratio:
Pricing |
|
Consolidated Total |
|
Commitment |
|
Revolving Credit Loans |
| ||
Level |
|
Leverage Ratio |
|
Fee |
|
LIBOR + |
|
Base Rate + |
|
I |
|
Greater than or equal to 2.75 to 1.00 |
|
0.500 |
% |
2.500 |
% |
1.500 |
% |
II |
|
Greater than or equal to 2.50 to 1.00 |
|
0.375 |
% |
2.250 |
% |
1.250 |
% |
III |
|
Greater than or equal to 2.00 to 1.00 |
|
0.300 |
% |
2.000 |
% |
1.000 |
% |
IV |
|
Greater than or equal to 1.50 to 1.00 |
|
0.250 |
% |
1.750 |
% |
0.750 |
% |
V |
|
Less than 1.50 to 1.00 |
|
0.200 |
% |
1.500 |
% |
0.500 |
% |
The Applicable Rate shall be determined and adjusted quarterly on the date (each a Calculation Date) ten (10) Business Days after the day by which the Borrower is required to provide an Officers Compliance Certificate pursuant to Section 8.2(a) for the most recently ended Fiscal Quarter of the Borrower; provided that (a) the Applicable Rate shall be based on Pricing Level V until the first Calculation Date occurring after the Closing Date and, thereafter the Pricing Level shall be determined by reference to the Consolidated Total Leverage Ratio as of the last day of the most recently ended Fiscal
Quarter of the Borrower preceding the applicable Calculation Date, and (b) if the Borrower fails to provide the Officers Compliance Certificate as required by Section 8.2(a) for the most recently ended Fiscal Quarter of the Borrower preceding the applicable Calculation Date, the Applicable Rate from such Calculation Date shall be based on Pricing Level I until such time as an appropriate Officers Compliance Certificate is provided, at which time the Pricing Level shall be determined by reference to the Consolidated Total Leverage Ratio as of the last day of the most recently ended Fiscal Quarter of the Borrower preceding such Calculation Date. The applicable Pricing Level shall be effective from one Calculation Date until the next Calculation Date. Any adjustment in the Pricing Level shall be applicable to all Extensions of Credit then existing or subsequently made or issued.
Notwithstanding the foregoing, in the event that any financial statement or Officers Compliance Certificate delivered pursuant to Section 8.1 or 8.2(a) is shown to be inaccurate (regardless of whether (i) this Agreement is in effect, (ii) any Commitments are in effect, or (iii) any Extension of Credit is outstanding when such inaccuracy is discovered or such financial statement or Officers Compliance Certificate was delivered), and such inaccuracy, if corrected, would have led to the application of a higher Applicable Rate for any period (an Applicable Period) than the Applicable Rate applied for such Applicable Period, then (A) the Borrower shall immediately deliver to the Administrative Agent a corrected Officers Compliance Certificate for such Applicable Period, (B) the Applicable Rate for such Applicable Period shall be determined as if the Consolidated Total Leverage Ratio in the corrected Officers Compliance Certificate were applicable for such Applicable Period, and (C) the Borrower shall immediately and retroactively be obligated to pay to the Administrative Agent the accrued additional interest and fees owing as a result of such increased Applicable Rate for such Applicable Period, which payment shall be promptly applied by the Administrative Agent in accordance with Section 5.4. Nothing in this paragraph shall limit the rights of the Administrative Agent and Lenders with respect to Sections 5.1(c) and 10.2 nor any of their other rights under this Agreement or any other Loan Document. The Borrowers obligations under this paragraph shall survive the termination of the Commitments and the repayment of all other Obligations hereunder.
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.
Arbitration Rules has the meaning assigned thereto in Section 12.6(b).
Arranger means Wells Fargo Securities, LLC, in its capacity as sole lead arranger and sole bookrunner.
Asset Disposition means the disposition of any or all of the assets (including, without limitation, any Capital Stock owned thereby) of any Credit Party or any Subsidiary thereof whether by sale, lease, transfer or otherwise, and any issuance of Capital Stock by any Subsidiary of the Borrower to any Person that is not a Credit Party or any Subsidiary thereof. The term Asset Disposition shall not include (a) the sale of inventory in the ordinary course of business, (b) the transfer of assets to the Borrower or any Subsidiary Guarantor pursuant to any other transaction permitted pursuant to Section 9.4, (c) the write-off, discount, sale or other disposition of defaulted or past-due receivables and similar obligations in the ordinary course of business and not undertaken as part of an accounts receivable financing transaction, (d) the disposition of any Hedge Agreement, (e) dispositions of Investments in cash and Cash Equivalents, and (f) (i) the transfer by any Credit Party of its assets to any other Credit Party, (ii) the transfer by any Non-Guarantor Subsidiary of its assets to any Credit Party (provided that in connection with any new transfer, such Credit Party shall not pay more than an amount equal to the fair market value of such assets as determined in good faith at the time of such transfer) and (iii) the transfer by any Non-Guarantor Subsidiary of its assets to any other Non-Guarantor Subsidiary.
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 12.10), and accepted by the Administrative Agent, in substantially the form attached as Exhibit G or any other form approved by the Administrative Agent.
Attributable Indebtedness means, on any date of determination, (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, the capitalized amount or principal 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.
Base Rate means, at any time, the highest of (a) the Prime Rate and (b) the Federal Funds Rate plus 0.50%; each change in the Base Rate shall take effect simultaneously with the corresponding change or changes in the Prime Rate or the Federal Funds Rate.
Base Rate Loan means any Loan bearing interest at a rate based upon the Base Rate as provided in Section 5.1(a).
Borrower means Supreme Industries, Inc., a Delaware corporation.
Business Day means (a) for all purposes other than as set forth in clause (b) below, any day other than a Saturday, Sunday or legal holiday on which banks in Indiana and New York, New York, are open for the conduct of their commercial banking business and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, any LIBOR Rate Loan, any day that is a Business Day described in clause (a) and that is also a day for trading by and between banks in Dollar deposits in the London interbank market.
Calculation Date has the meaning assigned thereto in the definition of Applicable Rate.
Capital Asset means, with respect to the Borrower and its Subsidiaries, any asset that should, in accordance with GAAP, be classified and accounted for as a capital asset on a Consolidated balance sheet of the Borrower and its Subsidiaries.
Capital Expenditures means, with respect to the Borrower and its Subsidiaries for any period, the aggregate cost of all Capital Assets acquired by the Borrower and its Subsidiaries during such period, as determined in accordance with GAAP, net of any Net Cash Proceeds received from (a) any disposition of Capital Assets (to the extent permitted hereunder) that have actually been reinvested during such period (and within twelve (12) months after receipt of such Net Cash Proceeds) in other Capital Assets used or useful in the business of the Borrower and its Subsidiaries or (b) any Insurance and Condemnation Event that have actually been reinvested during such period (and within twelve (12) months after receipt of such Net Cash Proceeds) in other Capital Assets used or useful in the business of the Borrower and its Subsidiaries; provided that (A) Capital Expenditures shall not be less than zero and (B) the Administrative Agent shall have received a certificate, in form and substance satisfactory to the Administrative Agent, executed by a Responsible Officer of the Borrower, certifying as to the other Capital Assets invested in with any such Net Cash Proceeds, the dates of such investments and the amount of such investments.
Capital Lease means any lease of any property by the Borrower or any of its Subsidiaries, as lessee, that should, in accordance with GAAP, be classified and accounted for as a capital lease on a Consolidated balance sheet of the Borrower and its Subsidiaries.
Capital Stock means (a) in the case of a corporation, capital stock, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (c) in the case of a partnership, partnership interests (whether general or limited), (d) in the case of a limited liability company, membership interests, (e) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person and (f) any and all warrants, rights or options to purchase any of the foregoing.
Cash Collateralize means, to deposit in a Controlled Account or to pledge and deposit with, or deliver to, the Administrative Agent, for the benefit of one or more of the Issuing Lender, the Swingline Lender or the Lenders, as collateral for L/C Obligations or obligations of the Lenders to fund participations in respect of L/C Obligations or Swingline Loans, cash or deposit account balances or, if the Administrative Agent, the Issuing Lender and the Swingline Lender shall agree, in their sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to the Administrative Agent, the Issuing Lender and the Swingline Lender. 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 (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within 1 year from the date of acquisition thereof, (b) marketable direct obligations issued or fully guaranteed by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within 1 year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moodys, (c) commercial paper maturing no more than 270 days from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moodys, (d) certificates of deposit, time deposits, overnight bank deposits or bankers acceptances maturing within 1 year from the date of acquisition thereof issued by any bank organized under the laws of the United States or any state thereof or the District of Columbia or any United States branch of a foreign bank having at the date of acquisition thereof combined capital and surplus of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank that satisfies the criteria described in clause (d) above, or (ii) any other bank organized under the laws of the United States or any state thereof so long as the full amount maintained with any such other bank is insured by the FDIC, (f) repurchase obligations of any commercial bank satisfying the requirements of clause (d) of this definition or recognized securities dealer having combined capital and surplus of not less than $250,000,000, having a term of not more than seven days, with respect to securities satisfying the criteria in clauses (a) or (d) above, (g) debt securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any commercial bank satisfying the criteria described in clause (d) above, and (h) Investments in money market funds substantially all of whose assets are invested in the types of assets described in clauses (a) through (g) above.
Cash Management Agreement means any agreement to provide cash management services, including treasury, depository, overdraft, credit or debit card (including non-card electronic payables), electronic funds transfer and other cash management arrangements.
Cash Management Bank means any Person that, (a) at the time it enters into a Cash Management Agreement with a Credit Party, is a Lender, an Affiliate of a Lender, the Administrative Agent or an Affiliate of the Administrative Agent, or (b) at the time it (or its Affiliate) becomes a Lender (including on the Closing Date), is a party to a Cash Management Agreement with a Credit Party, in each case in its capacity as a party to such Cash Management Agreement.
Change in 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 Exchange Act, other than the Permitted Investors, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of 25% or more of the Capital Stock of the Borrower entitled to vote in the election of members of the board of directors (or equivalent governing body) of the Borrower; (b) a majority of the members of the board of directors (or other equivalent governing body) of the Borrower shall not constitute Continuing Directors; or (c) the Borrower fails to own and control, directly or indirectly, 100% of the Capital Stock of each other Credit Party.
Change in Law means the occurrence, after the date of this Agreement, 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.
Class means, when used in reference to any Loan, whether such Loan is a Revolving Credit Loan or Swingline Loan and, when used in reference to any Commitment, a Revolving Credit Commitment.
Closing Date means the date of this Agreement.
Code means the Internal Revenue Code of 1986, and the rules and regulations promulgated thereunder.
Collateral means the collateral security for the Secured Obligations pledged or granted pursuant to the Security Documents.
Collateral Agreement means the collateral agreement of even date herewith executed by the Credit Parties in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, which shall be in form and substance acceptable to the Administrative Agent.
Commitment Fee has the meaning assigned thereto in Section 5.3(a).
Commitment Percentage means, as to any Lender, such Lenders Revolving Credit Commitment Percentage.
Commitments means, collectively, as to all Lenders, the Revolving Credit Commitments of such Lenders.
Connection Income Taxes means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
Consolidated means, when used with reference to financial statements or financial statement items of any Person, such statements or items on a consolidated basis in accordance with applicable principles of consolidation under GAAP.
Consolidated EBITDA means, for any period, the sum of the following determined on a Consolidated basis, without duplication, for the Borrower and its Subsidiaries (other than Supreme Insurance) in accordance with GAAP: (a) Consolidated Net Income for such period plus (b) the sum of the following, without duplication, to the extent deducted in determining Consolidated Net Income for such period: (i) income and franchise taxes paid or accrued during such period, (ii) Consolidated Interest Expense for such period, and (iii) amortization, depreciation and other non-cash charges for such period (except to the extent that such non-cash charges are reserved for cash charges to be taken in the future), (iv) extraordinary non-cash losses during such period other than in the ordinary course of business (excluding extraordinary losses from discontinued operations), and (v) Transaction Costs payable during such period less (c) interest income and any extraordinary gains during such period. For purposes of this Agreement, Consolidated EBITDA shall be adjusted on a Pro Forma Basis.
Consolidated Fixed Charges means, for any period, the sum of the following determined on a Consolidated basis for such period, without duplication, for the Borrower and its Subsidiaries (other than Supreme Insurance) in accordance with GAAP: (a) Consolidated Interest Expense paid in cash, (b) scheduled principal payments with respect to Indebtedness (other than any GM Credited Principal Payment), (c) federal, state, local, and foreign income taxes paid in cash, and (d) cash dividends and distributions.
Consolidated Fixed Charge Coverage Ratio means, as of any date of determination, the ratio of (a) Consolidated EBITDA for the period of four (4) consecutive Fiscal Quarters ending on or immediately prior to such date to (b) Consolidated Fixed Charges for the period of four (4) consecutive Fiscal Quarters ending on or immediately prior to such date.
Consolidated Interest Expense means, for any period, (a) the sum of the following determined on a Consolidated basis, without duplication, for the Borrower and its Subsidiaries (other than Supreme Insurance) in accordance with GAAP, interest expense paid (including, without limitation, interest expense paid attributable to Capital Leases and all net payment obligations pursuant to Hedge Agreements) for such period less (b) the aggregate amount of Interest Support Payments received by the Borrower and its Subsidiaries during such period.
Consolidated Net Income means, for any period, the net income (or loss) of the Borrower and its Subsidiaries (other than Supreme Insurance) for such period, determined on a Consolidated basis, without duplication, in accordance with GAAP; provided, that in calculating Consolidated Net Income of the Borrower and its Subsidiaries (other than Supreme Insurance) for any period, there shall be excluded (a) the net income (or loss) of any Person (other than a Subsidiary which shall be subject to clause (c) below), in which the Borrower or any of its Subsidiaries has a joint interest with a third party, except to the extent such net income is actually paid in cash to the Borrower or any of its Subsidiaries by dividend or other distribution during such period, (b) the net income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or any of its Subsidiaries or is merged into or consolidated with the Borrower or any of its Subsidiaries or that Persons assets are acquired by the Borrower or any of its Subsidiaries except to the extent included pursuant to the foregoing clause (a), and (c) the net income (if positive), of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary to the Borrower or any of its Subsidiaries of such net income (i) is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary or (ii) would be subject to any taxes payable on such dividends or distributions, but in each case only to the extent of such prohibition or taxes.
Consolidated Total Indebtedness means, as of any date of determination with respect to the Borrower and its Subsidiaries (other than Supreme Insurance) on a Consolidated basis without duplication, the sum of all Indebtedness of the Borrower and its Subsidiaries.
Consolidated Total Leverage Ratio means, as of any date of determination, the ratio of (a) Consolidated Total Indebtedness on such date to (b) Consolidated EBITDA for the period of four (4) consecutive Fiscal Quarters ending on or immediately prior to such date.
Continuing Director means (a) any member of the board of directors (or equivalent governing body) who was a director (or comparable manager) of the Borrower on the Closing Date and (b) any individual who becomes a member of the board of directors (or equivalent governing body) after the Closing Date if such individual was approved, appointed, or nominated for election to the board of directors (or equivalent governing body) by a majority of the Continuing Directors, but excluding any such individual originally proposed for election in opposition to the board of directors (or equivalent governing body) in office at the Closing Date in an actual or threatened election contest relating to the election of the directors (or comparable managers) of the Borrower and whose initial assumption of office resulted from such contest or the settlement thereof.
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.
Controlled Account means each deposit account or securities account that is subject to an account control agreement in form and substance satisfactory to the Administrative Agent and the Issuing Lender.
Credit Facility means, collectively, the Revolving Credit Facility, the Swingline Facility and the L/C Facility.
Credit Parties means, collectively, the Borrower and the Subsidiary Guarantors.
Debt Issuance means the issuance of any Indebtedness for borrowed money by any Credit Party or any of its Subsidiaries.
Debtor Relief Laws means the Bankruptcy Code of the United States of America, 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.
Default means any of the events specified in Section 10.1 which with the passage of time, the giving of notice or any other condition, would constitute an Event of Default.
Defaulting Lender means, subject to Section 5.15(b), any Lender that (a) has failed to (i) fund all or any portion of the Revolving Credit Loans, participations in L/C Obligations or participations in Swingline Loans required to be funded by it hereunder within two Business Days of the date such Loans or participations were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lenders determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, the Issuing Lender, the Swingline Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or
Swingline Loans) within two Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent, the Issuing Lender or the Swingline Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lenders obligation to fund a Loan hereunder and states that such position is based on such Lenders determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), 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, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the FDIC or any other state or federal regulatory authority acting in such a capacity; 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 so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 5.15(b)) upon delivery of written notice of such determination to the Borrower, the Issuing Lender, the Swingline Lender and each Lender.
Demonstration Unit means a motor vehicle chassis that satisfies both of the following requirements: (a) a Credit Party has added accessions (as such term is defined in the Code) to such motor vehicle chassis or such motor vehicle chassis has been fully or partially accessorized, improved, changed, converted, altered, modified or otherwise converted by a Credit Party, in each case since the delivery of such motor vehicle chassis, and the Indebtedness related to that chassis owed by any Credit Party to ALLY or any other lender providing financing for the acquisition of that chassis has not been paid in full by a Credit Party, and (b) such motor vehicle chassis and its accessions (as such term is defined in the Code) are not subject to a contract for the purchase between such Credit Party, as seller, and a bona fide purchaser for value, as buyer.
Disputes has the meaning set forth in Section 12.6.
Disqualified Capital Stock means any Capital Stock that, by its terms (or by the terms of any security or other Capital Stock into which it is convertible or for which it is exchangeable) or upon the happening of any event or condition, (a) matures or is mandatorily redeemable (other than solely for Qualified Capital Stock), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments), (b) is redeemable at the option of the holder thereof (other than solely for Qualified Capital Stock) (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments), in whole or in part, (c) provides for the scheduled payment of dividends in cash or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Capital Stock that would constitute Disqualified Capital
Stock, in each case, prior to the date that is 91 days after the Revolving Credit Maturity Date; provided, that if such Capital Stock is issued pursuant to a plan for the benefit of the Borrower or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased by the Borrower or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations.
Dollars or $ means, unless otherwise qualified, dollars in lawful currency of the United States.
Domestic Subsidiary means any Subsidiary 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 12.10(b)(iii), (v), and (vi) (subject to such consents, if any, as may be required under Section 12.10(b)(iii)).
Employee Benefit Plan means (a) any employee benefit plan within the meaning of Section 3(3) of ERISA that is maintained for employees of any Credit Party or any ERISA Affiliate or (b) any Pension Plan or Multiemployer Plan that has at any time within the preceding seven (7) years been maintained, funded or administered for the employees of any Credit Party or any current or former ERISA Affiliate.
Environmental Claims means any and all administrative, regulatory or judicial written actions, suits, demands, demand letters, claims, liens, accusations, allegations, notices of noncompliance or violation, investigations (other than internal reports prepared by any Person in the ordinary course of business and not in response to any third party action or request of any kind) or proceedings relating in any way to any actual or alleged violation of or liability under any Environmental Law or relating to any permit issued, or any approval given, under any such Environmental Law, including, without limitation, any and all claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to human health or the environment.
Environmental Laws means any and all federal, foreign, state, provincial and local laws, statutes, ordinances, codes, rules, standards and regulations, permits, licenses, approvals, interpretations and orders of courts or Governmental Authorities, relating to the protection of human health or the environment, including, but not limited to, requirements pertaining to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing, permitting, investigation or remediation of Hazardous Materials.
Equity Issuance means (a) any issuance by the Borrower of shares of its Capital Stock to any Person that is not a Credit Party (including, without limitation, in connection with the exercise of options or warrants or the conversion of any debt securities to equity) and (b) any capital contribution from any Person that is not a Credit Party into any Credit Party or any Subsidiary thereof. The term Equity Issuance shall not include (A) any Asset Disposition or (B) any Debt Issuance.
ERISA means the Employee Retirement Income Security Act of 1974, and the rules and regulations thereunder.
ERISA Affiliate means any Person who together with any Credit Party or any of its Subsidiaries is treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA.
Eurodollar Reserve Percentage means, for any day, the percentage (expressed as a decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%) which is in effect for such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any basic, supplemental or emergency reserves) in respect of eurocurrency liabilities or any similar category of liabilities for a member bank of the Federal Reserve System in New York City.
Event of Default means any of the events specified in Section 10.1; provided that any requirement for passage of time, giving of notice, or any other condition, has been satisfied.
Exchange Act means the Securities Exchange Act of 1934.
Excluded Taxes means any of the following Taxes imposed on or with respect to a 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 applicable 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, United States 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 5.12(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 5.11, amounts with respect to such Taxes were payable either to such Lenders 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 Recipients failure to comply with Section 5.11(g) and (d) any United States federal withholding Taxes imposed under FATCA.
Existing Credit Agreement means that certain Credit Agreement dated as of September 14, 2011, between the Borrower, Supreme Indiana, the Subsidiaries of Supreme Indiana party thereto, the lenders party thereto, and Wells Fargo Capital Finance, LLC, a Delaware limited liability company, as administrative agent for those lenders.
Existing Letters of Credit means those letters of credit existing on the Closing Date and identified on Schedule 1.1A.
Extensions of Credit means, as to any Lender at any time, (a) an amount equal to the sum of (i) the aggregate principal amount of all Revolving Credit Loans made by such Lender then outstanding, (ii) such Lenders Revolving Credit Commitment Percentage of the L/C Obligations then outstanding, and (iii) such Lenders Revolving Credit Commitment Percentage of the Swingline Loans then outstanding, or (b) the making of any Loan or participation in any Letter of Credit by such Lender, as the context requires.
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.
FDIC means the Federal Deposit Insurance Corporation.
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 (or, if such day is not a Business Day, for the immediately preceding Business Day), as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that if such rate is not so published for any day which is a Business Day, the average of the quotation for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by the Administrative Agent.
Fee Letter means the separate fee letter agreement dated as of December 19, 2012, among the Borrower, the Administrative Agent and the Arranger.
First Tier Foreign Subsidiary means any Foreign Subsidiary owned directly by any Credit Party.
Fiscal Quarter means, with respect to the Borrower and its Subsidiaries, one of the four fiscal accounting periods in each Fiscal Year of the Borrower and its Subsidiaries.
Fiscal Year means the 5253 week tax year of the Borrower and its Subsidiaries ending on the last Saturday of December each year.
Foreign Lender means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes.
Foreign Subsidiary means any Subsidiary that is not a Domestic Subsidiary.
Fronting Exposure means, at any time there is a Defaulting Lender, (a) with respect to the Issuing Lender, such Defaulting Lenders Revolving Credit Commitment Percentage of the outstanding L/C Obligations other than L/C Obligations as to which such Defaulting Lenders participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof and (b) with respect to the Swingline Lender, such Defaulting Lenders Revolving Credit Commitment Percentage of outstanding Swingline Loans other than Swingline Loans as to which such Defaulting Lenders 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; provided, however, that all calculations relative to liabilities shall be made without giving effect to Statement of Financial Accounting Standards No. 159.
GM means General Motors Company, a Delaware corporation.
GM Converters Agreement means that certain Special Vehicle Manufacturer Converters Agreement effective as of February 29, 2008, by and between Supreme Indiana and GM.
GM Credited Principal Payment means any payment made by or on behalf of any Credit Party on the outstanding principal balance of any ALLY Advance in respect of any Pool Unit which is funded by GM pursuant to Section 5.2 of the GM Converters Agreement.
Governmental Approvals means all authorizations, consents, approvals, permits, licenses and exemptions of, registrations and filings with, and reports to, all Governmental Authorities.
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).
Guaranty Obligation means, with respect to any Person, without duplication, any obligation, contingent or otherwise, of such Person pursuant to which such Person has directly or indirectly guaranteed any Indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of any such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement condition or otherwise) or (b) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, that the term Guaranty Obligation shall not include endorsements for collection or deposit in the ordinary course of business.
Hazardous Materials means (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable laws or regulations as hazardous substances, hazardous materials, hazardous wastes, toxic substances, or any other formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or EP toxicity, (b) oil, petroleum, or petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources, (c) any explosives or any radioactive materials, and (d) asbestos in any form or electrical equipment that contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of 50 parts per million.
Hedge Agreement 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.
Hedge Bank means any Person that, (a) at the time it enters into a Hedge Agreement with a Credit Party permitted under Article IX, is a Lender, an Affiliate of a Lender, the Administrative Agent or an Affiliate of the Administrative Agent or (b) at the time it (or its Affiliate) becomes a Lender (including on the Closing Date), is a party to a Hedge Agreement with a Credit Party, in each case in its capacity as a party to such Hedge Agreement.
Hedge Termination Value means, in respect of any one or more Hedge Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Hedge Agreements, (a) for any date on or after the date such Hedge Agreements 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 Hedge Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Hedge Agreements (which may include a Lender or any Affiliate of a Lender).
Increased Amount Date has the meaning assigned thereto in Section 5.13(a).
Incremental Lender has the meaning assigned thereto in Section 5.13(a).
Incremental Revolving Credit Commitment has the meaning assigned thereto in Section 5.13(a).
Incremental Revolving Credit Increase has the meaning assigned thereto in Section 5.13(a).
Indebtedness means, with respect to any Person at any date and without duplication, the sum of the following:
(a) all liabilities, obligations and indebtedness for borrowed money including, but not limited to, senior and subordinated debt agreements and obligations evidenced by bonds, debentures, notes, acceptances, or other similar instruments of any such Person and any other financial accommodation that, in accordance with GAAP, would be shown as a liability on a consolidated balance sheet;
(b) all obligations to pay the deferred purchase price of property or services of any such Person (including, without limitation, all obligations under non-competition, earn-out or similar agreements), except trade payables arising in the ordinary course of business not more than ninety (90) days past due, or that are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided for on the books of such Person;
(c) the Attributable Indebtedness of such Person with respect to such Persons obligations in respect of Capital Leases and Synthetic Leases (regardless of whether accounted for as indebtedness under GAAP);
(d) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person to the extent of the value of such property (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business);
(e) all Indebtedness of any other Person secured by a Lien on any asset owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements except trade payable arising in the ordinary course of business), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;
(f) all obligations, contingent or otherwise, of any such Person relative to the face amount of letters of credit, whether or not drawn, including, without limitation, any Reimbursement Obligation, and bankers acceptances issued for the account of any such Person;
(g) all obligations of any such Person in respect of Disqualified Capital Stock;
(h) all net mark-to-market obligations or receivables, as appropriate, of such Person under any Hedge Agreements; and
(i) all Guaranty Obligations of any such Person with respect to 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 Hedge Agreement on any date shall be deemed to be the Hedge Termination Value thereof as of such date. In addition, with respect to any Credit Party, the term Indebtedness includes, without limitation, all obligations of any Credit Party arising in connection with any of the ALLY Loan Agreements (including all ALLY Advances) or in connection with any similar arrangement or transaction between or among any Credit Party and ALLY, whether such arrangement is a loan, financing, bailment, consignment or other title retention arrangement.
Indemnified Taxes means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Credit Party under any Loan Document, and (b) to the extent not otherwise described in clause (a), Other Taxes.
Insurance and Condemnation Event means the receipt by any Credit Party or any of its Subsidiaries of any cash insurance proceeds or condemnation award payable by reason of theft, loss, physical destruction or damage, taking or similar event with respect to any of their respective Property.
Interest Period has the meaning assigned thereto in Section 5.1(b).
Interest Support Payment means payments to or for the account of any Credit Party made by GM or any other manufacturer or distributor of motor vehicle chassis in connection with the purchase or obtaining by such Credit Party, or any Affiliate of such Credit Party, of a motor vehicle chassis from such manufacturer or distributor, the purpose of which is to offset or reimburse such Credit Party for interest expense incurred or to be incurred by such Credit Party in connection with financing the acquisition or obtaining of such motor vehicle chassis.
IRS means the United States Internal Revenue Service.
ISP98 means the International Standby Practices (1998 Revision, effective January 1, 1999), International Chamber of Commerce Publication No. 590.
Issuing Lender means Wells Fargo, in its capacity as issuer thereof, or any successor thereto.
L/C Commitment means the lesser of (a) $10,000,000 and (b) the Revolving Credit Commitment.
L/C Facility means the letter of credit facility established pursuant to Article III.
L/C Obligations means at any time, an amount equal to the sum of (a) the aggregate undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit which have not then been reimbursed pursuant to Section 3.5.
L/C Participants means the collective reference to all the Revolving Credit Lenders.
Lender means each Person executing this Agreement as a Lender on the Closing Date and any other Person that shall have become a party to this Agreement as a Lender pursuant to an Assignment and Assumption, other than any Person that ceases to be a party hereto as a Lender pursuant to an Assignment and Assumption. Unless the context otherwise requires, the term Lenders includes the Swingline Lender.
Lender Joinder Agreement means a joinder agreement in form and substance reasonably satisfactory to the Administrative Agent delivered in connection with Section 5.13.
Lending Office means, with respect to any Lender, the office of such Lender maintaining such Lenders Extensions of Credit.
Letter of Credit Application means an application, in the form specified by the Issuing Lender from time to time, requesting the Issuing Lender to issue a Letter of Credit.
Letters of Credit means the collective reference to letters of credit issued pursuant to Section 3.1 and the Existing Letters of Credit.
LIBOR means the rate of interest per annum determined on the basis of the rate for deposits in Dollars for a period equal to the applicable Interest Period which appears on Reuters Screen LIBOR01 Page (or any applicable successor page) at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period (rounded upward, if necessary, to the nearest 1/100th of 1%). If, for any reason, such rate does not appear on Reuters Screen LIBOR01 Page (or any applicable successor page), then LIBOR shall be determined by the Administrative Agent to be the arithmetic average of the rate per annum at which deposits in Dollars in amounts approximately equal to the applicable LIBOR Loan would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period for a period equal to such Interest Period. Each calculation by the Administrative Agent of LIBOR shall be conclusive and binding for all purposes, absent manifest error.
LIBOR Rate means a rate per annum (rounded upwards, if necessary, to the next higher 1/100th of 1%) determined by the Administrative Agent pursuant to the following formula:
LIBOR Rate = |
LIBOR |
|
1.00 Eurodollar Reserve Percentage |
|
LIBOR Rate Loan means any Loan bearing interest at a rate based upon the LIBOR Rate as provided in Section 5.1(a).
Lien means, with respect to any asset, any mortgage, leasehold mortgage, lien, pledge, charge, security interest, hypothecation or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, a Person shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, Capital Lease or other title retention agreement relating to such asset.
Loan Documents means, collectively, this Agreement, each Note, the Letter of Credit Applications, the Security Documents, the Fee Letter, the ALLY Intercreditor Agreement, and each other document, instrument, certificate and agreement executed and delivered by the Credit Parties or any of their respective Subsidiaries in favor of or provided to the Administrative Agent or any Secured Party in connection with this Agreement or otherwise referred to herein or contemplated hereby (excluding any Secured Hedge Agreement and any Secured Cash Management Agreement).
Loans means the collective reference to the Revolving Credit Loans and the Swingline Loans, and Loan means any of such Loans.
Material Adverse Effect means (a) a material adverse effect on the business, operations, results of operations, assets, liabilities, or financial condition of the Borrower and its Subsidiaries, taken as a whole; (b) a material impairment of the Borrowers and its Subsidiaries ability to perform their obligations under the Loan Documents to which they are parties or of the Administrative Agents or any Lenders ability to enforce the Obligations or realize upon the Collateral; or (c) a material impairment of the enforceability or priority of Agents Liens with respect to the Collateral as a result of an action or failure to act on the part of the Borrower or its Subsidiaries.
Material Contract means, with respect to any Person, any contract or agreement the loss of which could reasonably be expected to result in a Material Adverse Effect and/or that is required to be publicly disclosed in accordance with applicable law. Without limitation, each of the following is a Material Contract: (a) that certain Ford Authorized Converter Pool Agreement, dated as of November 1, 2010, by and between Supreme Indiana and Ford Motor Company; (b) the GM Converters Agreement; and (c) each acquisition agreement or purchase agreement with respect to one or more Real Property Acquisitions.
Minimum Collateral Amount means, at any time, (i) with respect to Cash Collateral consisting of cash or deposit account balances, an amount equal to 105% of the Fronting Exposure of all Issuing Lenders with respect to Letters of Credit issued and outstanding at such time and (ii) otherwise, an amount determined by the Administrative Agent and the Issuing Lender in their reasonable discretion.
Moodys means Moodys Investors Service, Inc.
Mortgages means the collective reference to each mortgage, deed of trust or other real property security document, encumbering any real property now or hereafter owned by any Credit Party or any Subsidiary, in each case, in form and substance reasonably satisfactory to the Administrative Agent and executed by such Credit Party or such Subsidiary in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, as any such document may be amended, restated, supplemented or otherwise modified from time to time.
Multiemployer Plan means a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which any Credit Party or any ERISA Affiliate is making, or is accruing an obligation to make, or has accrued an obligation to make contributions within the preceding seven (7) years.
Net Cash Proceeds means, as applicable, (a) with respect to any Asset Disposition or Insurance and Condemnation Event, the gross proceeds received by any Credit Party or any of its Subsidiaries therefrom (including any cash, Cash Equivalents, deferred payment pursuant to, or by monetization of, a note receivable or otherwise, as and when received) less the sum of (i) in the case of an Asset Disposition, all income taxes and other taxes assessed by a Governmental Authority as a result of such transaction, (ii) all reasonable and customary out-of-pocket fees and expenses incurred in connection with such transaction or event and (iii) the principal amount of, premium, if any, and interest on any Indebtedness
secured by a Lien on the asset (or a portion thereof) disposed of, which Indebtedness is required to be repaid in connection with such transaction or event, and (b) with respect to any Equity Issuance or Debt Issuance, the gross cash proceeds received by any Credit Party or any of its Subsidiaries therefrom less all reasonable and customary out-of-pocket legal, underwriting and other fees and expenses incurred in connection therewith.
Non-Consenting Lender means any Lender that does not approve any consent, waiver, amendment, modification or termination that (i) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 12.2 and (ii) has been approved by the Required Lenders.
Non-Defaulting Lender means, at any time, each Lender that is not a Defaulting Lender at such time.
Non-Guarantor Subsidiary means any Subsidiary of the Borrower that is not a Subsidiary Guarantor.
Notes means the collective reference to the Revolving Credit Notes and the Swingline Note.
Notice of Account Designation has the meaning assigned thereto in Section 2.3(b).
Notice of Borrowing has the meaning assigned thereto in Section 2.3(a).
Notice of Conversion/Continuation has the meaning assigned thereto in Section 5.2.
Notice of Prepayment has the meaning assigned thereto in Section 2.4(c).
Obligations means, in each case, whether now in existence or hereafter arising: (a) the principal of and interest on (including interest accruing after the filing of any bankruptcy or similar petition) the Loans, (b) the L/C Obligations and (c) all other fees and commissions (including attorneys fees), charges, indebtedness, loans, liabilities, financial accommodations, obligations, covenants and duties owing by the Credit Parties and each of their respective Subsidiaries to the Lenders, the Issuing Lender or the Administrative Agent, in each case under any Loan Document, with respect to any Loan or Letter of Credit of every kind, nature and description, direct or indirect, absolute or contingent, due or to become due, contractual or tortious, liquidated or unliquidated, and whether or not evidenced by any note and including interest and fees that accrue after the commencement by or against any Credit Party or any Affiliate thereof of any proceeding under any federal bankruptcy laws (as now or hereafter in effect) or under any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up or adjustment of debts, 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 U.S. Department of the Treasurys Office of Foreign Assets Control.
Officers Compliance Certificate means a certificate of chief executive officer, chief financial officer, treasurer, or controller of the Borrower substantially in the form attached as Exhibit F.
Operating Lease means, as to any Person as determined in accordance with GAAP, any lease of Property (whether real, personal or mixed) by such Person as lessee which is not a Capital Lease.
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, court, documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 5.12).
Participant has the meaning assigned thereto in Section 12.10(d).
Participant Register has the meaning assigned thereto in Section 12.10(d).
PATRIOT Act means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).
PBGC means the Pension Benefit Guaranty Corporation or any successor agency.
Pension Plan means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of the Code and which (a) is maintained, funded or administered for the employees of any Credit Party or any ERISA Affiliate or (b) has at any time within the preceding seven (7) years been maintained, funded or administered for the employees of any Credit Party or any current or former ERISA Affiliates.
Permitted Acquisition means any acquisition by the Borrower or any Subsidiary thereof (subject to the requirements of Section 9.3(g)) in the form of acquisitions of all or substantially all of the business or a line of business (whether by the acquisition of Capital Stock, assets or any combination thereof) of any other Person if each such acquisition meets all of the following requirements:
(a) no less than fifteen (15) Business Days prior to the proposed closing date of such acquisition, the Borrower shall have delivered written notice of such acquisition to the Administrative Agent and the Lenders, which notice shall include the proposed closing date of such acquisition;
(b) the Borrower shall have certified on or before the closing date of such acquisition, in writing and in a form reasonably acceptable to the Administrative Agent, that such acquisition has been approved by the board of directors (or equivalent governing body) of the Person to be acquired;
(c) the Person or business to be acquired shall be in a line of business permitted pursuant to Section 9.11;
(d) if such transaction is a merger or consolidation, the Borrower or a Subsidiary Guarantor shall be the surviving Person and no Change of Control shall have been effected thereby;
(e) the Borrower shall have delivered to the Administrative Agent all documents required to be delivered pursuant to, and in accordance with, Section 8.14;
(f) no later than five (5) Business Days prior to the proposed closing date of such acquisition, the Borrower shall have delivered to the Administrative Agent an Officers Compliance Certificate for the most recent Fiscal Quarter end preceding such acquisition for which financial statements are available demonstrating, in form and substance reasonably satisfactory to the
Administrative Agent, that the Borrower is in compliance on a Pro Forma Basis (as of the date of the acquisition and after giving effect thereto and any Indebtedness incurred in connection therewith) with each covenant contained in Section 9.15;
(g) no later than five (5) Business Days prior to the proposed closing date of such acquisition the Borrower, to the extent requested by the Administrative Agent, (i) shall have delivered to the Administrative Agent promptly upon the finalization thereof copies of substantially final Permitted Acquisition Documents, and (ii) shall have delivered to, or made available for inspection by, the Administrative Agent substantially complete Permitted Acquisition Diligence Information;
(h) no Default or Event of Default shall have occurred and be continuing both before and after giving effect to such acquisition and any Indebtedness incurred in connection therewith;
(i) the Borrower shall have obtained the prior written consent of the Administrative Agent and the Required Lenders prior to the consummation of such acquisition if the Permitted Acquisition Consideration for any such acquisition (or series of related acquisitions), together with all other acquisitions consummated during that Fiscal Year, exceeds $10,000,000 (excluding any portion of the acquisitions paid with the proceeds from any Equity Issuance);
(j) the Borrower shall demonstrate, in form and substance reasonably satisfactory to the Administrative Agent, that the entity to be acquired had positive Consolidated EBITDA for the four (4) Fiscal Quarter period ended immediately prior to the proposed closing date of such acquisition;
(k) [reserved]; and
(l) the Borrower shall have (i) delivered to the Administrative Agent a certificate of a Responsible Officer certifying that all of the requirements set forth above have been satisfied or will be satisfied on or prior to the consummation of such purchase or other acquisition and (ii) provided such other documents and other information as may be reasonably requested by the Administrative Agent or the Required Lenders (through the Administrative Agent) in connection with such purchase or other acquisition.
Permitted Acquisition Consideration means the aggregate amount of the purchase price, including, but not limited to, any assumed debt, earn-outs (valued at the maximum amount payable thereunder), deferred payments, or Capital Stock of the Borrower, to be paid on a singular basis in connection with any applicable Permitted Acquisition as set forth in the applicable Permitted Acquisition Documents executed by the Borrower or any of its Subsidiaries in order to consummate the applicable Permitted Acquisition.
Permitted Acquisition Diligence Information means with respect to any acquisition proposed by the Borrower or any Subsidiary Guarantor, to the extent applicable, all material financial information, all material contracts, all material customer lists, all material supply agreements, and all other material information, in each case, reasonably requested to be delivered to the Administrative Agent in connection with such acquisition (except to the extent that any such information is (a) subject to any confidentiality agreement, unless mutually agreeable arrangements can be made to preserve such information as confidential, (b) classified or (c) subject to any attorney-client privilege).
Permitted Acquisition Documents means with respect to any acquisition proposed by the Borrower or any Subsidiary Guarantor, final copies or substantially final drafts if not executed at the required time of delivery of the purchase agreement, sale agreement, merger agreement or other agreement evidencing such acquisition, including, without limitation, all legal opinions and each other
document executed, delivered, contemplated by or prepared in connection therewith and any amendment, modification or supplement to any of the foregoing.
Permitted Investors means, collectively, Herbert Gardner or William Barrett, individually.
Permitted Liens means the Liens permitted pursuant to Section 9.2.
Person means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
Pool Unit means a new motor vehicle chassis (a) for which ALLY provides Supreme Indiana a loan or advance solely to pay 100% of the purchase price owed to GM for the restricted purchase of such new motor vehicle chassis, (b) to which there have been made or attached no Accessions, improvements, changes, additions, conversions, alterations, or modifications since the delivery of such Pool Unit to Supreme Indiana by GM, and (c) for which the Agreed Release Amount has not been paid. A Pool Unit does not include for any purpose any Accessions attached to or otherwise physically united with such Pool Unit.
Prime Rate means, at any time, the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in such prime rate occurs. The parties hereto acknowledge that the rate announced publicly by the Administrative Agent as its prime rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks.
Pro Forma Basis means, for purposes of calculating Consolidated EBITDA for any period during which one or more Specified Transactions occurs, that such Specified Transaction (and all other Specified Transactions that have been consummated during the applicable period) shall be deemed to have occurred as of the first day of the applicable period of measurement and:
(a) all income statement items (whether positive or negative) attributable to the Property or Person disposed of in a Specified Disposition shall be excluded and all income statement items (whether positive or negative) attributable to the Property or Person acquired in a Permitted Acquisition shall be included (provided that such income statement items to be included are reflected in financial statements or other financial data reasonably acceptable to the Administrative Agent and based upon reasonable assumptions and calculations which are expected to have a continuous impact); and
(b) non-recurring costs, extraordinary expenses and other pro forma adjustments attributable to such Specified Transaction may be included to the extent that such costs, expenses or adjustments:
(i) are reasonably expected to be realized within twelve (12) months of such Specified Transaction as set forth in reasonable detail on a certificate of a Responsible Officer of the Borrower delivered to the Administrative Agent;
(ii) are calculated on a basis consistent with GAAP and Regulation S-X of the Exchange Act; and
(iii) are approved by the Administrative Agent;
provided that the foregoing costs, expenses and adjustments shall be without duplication of any costs, expenses or adjustments that are already included in the calculation of Consolidated EBITDA or clause (a) above.
Property means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, including, without limitation, Capital Stock.
Qualified Capital Stock means any Capital Stock that is not Disqualified Capital Stock.
Real Property Acquisition means, as applicable, (a) the acquisition from G-2, Ltd., a Texas limited partnership, of the real property and improvements with a street address of 25722592 East Kercher Road, Goshen, Indiana; (b) the acquisition from G-2, Ltd., a Texas limited partnership, of the real property and improvements with a street address of 2051 Highway 41, Griffin, Georgia; and (c) the acquisition from BFG2011 Limited Liability Company, a New Jersey limited liability company, of the real property and improvements with a street address of 2213522211 Alessandro Boulevard, Moreno Valley, California.
Recipient means (a) the Administrative Agent, (b) any Lender and (c) the Issuing Lender, as applicable.
Register has the meaning assigned thereto in Section 12.10(c).
Reimbursement Obligation means the obligation of the Borrower to reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit.
Related Parties means, with respect to any Person, such Persons Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Persons Affiliates.
Required Lenders means, at any time, Lenders having Total Credit Exposures representing more than 50% of the Total Credit Exposures of all Lenders; provided, that at any time there are two or more Lenders, Required Lenders must include at least two Lenders. The Total Credit Exposure of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.
Required Revolving Credit Lenders means, at any date, any combination of Revolving Credit Lenders holding more than fifty percent (50%) of the sum of the aggregate amount of the Revolving Credit Commitment or, if the Revolving Credit Commitment has been terminated, any combination of Revolving Credit Lenders holding more than fifty percent (50%) of the aggregate Extensions of Credit under the Revolving Credit Facility; provided that the Revolving Credit Commitment of, and the portion of the Extensions of Credit under the Revolving Credit Facility, as applicable, held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Revolving Credit Lenders.
Responsible Officer means, as to any Person, the chief executive officer, president, chief financial officer, controller, treasurer or assistant treasurer of such Person or any other officer of such Person reasonably acceptable to the Administrative Agent. Any document delivered hereunder or under any other Loan Document that is signed by a Responsible Officer of a Person shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Person and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Person.
Restricted Payment has the meaning assigned thereto in Section 9.6.
Revolving Credit Commitment means (a) as to any Revolving Credit Lender, the obligation of such Revolving Credit Lender to make Revolving Credit Loans to, and to purchase participations in
L/C Obligations and Swingline Loans for the account of, the Borrower hereunder in an aggregate principal amount at any time outstanding not to exceed the amount set forth opposite such Revolving Credit Lenders name on the Register, as such amount may be modified at any time or from time to time pursuant to the terms hereof (including, without limitation, Section 5.13) and (b) as to all Revolving Credit Lenders, the aggregate commitment of all Revolving Credit Lenders to make Revolving Credit Loans, as such amount may be modified at any time or from time to time pursuant to the terms hereof (including, without limitation, Section 5.13). The aggregate Revolving Credit Commitment of all the Revolving Credit Lenders on the Closing Date shall be $45,000,000.
Revolving Credit Commitment Percentage means, with respect to any Revolving Credit Lender at any time, the percentage of the total Revolving Credit Commitments of all the Revolving Credit Lenders represented by such Revolving Credit Lenders Revolving Credit Commitment. If the Revolving Credit Commitments have terminated or expired, the Revolving Credit Commitment Percentages shall be determined based upon the Revolving Credit Commitments most recently in effect, giving effect to any assignments.
Revolving Credit Exposure means, as to any Revolving Credit Lender at any time, the aggregate principal amount at such time of its outstanding Revolving Credit Loans and such Revolving Credit Lenders participation in L/C Obligations and Swingline Loans at such time.
Revolving Credit Facility means the revolving credit facility established pursuant to Article II (including any increase in such revolving credit facility established pursuant to Section 5.13).
Revolving Credit Lenders means, collectively, all of the Lenders with a Revolving Credit Commitment.
Revolving Credit Loan means any revolving loan made to the Borrower pursuant to Section 2.1, and all such revolving loans collectively as the context requires.
Revolving Credit Maturity Date means the earliest to occur of (a) December 19, 2017, (b) the date of termination of the entire Revolving Credit Commitment by the Borrower pursuant to Section 2.5, and (c) the date of termination of the Revolving Credit Commitment pursuant to Section 10.2(a).
Revolving Credit Note means a promissory note made by the Borrower in favor of a Revolving Credit Lender evidencing the Revolving Credit Loans made by such Revolving Credit Lender, substantially in the form attached as Exhibit A-1, and any substitutes therefor, and any replacements, restatements, renewals or extension thereof, in whole or in part.
Revolving Credit Outstandings means the sum of (a) with respect to Revolving Credit Loans and Swingline Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Revolving Credit Loans and Swingline Loans, as the case may be, occurring on such date; plus (b) with respect to any L/C Obligations on any date, the aggregate outstanding amount thereof on such date after giving effect to any Extensions of Credit 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 of outstanding unpaid drawings under any Letters of Credit or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date.
Revolving Extensions of Credit means (a) any Revolving Credit Loan then outstanding, (b) any Letter of Credit then outstanding or (c) any Swingline Loan then outstanding.
S&P means Standard & Poors Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. and any successor thereto.
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 the U.S. Department of the Treasurys Office of Foreign Assets Control.
SEC means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
Secured Cash Management Agreement means any Cash Management Agreement between or among any Credit Party and any Cash Management Bank.
Secured Hedge Agreement means any Hedge Agreement between or among any Credit Party and any Hedge Bank.
Secured Obligations means, collectively, (a) the Obligations and (b) all existing or future payment and other obligations owing by any Credit Party under (i) any Secured Hedge Agreement and (ii) any Secured Cash Management Agreement.
Secured Parties means, collectively, the Administrative Agent, the Lenders, the Issuing Lender, the Hedge Banks, the Cash Management Banks, each co-agent or sub-agent appointed by the Administrative Agent from time to time pursuant to Section 11.5, any other holder from time to time of any of any Secured Obligations and, in each case, their respective successors and permitted assigns.
Security Documents means the collective reference to the Collateral Agreement, the Mortgages, the Guaranty Agreements, and each other agreement or writing pursuant to which any Credit Party purports to pledge or grant a security interest in any Property or assets securing the Secured Obligations or any such Person purports to guaranty the payment and/or performance of the Secured Obligations.
Silver Crown means Silver Crown, LLC, a Delaware limited liability company and a Subsidiary of the Borrower.
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 Persons 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 Persons 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 can reasonably be expected to become an actual or matured liability.
Specified Disposition means any disposition of all or substantially all of the assets or Capital Stock of any Subsidiary of the Borrower or any division, business unit, product line or line of business.
Specified Real Property means the real property and improvements identified on Schedule 1.1B.
Specified Transactions means (a) any Specified Disposition, (b) any Permitted Acquisition and (c) the Transactions.
Subordinated Indebtedness means the collective reference to any Indebtedness incurred by the Borrower or any of its Subsidiaries that is subordinated in right and time of payment to the Obligations on terms and conditions satisfactory to the Administrative Agent.
Subsidiary means as to any Person, any corporation, partnership, limited liability company or other entity of which more than fifty percent (50%) of the outstanding Capital Stock having ordinary voting power to elect a majority of the board of directors (or equivalent governing body) or other managers of such corporation, partnership, limited liability company or other entity is at the time owned by (directly or indirectly) or the management is otherwise controlled by (directly or indirectly) such Person (irrespective of whether, at the time, Capital Stock of any other class or classes of such corporation, partnership, limited liability company or other entity shall have or might have voting power by reason of the happening of any contingency). Unless otherwise qualified, references to Subsidiary or Subsidiaries herein shall refer to those of the Borrower.
Subsidiary Guarantors means, collectively, all direct and indirect Subsidiaries of the Borrower (other than (a) Supreme Insurance and (b) Foreign Subsidiaries to the extent that and for so long as the guaranty of such Foreign Subsidiary would have adverse tax consequences for the Borrower or any other Credit Party or result in a violation of Applicable Laws) in existence on the Closing Date or which become a party to the Subsidiary Guaranty Agreement pursuant to Section 8.14.
Subsidiary Guaranty Agreement means the unconditional guaranty agreement of even date herewith executed by the Subsidiary Guarantors in favor of the Administrative Agent, for the ratable benefit and the Secured Parties, which shall be in form and substance acceptable to the Administrative Agent.
Supreme Indiana means Supreme Indiana Operations, Inc., a Delaware corporation and a Subsidiary of the Borrower.
Supreme Insurance means Supreme Insurance Company, Inc., a Nevada corporation and a Subsidiary of the Borrower.
Supreme Murphy means Supreme/Murphy Truck Bodies, Inc., a North Carolina corporation and a Subsidiary of the Borrower.
Supreme Northwest means Supreme Northwest, L.L.C., a Texas limited liability company and a Subsidiary of the Borrower.
Swingline Commitment means the lesser of (a) $5,000,000 and (b) the Revolving Credit Commitment.
Swingline Facility means the swingline facility established pursuant to Section 2.2.
Swingline Lender means Wells Fargo in its capacity as swingline lender hereunder or any successor thereto.
Swingline Loan means any swingline loan made by the Swingline Lender to the Borrower pursuant to Section 2.2, and all such swingline loans collectively as the context requires.
Swingline Note means a promissory note made by the Borrower in favor of the Swingline Lender evidencing the Swingline Loans made by the Swingline Lender, substantially in the form attached as Exhibit A-2, and any substitutes therefor, and any replacements, restatements, renewals or extension thereof, in whole or in part.
Synthetic Lease means any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an Operating Lease in accordance with GAAP.
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, fines, additions to tax or penalties applicable thereto.
Termination Event means the occurrence of any of the following which, individually or in the aggregate, has resulted or could reasonably be expected to result in liability of the Borrower in an aggregate amount in excess of $500,000: (a) a Reportable Event described in Section 4043 of ERISA for which the thirty (30) day notice requirement has not been waived by the PBGC, or (b) the withdrawal of any Credit Party or any ERISA Affiliate from a Pension Plan during a plan year in which it 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, or (c) the termination of a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination, under Section 4041 of ERISA, if the plan assets are not sufficient to pay all plan liabilities, or (d) the institution of proceedings to terminate, or the appointment of a trustee with respect to, any Pension Plan by the PBGC, or (e) any other event or condition which would constitute grounds under Section 4042(a) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, or (f) the imposition of a Lien pursuant to Section 430(k) of the Code or Section 303 of ERISA, or (g) the determination that any Pension Plan or Multiemployer Plan is considered an at-risk plan or plan in endangered or critical status with the meaning of Sections 430, 431 or 432 of the Code or Sections 303, 304 or 305 of ERISA or (h) the partial or complete withdrawal of any Credit Party or any ERISA Affiliate from a Multiemployer Plan if withdrawal liability is asserted by such plan, or (i) any event or condition which results in the reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245 of ERISA, or (j) any event or condition which results in the termination of a Multiemployer Plan under Section 4041A of ERISA or the institution by PBGC of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA, or (k) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Credit Party or any ERISA Affiliate.
Total Credit Exposure means, as to any Lender at any time, the unused Commitments and Revolving Credit Exposure of such Lender at such time.
Transaction Costs means all transaction fees, charges and other amounts related to the Transactions and any Permitted Acquisitions (including, without limitation, any financing fees, merger and acquisition fees, legal fees and expenses, due diligence fees or any other fees and expenses in
connection therewith), in each case to the extent paid within six (6) months of the closing of the Credit Facility or such Permitted Acquisition, as applicable, and approved by the Administrative Agent in its reasonable discretion.
Transactions means, collectively, (a) the repayment in full of all Indebtedness (other than Indebtedness permitted pursuant to Section 9.1) on the Closing Date, (b) the initial Extensions of Credit, (c) the consummation of each Real Property Acquisition, and (d) the payment of the Transaction Costs incurred in connection with the foregoing.
UCC means the Uniform Commercial Code as in effect in the State of New York.
Uniform Customs means the Uniform Customs and Practice for Documentary Credits (2007 Revision), effective July 2007, International Chamber of Commerce Publication No. 600.
United States means the United States of America.
U.S. Person means any Person that is a United States Person as defined in Section 7701(a)(30) of the Code.
U.S. Tax Compliance Certificate has the meaning assigned thereto in Section 5.11(g).
Wells Fargo means Wells Fargo Bank, National Association, a national banking association.
Wholly-Owned means, with respect to a Subsidiary, that all of the shares of Capital Stock of such Subsidiary are, directly or indirectly, owned or controlled by the Borrower and/or one or more of its Wholly-Owned Subsidiaries (except for directors qualifying shares or other shares required by Applicable Law to be owned by a Person other than the Borrower and/or one or more of its Wholly-Owned Subsidiaries).
Withholding Agent means the Borrower and the Administrative Agent.
SECTION 1.2 Other Definitions and 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, (b) whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms, (c) the words include, includes and including shall be deemed to be followed by the phrase without limitation, (d) the word will shall be construed to have the same meaning and effect as the word shall, (e) any reference herein to any Person shall be construed to include such Persons successors and assigns, (f) the words herein, hereof and hereunder, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (g) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (h) 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, (i) the term documents includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form and (j) 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.
SECTION 1.3 Accounting Terms. 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 and in a manner consistent with that used in preparing the audited financial statements required by Section 8.1(a), except as otherwise specifically prescribed herein (including, without limitation, as prescribed by Section 12.9). 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. If any Accounting Change occurs after the Closing Date that results in any change in the calculation of any financial covenant, standard, or terms, then Administrative Agent, Lenders, and Borrower agree to enter into negotiations in order to amend such provisions of this Agreement so as to equitably reflect such Accounting Change with the desired result that the criteria for evaluating Borrowers financial condition shall be the same after such Accounting Change as if such Accounting Change had not occurred. Until such time as such amendment shall have been executed and delivered by Administrative Agent, the applicable Lenders, and Borrower, all financial covenants, standards, and terms in this Agreement shall continue to be calculated or construed as if such Accounting Change had not occurred.
SECTION 1.4 UCC Terms. Terms defined in the UCC in effect on the Closing Date and not otherwise defined herein shall, unless the context otherwise indicates, have the meanings provided by those definitions. Subject to the foregoing, the term UCC refers, as of any date of determination, to the UCC then in effect.
SECTION 1.5 Rounding. Any financial ratios required to be maintained 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 or percentage is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
SECTION 1.6 References to Agreement and Laws. Unless otherwise expressly provided herein, (a) any definition or reference to formation documents, governing documents, agreements (including the Loan Documents) and other contractual documents or instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Loan Document; and (b) any definition or reference to any Applicable Law, including, without limitation, the Code, ERISA, the Exchange Act, the PATRIOT Act, the Securities Act of 1933, the UCC, the Investment Company Act of 1940, the Interstate Commerce Act, the Trading with the Enemy Act of the United States or any of the foreign assets control regulations of the United States Treasury Department, shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Applicable Law.
SECTION 1.7 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).
SECTION 1.8 Letter of Credit Amounts. Unless otherwise specified, all references herein to the amount of a Letter of Credit at any time shall be deemed to mean the maximum face amount of such Letter of Credit after giving effect to all increases thereof contemplated by such Letter of Credit or the Letter of Credit Application therefor (at the time specified therefor in such applicable Letter of Credit or Letter of Credit Application and as such amount may be reduced by (a) any permanent reduction of such
Letter of Credit or (b) any amount which is drawn, reimbursed and no longer available under such Letter of Credit).
SECTION 1.9 Guaranty Obligations. Unless otherwise specified, the amount of any Guaranty Obligation shall be the lesser of the principal amount of the obligations guaranteed and still outstanding and the maximum amount for which the guaranteeing Person may be liable pursuant to the terms of the instrument embodying such Guaranty Obligation.
SECTION 1.10 Covenant Compliance Generally. For purposes of determining compliance under Sections 9.1, 9.2, 9.3, 9.5 and 9.6, any amount in a currency other than Dollars will be converted to Dollars in a manner consistent with that used in calculating Consolidated Net Income in the most recent annual financial statements of the Borrower and its Subsidiaries delivered pursuant to Section 8.1(a). Notwithstanding the foregoing, for purposes of determining compliance with Sections 9.1, 9.2 and 9.3, with respect to any amount of Indebtedness or Investment in a currency other than Dollars, no breach of any basket contained in such sections shall be deemed to have occurred solely as a result of changes in rates of exchange occurring after the time such Indebtedness or Investment is incurred; provided that for the avoidance of doubt, the foregoing provisions of this Section 1.10 shall otherwise apply to such Sections, including with respect to determining whether any Indebtedness or Investment may be incurred at any time under such Sections.
ARTICLE II
REVOLVING CREDIT FACILITY
SECTION 2.1 Revolving Credit Loans. Subject to the terms and conditions of this Agreement and the other Loan Documents, and in reliance upon the representations and warranties set forth in this Agreement and the other Loan Documents, each Revolving Credit Lender severally agrees to make Revolving Credit Loans to the Borrower from time to time from the Closing Date through, but not including, the Revolving Credit Maturity Date as requested by the Borrower in accordance with the terms of Section 2.3; provided, that (a) the Revolving Credit Outstandings shall not exceed the Revolving Credit Commitment and (b) the Revolving Credit Exposure of any Revolving Credit Lender shall not at any time exceed such Revolving Credit Lenders Revolving Credit Commitment. Each Revolving Credit Loan by a Revolving Credit Lender shall be in a principal amount equal to such Revolving Credit Lenders Revolving Credit Commitment Percentage of the aggregate principal amount of Revolving Credit Loans requested on such occasion. Subject to the terms and conditions hereof, the Borrower may borrow, repay and reborrow Revolving Credit Loans hereunder until the Revolving Credit Maturity Date.
SECTION 2.2 Swingline Loans.
(a) Availability. Subject to the terms and conditions of this Agreement and the other Loan Documents, including, without limitation, Section 6.2(e) of this Agreement, and in reliance upon the representations and warranties set forth in this Agreement and the other Loan Documents, the Swingline Lender may in its sole discretion make Swingline Loans to the Borrower from time to time from the Closing Date through, but not including, the Revolving Credit Maturity Date; provided, that (a) after giving effect to any amount requested, the Revolving Credit Outstandings shall not exceed the Revolving Credit Commitment and (b) the aggregate principal amount of all outstanding Swingline Loans (after giving effect to any amount requested), shall not exceed the Swingline Commitment.
(b) Refunding.
(i) Swingline Loans shall be refunded by the Revolving Credit Lenders on demand by the Swingline Lender (but no less frequently than weekly). Such refundings shall be made by
the Revolving Credit Lenders in accordance with their respective Revolving Credit Commitment Percentages and shall thereafter be reflected as Revolving Credit Loans of the Revolving Credit Lenders on the books and records of the Administrative Agent. Each Revolving Credit Lender shall fund its respective Revolving Credit Commitment Percentage of Revolving Credit Loans as required to repay Swingline Loans outstanding to the Swingline Lender upon demand by the Swingline Lender but in no event later than 2:00 p.m. on the next succeeding Business Day after such demand is made. No Revolving Credit Lenders obligation to fund its respective Revolving Credit Commitment Percentage of a Swingline Loan shall be affected by any other Revolving Credit Lenders failure to fund its Revolving Credit Commitment Percentage of a Swingline Loan, nor shall any Revolving Credit Lenders Revolving Credit Commitment Percentage be increased as a result of any such failure of any other Revolving Credit Lender to fund its Revolving Credit Commitment Percentage of a Swingline Loan.
(ii) The Borrower shall pay to the Swingline Lender on demand (but no less frequently than weekly) the amount of such Swingline Loans to the extent amounts received from the Revolving Credit Lenders are not sufficient to repay in full the outstanding Swingline Loans requested or required to be refunded. In addition, the Borrower hereby authorizes the Administrative Agent to charge any account maintained by the Borrower with the Swingline Lender (up to the amount available therein) in order to immediately pay the Swingline Lender the amount of such Swingline Loans to the extent amounts received from the Revolving Credit Lenders are not sufficient to repay in full the outstanding Swingline Loans requested or required to be refunded. If any portion of any such amount paid to the Swingline Lender shall be recovered by or on behalf of the Borrower from the Swingline Lender in bankruptcy or otherwise, the loss of the amount so recovered shall be ratably shared among all the Revolving Credit Lenders in accordance with their respective Revolving Credit Commitment Percentages (unless the amounts so recovered by or on behalf of the Borrower pertain to a Swingline Loan extended after the occurrence and during the continuance of an Event of Default of which the Administrative Agent has received notice in the manner required pursuant to Section 11.3 and which such Event of Default has not been waived by the Required Lenders or the Lenders, as applicable).
(iii) Each Revolving Credit Lender acknowledges and agrees that its obligation to refund Swingline Loans in accordance with the terms of this Section is absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, non-satisfaction of the conditions set forth in Article VI. Further, each Revolving Credit Lender agrees and acknowledges that if prior to the refunding of any outstanding Swingline Loans pursuant to this Section, one of the events described in Section 10.1(i) or (j) shall have occurred, each Revolving Credit Lender will, on the date the applicable Revolving Credit Loan would have been made, purchase an undivided participating interest in the Swingline Loan to be refunded in an amount equal to its Revolving Credit Commitment Percentage of the aggregate amount of such Swingline Loan. Each Revolving Credit Lender will immediately transfer to the Swingline Lender, in immediately available funds, the amount of its participation and upon receipt thereof the Swingline Lender will deliver to such Revolving Credit Lender a certificate evidencing such participation dated the date of receipt of such funds and for such amount. Whenever, at any time after the Swingline Lender has received from any Revolving Credit Lender such Revolving Credit Lenders participating interest in a Swingline Loan, the Swingline Lender receives any payment on account thereof, the Swingline Lender will distribute to such Revolving Credit Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Revolving Credit Lenders participating interest was outstanding and funded).
(c) Defaulting Lenders. Notwithstanding anything to the contrary contained in this Agreement, this Section 2.2 shall be subject to the terms and conditions of Section 5.14 and Section 5.15.
SECTION 2.3 Procedure for Advances of Revolving Credit Loans and Swingline Loans.
(a) Requests for Borrowing. The Borrower shall give the Administrative Agent irrevocable prior written notice substantially in the form of Exhibit B (a Notice of Borrowing) not later than noon (i) on the same Business Day as each Swingline Loan, (ii) at least one (1) Business Day before each Base Rate Loan (other than a Swingline Loan), and (iii) at least three (3) Business Days before each LIBOR Rate Loan, of its intention to borrow, specifying (A) the date of such borrowing, which shall be a Business Day, (B) the amount of such borrowing, which (x) with respect to Base Rate Loans (other than Swingline Loans), must be in an aggregate principal amount of $500,000 or a whole multiple of $100,000 in excess thereof (provided, that any Base Rate Loan may be in an amount that is equal to the entire unused balance of the total Commitments or that is required to finance the amount of the reimbursement of a drawing under a Letter of Credit as contemplated by Section 3.5), (y) with respect to LIBOR Rate Loans, must be in an aggregate principal amount of $500,000 or a whole multiple of $100,000 in excess thereof, and (z) with respect to Swingline Loans, may be in any amount, (C) whether such Loan is to be a Revolving Credit Loan or Swingline Loan, (D) in the case of a Revolving Credit Loan whether the Loans are to be LIBOR Rate Loans or Base Rate Loans, and (E) in the case of a LIBOR Rate Loan, the duration of the Interest Period applicable thereto. A Notice of Borrowing received after noon shall be deemed received on the next Business Day. The Administrative Agent shall promptly notify the Revolving Credit Lenders of each Notice of Borrowing.
(b) Disbursement of Revolving Credit and Swingline Loans. Not later than 2:00 p.m. on the proposed borrowing date, (i) each Revolving Credit Lender will make available to the Administrative Agent, for the account of the Borrower, at the office of the Administrative Agent in funds immediately available to the Administrative Agent, such Revolving Credit Lenders Revolving Credit Commitment Percentage of the Revolving Credit Loans to be made on such borrowing date and (ii) the Swingline Lender will make available to the Administrative Agent, for the account of the Borrower, at the office of the Administrative Agent in funds immediately available to the Administrative Agent, the Swingline Loans to be made on such borrowing date. The Borrower hereby irrevocably authorizes the Administrative Agent to disburse the proceeds of each borrowing requested pursuant to this Section in immediately available funds by crediting or wiring such proceeds to the deposit account of the Borrower identified in the most recent notice substantially in the form attached as Exhibit C (a Notice of Account Designation) delivered by the Borrower to the Administrative Agent or as may be otherwise agreed upon by the Borrower and the Administrative Agent from time to time. Subject to Section 5.7 hereof, the Administrative Agent shall not be obligated to disburse the portion of the proceeds of any Revolving Credit Loan requested pursuant to this Section to the extent that any Revolving Credit Lender has not made available to the Administrative Agent its Revolving Credit Commitment Percentage of such Loan. Revolving Credit Loans to be made for the purpose of refunding Swingline Loans shall be made by the Revolving Credit Lenders as provided in Section 2.2(b).
SECTION 2.4 Repayment and Prepayment of Revolving Credit and Swingline Loans.
(a) Repayment on Termination Date. The Borrower hereby agrees to repay the outstanding principal amount of (i) all Revolving Credit Loans in full on the Revolving Credit Maturity Date, and (ii) all Swingline Loans in accordance with Section 2.2(b) (but, in any event, no later than the Revolving Credit Maturity Date), together, in each case, with all accrued but unpaid interest thereon.
(b) Mandatory Prepayments. If at any time the Revolving Credit Outstandings exceed the Revolving Credit Commitment, the Borrower agrees to repay immediately upon notice from the
Administrative Agent, by payment to the Administrative Agent for the account of the Revolving Credit Lenders, Extensions of Credit in an amount equal to such excess with each such repayment applied first, to the principal amount of outstanding Swingline Loans, second to the principal amount of outstanding Revolving Credit Loans and third, with respect to any Letters of Credit then outstanding, a payment of Cash Collateral into a Cash Collateral account opened by the Administrative Agent, for the benefit of the Revolving Credit Lenders, in an amount equal to such excess (such Cash Collateral to be applied in accordance with Section 10.2(b)).
(c) Optional Prepayments. The Borrower may at any time and from time to time prepay Revolving Credit Loans and Swingline Loans, in whole or in part, with irrevocable prior written notice to the Administrative Agent substantially in the form attached as Exhibit D (a Notice of Prepayment) given not later than noon (i) at least one (1) Business Day before each Base Rate Loan (other than a Swingline Loan), (ii) at least three (3) Business Days before each LIBOR Rate Loan, and (iii) on the same Business Day as each Swingline Loan, in each case specifying the date and amount of prepayment and whether the prepayment is of LIBOR Rate Loans, Base Rate Loans, Swingline Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each. Upon receipt of such notice, the Administrative Agent shall promptly notify each Revolving Credit Lender. If any such notice is given, the amount specified in such notice shall be due and payable on the date set forth in such notice. Partial prepayments shall be in an aggregate amount of $500,000 or a whole multiple of $100,000 in excess thereof with respect to Base Rate Loans (other than Swingline Loans) and $500,000 or a whole multiple of $100,000 in excess thereof with respect to LIBOR Rate Loans, but no minimum amount will apply with respect to partial prepayments of Swingline Loans. A Notice of Prepayment received after noon shall be deemed received on the next Business Day. Each such repayment shall be accompanied by any amount required to be paid pursuant to Section 5.9 hereof. Notwithstanding the foregoing, any Notice of a Prepayment delivered in connection with any refinancing of all of the Credit Facility with the proceeds of such refinancing or of any incurrence of Indebtedness, may be, if expressly so stated to be, contingent upon the consummation of such refinancing or incurrence and may be revoked by the Borrower in the event such refinancing is not consummated (provided that the failure of such contingency shall not relieve the Borrower from its obligations in respect thereof under Section 5.9).
(d) [Reserved].
(e) Limitation on Prepayment of LIBOR Rate Loans. The Borrower may not prepay any LIBOR Rate Loan on any day other than on the last day of the Interest Period applicable thereto unless such prepayment is accompanied by any amount required to be paid pursuant to Section 5.9 hereof.
(f) Hedge Agreements. No repayment or prepayment pursuant to this Section shall affect any of the Borrowers obligations under any Hedge Agreement.
SECTION 2.5 Permanent Reduction of the Revolving Credit Commitment.
(a) Voluntary Reduction. The Borrower shall have the right at any time and from time to time, upon at least three (3) Business Days prior written notice to the Administrative Agent, to permanently reduce, without premium or penalty, (i) the entire Revolving Credit Commitment at any time or (ii) portions of the Revolving Credit Commitment, from time to time, in an aggregate principal amount not less than $5,000,000 or any whole multiple of $1,000,000 in excess thereof. Any reduction of the Revolving Credit Commitment shall be applied to the Revolving Credit Commitment of each Revolving Credit Lender according to its Revolving Credit Commitment Percentage. All Commitment Fees accrued until the effective date of any termination of the Revolving Credit Commitment shall be paid on the effective date of such termination.
(b) Mandatory Reduction. If the Borrower, the Administrative Agent, and one or more Lenders do not establish a secured term loan facility under this Agreement before March 29, 2013 (which term loan facility (i) must be secured by real property and improvements reasonably satisfactory to Administrative Agent, and (ii) must provide, pursuant to documentation in form and substance reasonably satisfactory to Administrative Agent, for one or more term loan commitments to make one or more term loans in an aggregate original principal amount of at least $10,000,000), then the Revolving Credit Commitment shall be permanently reduced by $10,000,000 effective as of March 29, 2013.
(c) [Reserved].
(d) Corresponding Payment. Each permanent reduction permitted or required pursuant to this Section shall be accompanied by a payment of principal sufficient to reduce the aggregate outstanding Revolving Credit Loans, Swingline Loans and L/C Obligations, as applicable, after such reduction to the Revolving Credit Commitment as so reduced, and if the aggregate amount of all outstanding Letters of Credit exceeds the Revolving Credit Commitment as so reduced, the Borrower shall be required to deposit Cash Collateral in a Cash Collateral account opened by the Administrative Agent in an amount equal to such excess. Such Cash Collateral shall be applied in accordance with Section 10.2(b). Any reduction of the Revolving Credit Commitment to zero shall be accompanied by payment of all outstanding Revolving Credit Loans and Swingline Loans (and furnishing of Cash Collateral satisfactory to the Administrative Agent for all L/C Obligations) and shall result in the termination of the Revolving Credit Commitment and the Swingline Commitment and the Revolving Credit Facility. If the reduction of the Revolving Credit Commitment requires the repayment of any LIBOR Rate Loan, such repayment shall be accompanied by any amount required to be paid pursuant to Section 5.9 hereof.
SECTION 2.6 Termination of Revolving Credit Facility. The Revolving Credit Facility and the Revolving Credit Commitments shall terminate on the Revolving Credit Maturity Date.
ARTICLE III
LETTER OF CREDIT FACILITY
SECTION 3.1 L/C Commitment.
(a) Availability. Subject to the terms and conditions of this Agreement and the other Loan Documents, including, without limitation, Section 6.2(e) of this Agreement, and in reliance upon the representations and warranties set forth in this Agreement and the other Loan Documents and on the agreements of the Revolving Credit Lenders set forth in Section 3.4(a), the Issuing Lender agrees to issue standby letters of credit (which standby letters of credit, together with the Existing Letters of Credit, constitute Letters of Credit) for the account of the Borrower or any other Credit Party on any Business Day from the Closing Date through but not including the twenty-fifth (25th) day prior to the Revolving Credit Maturity Date in such form as may be approved from time to time by the Issuing Lender; provided, that the Issuing Lender shall have no obligation to issue any Letter of Credit if, after giving effect to such issuance, (a) the L/C Obligations would exceed the L/C Commitment or (b) the Revolving Credit Outstandings would exceed the Revolving Credit Commitment. Each Letter of Credit shall (i) be denominated in Dollars, (ii) be a standby letter of credit issued to support obligations of the Borrower or any of its Subsidiaries, contingent or otherwise, incurred in the ordinary course of business, (iii) expire on a date no more than twelve (12) months after the date of issuance or last renewal of such Letter of Credit (subject to automatic renewal for additional one (1) year periods pursuant to the terms of the Letter of Credit Application or other documentation acceptable to the Issuing Lender), which date shall be no later than the twenty-fifth (25th) day prior to the Revolving Credit Maturity Date and (iv) be subject to the Uniform Customs and/or ISP98, as set forth in the Letter of Credit Application or as determined by the Issuing Lender and, to the extent not inconsistent therewith, the laws of the State of New York. The
Issuing Lender shall not at any time be obligated to issue any Letter of Credit hereunder if such issuance would conflict with, or cause the Issuing Lender or any L/C Participant to exceed any limits imposed by, any Applicable Law. References herein to issue and derivations thereof with respect to Letters of Credit shall also include extensions or modifications of any outstanding Letters of Credit, unless the context otherwise requires. As of the Closing Date, each of the Existing Letters of Credit shall constitute, for all purposes of this Agreement and the other Loan Documents, a Letter of Credit issued and outstanding hereunder.
(b) Defaulting Lenders. Notwithstanding anything to the contrary contained in this Agreement, Article III shall be subject to the terms and conditions of Section 5.14 and Section 5.15.
SECTION 3.2 Procedure for Issuance of Letters of Credit. The Borrower may from time to time request that the Issuing Lender issue a Letter of Credit by delivering to the Issuing Lender at the Administrative Agents Office a Letter of Credit Application therefor, completed to the satisfaction of the Issuing Lender, and such other certificates, documents and other papers and information as the Issuing Lender may request. Upon receipt of any Letter of Credit Application, the Issuing Lender shall process such Letter of Credit Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall, subject to Section 3.1 and Article VI, promptly issue the Letter of Credit requested thereby (but in no event shall the Issuing Lender be required to issue any Letter of Credit earlier than three (3) Business Days after its receipt of the Letter of Credit Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing Lender and the Borrower. The Issuing Lender shall promptly furnish to the Borrower a copy of such Letter of Credit and promptly notify each Revolving Credit Lender of the issuance and upon request by any Revolving Credit Lender, furnish to such Revolving Credit Lender a copy of such Letter of Credit and the amount of such Revolving Credit Lenders participation therein.
SECTION 3.3 Commissions and Other Charges.
(a) Letter of Credit Commissions. Subject to Section 5.15(a)(iii)(B), the Borrower shall pay to the Administrative Agent, for the account of the Issuing Lender and the L/C Participants, a letter of credit commission with respect to each Letter of Credit in the amount equal to the daily amount available to be drawn under such Letter of Credit times the Applicable Rate with respect to Revolving Credit Loans that are LIBOR Rate Loans (determined on a per annum basis). Such commission shall be payable quarterly in arrears on the last Business Day of each calendar quarter, on the Revolving Credit Maturity Date and thereafter on demand of the Administrative Agent. The Administrative Agent shall, promptly following its receipt thereof, distribute to the Issuing Lender and the L/C Participants all commissions received pursuant to this Section 3.3 in accordance with their respective Revolving Credit Commitment Percentages.
(b) Issuance Fee. In addition to the foregoing commission, the Borrower shall pay to the Administrative Agent, for the account of the Issuing Lender, an issuance fee with respect to each Letter of Credit as set forth in the Fee Letter. Such issuance fee shall be payable quarterly in arrears on the last Business Day of each calendar quarter (commencing with the first such date to occur after the issuance of such Letter of Credit), on the Revolving Credit Maturity Date and thereafter on demand of the Administrative Agent.
(c) Other Costs. In addition to the foregoing fees and commissions, the Borrower shall pay or reimburse the Issuing Lender for such normal and customary costs and expenses as are incurred or
charged by the Issuing Lender in issuing, effecting payment under, amending or otherwise administering any Letter of Credit.
SECTION 3.4 L/C Participations.
(a) The Issuing Lender irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce the Issuing Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Lender, on the terms and conditions hereinafter stated, for such L/C Participants own account and risk an undivided interest equal to such L/C Participants Revolving Credit Commitment Percentage in the Issuing Lenders obligations and rights under and in respect of each Letter of Credit issued hereunder and the amount of each draft paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees with the Issuing Lender that, if a draft is paid under any Letter of Credit for which the Issuing Lender is not reimbursed in full by the Borrower through a Revolving Credit Loan or otherwise in accordance with the terms of this Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at the Issuing Lenders address for notices specified herein an amount equal to such L/C Participants Revolving Credit Commitment Percentage of the amount of such draft, or any part thereof, which is not so reimbursed.
(b) Upon becoming aware of any amount required to be paid by any L/C Participant to the Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion of any payment made by the Issuing Lender under any Letter of Credit, the Issuing Lender shall notify each L/C Participant of the amount and due date of such required payment and such L/C Participant shall pay to the Issuing Lender the amount specified on the applicable due date. If any such amount is paid to the Issuing Lender after the date such payment is due, such L/C Participant shall pay to the Issuing Lender on demand, in addition to such amount, the product of (i) such amount, times (ii) the daily average Federal Funds Rate as determined by the Administrative Agent during the period from and including the date such payment is due to the date on which such payment is immediately available to the Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. A certificate of the Issuing Lender with respect to any amounts owing under this Section shall be conclusive in the absence of manifest error. With respect to payment to the Issuing Lender of the unreimbursed amounts described in this Section, if the L/C Participants receive notice that any such payment is due (A) prior to 2:00 p.m. on any Business Day, such payment shall be due that Business Day, and (B) after 2:00 p.m. on any Business Day, such payment shall be due on the following Business Day.
(c) Whenever, at any time after the Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its Revolving Credit Commitment Percentage of such payment in accordance with this Section, the Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise), or any payment of interest on account thereof, the Issuing Lender will distribute to such L/C Participant its pro rata share thereof; provided, that in the event that any such payment received by the Issuing Lender shall be required to be returned by the Issuing Lender, such L/C Participant shall return to the Issuing Lender the portion thereof previously distributed by the Issuing Lender to it.
SECTION 3.5 Reimbursement Obligation of the Borrower. In the event of any drawing under any Letter of Credit, the Borrower agrees to reimburse (either with the proceeds of a Revolving Credit Loan as provided for in this Section or with funds from other sources), in same day funds, the Issuing Lender on each date on which the Issuing Lender notifies the Borrower of the date and amount of a draft paid under any Letter of Credit for the amount of (a) such draft so paid and (b) any amounts referred to in Section 3.3(c) incurred by the Issuing Lender in connection with such payment. Unless the
Borrower shall immediately notify the Issuing Lender that the Borrower intends to reimburse the Issuing Lender for such drawing from other sources or funds, the Borrower shall be deemed to have timely given a Notice of Borrowing to the Administrative Agent requesting that the Revolving Credit Lenders make a Revolving Credit Loan as a Base Rate Loan on such date in the amount of (a) such draft so paid and (b) any amounts referred to in Section 3.3(c) incurred by the Issuing Lender in connection with such payment, and the Revolving Credit Lenders shall make a Revolving Credit Loan as a Base Rate Loan in such amount, the proceeds of which shall be applied to reimburse the Issuing Lender for the amount of the related drawing and costs and expenses. Each Revolving Credit Lender acknowledges and agrees that its obligation to fund a Revolving Credit Loan in accordance with this Section to reimburse the Issuing Lender for any draft paid under a Letter of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, non-satisfaction of the conditions set forth in Section 2.3(a) or Article VI. If the Borrower has elected to pay the amount of such drawing with funds from other sources and shall fail to reimburse the Issuing Lender as provided above, the unreimbursed amount of such drawing shall bear interest at the rate which would be payable on any outstanding Base Rate Loans which were then overdue from the date such amounts become payable (whether at stated maturity, by acceleration or otherwise) until payment in full.
SECTION 3.6 Obligations Absolute. The Borrowers obligations under this Article III (including, without limitation, the Reimbursement Obligation) shall be absolute and unconditional under any and all circumstances and irrespective of any set off, counterclaim or defense to payment which the Borrower may have or have had against the Issuing Lender or any beneficiary of a Letter of Credit or any other Person. The Borrower also agrees that the Issuing Lender and the L/C Participants shall not be responsible for, and the Borrowers Reimbursement Obligation under Section 3.5 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee. The Issuing Lender shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions caused by the Issuing Lenders gross negligence or willful misconduct, as determined by a court of competent jurisdiction by final nonappealable judgment. The Borrower agrees that any action taken or omitted by the Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct shall be binding on the Borrower and shall not result in any liability of the Issuing Lender or any L/C Participant to the Borrower. The responsibility of the Issuing Lender to the Borrower in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are in conformity with such Letter of Credit.
SECTION 3.7 Effect of Letter of Credit Application. To the extent that any provision of any Letter of Credit Application related to any Letter of Credit is inconsistent with the provisions of this Article III, the provisions of this Article III shall apply.
ARTICLE IV
[RESERVED]
ARTICLE V
GENERAL LOAN PROVISIONS
SECTION 5.1 Interest.
(a) Interest Rate Options. Subject to the provisions of this Section, at the election of the Borrower, (i) Revolving Credit Loans shall bear interest at (A) the Base Rate plus the Applicable Rate or (B) the LIBOR Rate plus the Applicable Rate (provided that the LIBOR Rate shall not be available until three (3) Business Days after the Closing Date unless the Borrower has delivered to the Administrative Agent a letter in form and substance reasonably satisfactory to the Administrative Agent indemnifying the Lenders in the manner set forth in Section 5.9 of this Agreement) and (ii) any Swingline Loan shall bear interest at the Base Rate plus the Applicable Rate. The Borrower shall select the rate of interest and Interest Period, if any, applicable to any Loan at the time a Notice of Borrowing is given or at the time a Notice of Conversion/Continuation is given pursuant to Section 5.2. Any Loan or any portion thereof as to which the Borrower has not duly specified an interest rate as provided herein shall be deemed a Base Rate Loan.
(b) Interest Periods. In connection with each LIBOR Rate Loan, the Borrower, by giving notice at the times described in Section 2.3 or 5.2, as applicable, shall elect an interest period (each, an Interest Period) to be applicable to such Loan, which Interest Period shall be a period of one (1), two (2), three (3), or six (6) months; provided that:
(i) the Interest Period shall commence on the date of advance of or conversion to any LIBOR Rate Loan and, in the case of immediately successive Interest Periods, each successive Interest Period shall commence on the date on which the immediately preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided that if any Interest Period with respect to a LIBOR Rate Loan would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the immediately preceding Business Day;
(iii) any Interest Period with respect to a LIBOR Rate 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 relevant calendar month at the end of such Interest Period;
(iv) no Interest Period shall extend beyond the Revolving Credit Maturity Date, and Interest Periods shall be selected by the Borrower so as to permit the Borrower to make mandatory reductions of the Revolving Credit Commitment pursuant to Section 2.5(b); and
(v) there shall be no more than eight (8) Interest Periods in effect at any time.
(c) Default Rate. Subject to Section 10.3, (i) immediately upon the occurrence and during the continuance of an Event of Default under Section 10.1(a), (b), (j) or (k), or (ii) at the election of the Required Lenders, upon the occurrence and during the continuance of any other Event of Default, (A) the Borrower shall no longer have the option to request LIBOR Rate Loans, Swingline Loans or Letters of
Credit, (B) all outstanding LIBOR Rate Loans shall bear interest at a rate per annum of two percent (2%) in excess of the rate (including the Applicable Rate) then applicable to LIBOR Rate Loans until the end of the applicable Interest Period and thereafter at a rate equal to two percent (2%) in excess of the rate (including the Applicable Rate) then applicable to Base Rate Loans, (C) all outstanding Base Rate Loans and other Obligations arising hereunder or under any other Loan Document shall bear interest at a rate per annum equal to two percent (2%) in excess of the rate (including the Applicable Rate) then applicable to Base Rate Loans or such other Obligations arising hereunder or under any other Loan Document and (D) all accrued and unpaid interest shall be due and payable on demand of the Administrative Agent. Interest shall continue to accrue on the Obligations after the filing by or against the Borrower of any petition seeking any relief in bankruptcy or under any act or law pertaining to insolvency or debtor relief, whether state, federal or foreign.
(d) Interest Payment and Computation. Interest on each Base Rate Loan shall be due and payable in arrears on the last Business Day of each calendar quarter (commencing December 31, 2012); and interest on each LIBOR Rate Loan shall be due and payable on the last day of each Interest Period applicable thereto, and if such Interest Period extends over three (3) months, at the end of each three (3) month interval during such Interest Period. All computations of interest for Base Rate Loans when the Base Rate is determined by the Prime Rate shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest provided hereunder shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365/366-day year).
(e) Maximum Rate. In no contingency or event whatsoever shall the aggregate of all amounts deemed interest under this Agreement charged or collected pursuant to the terms of this Agreement exceed the highest rate permissible under any Applicable Law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such a court determines that the Lenders have charged or received interest hereunder in excess of the highest applicable rate, the rate in effect hereunder shall automatically be reduced to the maximum rate permitted by Applicable Law and the Lenders shall at the Administrative Agents option (i) promptly refund to the Borrower any interest received by the Lenders in excess of the maximum lawful rate or (ii) apply such excess to the principal balance of the Obligations on a pro rata basis. It is the intent hereof that the Borrower not pay or contract to pay, and that neither the Administrative Agent nor any Lender receive or contract to receive, directly or indirectly in any manner whatsoever, interest in excess of that which may be paid by the Borrower under Applicable Law.
SECTION 5.2 Notice and Manner of Conversion or Continuation of Loans. Provided that no Default or Event of Default has occurred and is then continuing, the Borrower shall have the option to (a) convert at any time all or any portion of any outstanding Base Rate Loans (other than Swingline Loans) in a principal amount equal to $500,000 or any whole multiple of $100,000 in excess thereof into one or more LIBOR Rate Loans and (b) upon the expiration of any Interest Period, (i) convert all or any part of its outstanding LIBOR Rate Loans in a principal amount equal to $500,000 or a whole multiple of $100,000 in excess thereof into Base Rate Loans (other than Swingline Loans) or (ii) continue such LIBOR Rate Loans as LIBOR Rate Loans. Whenever the Borrower desires to convert or continue Loans as provided above, the Borrower shall give the Administrative Agent irrevocable prior written notice in the form attached as Exhibit E (a Notice of Conversion/Continuation) not later than noon three (3) Business Days before the day on which a proposed conversion or continuation of such Loan is to be effective specifying (A) the Loans to be converted or continued, and, in the case of any LIBOR Rate Loan to be converted or continued, the last day of the Interest Period therefor, (B) the effective date of such conversion or continuation (which shall be a Business Day), (C) the principal amount of such Loans to be converted or continued, and (D) the Interest Period to be applicable to such converted or continued
LIBOR Rate Loan. The Administrative Agent shall promptly notify the affected Lenders of such Notice of Conversion/Continuation.
SECTION 5.3 Fees.
(a) Commitment Fee. Commencing on the Closing Date, subject to Section 5.15(a)(iii)(A), the Borrower shall pay to the Administrative Agent, for the account of the Revolving Credit Lenders, a non-refundable commitment fee (the Commitment Fee) at a rate per annum equal to the Applicable Rate on the average daily unused portion of the Revolving Credit Commitment of the Revolving Credit Lenders (other than the Defaulting Lenders, if any). The Commitment Fee shall be payable in arrears on the last Business Day of each calendar quarter during the term of this Agreement (commencing December 31, 2012), and ending on the date upon which all Obligations (other than contingent indemnification obligations not then due) arising under the Revolving Credit Facility shall have been indefeasibly and irrevocably paid and satisfied in full, all Letters of Credit have been terminated or expired (or been Cash Collateralized) and the Revolving Credit Commitment has been terminated. The Commitment Fee shall be distributed by the Administrative Agent to the Revolving Credit Lenders (other than any Defaulting Lender) pro rata in accordance with such Revolving Credit Lenders respective Revolving Credit Commitment Percentages.
(b) [Reserved].
(c) Other Fees. The Borrower shall pay to the Arranger and the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in the Fee Letter. The Borrower shall pay to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified.
SECTION 5.4 Manner of Payment.
(a) Sharing of Payments. Each payment by the Borrower on account of the principal of or interest on the Loans or of any fee, commission or other amounts (including the Reimbursement Obligation) payable to the Lenders under this Agreement shall be made not later than 1:00 p.m. on the date specified for payment under this Agreement to the Administrative Agent at the Administrative Agents Office for the account of the Lenders entitled to such payment in Dollars, in immediately available funds and shall be made without any set off, counterclaim or deduction whatsoever. Any payment received after such time but before 2:00 p.m. on such day shall be deemed a payment on such date for the purposes of Section 10.1, but for all other purposes shall be deemed to have been made on the next succeeding Business Day. Any payment received after 2:00 p.m. shall be deemed to have been made on the next succeeding Business Day for all purposes. Upon receipt by the Administrative Agent of each such payment, the Administrative Agent shall distribute to each such Lender at its address for notices set forth herein its Commitment Percentage in respect of the relevant Credit Facility (or other applicable share as provided herein) of such payment and shall wire advice of the amount of such credit to each Lender. Each payment to the Administrative Agent on account of the principal of or interest on the Swingline Loans or of any fee, commission or other amounts payable to the Swingline Lender shall be made in like manner, but for the account of the Swingline Lender. Each payment to the Administrative Agent of the Issuing Lenders fees or L/C Participants commissions shall be made in like manner, but for the account of the Issuing Lender or the L/C Participants, as the case may be. Each payment to the Administrative Agent of Administrative Agents fees or expenses shall be made for the account of the Administrative Agent and any amount payable to any Lender under Sections 5.9, 5.10, 5.11 or 12.3 shall be paid to the Administrative Agent for the account of the applicable Lender. Subject to Section 5.1(b)(ii), if any payment under this Agreement shall be specified to be made upon a day which is not a Business Day, it shall be made on the next succeeding day which is a Business
Day and such extension of time shall in such case be included in computing any interest if payable along with such payment.
(b) Defaulting Lenders. Notwithstanding the foregoing clause (a), if there exists a Defaulting Lender each payment by the Borrower to such Defaulting Lender hereunder shall be applied in accordance with Section 5.15(a)(ii).
SECTION 5.5 Evidence of Indebtedness.
(a) Extensions of Credit. The Extensions of Credit 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 Extensions of Credit 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 Revolving Credit Note and/or Swingline Note, as applicable, which shall evidence such Lenders Revolving Credit Loans and/or Swingline Loans, as applicable, in addition to such accounts or records. Each Lender may attach schedules to its Notes and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.
(b) Participations. In addition to the accounts and records referred to in subsection (a), each Revolving Credit Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Revolving Credit Lender of participations in Letters of Credit and Swingline Loans. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Revolving Credit Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.
SECTION 5.6 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 its Loans or other obligations hereunder resulting in such Lenders receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other such obligations (other than pursuant to Sections 5.9, 5.10, 5.11 or 12.3) 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 Loans and such other obligations 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 Loans and other amounts owing them; provided that:
(i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to (A) any payment made by 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),
(B) the application of Cash Collateral provided for in Section 5.14 or (C) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in Swingline Loans and Letters of Credit to any assignee or participant, other than to the Borrower or any of its Subsidiaries or Affiliates (as to which the provisions of this paragraph shall apply).
Each Credit Party 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 each Credit Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of each Credit Party in the amount of such participation.
SECTION 5.7 Administrative Agents Clawback.
(a) Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender (i) in the case of Base Rate Loans, not later than noon on the date of any proposed borrowing and (ii) otherwise, prior to the proposed date of any borrowing that such Lender will not make available to the Administrative Agent such Lenders share of such borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Sections 2.3(b) 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 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 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 greater of the daily average Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. 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 borrowing to the Administrative Agent, then the amount so paid shall constitute such Lenders Loan included in such 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.
(b) Payments by the 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, the Issuing Lender or the Swingline Lender 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, the Issuing Lender or the Swingline Lender, 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, the Issuing Lender or the Swingline Lender, as the case maybe, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender, Issuing Lender or the Swingline Lender, 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, as the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
(c) Nature of Obligations of Lenders Regarding Extensions of Credit. The obligations of the Lenders under this Agreement to make the Loans and issue or participate in Letters of Credit are several and are not joint or joint and several. The failure of any Lender to make available its Commitment
Percentage of any Loan requested by the Borrower shall not relieve it or any other Lender of its obligation, if any, hereunder to make its Commitment Percentage of such Loan available on the borrowing date, but no Lender shall be responsible for the failure of any other Lender to make its Commitment Percentage of such Loan available on the borrowing date.
SECTION 5.8 Changed Circumstances.
(a) Circumstances Affecting LIBOR Rate Availability. In connection with any request for a LIBOR Rate Loan or a conversion to or continuation thereof, if for any reason (i) the Administrative Agent shall determine (which determination shall be conclusive and binding absent manifest error) that Dollar deposits are not being offered to banks in the London interbank Eurodollar market for the applicable amount and Interest Period of such Loan, (ii) the Administrative Agent shall determine (which determination shall be conclusive and binding absent manifest error) that reasonable and adequate means do not exist for the ascertaining the LIBOR Rate for such Interest Period with respect to a proposed LIBOR Rate Loan or (iii) the Required Lenders shall determine (which determination shall be conclusive and binding absent manifest error) that the LIBOR Rate does not adequately and fairly reflect the cost to such Lenders of making or maintaining such Loans during such Interest Period, then the Administrative Agent shall promptly give notice thereof to the Borrower. Thereafter, until the Administrative Agent notifies the Borrower that such circumstances no longer exist, the obligation of the Lenders to make LIBOR Rate Loans and the right of the Borrower to convert any Loan to or continue any Loan as a LIBOR Rate Loan shall be suspended, and (i) in the case of LIBOR Rate Loans, the Borrower shall either (A) repay in full (or cause to be repaid in full) the then outstanding principal amount of each such LIBOR Rate Loan together with accrued interest thereon (subject to Section 5.1(d)), on the last day of the then current Interest Period applicable to such LIBOR Rate Loan; or (B) convert the then outstanding principal amount of each such LIBOR Rate Loan to a Base Rate Loan as of the last day of such Interest Period.
(b) Laws Affecting LIBOR Rate Availability. If, after the date hereof, the introduction of, or any change in, any Applicable Law or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any of the Lenders (or any of their respective Lending Offices) with any request or directive (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, shall make it unlawful or impossible for any of the Lenders (or any of their respective Lending Offices) to honor its obligations hereunder to make or maintain any LIBOR Rate Loan, such Lender shall promptly give notice thereof to the Administrative Agent and the Administrative Agent shall promptly give notice to the Borrower and the other Lenders. Thereafter, until the Administrative Agent notifies the Borrower that such circumstances no longer exist, (i) the obligations of the Lenders to make LIBOR Rate Loans, and the right of the Borrower to convert any Loan to a LIBOR Rate Loan or continue any Loan as a LIBOR Rate Loan shall be suspended and thereafter the Borrower may select only Base Rate Loans and (iii) if any of the Lenders may not lawfully continue to maintain a LIBOR Rate Loan to the end of the then current Interest Period applicable thereto, the applicable Loan shall immediately be converted to a Base Rate Loan for the remainder of such Interest Period.
SECTION 5.9 Indemnity. The Borrower hereby indemnifies each of the Lenders against any loss or expense (including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain a LIBOR Rate Loan or from fees payable to terminate the deposits from which such funds were obtained) which may arise or be attributable to each Lenders obtaining, liquidating or employing deposits or other funds acquired to effect, fund or maintain any Loan (a) as a consequence of any failure by the Borrower to make any payment when due of any amount due hereunder in connection with a LIBOR Rate Loan, (b) due to any failure of the Borrower to borrow, continue or convert on a date
specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation or (c) due to any payment, prepayment or conversion of any LIBOR Rate Loan on a date other than the last day of the Interest Period therefor. The amount of such loss or expense shall be determined, in the applicable Lenders sole discretion, based upon the assumption that such Lender funded its Commitment Percentage of the LIBOR Rate Loans in the London interbank market and using any reasonable attribution or averaging methods which such Lender deems appropriate and practical. A certificate of such Lender setting forth the basis for determining such amount or amounts necessary to compensate such Lender (including the calculation in reasonable detail of such amount or amounts and the assumptions on which such calculation was based) shall be forwarded to the Borrower through the Administrative Agent and shall be conclusively presumed to be correct save for manifest error.
SECTION 5.10 Increased Costs.
(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 advances, loans or other credit extended or participated in by, any Lender (except any reserve requirement reflected in the LIBOR Rate) or the Issuing Lender;
(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Lender or the Issuing Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or LIBOR Rate Loans made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such Lender, the Issuing Lender or such other Recipient of making, converting to, continuing or maintaining any Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender, the Issuing Lender or such other Recipient 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, the Issuing Lender or other Recipient hereunder (whether of principal, interest or any other amount) then, upon written request of such Lender, the Issuing Lender or other Recipient, the Borrower shall promptly pay to any such Lender, the Issuing Lender or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, the Issuing Lender or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender or the Issuing Lender determines that any Change in Law affecting such Lender or the Issuing Lender or any lending office of such Lender or such Lenders or the Issuing Lenders holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lenders or the Issuing Lenders capital or on the capital of such Lenders or the Issuing Lenders holding company, if any, as a consequence of this Agreement, the Revolving Credit Commitment of such Lender or the Loans made by, or participations in Letters of Credit or Swingline Loans held by, such Lender, or the Letters of Credit issued by the Issuing Lender, to a level below that which such Lender or the Issuing Lender or such Lenders or the Issuing Lenders holding company could have achieved but for such Change in Law (taking into consideration such Lenders or the Issuing Lenders policies and the policies of such Lenders or the Issuing Lenders holding company with respect to capital adequacy), then from time to time upon written request of such
Lender or such Issuing Lender the Borrower shall promptly pay to such Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender or such Lenders or the Issuing Lenders holding company for any such reduction suffered.
(c) Certificates for Reimbursement. A certificate of a Lender, the Issuing Lender or such other Recipient setting forth the amount or amounts necessary to compensate such Lender, the Issuing Lender, such other Recipient or any of their respective holding companies, as the case may be, as specified in clause (a) or (b) of this Section (including, in reasonable detail, the basis for determining such amount or amounts, the calculation of such amount or amounts, and the assumptions on which that calculation is based) and delivered to the Borrower, shall be conclusive absent manifest error. The Borrower shall pay such Lender, the Issuing Lender or such other Recipient, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of any Lender, the Issuing Lender or such other Recipient to demand compensation pursuant to this Section shall not constitute a waiver of such Lenders, the Issuing Lenders or such other Recipients right to demand such compensation; provided that the Borrower shall not be required to compensate any Lender, the Issuing Lender or any other Recipient pursuant to this Section for any increased costs incurred or reductions suffered more than six (6) months prior to the date that such Lender, the Issuing Lender or such other Recipient, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions, and of such Lenders, the Issuing Lenders or such other Recipients intention to claim compensation therefor (except that if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof).
SECTION 5.11 Taxes.
(a) Defined Terms. For purposes of this Section 5.11, the term Lender includes the Issuing Lender and the term Applicable Law includes FATCA.
(b) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that, after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section), the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
(c) Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.
(d) Indemnification by the Borrower. The Borrower shall indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability delivered to the Borrower by a Recipient (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Recipient, shall be conclusive absent manifest error.
(e) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lenders failure to comply with the provisions of Section 12.10(d) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this clause (e).
(f) Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section 5.11, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(g) Status of Lenders.
(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 5.11(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lenders reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(ii) Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person:
(A) Any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the
Borrower or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from United States federal backup withholding tax;
(B) any Foreign Lender shall, to the extent it is legally entitled to do so, 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 reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:
(1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN establishing an exemption from, or reduction of, United States federal withholding Tax pursuant to the interest article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN establishing an exemption from, or reduction of, United States federal withholding Tax pursuant to the business profits or other income article of such tax treaty;
(2) executed originals of IRS Form W-8ECI;
(3) 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 substantially in the form of Exhibit H-1 to the effect that such Foreign Lender is not a bank within the meaning of Section 881(c)(3)(A) of the Code, a 10 percent shareholder of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a controlled foreign corporation described in Section 881(c)(3)(C) of the Code (a U.S. Tax Compliance Certificate) and (y) executed originals of IRS Form W-8BEN; or
(4) to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit H-2 or Exhibit H-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit H-4 on behalf of each such direct and indirect partner;
(C) any Foreign Lender shall, to the extent it is legally entitled to do so, 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 reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in United States federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and
(D) if a payment made to a Lender under any Loan Document would be subject to United States federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lenders obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), FATCA shall include any amendments made to FATCA after the date of this Agreement.
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
(h) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 5.11 (including by the payment of additional amounts pursuant to this Section 5.11), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this clause (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this clause (h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this clause (h) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
(i) Survival. Each partys obligations under this Section 5.11 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.
SECTION 5.12 Mitigation Obligations; Replacement of Lenders.
(a) Designation of a Different Lending Office. If any Lender requests compensation under Section 5.10, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 5.11, then such Lender shall, at the request of the Borrower, 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, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 5.10 or Section 5.11, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
(b) Replacement of Lenders. If any Lender requests compensation under Section 5.10, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 5.11, and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 5.12(a), or if any Lender is a Defaulting Lender or a Non-Consenting Lender, 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 12.10), all of its interests, rights (other than its existing rights to payments pursuant to Section 5.10 or Section 5.11) 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:
(i) the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 12.10;
(ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in Letters of Credit, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 5.9) 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);
(iii) in the case of any such assignment resulting from a claim for compensation under Section 5.10 or payments required to be made pursuant to Section 5.11, such assignment will result in a reduction in such compensation or payments thereafter;
(iv) such assignment does not conflict with Applicable Law; and
(v) in the case of any assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.
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.
SECTION 5.13 Incremental Loans.
(a) At any time, the Borrower may by written notice to the Administrative Agent elect to request the establishment of one or more increases in the Revolving Credit Commitments (any such increase, an Incremental Revolving Credit Commitment) to make revolving credit loans under the Revolving Credit Facility (any such increase, an Incremental Revolving Credit Increase); provided that (1) the total aggregate principal amount for all such Incremental Revolving Credit Commitments shall not (as of any date of incurrence thereof) exceed $10,000,000 and (2) the total aggregate amount for each Incremental Revolving Credit Commitment (and the Incremental Revolving Credit Increase made thereunder) shall not be less than a minimum principal amount of $5,000,000 or, if less, the remaining amount permitted pursuant to the foregoing clause (1). Each such notice shall specify the date (each, an
Increased Amount Date) on which the Borrower proposes that any Incremental Revolving Credit Commitment shall be effective, which shall be a date not less than ten (10) Business Days after the date on which such notice is delivered to Administrative Agent. The Borrower may invite any Lender, any Affiliate of any Lender and/or any Approved Fund, and/or any other Person reasonably satisfactory to the Administrative Agent, to provide an Incremental Revolving Credit Commitment (any such Person, an Incremental Lender). Any proposed Incremental Lender offered or approached to provide all or a portion of any Incremental Revolving Credit Commitment may elect or decline, in its sole discretion, to provide such Incremental Revolving Credit Commitment. Any Incremental Revolving Credit Commitment shall become effective as of such Increased Amount Date; provided that:
(A) no Default or Event of Default shall exist on such Increased Amount Date before or after giving effect to (1) any Incremental Revolving Credit Commitment, (2) the making of any Incremental Revolving Credit Increases pursuant thereto and (3) any Permitted Acquisition consummated in connection therewith;
(B) the Administrative Agent and the Lenders shall have received from the Borrower an Officers Compliance Certificate demonstrating, in form and substance reasonably satisfactory to the Administrative Agent, that the (1) Borrower is in compliance with the financial covenants set forth in Section 9.15 and (2) Consolidated Total Leverage Ratio will be at least 0.25 to 1.00 less than the maximum Consolidated Total Leverage Ratio in effect as of the Increase Amount Date pursuant to Section 9.15(a), in each case based on the financial statements most recently delivered pursuant to Section 8.1(a) or 8.1(b), as applicable, both before and after giving effect (on a Pro Forma Basis) to (x) any Incremental Revolving Credit Commitment, (y) the making of any Incremental Revolving Credit Increases pursuant thereto (with any Incremental Revolving Credit Commitment being deemed to be fully funded) and (z) any Permitted Acquisition consummated in connection therewith;
(C) each of the representations and warranties contained in Article VII shall be true and correct in all material respects, except to the extent any such representation and warranty is qualified by materiality or reference to Material Adverse Effect, in which case, such representation and warranty shall be true, correct and complete in all respects, on such Increased Amount Date with the same effect as if made on and as of such date (except for any such representation and warranty that by its terms is made only as of an earlier date, which representation and warranty shall remain true and correct as of such earlier date);
(D) the proceeds of any Incremental Revolving Credit Increases shall be used for general corporate purposes of the Borrower and its Subsidiaries (including Permitted Acquisitions);
(E) each Incremental Revolving Credit Commitment (and the Incremental Revolving Credit Increases made thereunder) shall constitute Obligations of the Borrower and shall be secured and guaranteed with the other Extensions of Credit on a pari passu basis;
(F) in the case of each Incremental Revolving Credit Increase (the terms of which shall be set forth in the relevant Lender Joinder Agreement):
(x) such Incremental Revolving Credit Increase shall mature on the Revolving Credit Maturity Date, shall bear interest and be entitled to fees, in
each case at the rate applicable to the Revolving Credit Loans, and shall be subject to the same terms and conditions as the Revolving Credit Loans;
(y) the outstanding Revolving Credit Loans and Revolving Credit Commitment Percentages of Swingline Loans and L/C Obligations will be reallocated by the Administrative Agent on the applicable Increased Amount Date among the Revolving Credit Lenders (including the Incremental Lenders providing such Incremental Revolving Credit Increase) in accordance with their revised Revolving Credit Commitment Percentages (and the Revolving Credit Lenders (including the Incremental Lenders providing such Incremental Revolving Credit Increase) agree to make all payments and adjustments necessary to effect such reallocation and the Borrower shall pay any and all costs required pursuant to Section 5.9 in connection with such reallocation as if such reallocation were a repayment); and
(z) except as provided above, all of the other terms and conditions applicable to such Incremental Revolving Credit Increase shall, except to the extent otherwise provided in this Section 5.13, be identical to the terms and conditions applicable to the Revolving Credit Facility;
(G) any Incremental Lender with an Incremental Revolving Credit Increase shall be entitled to the same voting rights as the existing Revolving Credit Lenders under the Revolving Credit Facility and any Extensions of Credit made in connection with each Incremental Revolving Credit Increase shall receive proceeds of prepayments on the same basis as the other Revolving Credit Loans made hereunder;
(H) such Incremental Revolving Credit Commitments shall be effected pursuant to one or more Lender Joinder Agreements executed and delivered by the Borrower, the Administrative Agent and the applicable Incremental Lenders (which Lender Joinder Agreement may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the Administrative Agent, to effect the provisions of this Section 5.13); and
(I) the Borrower shall deliver or cause to be delivered any customary legal opinions or other documents (including, without limitation, a resolution duly adopted by the board of directors (or equivalent governing body) of each Credit Party authorizing such Incremental Revolving Credit Agreement and/or Incremental Revolving Credit Commitment) reasonably requested by Administrative Agent in connection with any such transaction.
(b) The Incremental Lenders shall be included in any determination of the Required Lenders or Required Revolving Credit Lenders, as applicable, and, unless otherwise agreed, the Incremental Lenders will not constitute a separate voting class for any purposes under this Agreement.
(c) On any Increased Amount Date on which any Incremental Revolving Credit Increase becomes effective, subject to the foregoing terms and conditions, each Incremental Lender with an Incremental Revolving Credit Commitment shall become a Revolving Credit Lender hereunder with respect to such Incremental Revolving Credit Commitment.
SECTION 5.14 Cash Collateral. At any time that there shall exist a Defaulting Lender, within one Business Day following the written request of the Administrative Agent, the Issuing Lender or the Swingline Lender (with a copy to the Administrative Agent), the Borrower shall Cash Collateralize the Fronting Exposure of the Issuing Lender and/or the Swingline Lender, as applicable, with respect to such Defaulting Lender (determined after giving effect to Section 5.15(a)(iv) and any Cash Collateral provided by such Defaulting Lender) in an amount not less than the Minimum Collateral Amount.
(a) Grant of Security Interest. The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to the Administrative Agent, for the benefit of the Issuing Lender and the Swingline Lender, and agrees to maintain, a first priority security interest in all such Cash Collateral as security for the Defaulting Lenders obligation to fund participations in respect of L/C Obligations and Swingline Loans, to be applied pursuant to subsection (b) below. 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, the Issuing Lender and the Swingline Lender as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Borrower 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 (after giving effect to any Cash Collateral provided by the Defaulting Lender).
(b) Application. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section 5.14 or Section 5.15 in respect of Letters of Credit and Swingline Loans shall be applied to the satisfaction of the Defaulting Lenders obligation to fund participations in respect of L/C Obligations and Swingline Loans (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.
(c) Termination of Requirement. Cash Collateral (or the appropriate portion thereof) provided to reduce the Fronting Exposure of the Issuing Lender and/or the Swingline Lender, as applicable, shall no longer be required to be held as Cash Collateral pursuant to this Section 5.14 following (i) the elimination of the applicable Fronting Exposure (including by the termination of Defaulting Lender status of the applicable Lender), or (ii) the determination by the Administrative Agent, the Issuing Lender and the Swingline Lender that there exists excess Cash Collateral; provided that, subject to Section 5.15, the Person providing Cash Collateral, the Issuing Lender and the Swingline Lender may agree that Cash Collateral shall be held to support future anticipated Fronting Exposure or other obligations; and provided further that to the extent that such Cash Collateral was provided by the Borrower, such Cash Collateral shall remain subject to the security interest granted pursuant to the Loan Documents.
SECTION 5.15 Defaulting Lenders.
(a) Defaulting Lender Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by Applicable Law:
(i) Waivers and Amendments. Such Defaulting Lenders right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Lenders and Section 12.2.
(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article X or otherwise) or received by
the Administrative Agent from a Defaulting Lender pursuant to Section 12.4 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 such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to the Issuing Lender and the Swingline Lender hereunder; third, to Cash Collateralize the Fronting Exposure of the Issuing Lender and the Swingline Lender with respect to such Defaulting Lender in accordance with Section 5.14; fourth, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan or funded participation in respect of which such 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 a deposit account and released pro rata in order to (A) satisfy such Defaulting Lenders potential future funding obligations with respect to Loans and funded participations under this Agreement and (B) Cash Collateralize the Issuing Lenders future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit and Swingline Loans issued under this Agreement, in accordance with Section 5.14; sixth, to the payment of any amounts owing to the Lenders, the Issuing Lender or the Swingline Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the Issuing Lender or the Swingline Lender against such Defaulting Lender as a result of such Defaulting Lenders 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 such Defaulting Lender as a result of such Defaulting Lenders breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (1) such payment is a payment of the principal amount of any Loans or funded participations in Letters of Credit or Swingline Loans in respect of which such Defaulting Lender has not fully funded its appropriate share, and (2) such Loans were made or the related Letters of Credit or Swingline Loans were issued at a time when the conditions set forth in Section 6.2 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and funded participations in Letters of Credit or Swingline Loans owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or funded participations in Letters of Credit or Swingline Loans owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in L/C Obligations and Swingline Loans are held by the Lenders pro rata in accordance with the Revolving Credit Commitments under the applicable Revolving Credit Facility without giving effect to Section 5.15(a)(iv). 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 5.15(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(iii) Certain Fees.
(A) No Defaulting Lender shall be entitled to receive any Commitment Fee for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).
(B) Each Defaulting Lender shall be entitled to receive letter of credit commissions pursuant to Section 3.3 for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Revolving Credit Commitment Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 5.14.
(C) With respect to any Commitment Fee or letter of credit commission not required to be paid to any Defaulting Lender pursuant to clause (A) or (B) above, the Borrower shall (1) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lenders participation in L/C Obligations or Swingline Loans that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (2) pay to each Issuing Lender and Swingline Lender, as applicable, the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such Issuing Lenders or Swingline Lenders Fronting Exposure to such Defaulting Lender, and (3) not be required to pay the remaining amount of any such fee.
(iv) Reallocation of Participations to Reduce Fronting Exposure. All or any part of such Defaulting Lenders participation in L/C Obligations and Swingline Loans shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Revolving Credit Commitment Percentages (calculated without regard to such Defaulting Lenders Revolving Credit Commitment) but only to the extent that (x) the conditions set forth in Section 6.2 are satisfied at the time of such reallocation (and, unless the Borrower shall have otherwise notified the Administrative Agent at such time, the Borrower shall be deemed to have represented and warranted that such conditions are satisfied at such time), and (y) such reallocation does not cause the aggregate Revolving Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lenders Revolving Credit Commitment. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lenders increased exposure following such reallocation.
(v) Cash Collateral, Repayment of Swingline Loans. If the reallocation described in clause (iv) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, (x) first, prepay Swingline Loans in an amount equal to the Swingline Lenders Fronting Exposure and (y) second, Cash Collateralize the Issuing Lenders Fronting Exposure in accordance with the procedures set forth in Section 5.14.
(b) Defaulting Lender Cure. If the Borrower, the Administrative Agent, the Issuing Lender and the Swingline Lender agree in writing that a Lender is no longer 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), such Lender will, to the extent applicable, purchase at par 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 Loans and funded and unfunded participations in Letters of Credit and Swingline Loans to be held pro rata by the Lenders in accordance with the Commitments under the applicable Credit Facility (without giving effect to Section 5.15(a)(iv)), whereupon such 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 Lenders having been a Defaulting Lender.
ARTICLE VI
CONDITIONS OF CLOSING AND BORROWING
SECTION 6.1 Conditions to Closing and Initial Extensions of Credit. The obligation of the Lenders to close this Agreement and to make the initial Loans or issue or participate in the initial Letters of Credit, if any, is subject to the satisfaction of each of the following conditions:
(a) Executed Loan Documents. This Agreement, a Revolving Credit Note in favor of each Revolving Credit Lender requesting a Revolving Credit Note, a Swingline Note in favor of the Swingline Lender (if requested thereby), and the Security Documents (including Mortgages, but only with respect to the Specified Real Property marked in Schedule 1.1B as requiring a Mortgage on the Closing Date), together with any other applicable Loan Documents, shall have been duly authorized, executed and delivered to the Administrative Agent by the parties thereto, shall be in full force and effect and no Default or Event of Default shall exist hereunder or thereunder.
(b) Closing Certificates; Etc. The Administrative Agent shall have received each of the following in form and substance reasonably satisfactory to the Administrative Agent:
(i) Officers Certificate. A certificate from a Responsible Officer of the Borrower to the effect that (A) all representations and warranties of the Credit Parties contained in this Agreement and the other Loan Documents are true, correct and complete in all material respects (except to the extent any such representation and warranty is qualified by materiality or reference to Material Adverse Effect, in which case, such representation and warranty shall be true, correct and complete in all respects); (B) none of the Credit Parties is in violation of any of the covenants contained in this Agreement and the other Loan Documents; (C) after giving effect to the Transactions, no Default or Event of Default has occurred and is continuing; (D) since December 31, 2011, no event has occurred or condition arisen, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect; and (E) each of the Credit Parties, as applicable, has satisfied each of the conditions set forth in Section 6.1 and Section 6.2.
(ii) Certificate of Secretary of each Credit Party. A certificate of a Responsible Officer of each Credit Party certifying as to the incumbency and genuineness of the signature of each officer of such Credit Party executing Loan Documents to which it is a party and certifying that attached thereto is a true, correct and complete copy of (A) the articles or certificate of incorporation or formation (or equivalent), as applicable, of such Credit Party and all amendments thereto, certified as of a recent date by the appropriate Governmental Authority in its jurisdiction of incorporation, organization or formation (or equivalent), as applicable, (B) the bylaws or other governing document of such Credit Party as in effect on the Closing Date, (C) resolutions duly adopted by the board of directors (or other governing body) of such Credit Party authorizing and approving the transactions contemplated hereunder and the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party, and (D) each certificate required to be delivered pursuant to Section 6.1(b)(iii).
(iii) Certificates of Good Standing. Certificates as of a recent date of the good standing of each Credit Party under the laws of its jurisdiction of incorporation, organization or formation (or equivalent), as applicable, and, to the extent requested by the Administrative Agent, each other jurisdiction where such Credit Party is qualified to do business and, to the extent available, a certificate of the relevant taxing authorities of such jurisdictions certifying that such Credit Party has filed required tax returns and owes no delinquent taxes.
(iv) Opinions of Counsel. Favorable opinions of counsel to the Credit Parties addressed to the Administrative Agent and the Lenders with respect to the Credit Parties, the Loan Documents and such other matters as the Lenders shall request (which such opinions shall expressly permit reliance by permitted successors and assigns of the addressees thereof).
(v) ALLY Documents. Copies of each of the ALLY Documents, together with a certificate of a Responsible Officer of the Borrower certifying each such document as being a true, correct, and complete copy thereof.
(c) Personal Property Collateral.
(i) Filings and Recordings. The Administrative Agent shall have received all filings and recordations that are necessary to perfect the security interests of the Administrative Agent, on behalf of the Secured Parties, in the Collateral and the Administrative Agent shall have received evidence reasonably satisfactory to the Administrative Agent that upon such filings and recordations such security interests constitute valid and perfected first priority Liens thereon (subject to Permitted Liens).
(ii) Pledged Collateral. The Administrative Agent shall have received (A) original stock certificates or other certificates evidencing the Capital Stock pledged pursuant to the Security Documents, together with an undated stock power for each such certificate duly executed in blank by the registered owner thereof and (B) each original promissory note pledged pursuant to the Security Documents together with an undated endorsement for each such promissory note duly executed in blank by the holder thereof.
(iii) Lien Search. The Administrative Agent shall have received the results of a Lien search (including a search as to judgments, pending litigation, bankruptcy, tax and intellectual property matters), in form and substance reasonably satisfactory thereto, made against the Credit Parties under the Uniform Commercial Code (or applicable judicial docket) as in effect in each jurisdiction in which filings or recordations under the Uniform Commercial Code should be made to evidence or perfect security interests in all assets of such Credit Party, indicating among other things that the assets of each such Credit Party are free and clear of any Lien (except for Permitted Liens).
(iv) Hazard and Liability Insurance. The Administrative Agent shall have received, in each case in form and substance reasonably satisfactory to the Administrative Agent, evidence of property hazard, business interruption and liability insurance covering each Credit Party, evidence of payment of all insurance premiums for the current policy year of each policy (with appropriate endorsements naming the Administrative Agent as lenders loss payee (and mortgagee, as applicable) on all policies for property hazard insurance and as additional insured on all policies for liability insurance), and if requested by the Administrative Agent, copies of such insurance policies.
(v) Other Collateral Documentation. The Administrative Agent shall have received any documents reasonably requested thereby or as required by the terms of the Security Documents to evidence its security interest in the Collateral (including, without limitation, any landlord waivers or collateral access agreements, filings evidencing a security interest in any intellectual property included in the Collateral, notices and assignments of claims required under Applicable Laws, bailee or warehouseman letters or filings with the FCC or any other applicable Governmental Authority).
(d) Real Property Collateral.
(i) Title Insurance. The Administrative Agent shall have received a marked-up commitment for a policy of title insurance, insuring the Secured Parties first priority Liens and showing no Liens prior to the Secured Parties Liens other than for ad valorem taxes not yet due and payable, with title insurance companies acceptable to the Administrative Agent, on each property subject to a Mortgage. For the avoidance of doubt, only the Specified Real Property marked in Schedule 1.1B as requiring a Mortgage on the Closing Date will be required to be subject to a Mortgage on the Closing Date (including in connection with the consummation of the Transactions).
(ii) Title Exceptions. The Administrative Agent shall have received copies of all recorded documents creating exceptions to the title policy referred to in Section 6.1(d)(i).
(iii) Matters Relating to Flood Hazard Properties. The Administrative Agent shall have received a certification from the National Research Center, or any successor agency thereto, regarding each parcel of real property subject to a Mortgage.
(iv) Surveys. The Administrative Agent shall have received copies of as-built surveys of a recent date not more than thirty (30) days prior to the Closing Date of each parcel of real property subject to a Mortgage certified as of a recent date by a registered engineer or land surveyor. Each such survey shall be accompanied by an affidavit of an authorized signatory of the owner of such property stating that there have been no improvements or encroachments to the property since the date of the respective survey such that the existing survey is no longer accurate. Such survey shall show the area of such property, all boundaries of the land with courses and distances indicated, including chord bearings and arc and chord distances for all curves, and shall show dimensions and locations of all easements, private drives, roadways, and other facts materially affecting such property, and shall show such other details as the Administrative Agent may reasonably request, including, without limitation, any encroachment (and the extent thereof in feet and inches) onto the property or by any of the improvements on the property upon adjoining land or upon any easement burdening the property; any improvements, to the extent constructed, and the relation of the improvements by distances to the boundaries of the property, to any easements burdening the property, and to the established building lines and the street lines; and if improvements are existing, (A) a statement of the number of each type of parking space required by Applicable Laws, ordinances, orders, rules, regulations, restrictive covenants and easements affecting the improvement, and the number of each such type of parking space provided, and (B) the locations of all utilities serving the improvement.
(v) Environmental Assessments. The Administrative Agent shall have received a Phase I environmental assessment and such other environmental report reasonably requested by the Administrative Agent regarding each parcel of real property subject to a Mortgage by an environmental engineering firm acceptable to the Administrative Agent showing no environmental conditions in violation of Environmental Laws or liabilities under Environmental Laws, either of which could reasonably be expected to have a Material Adverse Effect.
(vi) [Reserved].
(vii) Other Real Property Information. The Administrative Agent shall have received such other certificates, documents and information as are reasonably requested by the Lenders, including, without limitation, landlord agreements/waivers, engineering and structural reports,
permanent certificates of occupancy and evidence of zoning compliance, each in form and substance reasonably satisfactory to the Administrative Agent.
(e) Consents; Defaults.
(i) Governmental and Third Party Approvals. The Credit Parties shall have received all material governmental, shareholder and third party consents and approvals necessary (or any other material consents as determined in the reasonable discretion of the Administrative Agent) in connection with the Transactions and the other transactions contemplated by this Agreement and the other Loan Documents and all applicable waiting periods shall have expired without any action being taken by any Person that could reasonably be expected to restrain, prevent or impose any material adverse conditions on any of the Credit Parties or such other transactions or that could seek or threaten any of the foregoing, and no law or regulation shall be applicable which in the reasonable judgment of the Administrative Agent could reasonably be expected to have such effect.
(ii) No Injunction, Etc. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain substantial damages in respect of, or which is related to or arises out of this Agreement or the other Loan Documents or the consummation of the transactions contemplated hereby or thereby or any other Transaction, or which, in the Administrative Agents sole discretion, would make it inadvisable to consummate the transactions contemplated by this Agreement or the other Loan Documents or the consummation of the transactions contemplated hereby or thereby or any other Transaction.
(f) Financial Matters.
(i) Financial Statements. The Administrative Agent shall have received (A) the audited Consolidated balance sheet of the Borrower and its Subsidiaries as of December 31, 2011, and the related audited statements of income and retained earnings and cash flows for the Fiscal Year then ended and (B) unaudited Consolidated balance sheet of the Borrower and its Subsidiaries as of October 27, 2012, and related unaudited interim statements of income and retained earnings.
(ii) [Reserved].
(iii) [Reserved].
(iv) Financial Condition/Solvency Certificate. The Borrower shall have delivered to the Administrative Agent a certificate, in form and substance satisfactory to the Administrative Agent, and certified as accurate by the chief financial officer of the Borrower, that (A) after giving effect to the Transactions, each Credit Party and each Subsidiary thereof is each Solvent, (B) attached thereto are calculations evidencing compliance on a Pro Forma Basis after giving effect to the Transactions with the covenants contained in Section 9.15, (C) the financial projections previously delivered to the Administrative Agent represent the good faith estimates (utilizing reasonable assumptions) of the financial condition and operations of the Borrower and its Subsidiaries.
(v) [Reserved].
(vi) Payment at Closing. The Borrower shall have paid (A) to the Administrative Agent, the Arranger and the Lenders the fees set forth or referenced in Section 5.3 and any other accrued and unpaid fees or commissions due hereunder, (B) all fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent accrued and unpaid 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) and (C) to any other Person such amount as may be due thereto in connection with the transactions contemplated hereby, including all taxes, fees and other charges in connection with the execution, delivery, recording, filing and registration of any of the Loan Documents.
(g) [Reserved].
(h) Miscellaneous.
(i) Notice of Borrowing. The Administrative Agent shall have received a Notice of Borrowing from the Borrower in accordance with Section 2.3(a), and a Notice of Account Designation specifying the account or accounts to which the proceeds of any Loans made on or after the Closing Date are to be disbursed.
(ii) Due Diligence. The Administrative Agent shall have completed, to its satisfaction, all legal, tax, environmental, business and other due diligence with respect to the business, assets, liabilities, operations and condition (financial or otherwise) of the Borrower and its Subsidiaries in scope and determination satisfactory to the Administrative Agent in its sole discretion.
(iii) Existing Indebtedness. All existing Indebtedness of the Borrower and its Subsidiaries (including Indebtedness under the Existing Credit Agreement but excluding Indebtedness permitted pursuant to Section 9.1) shall be repaid in full and terminated and all collateral security therefor shall be released, and the Administrative Agent shall have received pay-off letters in form and substance satisfactory to it evidencing such repayment, termination and release. Any existing Indebtedness permitted pursuant to Section 9.1 shall be on terms and conditions reasonably satisfactory to the Administrative Agent.
(iv) [Reserved].
(v) PATRIOT Act, etc. The Borrower and each of the Subsidiary Guarantors shall have provided to the Administrative Agent and the Lenders the documentation and other information requested by the Administrative Agent in order to comply with requirements of the PATRIOT Act, applicable know your customer and anti-money laundering rules and regulations.
(vi) Other Documents. All opinions, certificates and other instruments and all proceedings in connection with the transactions contemplated by this Agreement shall be satisfactory in form and substance to the Administrative Agent. The Administrative Agent shall have received copies of all other documents, certificates and instruments reasonably requested thereby, with respect to the transactions contemplated by this Agreement.
Without limiting the generality of the provisions of the last paragraph of Section 11.3, for purposes of determining compliance with the conditions specified in this Section 6.1, the Administrative Agent and 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.
SECTION 6.2 Conditions to All Extensions of Credit. The obligations of the Lenders to make or participate in any Extensions of Credit (including the initial Extension of Credit), convert or continue any Loan, and/or the Issuing Lender to issue or extend any Letter of Credit are subject to the satisfaction of the following conditions precedent on the relevant borrowing, continuation, conversion, issuance or extension date:
(a) Continuation of Representations and Warranties. The representations and warranties contained in this Agreement and the other Loan Documents shall be true and correct in all material respects, except for any representation and warranty that is qualified by materiality or reference to Material Adverse Effect, which such representation and warranty shall be true and correct in all respects, on and as of such borrowing, continuation, conversion, issuance or extension date with the same effect as if made on and as of such date (except for any such representation and warranty that by its terms is made only as of an earlier date, which representation and warranty shall remain true and correct in all material respects as of such earlier date, except for any representation and warranty that is qualified by materiality or reference to Material Adverse Effect, which such representation and warranty shall be true and correct in all respects as of such earlier date).
(b) No Existing Default. No Default or Event of Default shall have occurred and be continuing (i) on the borrowing, continuation or conversion date with respect to such Loan or after giving effect to the Loans to be made, continued or converted on such date or (ii) on the issuance or extension date with respect to such Letter of Credit or after giving effect to the issuance or extension of such Letter of Credit on such date.
(c) Notices. The Administrative Agent shall have received a Notice of Borrowing or Notice of Conversion/Continuation, as applicable, from the Borrower in accordance with Section 2.3(a) or Section 5.2, as applicable.
(d) Additional Documents. The Administrative Agent shall have received each additional document, instrument, legal opinion or other item reasonably requested by it.
(e) New Swingline Loans/Letters of Credit. So long as any Lender is a Defaulting Lender, (i) the Swingline Lender shall not be required to fund any Swingline Loans unless it is satisfied that it will have no Fronting Exposure after giving effect to such Swingline Loan and (ii) the Issuing Lender shall not be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and Lenders to enter into this Agreement and to induce the Lenders to make Extensions of Credit, the Borrower hereby represents and warrants to the Administrative Agent and the Lenders both before and after giving effect to the transactions contemplated hereunder, which representations and warranties shall be deemed made on the Closing Date and as otherwise set forth in Section 6.2, that:
SECTION 7.1 Organization; Power; Qualification. Each Credit Party and each Subsidiary thereof (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation, (b) has the power and authority to own its Properties and to carry on its business as now being and hereafter proposed to be conducted and (c) is duly qualified and authorized to do business in each jurisdiction in which the character of its Properties or the nature of its business requires such qualification and authorization except in jurisdictions where the failure to be so qualified or in good standing could not reasonably be expected to result in a Material Adverse Effect. The jurisdictions in which each Credit Party and each Subsidiary thereof are organized and qualified to do business as of the Closing Date are described on Schedule 7.1.
SECTION 7.2 Ownership. Each Subsidiary of each Credit Party as of the Closing Date is listed on Schedule 7.2. As of the Closing Date, the capitalization of each Credit Party and its Subsidiaries consists of the number of shares, authorized, issued and outstanding, of such classes and series, with or without par value, described on Schedule 7.2. All outstanding shares have been duly authorized and validly issued and are fully paid and nonassessable and not subject to any preemptive or similar rights, except as described in Schedule 7.2. The shareholders or other owners, as applicable, of each Subsidiary of the Borrower and the number of shares owned by each as of the Closing Date are described on Schedule 7.2. As of the Closing Date, there are no outstanding stock purchase warrants, subscriptions, options, securities, instruments or other rights of any type or nature whatsoever, which are convertible into, exchangeable for or otherwise provide for or require the issuance of Capital Stock of any Credit Party or any Subsidiary thereof, except as described on Schedule 7.2.
SECTION 7.3 Authorization; Enforceability. Each Credit Party and each Subsidiary thereof has the right, power and authority and has taken all necessary corporate and other action to authorize the execution, delivery and performance of this Agreement and each of the other Loan Documents to which it is a party in accordance with their respective terms. This Agreement and each of the other Loan Documents have been duly executed and delivered by the duly authorized officers of each Credit Party and each Subsidiary thereof that is a party thereto, and each such document constitutes the legal, valid and binding obligation of each Credit Party and each Subsidiary thereof that is a party thereto, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors rights in general and the availability of equitable remedies.
SECTION 7.4 Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc. The execution, delivery and performance by each Credit Party and each Subsidiary thereof of the Loan Documents to which each such Person is a party, in accordance with their respective terms, the Extensions of Credit hereunder and the transactions contemplated hereby or thereby do not and will not, by the passage of time, the giving of notice or otherwise, (a) require any Governmental Approval or violate any Applicable Law relating to any Credit Party or any Subsidiary thereof, (b) conflict with, result in a breach of or constitute a default under the articles of incorporation, bylaws or other organizational documents of any Credit Party or any Subsidiary thereof, (c) conflict with, result in a breach of or constitute a default under any Material Contract or any other indenture, agreement, or instrument to which such Person is a party or by which any of its properties may be bound or any Governmental Approval relating to such Person, which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (d) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by such Person other than Permitted Liens or (e) require any consent or authorization of, filing with, or other act in respect of, an arbitrator or Governmental Authority and no consent of any other Person is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement other than (i) consents, authorizations, filings or other acts or consents for which the failure to obtain or make could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, (ii) consents or filings under the UCC and (iii) filings with the United States Patent and Trademark Office.
SECTION 7.5 Compliance with Law; Governmental Approvals. Each Credit Party and each Subsidiary thereof (a) has all Governmental Approvals required by any Applicable Law for it to conduct its business, each of which is in full force and effect, is final and not subject to review on appeal and is not the subject of any pending or, to its knowledge, threatened attack by direct or collateral proceeding, (b) is in compliance with each Governmental Approval applicable to it and in compliance with all other Applicable Laws relating to it or any of its respective properties and (c) has timely filed all material reports, documents and other materials required to be filed by it under all Applicable Laws with any Governmental Authority and has retained all material records and documents required to be retained by it under Applicable Law except in each case (a), (b) or (c) where the failure to have, comply or file could not reasonably be expected to have a Material Adverse Effect.
SECTION 7.6 Tax Returns and Payments. Each Credit Party and each Subsidiary thereof has duly filed or caused to be filed all federal, state, local and other tax returns required by Applicable Law to be filed, and has paid, or made adequate provision for the payment of, all federal, state, local and other taxes, assessments and governmental charges or levies upon it and its property, income, profits and assets which are due and payable (other than any amount the validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided for on the books of the relevant Credit Party). Such returns accurately reflect in all material respects all liability for taxes of any Credit Party or any Subsidiary thereof for the periods covered thereby. There is no ongoing audit or examination or, to its knowledge, other investigation by any Governmental Authority of the tax liability of any Credit Party or any Subsidiary thereof. No Governmental Authority has asserted any Lien or other claim against any Credit Party or any Subsidiary thereof with respect to unpaid taxes which has not been discharged or resolved (other than (a) any amount the validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided for on the books of the relevant Credit Party and (b) Permitted Liens). The charges, accruals and reserves on the books of each Credit Party and each Subsidiary thereof in respect of federal, state, local and other taxes for all Fiscal Years and portions thereof since the organization of any Credit Party or any Subsidiary thereof are in the judgment of the Borrower adequate, and the Borrower does not anticipate any additional taxes or assessments for any of such years.
SECTION 7.7 Intellectual Property Matters. Each Credit Party and each Subsidiary thereof owns or possesses rights to use all franchises, licenses, copyrights, copyright applications, patents, patent rights or licenses, patent applications, trademarks, trademark rights, service mark, service mark rights, trade names, trade name rights, copyrights and other rights with respect to the foregoing which are necessary to conduct its business. No event has occurred which permits, or after notice or lapse of time or both would permit, the revocation or termination of any such rights, and no Credit Party nor any Subsidiary thereof is liable to any Person for infringement under Applicable Law with respect to any such rights as a result of its business operations.
SECTION 7.8 Environmental Matters.
(a) Except as set forth on Schedule 7.8, the properties owned, leased or operated by each Credit Party and each Subsidiary thereof now or in the past do not contain, and to their knowledge have not previously contained, any Hazardous Materials in amounts or concentrations which constitute or constituted a violation of applicable Environmental Laws;
(b) Except as set forth on Schedule 7.8, to the knowledge of the Borrower, each Credit Party and each Subsidiary thereof and such properties and all operations conducted in connection therewith are in compliance, and have been in compliance, with all applicable Environmental Laws, and there is no contamination at, under or about such properties or such operations which could interfere with the continued operation of such properties or impair the fair saleable value thereof;
(c) Except as set forth on Schedule 7.8, no Credit Party nor any Subsidiary thereof has received any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters, Hazardous Materials, or compliance with Environmental Laws, nor does any Credit Party or any Subsidiary thereof have knowledge or reason to believe that any such notice will be received or is being threatened;
(d) Except as set forth on Schedule 7.8, to the knowledge of the Borrower, Hazardous Materials have not been transported or disposed of to or from the properties owned, leased or operated by any Credit Party or any Subsidiary thereof in violation of, or in a manner or to a location which could give rise to liability under, Environmental Laws, nor have any Hazardous Materials been generated, treated, stored or disposed of at, on or under any of such properties in violation of, or in a manner that could give rise to liability under, any applicable Environmental Laws;
(e) Except as set forth on Schedule 7.8, no judicial proceedings or governmental or administrative action is pending, or, to the knowledge of the Borrower, threatened, under any Environmental Law to which any Credit Party or any Subsidiary thereof is or will be named as a potentially responsible party with respect to such properties or operations conducted in connection therewith, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to any Credit Party, any Subsidiary thereof or such properties or such operations that could reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect; and
(f) Except as set forth on Schedule 7.8, there has been no release, or to the knowledge of the Borrower, threat of release, of Hazardous Materials at or from properties owned, leased or operated by any Credit Party or any Subsidiary, now or in the past, in violation of or in amounts or in a manner that could give rise to liability under Environmental Laws that could reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
SECTION 7.9 Employee Benefit Matters.
(a) As of the Closing Date, no Credit Party nor any ERISA Affiliate maintains or contributes to, or has any obligation under, any Employee Benefit Plans other than those identified on Schedule 7.9;
(b) Each Credit Party and each ERISA Affiliate is in compliance with all applicable provisions of ERISA, the Code and the regulations and published interpretations thereunder with respect to all Employee Benefit Plans except for any required amendments for which the remedial amendment period as defined in Section 401(b) of the Code has not yet expired and except where a failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code has been determined by the IRS to be so qualified, and each trust related to such plan has been determined to be exempt under Section 501(a) of the Code except for such plans that have not yet received determination letters but for which the remedial amendment period for submitting a determination letter has not yet expired. No liability has been incurred by any Credit Party or any ERISA Affiliate which remains unsatisfied for any taxes or penalties assessed with respect to any Employee Benefit Plan or any Multiemployer Plan except for a liability that could not reasonably be expected to have a Material Adverse Effect;
(c) As of the Closing Date, no Pension Plan has been terminated, nor has any Pension Plan become subject to funding based benefit restrictions under Section 436 of the Code, nor has any funding waiver from the IRS been received or requested with respect to any Pension Plan, nor has any Credit Party or any ERISA Affiliate failed to make any contributions or to pay any amounts due and owing as required by Sections 412 or 430 of the Code, Section 302 of ERISA or the terms of any Pension Plan on or prior to the due dates of such contributions under Sections 412 or 430 of the Code or Section 302 of ERISA, nor has there been any event requiring any disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension Plan;
(d) Except where the failure of any of the following representations to be correct could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, no Credit Party nor any ERISA Affiliate has: (i) engaged in a nonexempt prohibited transaction described in Section 406 of the ERISA or Section 4975 of the Code, (ii) incurred any liability to the PBGC which remains outstanding other than the payment of premiums and there are no premium payments which are due and unpaid, (iii) failed to make a required contribution or payment to a Multiemployer Plan, or (iv) failed to make a required installment or other required payment under Sections 412 or 430 of the Code;
(e) No Termination Event has occurred or is reasonably expected to occur;
(f) Except where the failure of any of the following representations to be correct could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, no proceeding, claim (other than a benefits claim in the ordinary course of business), lawsuit and/or investigation is existing or, to its knowledge, threatened concerning or involving (i) any employee welfare benefit plan (as defined in Section 3(1) of ERISA) currently maintained or contributed to by any Credit Party or any ERISA Affiliate, (ii) any Pension Plan or (iii) any Multiemployer Plan.
(g) No Credit Party nor any Subsidiary thereof is a party to any contract, agreement or arrangement that could, solely as a result of the delivery of this Agreement or the consummation of transactions contemplated hereby, result in the payment of any excess parachute payment within the meaning of Section 280G of the Code.
SECTION 7.10 Margin Stock. No Credit Party nor any Subsidiary thereof is engaged principally or as one of its activities in the business of extending credit for the purpose of purchasing or carrying any margin stock (as each such term is defined or used, directly or indirectly, in Regulation U of the Board of Governors of the Federal Reserve System). No part of the proceeds of any of the Loans or Letters of Credit will be used for purchasing or carrying margin stock or for any purpose which violates, or which would be inconsistent with, the provisions of Regulation T, U or X of such Board of Governors.
SECTION 7.11 Government Regulation. No Credit Party nor any Subsidiary thereof is an investment company or a company controlled by an investment company (as each such term is defined or used in the Investment Company Act of 1940) and no Credit Party nor any Subsidiary thereof is, or after giving effect to any Extension of Credit will be, subject to regulation under the Interstate Commerce Act, or any other Applicable Law which limits its ability to incur or consummate the transactions contemplated hereby.
SECTION 7.12 Material Contracts. Schedule 7.12 sets forth a complete and accurate list of all Material Contracts of each Credit Party and each Subsidiary thereof in effect as of the Closing Date. Other than as set forth in Schedule 7.12, each such Material Contract is, and after giving effect to the consummation of the transactions contemplated by the Loan Documents will be, in full force and effect in
accordance with the terms thereof. To the extent requested by the Administrative Agent, each Credit Party and each Subsidiary thereof has delivered to the Administrative Agent a true and complete copy of each Material Contract required to be listed on Schedule 7.12 or any other Schedule hereto. No Credit Party nor any Subsidiary thereof (nor, to its knowledge, any other party thereto) is in breach of or in default under any Material Contract in any material respect.
SECTION 7.13 Employee Relations. No Credit Party or any Subsidiary thereof is party to any collective bargaining agreement, nor has any labor union been recognized as the representative of its employees except as set forth on Schedule 7.13. The Borrower knows of no pending, threatened or contemplated strikes, work stoppage or other collective labor disputes involving its employees or those of its Subsidiaries.
SECTION 7.14 Burdensome Provisions. The Credit Parties and their respective Subsidiaries do not presently anticipate that future expenditures needed to meet the provisions of any statutes, orders, rules or regulations of a Governmental Authority will be so burdensome as to have a Material Adverse Effect. No Subsidiary is party to any agreement or instrument or otherwise subject to any restriction or encumbrance that restricts or limits its ability to make dividend payments or other distributions in respect of its Capital Stock to the Borrower or any Subsidiary or to transfer any of its assets or properties to the Borrower or any other Subsidiary in each case other than existing under or by reason of the Loan Documents or Applicable Law.
SECTION 7.15 Financial Statements. The audited and unaudited financial statements delivered pursuant to Section 6.1(f)(i) are complete and correct and fairly present on a Consolidated basis the assets, liabilities and financial position of the Borrower and its Subsidiaries as at such dates, and the results of the operations and changes of financial position for the periods then ended (other than customary year-end adjustments for unaudited financial statements and the absence of footnotes from unaudited financial statements). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP. Such financial statements show all material indebtedness and other material liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof, including material liabilities for taxes, material commitments, and Indebtedness, in each case, to the extent required to be disclosed under GAAP.
SECTION 7.16 No Material Adverse Change. Since December 31, 2011, there has been no material adverse change in the properties, business, operations, or condition (financial or otherwise) of the Borrower and its Subsidiaries and no event has occurred or condition arisen, either individually or in the aggregate, that could reasonably be expected to have a Material Adverse Effect.
SECTION 7.17 Solvency. The Credit Parties, on a Consolidated basis, are Solvent.
SECTION 7.18 Titles to Properties. As of the Closing Date, the real property listed on Schedule 7.18 constitutes all of the real property that is owned, leased, subleased or used by any Credit Party or any of its Subsidiaries. Each Credit Party and each Subsidiary thereof has such title to the real property owned or leased by it as is necessary or desirable to the conduct of its business and valid and legal title to all of its personal property and assets, except those which have been disposed of by the Credit Parties and their Subsidiaries subsequent to such date which dispositions have been in the ordinary course of business or as otherwise expressly permitted hereunder.
SECTION 7.19 Litigation. Except for matters existing on the Closing Date that are set forth on Schedule 7.19, there are no actions, suits or proceedings pending nor, to its knowledge, threatened against or in any other way relating adversely to or affecting any Credit Party or any Subsidiary thereof or
any of their respective properties in any court or before any arbitrator of any kind or before or by any Governmental Authority that could reasonably be expected to have a Material Adverse Effect.
SECTION 7.20 Anti-Terrorism; Anti-Money Laundering. No Credit Party nor any of its Subsidiaries (i) is an enemy or an ally of the enemy within the meaning of Section 2 of the Trading with the Enemy Act of the United States (50 U.S.C. App. §§ 1 et seq.), (ii) is in violation of (A) the Trading with the Enemy Act, (B) any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V) or any enabling legislation or executive order relating thereto or (C) the PATRIOT Act or (iii) is a Sanctioned Person. No part of the proceeds of any Extension of Credit hereunder will be used directly or indirectly to fund any operations in, finance any investments or activities in or make any payments to, a Sanctioned Person or a Sanctioned Country.
SECTION 7.21 Absence of Defaults. No event has occurred or is continuing (a) which constitutes a Default or an Event of Default, or (b) which constitutes, or which with the passage of time or giving of notice or both would constitute, a default or event of default by any Credit Party or any Subsidiary thereof under (i) any Material Contract or (ii) any judgment, decree or order to which any Credit Party or any Subsidiary thereof is a party or by which any Credit Party or any Subsidiary thereof or any of their respective properties may be bound or which would require any Credit Party or any Subsidiary thereof to make any payment thereunder prior to the scheduled maturity date therefor that, in any case under this clause (ii), could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 7.22 Senior Indebtedness Status. The Obligations of each Credit Party and each Subsidiary thereof under this Agreement and each of the other Loan Documents ranks and shall continue to rank at least senior in priority of payment to all Subordinated Indebtedness and all senior unsecured Indebtedness of each such Person and is designated as Senior Indebtedness under all instruments and documents, now or in the future, relating to all Subordinated Indebtedness and all senior unsecured Indebtedness of such Person.
SECTION 7.23 Investment Bankers and Similar Fees. No Credit Party has any obligation to any Person in respect of any finders, brokers, investment banking or other similar fee in connection with any of the Transactions.
SECTION 7.24 Disclosure. The Borrower and/or its Subsidiaries have disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which any Credit Party and any Subsidiary thereof are subject, and all other matters known to them, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No financial statement, material report, material certificate or other material information furnished (whether in writing or orally) by or on behalf of any Credit Party or any Subsidiary thereof to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished), taken together as a whole, contains any untrue statement of a material 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, pro forma financial information, estimated financial information and other projected or estimated information, such information was prepared in good faith based upon assumptions believed to be reasonable at the time.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until all of the Obligations (other than contingent indemnification obligations not then due) have been paid and satisfied in full in cash, all Letters of Credit have been terminated or expired (or been Cash Collateralized) and the Commitments terminated, the Borrower will, and will cause each of its Subsidiaries to do the following:
SECTION 8.1 Financial Statements and Budgets. Deliver to the Administrative Agent, in form and detail satisfactory to the Administrative Agent (which shall promptly make such information available to the Lenders in accordance with its customary practice):
(a) Annual Financial Statements. As soon as practicable and in any event within ninety (90) days (or, if earlier, on the date of any required public filing thereof) after the end of each Fiscal Year (commencing with the Fiscal Year ended December 29, 2012), an audited Consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as of the close of such Fiscal Year and audited Consolidated and consolidating statements of income, retained earnings and cash flows including the notes thereto, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the preceding Fiscal Year and prepared in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the year. Such annual financial statements shall be audited by an independent certified public accounting firm of recognized national standing acceptable to the Administrative Agent, and accompanied by a report and opinion thereon by such certified public accountants prepared in accordance with generally accepted auditing standards that is not subject to any going concern or similar qualification or exception or any qualification as to the scope of such audit or with respect to accounting principles followed by the Borrower or any of its Subsidiaries not in accordance with GAAP.
(b) Quarterly Financial Statements. As soon as practicable and in any event within forty-five (45) days (or, if earlier, on the date of any required public filing thereof) after the end of the first three Fiscal Quarters of each Fiscal Year (commencing with the Fiscal Quarter ended March 30, 2013), an unaudited Consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as of the close of such Fiscal Quarter and unaudited Consolidated and consolidating statements of income, retained earnings and cash flows, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the corresponding period in the preceding Fiscal Year and prepared by the Borrower in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the period, and certified by the chief financial officer of the Borrower to present fairly in all material respects the financial condition of the Borrower and its Subsidiaries on a Consolidated and consolidating basis as of their respective dates and the results of operations of the Borrower and its Subsidiaries for the respective periods then ended, subject to normal year-end adjustments and the absence of footnotes.
(c) Annual Business Plan and Budget. As soon as practicable and in any event within thirty (30) days after the end of each Fiscal Year, a business plan and operating and capital budget of the Borrower and its Subsidiaries for the ensuing four (4) Fiscal Quarters, such plan to be prepared in accordance with GAAP and to include, on a quarterly basis, the following: a quarterly operating and capital budget, a projected income statement, statement of cash flows and balance sheet, calculations demonstrating projected compliance with the financial covenants set forth in Section 9.15 and a report containing managements discussion and analysis of such budget with a reasonable disclosure of the key assumptions and drivers with respect to such budget, accompanied by a certificate from a Responsible
Officer of the Borrower to the effect that such budget contains good faith estimates (utilizing assumptions believed to be reasonable at the time of delivery of such budget) of the financial condition and operations of the Borrower and its Subsidiaries for such period.
SECTION 8.2 Certificates; Other Reports. Deliver to the Administrative Agent (which shall promptly make such information available to the Lenders in accordance with its customary practice):
(a) at each time financial statements are delivered pursuant to Sections 8.1(a) or (b) and at such other times as the Administrative Agent shall reasonably request, a duly completed Officers Compliance Certificate signed by the chief executive officer, chief financial officer, treasurer or controller of the Borrower and a report containing managements discussion and analysis of such financial statements;
(b) at each time financial statements are delivered pursuant to Sections 8.1(a) or (b), a report certified the chief executive officer, chief financial officer, treasurer or controller of the Borrower and containing (i) a statement of the aggregate amount of insurance premiums paid to Supreme Insurance during the Fiscal Quarter or Fiscal Year then most recently ended, as applicable, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the preceding Fiscal Year or the corresponding period in the preceding Fiscal Year, as applicable, (ii) a description of any anticipated increase in the insurance premiums to be paid to Supreme Insurance by the Borrower and its other Subsidiaries, (iii) copies of any outside actuarial reports prepared during the applicable period with respect to any projection, valuation, or appraisal of Supreme Insurance, and (iv) without duplication or derogation of anything in this Agreement, such other information regarding the operations, business affairs and financial condition of Supreme Insurance as the Administrative Agent or any Lender may reasonably request;
(c) promptly upon receipt thereof, copies of all reports, if any, submitted to any Credit Party, any Subsidiary thereof or any of their respective boards of directors by their respective independent public accountants in connection with their auditing function, including, without limitation, any management report and any management responses thereto;
(d) promptly after the furnishing thereof, copies of any statement or report furnished to any holder of Indebtedness of any Credit Party or any Subsidiary thereof in excess of $500,000 pursuant to the terms of any indenture, loan or credit or similar agreement;
(e) promptly after the assertion or occurrence thereof, notice of any action or proceeding against or of any noncompliance by any Credit Party or any Subsidiary thereof with any Environmental Law that could (i) reasonably be expected to have a Material Adverse Effect or (ii) cause any Property described in the Mortgages to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law;
(f) 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 Exchange Act, or with any national securities exchange, and in any case not otherwise required to be delivered to the Administrative Agent pursuant hereto;
(g) promptly, and in any event within five (5) Business Days after receipt thereof by any Credit 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 inquiry by such agency regarding financial or other operational results of any Credit Party or any Subsidiary thereof;
(h) promptly upon the request thereof, such other information and documentation required by bank regulatory authorities under applicable know your customer and anti-money laundering rules and regulations (including, without limitation, the PATRIOT Act), as from time to time reasonably requested by the Administrative Agent or any Lender;
(i) at each time an Officers Compliance Certificate is delivered pursuant to Section 8.2(a), copies of (i) each Material Contract entered into since the delivery of the previous Officers Compliance Certificate and (ii) each material amendment or modification of any Material Contract entered into since the delivery of the previous Officers Compliance Certificate; and
(j) such other information regarding the operations, business affairs and financial condition of any Credit Party or any Subsidiary thereof as the Administrative Agent or any Lender may reasonably request.
Documents required to be delivered pursuant to Section 8.1(a) or (b) or Section 8.2(f) (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 Borrowers website on the Internet at the website address listed in Section 12.1; or (ii) on which such documents are posted on the Borrowers 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: (i) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower shall notify the Administrative Agent and each Lender (by facsimile or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions of such documents. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the Officers Compliance Certificates required by Section 8.2 to the Administrative Agent. Except for such Officers Compliance Certificates, the Administrative Agent shall have no obligation to request the delivery or to maintain 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 for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.
SECTION 8.3 Notice of Litigation and Other Matters. Promptly (but in no event later than ten (10) days after any Responsible Officer of any Credit Party obtains knowledge thereof) notify the Administrative Agent in writing of (which shall promptly make such information available to the Lenders in accordance with its customary practice):
(a) the occurrence of any Default or Event of Default;
(b) the commencement of all proceedings and investigations by or before any Governmental Authority and all actions and proceedings in any court or before any arbitrator against or involving any Credit Party or any Subsidiary thereof or any of their respective properties, assets or businesses in each case that if adversely determined could reasonably be expected to result in a Material Adverse Effect;
(c) any notice of any violation received by any Credit Party or any Subsidiary thereof from any Governmental Authority including, without limitation, any notice of violation of Environmental Laws which in any such case could reasonably be expected to have a Material Adverse Effect;
(d) any labor controversy that has resulted in, or threatens to result in, a strike or other work action against any Credit Party or any Subsidiary thereof;
(e) any attachment, judgment, lien, levy or order exceeding $500,000 that may be assessed against or threatened against any Credit Party or any Subsidiary thereof;
(f) any event which constitutes or which with the passage of time or giving of notice or both would constitute a default or event of default under any Material Contract to which the Borrower or any of its Subsidiaries is a party or by which the Borrower or any Subsidiary thereof or any of their respective properties may be bound;
(g) (i) any unfavorable determination letter from the IRS regarding the qualification of an Employee Benefit Plan under Section 401(a) of the Code (along with a copy thereof), (ii) all notices received by any Credit Party or any ERISA Affiliate of the PBGCs intent to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan, (iii) all notices received by any Credit Party or any ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA and (iv) the Borrower obtaining knowledge or reason to know that any Credit Party or any ERISA Affiliate has filed or intends to file a notice of intent to terminate any Pension Plan under a distress termination within the meaning of Section 4041(c) of ERISA; and
(h) any event which makes any of the representations set forth in Article VII that is subject to materiality or Material Adverse Effect qualifications inaccurate in any respect or any event which makes any of the representations set forth in Article VII that is not subject to materiality or Material Adverse Effect qualifications inaccurate in any material respect.
Each notice pursuant to Section 8.3 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 8.3(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.
SECTION 8.4 Preservation of Corporate Existence and Related Matters. Except as permitted by Section 9.4, preserve and maintain its separate corporate existence and all rights, franchises, licenses and privileges necessary to the conduct of its business, and qualify and remain qualified as a foreign corporation or other entity and authorized to do business in each jurisdiction in which the failure to so qualify could reasonably be expected to have a Material Adverse Effect.
SECTION 8.5 Maintenance of Property and Licenses.
(a) In addition to the requirements of any of the Security Documents, protect and preserve all Properties necessary in and material to its business, including copyrights, patents, trade names, service marks and trademarks; maintain in good working order and condition, ordinary wear and tear excepted, all buildings, equipment and other tangible real and personal property; and from time to time make or cause to be made all repairs, renewals and replacements thereof and additions to such Property necessary for the conduct of its business, so that the business carried on in connection therewith may be conducted in a commercially reasonable manner.
(b) Maintain, in full force and effect in all material respects, each and every license, permit, certification, qualification, approval or franchise issued by any Governmental Authority (each a License) required for each of them to conduct their respective businesses as presently conducted.
SECTION 8.6 Insurance. Maintain insurance with financially sound and reputable insurance companies against at least such risks and in at least such amounts as are customarily maintained by similar businesses and as may be required by Applicable Law and as are required by any Security Documents (including, without limitation, hazard and business interruption insurance). All such insurance shall, (a) provide that no cancellation or material modification thereof shall be effective until at least 30 days after receipt by the Administrative Agent of written notice thereof, (b) name the Administrative Agent as an additional insured party thereunder and (c) in the case of each casualty insurance policy, name the Administrative Agent as lenders loss payee. On the Closing Date and from time to time thereafter deliver to the Administrative Agent upon its request information in reasonable detail as to the insurance then in effect, stating the names of the insurance companies, the amounts and rates of the insurance, the dates of the expiration thereof and the properties and risks covered thereby.
SECTION 8.7 Accounting Methods and Financial Records. Maintain a system of accounting, and keep proper books, records and accounts (which shall be true and complete in all material respects) as may be required or as may be necessary to permit the preparation of financial statements in accordance with GAAP and in compliance with the regulations of any Governmental Authority having jurisdiction over it or any of its Properties.
SECTION 8.8 Payment of Taxes and Other Obligations. Pay and perform (a) all taxes, assessments and other governmental charges that may be levied or assessed upon it or any of its Property and (b) all other indebtedness, obligations and liabilities in accordance with customary trade practices; provided, that the Borrower or such Subsidiary may contest any item described in clause (a) of this Section in good faith so long as adequate reserves are maintained with respect thereto in accordance with GAAP.
SECTION 8.9 Compliance with Laws and Approvals. Observe and remain in compliance with all Applicable Laws and maintain in full force and effect all Governmental Approvals, in each case applicable to the conduct of its business, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.
SECTION 8.10 Environmental Laws. In addition to and without limiting the generality of Section 8.9, (a) comply with, and ensure such compliance by all tenants and subtenants with all applicable Environmental Laws and obtain and comply in all material respects with and maintain, and ensure that all tenants and subtenants, if any, obtain and comply in all material respects with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws, (b) conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws, and promptly comply with all lawful orders and directives of any Governmental Authority regarding Environmental Laws, (c) accurately characterize and properly store and dispose of all wastes constituting Hazardous Materials, in all material respects, in accordance with applicable Environmental Laws, and (d) subject to Section 12.3, defend, indemnify and hold harmless the Administrative Agent and the Lenders, and their respective parents, Subsidiaries, Affiliates, employees, agents, officers and directors, from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature known or unknown, contingent or otherwise, arising out of, or in any way relating to the presence of Hazardous Materials, or the violation of, noncompliance with or liability under any Environmental Laws applicable to the operations of the Borrower or any such Subsidiary, or any orders, requirements or demands of Governmental Authorities related thereto, including, without limitation, reasonable attorneys and
consultants fees, investigation and laboratory fees, response costs, court costs and litigation expenses, except to the extent that any of the foregoing directly result from the gross negligence or willful misconduct of the party seeking indemnification therefor, as determined by a court of competent jurisdiction by final nonappealable judgment.
SECTION 8.11 Compliance with ERISA. In addition to and without limiting the generality of Section 8.9, (a) except where the failure to so comply could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) comply with applicable provisions of ERISA, the Code and the regulations and published interpretations thereunder with respect to all Employee Benefit Plans, (ii) not take any action or fail to take action the result of which could reasonably be expected to result in a liability to the PBGC or to a Multiemployer Plan, (iii) not participate in any prohibited transaction that could result in any civil penalty under ERISA or tax under the Code and (iv) operate each Employee Benefit Plan in such a manner that will not incur any tax liability under Section 4980B of the Code or any liability to any qualified beneficiary as defined in Section 4980B of the Code and (b) furnish to the Administrative Agent upon the Administrative Agents request such additional information about any Employee Benefit Plan as may be reasonably requested by the Administrative Agent.
SECTION 8.12 Compliance with Agreements. Comply in all respects with each term, condition and provision of all leases, agreements and other instruments entered into in the conduct of its business including, without limitation, any Material Contract; provided, that the Borrower or any such Subsidiary may contest any such lease, agreement or other instrument in good faith through applicable proceedings so long as adequate reserves are maintained in accordance with GAAP, except as could not reasonably be expected to have a Material Adverse Effect.
SECTION 8.13 Visits and Inspections. Permit representatives of the Administrative Agent or any Lender, from time to time upon prior reasonable notice and at such times during normal business hours, all at the expense of the Borrower, to visit and inspect its properties; inspect, audit and make extracts from its books, records and files, including, but not limited to, management letters prepared by independent accountants; and discuss with its principal officers, and its independent accountants, its business, assets, liabilities, financial condition, results of operations and business prospects (with the opportunity, in the case of discussions with its independent accountants, to participate in any such discussions); provided that upon the occurrence and during the continuance of an Event of Default, the Administrative Agent or any Lender may do any of the foregoing at the expense of the Borrower at any time without advance notice and without opportunity to participate.
SECTION 8.14 Additional Subsidiaries.
(a) Additional Domestic Subsidiaries. Notify the Administrative Agent prior to the creation or acquisition of any Domestic Subsidiary and promptly thereafter (and in any event within thirty (30) days after such creation or acquisition, as such time period may be extended by the Administrative Agent in its sole discretion) cause such Person to (i) become a Subsidiary Guarantor by delivering to the Administrative Agent a duly executed supplement to the Subsidiary Guaranty Agreement or such other document as the Administrative Agent shall deem appropriate for such purpose, (ii) grant a security interest in all Collateral (subject to the exceptions specified in the Collateral Agreement) owned by such Subsidiary by delivering to the Administrative Agent a duly executed supplement to each Security Document or such other document as the Administrative Agent shall deem appropriate for such purpose and comply with the terms of each Security Document, (iii) deliver to the Administrative Agent such opinions, documents and certificates referred to in Section 6.1 as may be reasonably requested by the Administrative Agent, (iv) deliver to the Administrative Agent such original Capital Stock or other certificates and stock or other transfer powers evidencing the Capital Stock of such Person, (v) deliver to
the Administrative Agent such updated Schedules to the Loan Documents as requested by the Administrative Agent with respect to such Person, and (vi) deliver to the Administrative Agent such other documents as may be reasonably requested by the Administrative Agent, all in form, content and scope reasonably satisfactory to the Administrative Agent.
(b) Additional Foreign Subsidiaries. Notify the Administrative Agent at the time that any Person becomes a First Tier Foreign Subsidiary, and at the request of the Administrative Agent, promptly thereafter (and in any event within forty-five (45) days after such request, as such time period may be extended by the Administrative Agent in its sole discretion), cause (i) the applicable Credit Party to deliver to the Administrative Agent Security Documents pledging sixty-six percent (66%) of the total outstanding voting Capital Stock (and one hundred percent (100%) of the non-voting Capital Stock) of any such new First Tier Foreign Subsidiary and a consent thereto executed by such new First Tier Foreign Subsidiary (including, without limitation, if applicable, original stock certificates (or the equivalent thereof pursuant to the Applicable Laws and practices of any relevant foreign jurisdiction) evidencing the Capital Stock of such new First Tier Foreign Subsidiary, together with an appropriate undated stock power for each certificate duly executed in blank by the registered owner thereof), (ii) such Person to deliver to the Administrative Agent such opinions, documents and certificates referred to in Section 6.1 as may be reasonably requested by the Administrative Agent, (iii) such Person to deliver to the Administrative Agent such updated Schedules to the Loan Documents as requested by the Administrative Agent with regard to such Person and (iv) such Person to deliver to the Administrative Agent such other documents as may be reasonably requested by the Administrative Agent, all in form, content and scope reasonably satisfactory to the Administrative Agent.
(c) [Reserved].
(d) Merger Subsidiaries. Notwithstanding the foregoing, to the extent any new Subsidiary is created solely for the purpose of consummating a merger transaction pursuant to a Permitted Acquisition, and such new Subsidiary at no time holds any assets or liabilities other than any merger consideration contributed to it contemporaneously with the closing of such merger transaction, such new Subsidiary shall not be required to take the actions set forth in Section 8.14(a) or (b), as applicable, until the consummation of such Permitted Acquisition (at which time, the surviving entity of the respective merger transaction shall be required to so comply with Section 8.14(a) or (b), as applicable, within ten (10) Business Days of the consummation of such Permitted Acquisition).
(e) Exclusions. The provisions of this Section 8.14 shall not apply to assets as to which the Administrative Agent and the Borrower shall reasonably determine that the costs and burdens of obtaining a security interest therein or perfection thereof outweigh the value of the security afforded thereby.
SECTION 8.15 Hedge Agreement. Not later than 180 days after the Closing Date, enter into and maintain at all times thereafter for a period of not less than three years, Hedge Agreements with Persons acceptable to the Administrative Agent, in an amount sufficient to cause at least $2,000,000 of the aggregate principal amount of outstanding Indebtedness for borrowed money of the Borrower and its Subsidiaries to be fixed rate Indebtedness.
SECTION 8.16 Use of Proceeds.
(a) The Borrower shall use the proceeds of the Revolving Extensions of Credit (i) to finance the acquisition of Capital Assets, (ii) to refinance certain existing Indebtedness of the Credit Parties, and (iii) for working capital and general corporate purposes of the Borrower and its Subsidiaries, including the payment of certain fees and expenses incurred in connection with the Transactions and this Agreement.
(b) [Reserved].
(c) The Borrower shall use the proceeds of any Incremental Revolving Credit Increase as permitted pursuant to Section 5.13, as applicable.
SECTION 8.17 [Reserved].
SECTION 8.18 Corporate Governance. (a) Maintain entity records and books of account separate from those of any other entity which is an Affiliate of such entity, (b) not commingle its funds or assets with those of any other entity which is an Affiliate of such entity (except pursuant to cash management systems reasonably acceptable to the Administrative Agent) and (c) provide that its board of directors (or equivalent governing body) will hold all appropriate meetings to authorize and approve such entitys actions, which meetings will be separate from those of any other entity which is an Affiliate of such entity. For the purposes of this Section 8.18, Affiliate shall not include the Borrower or any Subsidiary thereof.
SECTION 8.19 [Reserved].
SECTION 8.20 Further Assurances.
(a) Maintain the security interest created by the Security Documents in accordance with Section 4.1 of the Collateral Agreement, subject to the rights of the Credit Parties to dispose of the Collateral pursuant to the Loan Documents; and make, execute and deliver all such additional and further acts, things, deeds, instruments and documents as the Administrative Agent or the Required Lenders (through the Administrative Agent) may reasonably require for the purposes of implementing or effectuating the provisions of this Agreement and the other Loan Documents, or of renewing the rights of the Secured Parties with respect to the Collateral as to which the Administrative Agent, for the ratable benefit of the Secured Parties, has a perfected Lien pursuant hereto or thereto, including, without limitation, filing any financing or continuation statements under the UCC (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby or by the other Loan Documents.
(b) If requested by the Administrative Agent or any Lender (through the Administrative Agent), promptly furnish to the Administrative Agent and each Lender a statement in conformity with the requirements of FR Form G-3 or FR Form U-1, as applicable.
SECTION 8.21 Post-Closing Matters. Execute and deliver the documents and complete the tasks set forth on Schedule 8.21, in each case within the time limits specified on such schedule.
SECTION 8.22 Pool Units. Cause each Credit Party to apply 100% of the cash proceeds of each Pool Unit received by any Credit Party first to repay the Agreed Release Amount of such Pool Unit, and, the remainder, if any, to reduce the other ALLY Advances.
SECTION 8.23 Assignable Material Contracts. Use commercially reasonable efforts to ensure that any Material Contract entered into after the Closing Date by the Borrower or one of its Subsidiaries that generates or, by its terms, will generate revenue permits the assignment of such agreement (and all rights of the Borrower or such Subsidiary, as applicable, thereunder) to the Borrowers or such Subsidiarys lenders or an agent for any such lenders (and any transferees of such lenders or such agent, as applicable).
ARTICLE IX
NEGATIVE COVENANTS
Until all of the Obligations (other than contingent, indemnification obligations not then due) have been paid and satisfied in full in cash, all Letters of Credit have been terminated or expired (or been Cash Collateralized) and the Commitments terminated, the Borrower will not, and will not permit any of their respective Subsidiaries to do any of the following:
SECTION 9.1 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness except:
(a) the Obligations;
(b) Indebtedness and obligations owing under (i) Hedge Agreements entered into in order to manage existing or anticipated interest rate, exchange rate or commodity price risks and not for speculative purposes and (ii) Secured Cash Management Agreements entered into in the ordinary course of business;
(c) Indebtedness existing on the Closing Date that is listed on Schedule 9.1, and any refinancings, refundings, renewals or extensions thereof; provided that (i) the principal 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, (ii) the final maturity date and weighted average life of such refinancing, refunding, renewal or extension shall not be prior to or shorter than that applicable to the Indebtedness prior to such refinancing, refunding, renewal or extension and (iii) any refinancing, refunding, renewal or extension of any Subordinated Indebtedness shall be (A) on subordination terms at least as favorable to the Lenders, (B) no more restrictive on the Borrower and its Subsidiaries than the Subordinated Indebtedness being refinanced, refunded, renewed or extended and (C) in an amount not less than the amount outstanding at the time of such refinancing, refunding, renewal or extension;
(d) Indebtedness incurred in connection with Capital Leases and purchase money Indebtedness in an aggregate amount not to exceed $250,000 at any time outstanding;
(e) Indebtedness of a Person existing at the time such Person became a Subsidiary or assets were acquired from such Person in connection with an Investment permitted pursuant to Section 9.3, to the extent that (i) such Indebtedness was not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary or the acquisition of such assets, (ii) neither the Borrower nor any Subsidiary thereof (other than such Person or any other Person that such Person merges with or that acquires the assets of such Person) shall have any liability or other obligation with respect to such Indebtedness and (iii) the aggregate outstanding principal amount of such Indebtedness does not exceed $250,000 at any time outstanding;
(f) Guaranty Obligations with respect to Indebtedness permitted pursuant to clauses (a) through (e) of this Section;
(g) unsecured intercompany Indebtedness:
(i) owed by any Credit Party to another Credit Party;
(ii) owed by any Credit Party to any Non-Guarantor Subsidiary (provided that such Indebtedness shall be subordinated to the Obligations in a manner reasonably satisfactory to the Administrative Agent);
(iii) owed by any Non-Guarantor Subsidiary to any other Non-Guarantor Subsidiary; and
(iv) owed by any Non-Guarantor Subsidiary to any Credit Party to the extent permitted pursuant to Section 9.3(a)(vi);
(h) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or other similar instrument drawn against insufficient funds in the ordinary course of business;
(i) Subordinated Indebtedness of the Borrower and its Subsidiaries; provided, that in the case of each incurrence of such Subordinated Indebtedness, (i) no Default or Event of Default shall have occurred and be continuing or would be caused by the incurrence of such Subordinated Indebtedness, (ii) the Administrative Agent shall have received satisfactory written evidence that the Borrower would be in compliance with the financial covenants set forth in Section 9.15 on a Pro Forma Basis after giving effect to the issuance of any such Subordinated Indebtedness;
(j) Indebtedness under performance bonds, surety bonds, release, appeal and similar bonds, statutory obligations or with respect to workers compensation claims, in each case incurred in the ordinary course of business, and reimbursement obligations in respect of any of the foregoing;
(k) [reserved];
(l) Indebtedness consisting of promissory notes issued to current or former officers, directors and employees (or their respective family members, estates or trusts or other entities for the benefit of any of the foregoing) of the Borrower or its Subsidiaries to purchase or redeem Capital Stock or options of the Borrower permitted pursuant to Section 9.6(d)(iv); provided that the aggregate principal amount of all such Indebtedness shall not exceed $250,000 at any time outstanding;
(m) outstanding unpaid loans or advances made by ALLY to or for the account of Supreme Indiana under an ALLY Loan Agreement (ALLY Advances) in an aggregate unpaid amount not to exceed at any time $30,750,000, to pay for the restricted purchase of Pool Units, but only so long as such ALLY Advances are used solely to pay 100% (and not any lesser portion) of the purchase price of Pool Units;
(n) Indebtedness owed to any Person providing property, casualty, liability, or other insurance to the Borrower or any of its Subsidiaries, so long as the amount of such Indebtedness is not in excess of the amount of the unpaid cost of, and such Indebtedness is incurred only to defer the cost of, such insurance for the year in which such Indebtedness is incurred and such Indebtedness is outstanding only during such year;
(o) Indebtedness composing Investments permitted pursuant to Section 9.3; and
(p) Indebtedness of any Credit Party or any Subsidiary thereof not otherwise permitted pursuant to this Section in an aggregate principal amount not to exceed $500,000 at any time outstanding.
SECTION 9.2 Liens. Create, incur, assume or suffer to exist, any Lien on or with respect to any of its Property, whether now owned or hereafter acquired, except:
(a) Liens created pursuant to the Loan Documents (including, without limitation, Liens in favor of the Swingline Lender and/or the Issuing Lender, as applicable, on Cash Collateral granted pursuant to the Loan Documents);
(b) Liens in existence on the Closing Date that are described on Schedule 9.2, and the replacement, renewal or extension thereof (including Liens incurred, assumed or suffered to exist in connection with any refinancing, refunding, renewal or extension of Indebtedness pursuant to Section 9.1(c) (solely to the extent that such Liens were in existence on the Closing Date and described on Schedule 9.2)); provided that the scope of any such Lien shall not be increased, or otherwise expanded, to cover any additional property or type of asset, as applicable, beyond that in existence on the Closing Date, except for products and proceeds of the foregoing;
(c) Liens for taxes, assessments and other governmental charges or levies (excluding any Lien imposed pursuant to any of the provisions of ERISA or Environmental Laws) (i) not yet due or as to which the period of grace (not to exceed thirty (30) days), if any, related thereto has not expired or (ii) which are being contested in good faith and by appropriate proceedings if adequate reserves are maintained to the extent required by GAAP;
(d) the claims of materialmen, mechanics, carriers, warehousemen, processors or landlords for labor, materials, supplies or rentals incurred in the ordinary course of business, which (i) are not overdue for a period of more than thirty (30) days, or if more than thirty (30) days overdue, no action has been taken to enforce such Liens and such Liens are being contested in good faith and by appropriate proceedings if adequate reserves are maintained to the extent required by GAAP and (ii) do not, individually or in the aggregate, materially impair the use thereof in the operation of the business of the Borrower or any of its Subsidiaries;
(e) deposits or pledges made in the ordinary course of business in connection with, or to secure payment of, obligations under workers compensation, unemployment insurance and other types of social security or similar legislation, or to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the ordinary course of business, in each case, so long as no foreclosure sale or similar proceeding has been commenced with respect to any portion of the Collateral on account thereof;
(f) encumbrances in the nature of zoning restrictions, easements and rights or restrictions of record on the use of real property, which in the aggregate are not substantial in amount and which do not, in any case, detract from the value of such property or impair the use thereof in the ordinary conduct of business;
(g) Liens arising from the filing of precautionary UCC financing statements relating solely to personal property leased pursuant to operating leases entered into in the ordinary course of business of the Borrower and its Subsidiaries;
(h) Liens securing Indebtedness permitted under Section 9.1(d); provided that (i) such Liens shall be created substantially simultaneously with the acquisition, repair, improvement or lease, as applicable, of the related Property, (ii) such Liens do not at any time encumber any property other than the Property financed by such Indebtedness, (iii) the amount of Indebtedness secured thereby is not increased, and (iv) the principal amount of Indebtedness secured by any such Lien shall at no time exceed
one hundred percent (100%) of the original price for the purchase, repair improvement or lease amount (as applicable) of such Property at the time of purchase, repair, improvement or lease (as applicable);
(i) Liens securing (i) judgments for the payment of money not constituting an Event of Default under Section 10.1(m) or (ii) appeal or other surety bonds relating to such judgments;
(j) Liens on Property (i) of any Subsidiary which are in existence at the time that such Subsidiary is acquired pursuant to a Permitted Acquisition and (ii) of the Borrower or any of its Subsidiaries existing at the time such tangible property or tangible assets are purchased or otherwise acquired by the Borrower or such Subsidiary thereof pursuant to a transaction permitted pursuant to this Agreement; provided that, with respect to each of the foregoing clauses (i) and (ii), (A) such Liens are not incurred in connection with, or in anticipation of, such Permitted Acquisition, purchase or other acquisition, (B) such Liens are applicable only to specific Property, (C) such Liens are not blanket or all asset Liens, (D) such Liens do not attach to any other Property of the Borrower or any of its Subsidiaries and (E) the Indebtedness secured by such Liens is permitted under Section 9.1(e) of this Agreement);
(k) [reserved];
(l) (i) Liens of a collecting bank arising in the ordinary course of business under Section 4-210 of the Uniform Commercial Code in effect in the relevant jurisdiction and (ii) Liens of any depositary bank in connection with statutory, common law and contractual rights of set-off and recoupment with respect to any deposit account of the Borrower or any Subsidiary thereof;
(m) (i) contractual or statutory Liens of landlords to the extent relating to the property and assets relating to any lease agreements with such landlord, and (ii) contractual Liens of suppliers (including sellers of goods) or customers granted in the ordinary course of business to the extent limited to the property or assets relating to such contract;
(n) any interest or title of a licensor, sublicensor, lessor or sublessor with respect to any assets under any license or lease agreement entered into in the ordinary course of business which do not (i) interfere in any material respect with the business of the Borrower or its Subsidiaries or materially detract from the value of the relevant assets of the Borrower or its Subsidiaries or (ii) secure any Indebtedness;
(o) non-exclusive licenses of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of business;
(p) Liens granted in the ordinary course of business on the unearned portion of insurance premiums securing the financing of insurance premiums to the extent the financing is permitted under Section 9.1;
(q) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(r) Liens on the ALLY Collateral securing only ALLY Advances permitted by clause (m) of Section 9.1; provided that, notwithstanding the foregoing, the ALLY Pledged Funds shall not exceed $500,000 at any one time outstanding; and
(s) Liens that do not secure Indebtedness for borrowed money or letters of credit and as to which the aggregate amount of the obligations secured thereby does not exceed $250,000.
SECTION 9.3 Investments. Purchase, own, invest in or otherwise acquire (in one transaction or a series of transactions), directly or indirectly, any Capital Stock, interests in any partnership or joint venture (including, without limitation, the creation or capitalization of any Subsidiary), evidence of Indebtedness or other obligation or security, substantially all or a portion of the business or assets of any other Person or any other investment or interest whatsoever in any other Person, or make or permit to exist, directly or indirectly, any loans, advances or extensions of credit to, or any investment in cash or by delivery of Property in, any Person (all the foregoing, Investments) except:
(a) the following Investments:
(i) Investments existing on the Closing Date in Subsidiaries existing on the Closing Date;
(ii) Investments existing on the Closing Date (other than Investments in Subsidiaries existing on the Closing Date) and described on Schedule 9.3;
(iii) Investments made after the Closing Date by any Credit Party in any other Credit Party;
(iv) Investments made after the Closing Date by any Non-Guarantor Subsidiary in any other Non-Guarantor Subsidiary;
(v) Investments made after the Closing Date by any Non-Guarantor Subsidiary in any Credit Party; and
(vi) Investments made after the Closing Date by any Credit Party in any Non-Guarantor Subsidiary in an amount not to exceed at any time $500,000 (provided that any Investments in the form of loans or advances made by any Credit Party to any Non-Guarantor Subsidiary pursuant to this clause (vi) shall be evidenced by a demand note in form and substance reasonably satisfactory to the Administrative Agent and shall be pledged and delivered to the Administrative Agent pursuant to the Security Documents);
(b) Investments in cash and Cash Equivalents;
(c) Investments by the Borrower or any of its Subsidiaries consisting of Capital Expenditures permitted by this Agreement;
(d) deposits made in the ordinary course of business to secure the performance of leases or other obligations as permitted by Section 9.2;
(e) Hedge Agreements permitted pursuant to Section 9.1;
(f) purchases of assets in the ordinary course of business and advances made in connection with the purchase of assets in the ordinary course of business;
(g) Investments by the Borrower or any Subsidiary thereof in the form of Permitted Acquisitions to the extent that any Person or Property acquired in such acquisition becomes a part of the Borrower or a Subsidiary Guarantor or becomes (whether or not such Person is a Wholly-Owned Subsidiary) a Subsidiary Guarantor in the manner contemplated by Section 8.14;
(h) Investments in the form of loans and advances to officers, directors and employees in the ordinary course of business in an aggregate amount not to exceed at any time outstanding $250,000 (determined without regard to any write-downs or write-offs of such loans or advances);
(i) Investments in the form of Restricted Payments permitted pursuant to Section 9.6;
(j) Guaranty Obligations permitted pursuant to Section 9.1;
(k) the following Investments:
(i) Investments in negotiable instruments deposited or to be deposited for collection in the ordinary course of business;
(ii) Investments received in settlement of amounts due to any Credit Party or any of its Subsidiaries effected in the ordinary course of business or owing to any Credit Party or any of its Subsidiaries as a result of a case or other proceeding under Debtor Relief Laws involving an account debtor or upon the foreclosure or enforcement of any Lien in favor of a Credit Party or its Subsidiaries; and
(iii) Capital Stock or other securities acquired in connection with the satisfaction or enforcement of Indebtedness or claims due or owing to a Credit Party or its Subsidiaries (in bankruptcy of customers or suppliers or otherwise outside the ordinary course of business) or as security for any such Indebtedness or claims;
(l) Investments in joint ventures; provided, that the aggregate amount of all such Investments shall not at any time exceed $250,000; and
(m) Investments not otherwise permitted pursuant to this Section in an aggregate amount not to exceed $1,000,000 during the term of this Agreement; provided that, immediately before and immediately after giving pro forma effect to any such Investments, no Default or Event of Default shall have occurred and be continuing.
For purposes of determining the amount of any Investment outstanding for purposes of this Section 9.3, such amount shall be deemed to be the amount of such Investment when made, purchased or acquired (without adjustment for subsequent increases or decreases in the value of such Investment) less any amount realized in respect of such Investment upon the sale, collection or return of capital (not to exceed the original amount invested).
SECTION 9.4 Fundamental Changes. Merge, consolidate or enter into any similar combination with, or enter into any Asset Disposition of all or substantially all of its assets (whether in a single transaction or a series of transactions) with, any other Person or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution) except:
(a) (i) any Wholly-Owned Subsidiary of the Borrower may be merged, amalgamated or consolidated with or into the Borrower (provided that the Borrower shall be the continuing or surviving entity) or (ii) any Wholly-Owned Subsidiary of the Borrower may be merged, amalgamated or
consolidated with or into any Subsidiary Guarantor (provided that the Subsidiary Guarantor shall be the continuing or surviving entity or simultaneously with such transaction, the continuing or surviving entity shall become a Subsidiary Guarantor and the Borrower shall comply with Section 8.14 in connection therewith);
(b) (i) any Non-Guarantor Subsidiary that is a Foreign Subsidiary may be merged, amalgamated or consolidated with or into, or be liquidated into, any other Non-Guarantor Subsidiary and (ii) any Non-Guarantor Subsidiary that is a Domestic Subsidiary may be merged, amalgamated or consolidated with or into, or be liquidated into, any other Non-Guarantor Subsidiary that is a Domestic Subsidiary;
(c) any Subsidiary may dispose of all or substantially all of its assets (upon voluntary liquidation, dissolution, winding up or otherwise) to the Borrower or any Subsidiary Guarantor; provided that, with respect to any such disposition by any Non-Guarantor Subsidiary, the consideration for such disposition shall not exceed the fair value of such assets;
(d) (i) any Non-Guarantor Subsidiary that is a Foreign Subsidiary may dispose of all or substantially all of its assets (upon voluntary liquidation, dissolution, winding up or otherwise) to any other Non-Guarantor Subsidiary and (ii) any Non-Guarantor Subsidiary that is a Domestic Subsidiary may dispose of all or substantially all of its assets (upon voluntary liquidation, dissolution, winding up or otherwise) to any other Non-Guarantor Subsidiary that is a Domestic Subsidiary;
(e) any Wholly-Owned Subsidiary of the Borrower may merge with or into the Person such Wholly-Owned Subsidiary was formed to acquire in connection with any acquisition permitted hereunder (including, without limitation, any Permitted Acquisition permitted pursuant to Section 9.3(g)); provided that in the case of any merger involving a Wholly-Owned Subsidiary that is a Domestic Subsidiary, (i) a Subsidiary Guarantor shall be the continuing or surviving entity or (ii) simultaneously with such transaction, the continuing or surviving entity shall become a Subsidiary Guarantor and the Borrower shall comply with Section 8.14 in connection therewith;
(f) any Person may merge into the Borrower or any of its Wholly-Owned Subsidiaries in connection with a Permitted Acquisition permitted pursuant to Section 9.3(g); provided that (i) in the case of a merger involving the Borrower or a Subsidiary Guarantor, the continuing or surviving Person shall be the Borrower or such Subsidiary Guarantor and (ii) the continuing or surviving Person shall be the Borrower or a Wholly-Owned Subsidiary of the Borrower; and
(g) subject to the other provisions of this Section 9.4, any of Silver Crown, Supreme Northwest, and, after it ceases to own any real property, Supreme Murphy may voluntarily liquidate, dissolve, or wind up so long as (i) the Borrower has provided at least ten (10) days prior written notice of that liquidation, dissolution, or winding up; and (ii) all of the assets (including any interest in Capital Stock) of that liquidating, dissolving, or winding-up Subsidiary are transferred to the Borrower or any Subsidiary Guarantor.
SECTION 9.5 Asset Dispositions. Make any Asset Disposition except:
(a) the sale of obsolete, worn-out or surplus assets no longer used or usable in the business of the Borrower or any of its Subsidiaries;
(b) non-exclusive licenses and sublicenses of intellectual property rights in the ordinary course of business not interfering, individually or in the aggregate, in any material respect with the conduct of the business of the Borrower and its Subsidiaries;
(c) leases, subleases, licenses or sublicenses of real or personal property granted by the Borrower or any of its Subsidiaries to others in the ordinary course of business not detracting from the value of such real or personal property or interfering in any material respect with the business of the Borrower or any of its Subsidiaries;
(d) Asset Dispositions in connection with Insurance and Condemnation Events;
(e) the following Asset Dispositions:
(i) sales of inventory to buyers in the ordinary course of business;
(ii) the use or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of the Agreement or the other Loan Documents;
(iii) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of business;
(iv) the granting of Permitted Liens;
(v) any involuntary loss, damage, or destruction of property;
(vi) the leasing or subleasing of assets of the Borrower or its Subsidiaries in the ordinary course of business;
(vii) the sale or issuance of Capital Stock (other than Disqualified Capital Stock) of the Borrower;
(viii) the lapse of registered patents, trademarks and other intellectual property of the Borrower and its Subsidiaries to the extent not economically desirable in the conduct of their business and so long as such lapse is not materially adverse to the interests of the Lenders;
(ix) the making of a Restricted Payment that is expressly permitted to be made pursuant to the Agreement;
(x) the making of an Investment permitted pursuant to Section 9.3; and
(xi) dispositions of any real property listed on Schedule 9.5 and of any equipment situated thereon; provided that (i) at the time of any such disposition, no Default or Event of Default shall exist or would result from such disposition, (ii) such disposition is made on commercially reasonable terms fully disclosed to the Administrative Agent prior to the consummation of such disposition, and (iii) the consideration received shall be no less than 75% in cash;
(f) Assets Dispositions in connection with transactions permitted by Section 9.4; and
(g) Asset Dispositions not otherwise permitted pursuant to this Section; provided that (i) at the time of such Asset Disposition, no Default or Event of Default shall exist or would result from such Asset Disposition, (ii) such Asset Disposition is made for fair market value and the consideration received shall be no less than 75% in cash or in like-kind property received in connection with an exchange under Section 1031 of the Code, and (iii) the aggregate fair market value of all property disposed of in reliance on this clause (g) shall not exceed $2,500,000 during the term of this Agreement.
SECTION 9.6 Restricted Payments. Declare or pay any dividend on, or make any payment or other distribution on account of, or purchase, redeem, retire or otherwise acquire (directly or indirectly), or set apart assets for a sinking or other analogous fund for the purchase, redemption, retirement or other acquisition of, any class of Capital Stock of any Credit Party or any Subsidiary thereof, or make any distribution of cash, property or assets to the holders of shares of any Capital Stock of any Credit Party or any Subsidiary thereof (all of the foregoing, the Restricted Payments) provided that:
(a) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, the Borrower or any of its Subsidiaries may pay dividends in shares of its own Qualified Capital Stock;
(b) any Subsidiary of the Borrower may pay cash dividends to the Borrower or any Subsidiary Guarantor;
(c) (i) any Non-Guarantor Subsidiary that is a Domestic Subsidiary may make Restricted Payments to any other Non-Guarantor Subsidiary that is a Domestic Subsidiary (and, if applicable, to other holders of its outstanding Capital Stock on a ratable basis) and (ii) any Non-Guarantor Subsidiary that is a Foreign Subsidiary may make Restricted Payments to any other Non-Guarantor Subsidiary (and, if applicable, to other holders of its outstanding Capital Stock on a ratable basis);
(d) each Subsidiary of the Borrower may declare and make Restricted Payments to the Borrower, so that the Borrower may, and the Borrower shall be permitted to:
(i) pay any Taxes which are due and payable by the Credit Parties as part of a consolidated group;
(ii) pay corporate operating (including, without limitation, directors fees and expenses) and overhead expenses (including, without limitation, rent, utilities and salary) in the ordinary course of business and fees and expenses of attorneys, accountants, appraisers and the like;
(iii) redeem, retire, or otherwise acquire, in a single transaction or a series of transactions, up to 1,000,000 shares of its Capital Stock from present shareholders, so long as (A) no Default or Event of Default has occurred and is continuing or would result therefrom, (B) the Borrower is in compliance on a Pro Forma Basis (as of the date of any such redemption, retirement, or other acquisition and after giving effect thereto) with each covenant contained in Section 9.15, and (C) the aggregate amount paid by the Borrower in connection with all such redemptions, retirements, or other acquisitions does not exceed $5,000,000; and
(iv) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, redeem, retire, or otherwise acquire any other shares of its Capital Stock or options or other equity or phantom equity in respect of its Capital Stock from present or former officers, employees, directors or consultants (or their family members or trusts or other entities for the benefit of any of the foregoing) or make severance payments to such Persons in connection with the death, disability or termination of employment or consultancy of any such officer, employee, director or consultant in an aggregate amount, when combined with the aggregate amount of Indebtedness outstanding under Section 9.1(l), not to exceed $750,000 during the term of this Agreement; and
(e) the Borrower may pay cash dividends to the holders of shares of its Capital Stock, so long as (i) no Default or Event of Default has occurred and is continuing or would result therefrom, (ii) the Borrower is in compliance on a Pro Forma Basis (as of the date of such payment of cash dividends and after giving effect thereto) with each covenant contained in Section 9.15, and (iii) the aggregate amount of all such cash dividend paid in any Fiscal Quarter does not exceed an amount equal to 33% of Consolidated Net Income for the immediately preceding Fiscal Quarter.
SECTION 9.7 Transactions with Affiliates. Directly or indirectly enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of Property, the rendering of any service or the payment of any management, advisory or similar fees, with (a) any officer, director, holder of any Capital Stock in, or other Affiliate of, the Borrower or any of its Subsidiaries, or (b) any Affiliate of any such officer, director or holder, other than:
(i) transactions permitted by Sections 9.1, 9.3, 9.4, 9.5, 9.6 and 9.13;
(ii) transactions existing on the Closing Date and described on Schedule 9.7;
(iii) transactions among Credit Parties;
(iv) other transactions in the ordinary course of business on terms as favorable as would be obtained by it on a comparable arms-length transaction with an independent, unrelated third party as determined in good faith by the board of directors (or equivalent governing body) of the Borrower;
(v) employment and severance arrangements (including equity incentive plans and employee benefit plans and arrangements) with their respective officers and employees in the ordinary course of business; and
(vi) payment of customary fees and reasonable out of pocket costs to, and indemnities for the benefit of, directors, officers and employees of the Borrower and its Subsidiaries in the ordinary course of business to the extent attributable to the ownership or operation of the Borrower and its Subsidiaries.
SECTION 9.8 Accounting Changes; Organizational Documents.
(a) Change its Fiscal Year end, or make (without the consent of the Administrative Agent) any material change in its accounting treatment and reporting practices except as required by GAAP.
(b) Amend, modify or change its articles of incorporation (or corporate charter or other similar organizational documents) or amend, modify or change its bylaws (or other similar documents) in any manner materially adverse to the rights or interests of the Lenders.
SECTION 9.9 Payments and Modifications of Subordinated Indebtedness.
(a) Amend, modify, waive or supplement (or permit the modification, amendment, waiver or supplement of) any of the terms or provisions of any Subordinated Indebtedness in any respect which would materially and adversely affect the rights or interests of the Administrative Agent and Lenders hereunder.
(b) Cancel, forgive, make any payment or prepayment on, or redeem or acquire for value (including, without limitation, (i) by way of depositing with any trustee with respect thereto money or
securities before due for the purpose of paying when due and (ii) at the maturity thereof) any Subordinated Indebtedness, except:
(i) refinancings, refundings, renewals, extensions or exchange of any Subordinated Indebtedness permitted by Section 9.1(c), (g)(iii), (i) or (m), and by any subordination provisions applicable thereto; and
(ii) the payment of interest, expenses and indemnities in respect of Subordinated Indebtedness incurred under Section 9.1(c), (g)(iii), (i) or (m) (other than any such payments prohibited by any subordination provisions applicable thereto).
SECTION 9.10 No Further Negative Pledges; Restrictive Agreements.
(a) Enter into, assume or be subject to any agreement prohibiting or otherwise restricting the creation or assumption of any Lien upon its properties or assets, whether now owned or hereafter acquired, or requiring the grant of any security for such obligation if security is given for some other obligation, except (i) pursuant to this Agreement and the other Loan Documents, (ii) pursuant to any document or instrument governing Indebtedness incurred pursuant to Section 9.1(d) (provided that any such restriction contained therein relates only to the asset or assets financed thereby), (iii) customary restrictions contained in the organizational documents of any Non-Guarantor Subsidiary as of the Closing Date and (iv) customary restrictions in connection with any Permitted Lien or any document or instrument governing any Permitted Lien (provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien).
(b) Create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Credit Party or any Subsidiary thereof to (i) pay dividends or make any other distributions to any Credit Party or any Subsidiary on its Capital Stock or with respect to any other interest or participation in, or measured by, its profits, (ii) pay any Indebtedness or other obligation owed to any Credit Party or (iii) make loans or advances to any Credit Party, except in each case for such encumbrances or restrictions existing under or by reason of (A) this Agreement and the other Loan Documents and (B) Applicable Law.
(c) Create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Credit Party or any Subsidiary thereof to (i) sell, lease or transfer any of its properties or assets to any Credit Party or (ii) act as a Credit Party pursuant to the Loan Documents or any renewals, refinancings, exchanges, refundings or extension thereof, except in each case for such encumbrances or restrictions existing under or by reason of (A) this Agreement and the other Loan Documents, (B) Applicable Law, (C) any document or instrument governing Indebtedness incurred pursuant to Section 9.1(d) (provided that any such restriction contained therein relates only to the asset or assets acquired in connection therewith), (D) any Permitted Lien or any document or instrument governing any Permitted Lien (provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien), (E) obligations that are binding on a Subsidiary at the time such Subsidiary first becomes a Subsidiary of the Borrower, so long as such obligations are not entered into in contemplation of such Person becoming a Subsidiary, (F) customary restrictions contained in an agreement related to the sale of Property (to the extent such sale is permitted pursuant to Section 9.5) that limit the transfer of such Property pending the consummation of such sale, (G) customary restrictions in leases, subleases, licenses and sublicenses or asset sale agreements otherwise permitted by this Agreement so long as such restrictions relate only to the assets subject thereto and (H) customary provisions restricting assignment of any agreement entered into in the ordinary course of business.
SECTION 9.11 Nature of Business. Engage in any business other than the business conducted by the Borrower and its Subsidiaries as of the Closing Date and business activities reasonably related or ancillary thereto or that are reasonable extensions thereof.
SECTION 9.12 Amendments of Other Documents. Amend, modify, waive or supplement (or permit modification, amendment, waiver or supplement of) any of the terms or provisions of any Material Contract, in any respect which would materially and adversely affect the rights or interests of the Administrative Agent and the Lenders hereunder, in each case without the prior written consent of the Administrative Agent.
SECTION 9.13 Sale Leasebacks. Directly or indirectly become or remain liable as lessee or as guarantor or other surety with respect to any lease, whether an operating lease or a Capital Lease, of any Property (whether real, personal or mixed), whether now owned or hereafter acquired, (a) which any Credit Party or any Subsidiary thereof has sold or transferred or is to sell or transfer to a Person which is not another Credit Party or Subsidiary of a Credit Party or (b) which any Credit Party or any Subsidiary of a Credit Party intends to use for substantially the same purpose as any other Property that has been sold or is to be sold or transferred by such Credit Party or such Subsidiary to another Person which is not another Credit Party or Subsidiary of a Credit Party in connection with such lease.
SECTION 9.14 Capital Expenditures. Permit the aggregate amount of all Capital Expenditures in any Fiscal Year to exceed $7,000,000. Notwithstanding the foregoing, 50% of any portion of any amount set forth above, if not expended in the Fiscal Year for which it is permitted above, may be carried over for expenditure in the next following Fiscal Year; provided that, if any such amount is so carried over, (a) it will be deemed used in the applicable subsequent Fiscal Year after the amount set forth opposite such Fiscal Year above and (b) it may not be carried over to any subsequent Fiscal Year.
SECTION 9.15 Financial Covenants.
(a) Consolidated Total Leverage Ratio. As of the last day of any Fiscal Quarter (commencing with the Fiscal Quarter ending December 29, 2012), permit the Consolidated Total Leverage Ratio to be greater than 3.00 to 1.00.
(b) Consolidated Fixed Charge Coverage Ratio. As of the last day of any Fiscal Quarter (commencing with the Fiscal Quarter ending December 29, 2012), permit the Consolidated Fixed Charge Ratio to be less than 1.25 to 1.00.
SECTION 9.16 [Reserved].
SECTION 9.17 Disposal of Subsidiary Interests. Permit any Domestic Subsidiary to be a non-Wholly-Owned Subsidiary except as a result of or in connection with a dissolution, merger, amalgamation, consolidation or disposition permitted by Section 9.4 or 9.5.
SECTION 9.18 Non-Operating Subsidiaries. Notwithstanding anything to the contrary contained in this Agreement, do any of the following with respect to Silver Crown, Supreme Northwest, or Supreme Murphy, in each case except to the extent necessary to transfer assets to the Borrower or a Subsidiary Guarantor in connection with the liquidation, dissolution, or winding up of any such Subsidiary: (a) sell, assign, transfer, lease, or otherwise dispose of any asset to any such Subsidiary; or (b) make any loan to, Investment in, or otherwise engage in any other transactions with any such Subsidiary.
SECTION 9.19 Captive Insurance Company.
(a) Sell, assign, transfer, lease, or otherwise dispose of any asset to Supreme Insurance except in the ordinary course of business with respect to insurance matters between a Credit Party and Supreme Insurance (including, without limitation, payment to Supreme Insurance in the ordinary course of business of insurance premiums that are reasonable and customary and in accordance with Applicable Law), or, subject to Section 9.3, make any loan to or Investment in Supreme Insurance except for existing Investments outstanding on the Closing Date.
(b) Without duplication or derogation of anything contained in this Agreement, cause or permit Supreme Insurance to fail to maintain any license, permit, authorization, or qualification required under Applicable Law, including any certification or authorization necessary to ensure that Supreme Insurance is eligible for all reimbursements available under applicable insurance regulations.
(c) Cause or permit Supreme Insurance to fail to conduct its insurance business using sound actuarial principles.
(d) Without duplication or derogation of anything contained in this Agreement, directly or indirectly enter into any transaction with Supreme Insurance, or cause or permit Supreme Insurance to directly or indirectly enter into any transaction or business, other than insurance transactions between Supreme Insurance, on the one hand, and one or more of the Borrower and its other Subsidiaries, on the other hand, in the ordinary course of business and in accordance with Applicable Law, on reasonable and customary terms (including, without limitation, all premiums, payments, and coverage terms) no more favorable to Supreme Insurance and no less favorable to the Borrower or any of its other Subsidiaries as would be obtained by any such Person on a comparable arms-length transaction with an independent, unrelated third party as determined in good faith by the board of directors (or equivalent governing body) of that Person.
SECTION 9.20 Demonstration Units. At any time (a) have more than 12 Demonstration Units in which any security interest is held by ALLY to secure the ALLY Loan Agreements (any such Demonstration Units, ALLY Lien Demonstration Units); (b) have ALLY Lien Demonstration Units with an aggregate book value in excess of $436,000; (c) have ALLY Lien Demonstration Units for which the outstanding principal amount financed under the ALLY Loan Agreements exceeds $340,000; or (d) have Demonstration Units (other than ALLY Lien Demonstration Units) with an aggregate book value in excess of $200,000.
ARTICLE X
DEFAULT AND REMEDIES
SECTION 10.1 Events of Default. Each of the following shall constitute an Event of Default:
(a) Default in Payment of Principal of Loans and Reimbursement Obligations. The Borrower shall default in any payment of principal of any Loan or Reimbursement Obligation when and as due (whether at maturity, by reason of acceleration or otherwise).
(b) Other Payment Default. The Borrower or any other Credit Party shall default in the payment when and as due (whether at maturity, by reason of acceleration or otherwise) of interest on any Loan or Reimbursement Obligation or the payment of any other Obligation, and such default shall continue for a period of three (3) Business Days.
(c) Misrepresentation. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Credit Party or any Subsidiary thereof in this Agreement, in any other Loan Document, or in any document delivered in connection herewith or therewith that is subject to materiality or Material Adverse Effect qualifications, shall be incorrect or misleading in any respect when made or deemed made or any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Credit Party or any Subsidiary thereof in this Agreement, any other Loan Document, or in any document delivered in connection herewith or therewith that is not subject to materiality or Material Adverse Effect qualifications, shall be incorrect or misleading in any material respect when made or deemed made.
(d) Default in Performance of Certain Covenants. Any Credit Party shall default in the performance or observance of any covenant or agreement contained in Sections 8.1, 8.2, 8.3, 8.4 (solely if any Credit Party is not in good standing in its jurisdiction of organization), 8.13, 8.14, 8.15, 8.16, or 8.21 or Article IX.
(e) Default in Performance of Other Covenants and Conditions. Any Credit Party or any Subsidiary thereof shall default in the performance or observance of any term, covenant, condition or agreement contained in this Agreement (other than as specifically provided for in this Section) or any other Loan Document and such default shall continue for a period of thirty (30) days after the earlier of (i) the Administrative Agents delivery of written notice thereof to the Borrower and (ii) a Responsible Officer of any Credit Party having obtained knowledge thereof.
(f) Indebtedness Cross-Default. Any Credit Party or any Subsidiary thereof shall (i) default in the payment of any Indebtedness (other than the Loans or any Reimbursement Obligation) the aggregate principal amount (including undrawn committed or available amounts), or with respect to any Hedge Agreement, the Hedge Termination Value, of which is in excess of $500,000 beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created, or (ii) default in the observance or performance of any other agreement or condition relating to any Indebtedness (other than the Loans or any Reimbursement Obligation) the aggregate principal amount (including undrawn committed or available amounts), or with respect to any Hedge Agreement, the Hedge Termination Value, of which is in excess of $500,000 or contained in any instrument or agreement evidencing, securing or relating thereto or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice and/or lapse of time (if required) and upon the expiration of any applicable grace period, any such Indebtedness to become due prior to its stated maturity.
(g) ALLY Cross-Default. ALLY does either of the following: (A) suspends, withdraws, or terminates making advances on the ALLY Loan Agreements or (B) reduces or restricts the availability of funds to Supreme Indiana under the ALLY Loan Agreements, or alters the conditions to making advances under the ALLY Loan Agreements in a manner that has a material adverse effect on the acquisition of Pool Units by Supreme Indiana.
(h) Change in Control. Any Change in Control shall occur.
(i) Voluntary Bankruptcy Proceeding. Any Credit Party or any Subsidiary thereof shall (i) commence a voluntary case under any Debtor Relief Laws, (ii) file a petition seeking to take advantage of any Debtor Relief Laws, (iii) consent to or fail to contest in a timely and appropriate manner any petition filed against it in an involuntary case under any Debtor Relief Laws, (iv) apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee, or liquidator of itself or of a substantial part of its property, domestic or
foreign, (v) admit in writing its inability to pay its debts as they become due, (vi) make a general assignment for the benefit of creditors, or (vii) take any corporate action for the purpose of authorizing any of the foregoing.
(j) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be commenced against any Credit Party or any Subsidiary thereof in any court of competent jurisdiction seeking (i) relief under any Debtor Relief Laws, or (ii) the appointment of a trustee, receiver, custodian, liquidator or the like for any Credit Party or any Subsidiary thereof or for all or any substantial part of their respective assets, domestic or foreign, and such case or proceeding shall continue without dismissal or stay for a period of sixty (60) consecutive days, or an order granting the relief requested in such case or proceeding (including, but not limited to, an order for relief under such federal bankruptcy laws) shall be entered.
(k) Failure of Agreements.
(i) Any provision of this Agreement or any provision of any other Loan Document shall for any reason cease to be valid and binding on any Credit Party or any Subsidiary thereof party thereto or any such Person shall so state in writing.
(ii) Any Loan Document shall for any reason cease to create a valid and perfected first priority Lien (subject to Permitted Liens) on, or security interest in, any of the Collateral purported to be covered thereby, in each case other than (A) in accordance with the express terms hereof or thereof; (B) with respect to Collateral the aggregate value of which, for all such Collateral, does not exceed at any time, $250,000; or (C) as the result of an action or failure to act on the part of the Administrative Agent.
(l) ERISA Events. The occurrence of any of the following events: (i) any Credit Party or any ERISA Affiliate fails to make full payment when due of all amounts which, under the provisions of any Pension Plan or Sections 412 or 430 of the Code, any Credit Party or any ERISA Affiliate is required to pay as contributions thereto and such unpaid amounts are in excess of $500,000, (ii) a Termination Event or (iii) any Credit Party or any ERISA Affiliate as employers under one or more Multiemployer Plans makes a complete or partial withdrawal from any such Multiemployer Plan and the plan sponsor of such Multiemployer Plans notifies such withdrawing employer that such employer has incurred a withdrawal liability requiring payments in an amount exceeding $500,000.
(m) Judgment. A judgment or order for the payment of money which causes the aggregate amount of all such judgments or orders (net of any amounts paid or fully covered by independent third party insurance as to which the relevant insurance company does not dispute coverage) to exceed $500,000 shall be entered against any Credit Party or any Subsidiary thereof by any court and such judgment or order shall continue without having been discharged, vacated, stayed, or bonded pending appeal for a period of thirty (30) consecutive days after the entry thereof.
SECTION 10.2 Remedies. Upon the occurrence of an Event of Default, with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower:
(a) Acceleration; Termination of Credit Facility. Terminate the Revolving Credit Commitment and declare the principal of and interest on the Loans and the Reimbursement Obligations at the time outstanding, and all other amounts owed to the Lenders and to the Administrative Agent under this Agreement or any of the other Loan Documents (including, without limitation, all L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented or shall be entitled to present the documents required thereunder) and all other Obligations, to be forthwith due and
payable, whereupon the same shall immediately become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by each Credit Party, anything in this Agreement or the other Loan Documents to the contrary notwithstanding, and terminate the Credit Facility and any right of the Borrower to request borrowings or Letters of Credit thereunder; provided, that upon the occurrence of an Event of Default specified in Section 10.1(i) or (j), the Credit Facility shall be automatically terminated and all Obligations shall automatically become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by each Credit Party, anything in this Agreement or in any other Loan Document to the contrary notwithstanding.
(b) Letters of Credit. With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to the preceding paragraph, the Borrower shall at such time deposit in a Cash Collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such Cash Collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay the other Secured Obligations on a pro rata basis. After all such Letters of Credit shall have expired or been fully drawn upon, the Reimbursement Obligation shall have been satisfied and all other Secured Obligations shall have been paid in full, the balance, if any, in such Cash Collateral account shall be returned to the Borrower.
(c) General Remedies. Exercise on behalf of the Secured Parties all of its other rights and remedies under this Agreement, the other Loan Documents and Applicable Law, in order to satisfy all of the Secured Obligations.
SECTION 10.3 Rights and Remedies Cumulative; Non-Waiver; etc.
(a) The enumeration of the rights and remedies of the Administrative Agent and the Lenders set forth in this Agreement is not intended to be exhaustive and the exercise by the Administrative Agent and the Lenders of any right or remedy shall not preclude the exercise of any other rights or remedies, all of which shall be cumulative, and shall be in addition to any other right or remedy given hereunder or under the other Loan Documents or that may now or hereafter exist at law or in equity or by suit or otherwise. No delay or failure to take action on the part of the Administrative Agent or any Lender in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege or shall be construed to be a waiver of any Event of Default. No course of dealing between the Borrower, the Administrative Agent and the Lenders or their respective agents or employees shall be effective to change, modify or discharge any provision of this Agreement or any of the other Loan Documents or to constitute a waiver of any Event of Default.
(b) 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 Credit 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 10.2 for the benefit of all the Lenders and the Issuing Lender; provided 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 Issuing Lender or the Swingline Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as Issuing Lender or Swingline Lender, as the case may be) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 12.4 (subject to the terms of Section 5.6), 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 Credit 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 10.2 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 5.6, 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.
SECTION 10.4 Crediting of Payments and Proceeds. In the event that the Obligations have been accelerated pursuant to Section 10.2 or the Administrative Agent or any Lender has exercised any remedy set forth in this Agreement or any other Loan Document, all payments received by the Lenders upon the Secured Obligations and all net proceeds from the enforcement of the Secured Obligations shall be applied:
First, to payment of that portion of the Secured Obligations constituting fees, indemnities, expenses and other amounts, including attorney fees, payable to the Administrative Agent in its capacity as such, the Issuing Lender in its capacity as such and the Swingline Lender in its capacity as such, ratably among the Administrative Agent, the Issuing Lender and Swingline Lender in proportion to the respective amounts described in this clause First payable to them;
Second, to payment of that portion of the Secured Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders under the Loan Documents, including attorney fees, ratably among the Lenders in proportion to the respective amounts described in this clause Second payable to them;
Third, to payment of that portion of the Secured Obligations constituting accrued and unpaid interest on the Loans and Reimbursement Obligations, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them;
Fourth, to payment of that portion of the Secured Obligations constituting unpaid principal of the Loans, Reimbursement Obligations and payment obligations then owing under Secured Hedge Agreements and Secured Cash Management Agreements, ratably among the Lenders, the Issuing Lender, the Hedge Banks and the Cash Management Banks in proportion to the respective amounts described in this clause Fourth payable to them;
Fifth, to the Administrative Agent for the account of the Issuing Lender, to Cash Collateralize any L/C Obligations then outstanding; and
Last, the balance, if any, after all of the Secured Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Applicable Law.
Notwithstanding the foregoing, Secured Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements shall be excluded from the application described above if the Administrative Agent has not received written notice thereof, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be. Each Cash Management Bank or Hedge Bank not a party to this Agreement that has given the notice contemplated by the preceding sentence shall, by such notice, be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of Article XI for itself and its Affiliates as if a Lender party hereto.
SECTION 10.5 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 Credit 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 (but not obligated) by intervention in such proceeding or otherwise:
(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 Issuing Lender and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Issuing Lender and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the Issuing Lender and the Administrative Agent under Sections 3.3, 5.3 and 12.3) 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 Issuing Lender 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 Issuing Lender, 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 3.3, 5.3 and 12.3.
SECTION 10.6 Credit Bidding.
(a) The Administrative Agent, on behalf of itself and the Lenders, shall have the right to credit bid and purchase for the benefit of the Administrative Agent and the Lenders all or any portion of Collateral at any sale thereof conducted by the Administrative Agent under the provisions of the UCC, including pursuant to Sections 9-610 or 9-620 of the UCC, at any sale thereof conducted under the provisions of the United States Bankruptcy Code, including Section 363 thereof, or a sale under a plan of reorganization, or at any other sale or foreclosure conducted by the Administrative Agent (whether by judicial action or otherwise) in accordance with Applicable Law.
(b) Each Lender hereby agrees that, except as otherwise provided in any Loan Documents or with the written consent of the Administrative Agent and the Required Lenders, it will not take any enforcement action, accelerate obligations under any Loan Documents, or exercise any right that it might otherwise have under Applicable Law to credit bid at foreclosure sales, UCC sales or other similar dispositions of Collateral.
ARTICLE XI
THE ADMINISTRATIVE AGENT
SECTION 11.1 Appointment and Authority.
(a) Each of the Lenders and the Issuing Lender hereby irrevocably appoints Wells Fargo 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 Issuing Lender, and neither the Borrower nor any Subsidiary thereof 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.
(b) The Administrative Agent shall also act as the collateral agent under the Loan Documents, and each of the Lenders (including in its capacity as a potential Hedge Bank or Cash Management Bank) and the Issuing Lender hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender and the Issuing Lender for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Credit Parties to secure any of the Secured Obligations, together with such powers and discretion as are reasonably incidental thereto (including, without limitation, to enter into additional Loan Documents or supplements to existing Loan Documents on behalf of the Secured Parties). 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 this Article XI for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security 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 Articles XI and XII (including Section 12.3, 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.
SECTION 11.2 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.
SECTION 11.3 Exculpatory Provisions.
(a) 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 and thereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:
(i) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing;
(ii) 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
(iii) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries or Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.
(b) The Administrative Agent shall not be liable for any action taken or not taken by it (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 Section 12.2 and Section 10.2) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final nonappealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default or Event of Default unless and until notice describing such Default or Event of Default is given to the Administrative Agent by the Borrower, a Lender or the Issuing Lender.
(c) 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 or Event of 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 VI or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
SECTION 11.4 Reliance by the Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, 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 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 Issuing Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Issuing Lender unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Lender 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 Borrower), 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.
SECTION 11.5 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 Facility 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.
SECTION 11.6 Resignation of Administrative Agent.
(a) The Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Lender and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower and subject to the consent of the Borrower (provided no Event of Default has occurred and is continuing at the time of such resignation), 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 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 Issuing Lender, 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) If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by Applicable Law, by notice in writing to the Borrower and such Person, remove such Person as Administrative Agent and, in consultation with the Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the Removal Effective Date), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.
(c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable), (1) the retiring or removed 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 Issuing Lender under any of the Loan Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (2) except for any indemnity payments owed to the retiring or removed 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 Issuing Lender directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successors 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 or removed Administrative Agent (other than any rights to indemnity payments owed to the retiring or removed Administrative Agent), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents. 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 or removed Administrative Agents resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 12.3 shall continue in effect for the benefit of such retiring or removed 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 or removed Administrative Agent was acting as Administrative Agent.
(d) Any resignation by, or removal of, Wells Fargo as Administrative Agent pursuant to this Section shall also constitute its resignation as Issuing Lender and Swingline Lender. Upon the acceptance of a successors appointment as Administrative Agent hereunder, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Lender and Swingline Lender, (b) the retiring Issuing Lender and Swingline Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (c) the successor Issuing Lender shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangement satisfactory to the retiring Issuing Lender to effectively assume the obligations of the retiring Issuing Lender with respect to such Letters of Credit.
SECTION 11.7 Non-Reliance on Administrative Agent and Other Lenders. Each Lender and the Issuing Lender 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 Issuing Lender 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.
SECTION 11.8 No Other Duties, etc. Anything herein to the contrary notwithstanding, none of the syndication agents, documentation agents, co-agents, arrangers or bookrunners 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 Issuing Lender hereunder.
SECTION 11.9 Collateral and Guaranty Matters.
(a) Each of the Lenders (including in its or any of its Affiliates capacities as a potential Hedge Bank or Cash Management Bank) irrevocably authorize the Administrative Agent, at its option and in its discretion:
(i) to release any Lien on any Collateral granted to or held by the Administrative Agent, for the ratable benefit of the Secured Parties, under any Loan Document (A) upon the termination of the Revolving Credit Commitment and payment in full of all Secured Obligations (other than (1) contingent indemnification obligations and (2) obligations and liabilities under Secured Cash Management Agreements or Secured Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made) 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 Issuing Lender shall have been made), (B) that is sold or otherwise disposed of or to be sold or otherwise disposed of as part of or in connection with any sale or other disposition permitted under the Loan Documents, or (C) if approved, authorized or ratified in writing in accordance with Section 12.2;
(ii) to subordinate any Lien on any Collateral granted to or held by the Administrative Agent under any Loan Document to the holder of any Permitted Lien; and
(iii) to release any Subsidiary Guarantor from its obligations under any Loan Documents if such Person ceases to be a Subsidiary as a result of a transaction permitted under the Loan Documents.
Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agents authority to release or subordinate its interest in particular types or items of property, or to release any Subsidiary Guarantor from its obligations under the Subsidiary Guaranty Agreement pursuant to this Section 11.9. In each case as specified in this Section 11.9, the Administrative Agent will, at the Borrowers expense, execute and deliver to the applicable Credit Party such documents as such Credit Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Security Documents or to subordinate its interest in such item, or to release such Guarantor from its obligations under the Subsidiary Guaranty Agreement, in each case in accordance with the terms of the Loan Documents and this Section 11.9. In the case of any such sale, transfer or disposal of any property constituting Collateral in a transaction constituting an Asset Disposition permitted pursuant to Section 9.5, the Liens created by any of the Security Documents on such property shall be automatically released without need for further action by any person.
(b) The Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Administrative Agents Lien thereon, or any certificate prepared by any Credit Party in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.
SECTION 11.10 Secured Hedge Agreements and Secured Cash Management Agreements. No Cash Management Bank or Hedge Bank that obtains the benefits of Section 10.4 or any Collateral by virtue of the provisions hereof or of any Security Document shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents. Notwithstanding any other provision of this Article XI to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Secured Cash Management Agreements and Secured Hedge Agreements unless the Administrative Agent has received written notice of such Secured Cash Management Agreements and Secured Hedge Agreements, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Notices.
(a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in clause (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as follows:
If to the Borrower:
c/o Supreme Indiana Operations, Inc.
2581 East Kercher Road
Goshen, Indiana 46528
Attention: Matthew W. Long
Telephone No.: (574) 672-0713
Facsimile No.: (574) 642-4540
Email: matt.long@supremecorp.com
with copies to:
Haynes and Boone, LLP
2323 Victory Avenue, Suite 700
Dallas, Texas 75219-7673
Attention: Paul Amiel
Telephone No.: (214) 651-5605
Facsimile No.: (214) 200-0555
Email: paul.amiel@haynesboone.com
If to Wells Fargo as Administrative Agent:
Wells Fargo Bank, National Association
300 N. Meridian Street, Suite 1600
Indianapolis, Indiana 46204-1751
Attention: David ONeal
Telephone No.: (317) 977-2166
Facsimile No.: (317) 977-1118
Email: david.w.oneal@wellsfargo.com
with copies to:
McGuireWoods, LLP
77 W. Wacker Drive, Suite 4100
Chicago, Illinois 60601-1818
Attention: Philip J. Perzek
Telephone No.: (312) 849-8270
Facsimile No.: (312) 698-4555
Email: pperzek@mcguirewoods.com
If to any Lender:
To the address set forth on the Register
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications to the extent provided in clause (b) below, shall be effective as provided in said clause (b).
(b) Electronic Communications. Notices and other communications to the Lenders and the Issuing Lender hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or the Issuing Lender pursuant to Article II if such Lender or the Issuing Lender, as applicable, has notified the Administrative Agent that 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 senders 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), 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; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or other communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.
(c) Administrative Agents Office. The Administrative Agent hereby designates its office located at the address set forth above, or any subsequent office which shall have been specified for such purpose by written notice to the Borrower and Lenders, as the Administrative Agents Office referred to herein, to which payments due are to be made and at which Loans will be disbursed and Letters of Credit requested.
(d) Change of Address, Etc. Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.
SECTION 12.2 Amendments, Waivers and Consents. Except as set forth below or as specifically provided in any Loan Document, any term, covenant, agreement or condition of this Agreement or any of the other Loan Documents may be amended or waived by the Lenders, and any consent given by the Lenders, if, but only if, such amendment, waiver or consent is in writing signed by the Required Lenders (or by the Administrative Agent with the consent of the Required Lenders) and delivered to the Administrative Agent and, in the case of an amendment, signed by the Borrower; provided, that no amendment, waiver or consent shall:
(a) without the prior written consent of the Required Revolving Credit Lenders, amend, modify or waive (i) Section 6.2 or any other provision of this Agreement if the effect of such amendment, modification or waiver is to require the Revolving Credit Lenders (pursuant to, in the case of any such amendment to a provision hereof other than Section 6.2, any substantially concurrent request by the Borrower for a borrowing of Revolving Credit Loans) to make Revolving Credit Loans when such Revolving Credit Lenders would not otherwise be required to do so, (ii) the amount of the Swingline Commitment or (iii) the amount of the L/C Commitment;
(b) increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 10.2) or the amount of Loans of any Lender, in any case, without the written consent of such Lender;
(c) waive, extend or postpone any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due to the Lenders (or any of them) or any scheduled or mandatory reduction of the Revolving Credit Commitment hereunder or under any other Loan Document without the written consent of each Lender directly and adversely affected thereby;
(d) reduce the principal of, or the rate of interest specified herein on, any Loan or Reimbursement Obligation, or (subject to clause (iv) of the proviso set forth in the paragraph below) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly and adversely affected thereby;
(e) change Section 5.6 or Section 10.4 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender directly and adversely affected thereby;
(f) except as otherwise permitted by this Section 12.2, change any provision of this Section or reduce the percentages specified in the definitions of Required Lenders, or Required Revolving Credit 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 directly affected thereby;
(g) consent to the assignment or transfer by any Credit Party of such Credit Partys rights and obligations under any Loan Document to which it is a party (except as permitted pursuant to Section 9.4), in each case, without the written consent of each Lender; or
(h) release all or substantially all of the Collateral or release any Security Document (other than as authorized in Section 11.9 or as otherwise specifically permitted or contemplated in this Agreement or the applicable Security Document) without the written consent of each Lender;
provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the Issuing Lender in addition to the Lenders required above, affect the rights or duties of the Issuing Lender under this Agreement or any Letter of Credit Application 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 Swingline Lender in addition to the Lenders required above, affect the rights or duties of the Swingline Lender under this Agreement; (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; (iv) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto, and (v) the Administrative Agent and the Borrower shall be permitted to amend any provision of the Loan Documents (and such amendment shall become effective without any further action or consent of any other party to any Loan Document) if the Administrative Agent and the Borrower shall have jointly identified an obvious error or any error or omission of a technical or immaterial nature in any such provision. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Revolving Credit Commitment of such Lender may not be increased or extended without the consent of such Lender.
Notwithstanding anything in this Agreement to the contrary, each Lender hereby irrevocably authorizes the Administrative Agent on its behalf, and without further consent, to enter into amendments or modifications to this Agreement (including, without limitation, amendments to this Section 12.2) or any of the other Loan Documents or to enter into additional Loan Documents as the Administrative Agent reasonably deems appropriate in order to effectuate the terms of Section 5.13 (including, without limitation, as applicable, (1) to permit the Incremental Revolving Credit Increases to share ratably in the benefits of this Agreement and the other Loan Documents and (2) to include the outstanding Incremental Revolving Credit Increases in any determination of (i) Required Lenders or Required Revolving Credit Lenders, as applicable or (ii) similar required lender terms applicable thereto); provided that no amendment or modification shall result in any increase in the amount of any Lenders Commitment or any increase in any Lenders Commitment Percentage, in each case, without the written consent of such affected Lender.
SECTION 12.3 Expenses; Indemnity.
(a) Costs and Expenses. The Borrower and any other Credit Party, jointly and severally, 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 Facility, 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 Issuing Lender in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out of pocket expenses incurred by the Administrative Agent, any Lender or the Issuing Lender (including the fees, charges and disbursements of any counsel for the Administrative Agent, any Lender or the Issuing Lender), in connection with the enforcement or protection of its rights (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.
(b) Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender and the Issuing Lender, and each Related Party of any of the foregoing Persons (each such Person being called an Indemnitee) against, and hold each Indemnitee harmless from, and shall pay or reimburse any such Indemnitee for, any and all losses, claims (including, without limitation, any Environmental Claims), penalties, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the Borrower or any other Credit Party), other than such Indemnitee and its Related Parties, 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 or the consummation of the transactions contemplated hereby or thereby (including, without limitation, the Transactions), (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Issuing Lender 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 any Credit Party or any Subsidiary thereof, or any Environmental Claim related in any way to any Credit Party or any Subsidiary, (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 any Credit Party or any Subsidiary thereof, and regardless of whether any Indemnitee is a party thereto, or (v) any claim (including, without limitation, any Environmental Claims), investigation, litigation or other proceeding (whether or not the Administrative Agent or any Lender is a party thereto) and the prosecution and defense thereof, arising out of or in any way connected with the Loans, this Agreement, any other Loan Document, or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby, including without limitation, reasonable attorneys and consultants fees, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (A) 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 (B) do not relate to or arise from such Indemnitees acting as or for the Administrative Agent (in its capacity as the Administrative Agent), as or for a Lender (in its capacity as a Lender), or as or for the Issuing Lender (in its capacity as the Issuing Lender). This Section 12.3(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim. THE BORROWER HAS NO OBLIGATION TO INDEMNIFY OR TAKE ANY
OTHER ACTION UNDER THIS AGREEMENT WITH RESPECT TO THE PRESENCE OF HAZARDOUS MATERIALS, OR THE VIOLATION OF, NONCOMPLIANCE WITH OR LIABILITY UNDER ANY ENVIRONMENTAL LAWS THAT ARISE AFTER THE DATE OF A FORECLOSURE OR A CONVEYANCE IN LIEU OF FORECLOSURE.
(c) Reimbursement by Lenders. To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under clause (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the Issuing Lender, the Swingline Lender 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 Issuing Lender, the Swingline Lender or such Related Party, as the case may be, such Lenders pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lenders share of the Total Credit Exposure at such time, or if the Total Credit Exposure has been reduced to zero, then based on such Lenders share of the Total Credit Exposure immediately prior to such reduction) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender); provided that with respect to such unpaid amounts owed to the Issuing Lender or the Swingline Lender solely in its capacity as such, only the Revolving Credit Lenders shall be required to pay such unpaid amounts, such payment to be made severally among them based on such Revolving Credit Lenders Revolving Credit Commitment Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought or, if the Revolving Credit Commitment has been reduced to zero as of such time, determined immediately prior to such reduction); provided, further, 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), the Issuing Lender or the Swingline Lender 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), Issuing Lender or the Swingline Lender in connection with such capacity. The obligations of the Lenders under this clause (c) are subject to the provisions of Section 5.7.
(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by Applicable Law, the Borrower and each other Credit Party 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 clause (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it 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.
(e) Payments. All amounts due under this Section shall be payable promptly after demand therefor.
(f) Survival. Each partys obligations under this Section shall survive the termination of the Loan Documents and payment of the obligations hereunder.
SECTION 12.4 Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender, the Issuing Lender, the Swingline Lender 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 Issuing Lender, the Swingline Lender or any such Affiliate to or for the credit or the account of the Borrower or any other
Credit Party against any and all of the obligations of the Borrower or such Credit Party now or hereafter existing under this Agreement or any other Loan Document to such Lender, the Issuing Lender or the Swingline Lender or any of their respective Affiliates, irrespective of whether or not such Lender, the Issuing Lender, the Swingline Lender or any such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower or such Credit Party may be contingent or unmatured or are owed to a branch or office of such Lender, the Issuing Lender, the Swingline Lender or such Affiliate different from the branch, office or Affiliate 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 10.4 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, the Issuing Lender, the Swingline Lender 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 Issuing Lender, the Swingline Lender and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the Issuing Lender, the Swingline Lender or their respective Affiliates may have. Each Lender, the Issuing Lender and the Swingline Lender agree 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.
SECTION 12.5 Governing Law; Jurisdiction, Etc.
(a) Governing Law. This Agreement and the other Loan Documents and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the law of the State of New York.
(b) Submission to Jurisdiction. The Borrower and each other Credit Party irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Administrative Agent, any Lender, the Issuing Lender, the Swingline Lender, or any Related Party of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in New York County, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York 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, litigation 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 the Administrative Agent, any Lender, the Issuing Lender or the Swingline Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against the Borrower or any other Credit Party or its properties in the courts of any jurisdiction.
(c) Waiver of Venue. The Borrower and each other Credit Party 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 clause (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 12.1. Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by Applicable Law.
SECTION 12.6 Waiver of Jury Trial.
(a) 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). IF AND TO THE EXTENT THAT THE FOREGOING WAIVER OF THE RIGHT TO A JURY TRIAL IS UNENFORCEABLE FOR ANY REASON IN SUCH FORUM, EACH OF THE PARTIES HERETO HEREBY CONSENTS TO THE ADJUDICATION OF ALL CLAIMS PURSUANT TO JUDICIAL REFERENCE AS PROVIDED IN CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638, AND THE JUDICIAL REFEREE SHALL BE EMPOWERED TO HEAR AND DETERMINE ALL ISSUES IN SUCH REFERENCE, WHETHER FACT OR LAW. 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 CONSENT 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.
(b) Binding Arbitration.
(i) Agreement to Arbitrate. Upon demand of any party, whether made before or after institution of any judicial proceeding, any dispute, claim or controversy arising out of, connected with or relating to this Agreement or any other Loan Document (Disputes), between or among parties hereto and to the other Loan Documents shall be resolved by binding arbitration as provided herein. Institution of a judicial proceeding by a party does not waive the right of that party to demand arbitration hereunder. Disputes may include, without limitation, tort claims, counterclaims, claims brought as class actions, claims arising from Loan Documents executed in the future, disputes as to whether a matter is subject to arbitration, or claims concerning any aspect of the past, present or future relationships arising out of or connected with the Loan Documents. The parties hereto do not waive any applicable Federal or state substantive law (including the protections afforded to banks under 12 U.S.C. Section 91 or any similar applicable state law) except as provided herein. A judgment upon the award may be entered in any court having jurisdiction. Notwithstanding the foregoing, this paragraph shall not apply to any Hedge Agreement or Cash Management Agreement.
(ii) General Rules of Arbitration. Any arbitration proceeding will (A) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the Loan Documents between the parties, (B) be conducted by the American Arbitration Association (the AAA), or such other administrator as the parties shall mutually agree upon, in accordance with the commercial dispute resolution procedures of the AAA, unless the claim or counterclaim is at least $1,000,000 exclusive of claimed interest,
arbitration fees and costs, in which case the arbitration shall be conducted in accordance with the AAAs optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to, as applicable, as the Arbitration Rules) and (C) proceed in a location in New York, New York, selected by the AAA. The expedited procedures set forth in Rule 51, et seq. of the Arbitration Rules shall be applicable to claims of less than $1,000,000. All applicable statutes of limitations shall apply to any Dispute. If there is any inconsistency between the terms hereof and the Arbitration Rules, the terms and procedures set forth herein shall control. Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute. Notwithstanding anything in the foregoing to the contrary, any arbitration proceeding demanded hereunder shall begin within ninety (90) days after such demand thereof and shall be concluded within one hundred twenty (120) days after such demand. These time limitations may not be extended unless a party hereto shows cause for extension and then such extension shall not exceed a total of sixty (60) days.
(iii) Arbitrators. Any arbitration proceeding in which the amount in controversy is $5,000,000 or less will be decided by a single arbitrator selected according to the Arbitration Rules, and who shall not render an award of greater than $5,000,000. Any dispute in which the amount in controversy exceeds $5,000,000 shall be decided by majority vote of a panel of three arbitrators; provided that all three arbitrators must actively participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed in the jurisdiction of the state where the hearing will be conducted or a neutral retired judge of the jurisdiction, state or federal, of the state where the hearing will be conducted, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated. In any arbitration proceeding, the arbitrator will decide (by documents only or with a hearing at the arbitrators discretion) any pre hearing motions that are similar to motions to dismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all disputes in accordance with the substantive law of New York and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure or other Applicable Law.
(iv) Preservation of Certain Remedies. Notwithstanding the preceding binding arbitration provisions, the parties hereto and the other Loan Documents preserve, without diminution, certain remedies that such Persons may employ or exercise freely, either alone, in conjunction with or during a Dispute. Each such Person shall have and hereby reserves the right to proceed in any court of proper jurisdiction or by self-help to exercise or prosecute the following remedies, as applicable: (A) all rights to foreclose against any real or personal property or other security by exercising a power of sale granted in the Loan Documents or under Applicable Law or by judicial foreclosure and sale, including a proceeding to confirm the sale, (B) all rights of self-help including peaceful occupation of property and collection of rents, set off, and peaceful possession of property, (C) obtaining provisional or ancillary remedies including injunctive relief, sequestration, garnishment, attachment, appointment of receiver and in filing an involuntary bankruptcy proceeding, and (D) when applicable, a judgment by confession of judgment. Preservation of these remedies does not limit the power of an arbitrator to grant similar remedies that may be requested by a party in a Dispute.
(v) Matters Involving Real Property. Notwithstanding anything herein to the contrary, no dispute shall be submitted to arbitration if the dispute concerns indebtedness secured directly or indirectly, in whole or in part, by any real property unless: (A) the holder of the mortgage, lien or security interest specifically elects in writing to proceed with the arbitration; or (B) all parties to the arbitration waive any rights or benefits that might accrue to them by virtue of the single action rule statute of California, thereby agreeing that all indebtedness and obligations of the parties, and all mortgages, liens and security interests securing such indebtedness and obligations, shall remain fully valid and enforceable. If any such dispute is not submitted to arbitration, the dispute shall be referred to a referee in accordance with California Code of Civil Procedure Section 638 et seq., and this general reference agreement is intended to be specifically enforceable in accordance with such Section 638. A referee with the qualifications required herein for arbitrators shall be selected pursuant to the AAAs selection procedures. Judgment upon the decision rendered by a referee shall be entered in the court in which such proceeding was commenced in accordance with California Code of Civil Procedure Sections 644 and 645.
SECTION 12.7 Reversal of Payments. To the extent any Credit Party makes a payment or payments to the Administrative Agent for the ratable benefit of the Lenders or the Administrative Agent receives any payment or proceeds of the Collateral which payments or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any Debtor Relief Law, other Applicable Law or equitable cause, then, to the extent of such payment or proceeds repaid, the Obligations or part thereof intended to be satisfied shall be revived and continued in full force and effect as if such payment or proceeds had not been received by the Administrative Agent.
SECTION 12.8 Injunctive Relief. The Borrower recognizes that, in the event the Borrower fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, any remedy of law may prove to be inadequate relief to the Lenders. Therefore, the Borrower agrees that the Lenders, at the Lenders option, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.
SECTION 12.9 Accounting Matters. If at any time any change in GAAP 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.
SECTION 12.10 Successors and Assigns; Participations.
(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 Credit 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 clause (b) of this Section, (ii) by way of participation in accordance with the provisions of clause (d) of this Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of clause (e) 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 clause (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent 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 Revolving Credit Commitment and the Loans at the time owing to it); provided that, in each case with respect to any Credit Facility, 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 Lenders Commitment and/or the Loans at the time owing to it (in each case with respect to any Credit Facility) or contemporaneous assignments to related Approved Funds that equal at least the amount specified in paragraph (b)(i)(B) of this Section in the aggregate 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 paragraph (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable 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, in the case of any assignment in respect of the Revolving Credit Facility, 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 that the Borrower shall be deemed to have given its consent five (5) Business Days after the date written notice thereof has been delivered by the assigning Lender (through the Administrative Agent) unless such consent is expressly refused by the Borrower prior to such fifth (5th) Business Day;
(ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lenders rights and obligations under this Agreement with respect to the Loan or the Commitment assigned, except that this clause (ii) shall not prohibit any Lender from assigning all or a portion of its rights and obligations among separate classes on a non-pro rata basis;
(iii) Required Consents. No consent shall be required for any assignment except to the extent required by paragraph (b)(i)(B) of this Section and, in addition:
(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) an Event of Default has occurred and is continuing at the time of such assignment or (y) 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 for all assignments; and
(C) the consents of the Issuing Lender and the Swingline Lender shall be required for any assignment in respect of the Revolving Credit Facility.
(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 of $3,500 for each assignment; provided that (A) only one such fee will be payable in connection with simultaneous assignments to two or more related Approved Funds by a Lender and (B) 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 to (A) the Borrower or any of its Subsidiaries or Affiliates 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).
(vi) No Assignment to Natural Persons. No such assignment shall be made to a natural Person.
(vii) 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 (A) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, the Issuing Lender, the Swingline Lender and each other Lender hereunder (and interest accrued thereon), and (B) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit and Swingline Loans in accordance with its Revolving Credit Commitment 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 clause (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 Lenders 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 5.8, 5.9, 5.10, 5.11 and 12.3 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lenders having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph 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 clause (d) of this Section.
(c) Register. The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices in Indianapolis, Indiana, a copy of each Assignment and Assumption and each Lender Joinder Agreement delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amounts of (and stated interest on) the Loans owing to, each Lender pursuant to the terms hereof from time to time (the Register). The entries in the Register shall be conclusive, absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender (but only to the extent of entries in the Register that are applicable to such Lender), at any reasonable time and from time to time upon reasonable prior notice.
(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 or the Borrower or any of the Borrowers Affiliates or Subsidiaries) (each, a Participant) in all or a portion of such Lenders rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lenders 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 Issuing Lender, the Swingline Lender and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lenders rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 12.3(c) with respect to any payments made by such Lender to its Participant(s).
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, modification or waiver or modification described in the first proviso to Section 12.2 that affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Sections 5.9, 5.10 and 5.11 (subject to the requirements and limitations therein, including the requirements under Section 5.11(f) (it being understood that the documentation required under Section 5.11(f) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to clause (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Section 5.12 as if it were an assignee under clause (b) of this Section; and (B) shall not be entitled to receive any greater payment under Sections 5.10 or 5.11, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrowers request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 5.12(b) with respect to any Participant. To the extent permitted by law, each Participant also shall
be entitled to the benefits of Section 12.4 as though it were a Lender; provided that such Participant agrees to be subject to Section 5.6 as though it were a Lender.
Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts of (and stated interest on) each Participants interest in the Loans or other obligations under the Loan Documents (the Participant Register); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participants interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(e) 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 to secure obligations of such Lender, including without limitation 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.
SECTION 12.11 Treatment of Certain Information; Confidentiality. Each of the Administrative Agent, the Lenders and the Issuing Lender 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 Related Parties (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 required or requested by, or required to be disclosed to, any rating agency, or regulatory or similar authority purporting to have jurisdiction over such Person or its Related Parties (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 under this Agreement, under any other Loan Document or under any Secured Hedge Agreement or Secured Cash Management Agreement, or any action or proceeding relating to this Agreement, any other Loan Document or any Secured Hedge Agreement or Secured Cash Management Agreement, 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 and obligations under this Agreement, or (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder; (g) on a confidential basis to (i) any rating agency in connection with rating the Borrower or its Subsidiaries or the Credit Facility or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the Credit Facility; (h) with the consent of the Borrower, (i) to Gold Sheets and other similar bank trade publications, such information to consist of deal terms and other information customarily found in such publications, (j) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, any Lender, the Issuing Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower or (k) to governmental regulatory authorities in connection with any regulatory examination of the Administrative Agent or any Lender or in accordance with the Administrative Agents or any Lenders regulatory compliance policy if the
Administrative Agent or such Lender deems necessary for the mitigation of claims by those authorities against the Administrative Agent or such Lender or any of its subsidiaries or affiliates. For purposes of this Section, Information means all information received from any Credit Party or any Subsidiary thereof relating to any Credit Party or any Subsidiary thereof or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the Issuing Lender on a nonconfidential basis prior to disclosure by any Credit Party or any Subsidiary thereof; provided that, in the case of information received from a Credit Party or any Subsidiary thereof 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.
SECTION 12.12 Performance of Duties. Each of the Credit Partys obligations under this Agreement and each of the other Loan Documents shall be performed by such Credit Party at its sole cost and expense.
SECTION 12.13 All Powers Coupled with Interest. All powers of attorney and other authorizations granted to the Lenders, the Administrative Agent and any Persons designated by the Administrative Agent or any Lender pursuant to any provisions of this Agreement or any of the other Loan Documents shall be deemed coupled with an interest and shall be irrevocable so long as any of the Obligations remain unpaid or unsatisfied, any of the Commitments remain in effect or the Credit Facility has not been terminated.
SECTION 12.14 Survival.
(a) All representations and warranties set forth in Article VII and all representations and warranties contained in any certificate, or any of the Loan Documents (including, but not limited to, any such representation or warranty made in or in connection with any amendment thereto) shall constitute representations and warranties made under this Agreement. All representations and warranties made under this Agreement shall be made or deemed to be made at and as of the Closing Date (except those that are expressly made as of a specific date), shall survive the Closing Date and shall not be waived by the execution and delivery of this Agreement, any investigation made by or on behalf of the Lenders or any borrowing hereunder.
(b) Notwithstanding any termination of this Agreement, the indemnities to which the Administrative Agent and the Lenders are entitled under the provisions of this Article XII and any other provision of this Agreement and the other Loan Documents shall continue in full force and effect and shall protect the Administrative Agent and the Lenders against events arising after such termination as well as before.
SECTION 12.15 Titles and Captions. Titles and captions of Articles, Sections and subsections in, and the table of contents of, this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement.
SECTION 12.16 Severability of Provisions. Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.
SECTION 12.17 Counterparts; Integration; Effectiveness; Electronic Execution.
(a) 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, and any separate letter agreements with respect to fees payable to the Administrative Agent, the Issuing Lender, the Swingline Lender and/or the Arranger, 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 6.1, 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 facsimile or in electronic (i.e., pdf or tif) format shall be effective as delivery of a manually executed counterpart of this Agreement.
(b) Electronic Execution of Assignments. The words execution, signed, signature, and words of like import in any Assignment and Assumption 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.
SECTION 12.18 Term of Agreement. This Agreement shall remain in effect from the Closing Date through and including the date upon which all Obligations (other than contingent indemnification obligations not then due) arising hereunder or under any other Loan Document shall have been indefeasibly and irrevocably paid and satisfied in full, all Letters of Credit have been terminated or expired (or been Cash Collateralized) and the Revolving Credit Commitment has been terminated. No termination of this Agreement shall affect the rights and obligations of the parties hereto arising prior to such termination or in respect of any provision of this Agreement which survives such termination.
SECTION 12.19 USA PATRIOT Act. The Administrative Agent and each Lender hereby notifies the Borrower that pursuant to the requirements of the PATRIOT Act, each of them is required to obtain, verify and record information that identifies each Credit Party, which information includes the name and address of each Credit Party and other information that will allow such Lender to identify each Credit Party in accordance with the PATRIOT Act.
SECTION 12.20 Independent Effect of Covenants. The Borrower expressly acknowledges and agrees that each covenant contained in Articles VIII or IX hereof shall be given independent effect. Accordingly, the Borrower shall not engage in any transaction or other act otherwise permitted under any covenant contained in Articles VIII or IX, before or after giving effect to such transaction or act, the Borrower shall or would be in breach of any other covenant contained in Articles VIII or IX.
SECTION 12.21 Inconsistencies with Other Documents. In the event there is a conflict or inconsistency between this Agreement and any other Loan Document, the terms of this Agreement shall control; provided that any provision of the Security Documents which imposes additional burdens on the Borrower or any of its Subsidiaries or further restricts the rights of the Borrower or any of its Subsidiaries or gives the Administrative Agent or Lenders additional rights shall not be deemed to be in conflict or inconsistent with this Agreement and shall be given full force and effect.
[Signature pages to follow]
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be executed under seal by their duly authorized officers, all as of the day and year first written above.
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SUPREME INDUSTRIES, INC., | |
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as Borrower | |
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By: |
/s/ Matthew W. Long |
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Name: |
Matthew W. Long |
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Title: |
Chief Financial Officer |
Supreme Industries (CF) Credit Agreement
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AGENTS AND LENDERS: | |
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WELLS FARGO BANK, NATIONAL | |
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By: |
/s/ David W. ONeal |
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Name: |
David W. ONeal |
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Title: |
Senior Vice President |
Supreme Industries (CF) Credit Agreement
EXHIBIT A-1
to
Credit Agreement
dated as of December 19, 2012
by and among
Supreme Industries, Inc.,
as Borrower,
the lenders party thereto,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF REVOLVING CREDIT NOTE
REVOLVING CREDIT NOTE
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, 20 |
FOR VALUE RECEIVED, the undersigned, SUPREME INDUSTRIES, INC., a Delaware corporation (the Borrower), promises to pay to (the Lender), at the place and times provided in the Credit Agreement referred to below, the principal sum of DOLLARS ($ ) or, if less, the unpaid principal amount of all Revolving Credit Loans made by the Lender from time to time pursuant to that certain Credit Agreement, dated as of December 19, 2012 (the Credit Agreement), by and among the Borrower, the Lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
The unpaid principal amount of this Revolving Credit Note from time to time outstanding is payable as provided in the Credit Agreement and shall bear interest as provided in Section 5.1 of the Credit Agreement. All payments of principal and interest on this Revolving Credit Note shall be payable in Dollars in immediately available funds as provided in the Credit Agreement.
This Revolving Credit Note is entitled to the benefits of, and evidences Obligations incurred under, the Credit Agreement, to which reference is made for a description of the security for this Revolving Credit Note and for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Obligations evidenced by this Revolving Credit Note and on which such Obligations may be declared to be immediately due and payable.
THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
The Indebtedness evidenced by this Revolving Credit Note is senior in right of payment to all Subordinated Indebtedness referred to in the Credit Agreement.
The Borrower hereby waives all requirements as to diligence, presentment, demand of payment, protest and (except as required by the Credit Agreement) notice of any kind with respect to this Revolving Credit Note.
[Signature page follows]
IN WITNESS WHEREOF, the undersigned has executed this Revolving Credit Note under seal as of the day and year first above written.
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SUPREME INDUSTRIES, INC. | |
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By: |
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Name: |
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Title: |
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EXHIBIT A-2
to
Credit Agreement
dated as of December 19, 2012
by and among
Supreme Industries, Inc.,
as Borrower,
the lenders party thereto,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF SWINGLINE NOTE
SWINGLINE NOTE
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FOR VALUE RECEIVED, the undersigned, SUPREME INDUSTRIES, INC., a Delaware corporation (the Borrower), promises to pay to WELLS FARGO BANK, NATIONAL ASSOCIATION (the Lender), at the place and times provided in the Credit Agreement referred to below, the principal sum of DOLLARS ($ ) or, if less, the unpaid principal amount of all Swingline Loans made by the Lender from time to time pursuant to that certain Credit Agreement, dated as of December 19, 2012 (the Credit Agreement), by and among the Borrower, the Lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
The unpaid principal amount of this Swingline Note from time to time outstanding is payable as provided in the Credit Agreement and shall bear interest as provided in Section 5.1 of the Credit Agreement. Swingline Loans refunded as Revolving Credit Loans in accordance with Section 2.2(b) of the Credit Agreement shall be payable by the Borrower as Revolving Credit Loans pursuant to the Revolving Credit Notes, and shall not be payable under this Swingline Note as Swingline Loans. All payments of principal and interest on this Swingline Note shall be payable in Dollars in immediately available funds as provided in the Credit Agreement.
This Swingline Note is entitled to the benefits of, and evidences Obligations incurred under, the Credit Agreement, to which reference is made for a description of the security for this Swingline Note and for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Obligations evidenced by this Swingline Note and on which such Obligations may be declared to be immediately due and payable.
THIS SWINGLINE NOTE SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
The Indebtedness evidenced by this Swingline Note is senior in right of payment to all Subordinated Indebtedness referred to in the Credit Agreement.
The Borrower hereby waives all requirements as to diligence, presentment, demand of payment, protest and (except as required by the Credit Agreement) notice of any kind with respect to this Swingline Note.
[Signature page follows]
IN WITNESS WHEREOF, the undersigned has executed this Swingline Note under seal as of the day and year first above written.
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SUPREME INDUSTRIES, INC. | |
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By: |
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EXHIBIT B
to
Credit Agreement
dated as of December 19, 2012
by and among
Supreme Industries, Inc.,
as Borrower,
the lenders party thereto,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF NOTICE OF BORROWING
NOTICE OF BORROWING
Dated as of:
Wells Fargo Bank, National Association,
as Administrative Agent
300 N. Meridian Street, Suite 1600
Indianapolis, Indiana 46204-1751
Attention: David ONeal
Ladies and Gentlemen:
This irrevocable Notice of Borrowing is delivered to you pursuant to Section 2.3 of the Credit Agreement dated as of December 19, 2012 (the Credit Agreement), by and among Supreme Industries, Inc., a Delaware corporation (the Borrower), the Lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
1. The Borrower hereby requests that the Lenders make [a Revolving Credit Loan][a Swingline Loan] to the Borrower in the aggregate principal amount of $ . (Complete with an amount in accordance with Section 2.3 or Section 5.13, as applicable, of the Credit Agreement.)
2. The Borrower hereby requests that such Loan(s) be made on the following Business Day: . (Complete with a Business Day in accordance with Section 2.3 of the Credit Agreement for Revolving Credit Loans or Swingline Loans.)
3. The Borrower hereby requests that such Loan(s) bear interest at the following interest rate, plus the Applicable Rate, as set forth below:
Component |
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Interest Rate |
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Interest Period |
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[Base Rate or LIBOR Rate](2) |
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4. The aggregate principal amount of all Loans and L/C Obligations outstanding as of the date hereof (including the Loan(s) requested herein) does not exceed the maximum amount permitted to be outstanding pursuant to the terms of the Credit Agreement.
5. All of the conditions applicable to the Loan(s) requested herein as set forth in the Credit Agreement have been satisfied as of the date hereof and will remain satisfied to the date of such Loan.
[Signature page follows]
(1) Complete with the Dollar amount of that portion of the overall Loan requested that is to bear interest at the selected interest rate and/or Interest Period.
(2) Complete with (i) the Base Rate or the LIBOR Rate for Revolving Credit Loans or (ii) the Base Rate for Swingline Loans.
IN WITNESS WHEREOF, the undersigned has executed this Notice of Borrowing as of the day and year first written above.
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SUPREME INDUSTRIES, INC. | |
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By: |
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Name: |
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Title: |
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EXHIBIT C
to
Credit Agreement
dated as of December 19, 2012
by and among
Supreme Industries, Inc.,
as Borrower,
the lenders party thereto,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF NOTICE OF ACCOUNT DESIGNATION
NOTICE OF ACCOUNT DESIGNATION
Dated as of:
Wells Fargo Bank, National Association,
as Administrative Agent
300 N. Meridian Street, Suite 1600
Indianapolis, Indiana 46204-1751
Attention: David ONeal
Ladies and Gentlemen:
This Notice of Account Designation is delivered to you pursuant to Section 2.3(b) of the Credit Agreement dated as of December 19, 2012 (the Credit Agreement), by and among Supreme Industries, Inc., a Delaware corporation (the Borrower), the Lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
1. The Administrative Agent is hereby authorized to disburse all Loan proceeds into the following account(s):
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ABA Routing Number: |
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Account Number: |
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2. This authorization shall remain in effect until revoked or until a subsequent Notice of Account Designation is provided to the Administrative Agent.
[Signature page follows]
IN WITNESS WHEREOF, the undersigned has executed this Notice of Account Designation as of the day and year first written above.
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SUPREME INDUSTRIES, INC. | |
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By: |
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Name: |
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Title: |
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EXHIBIT D
to
Credit Agreement
dated as of December 19, 2012
by and among
Supreme Industries, Inc.,
as Borrower,
the lenders party thereto,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF NOTICE OF PREPAYMENT
NOTICE OF PREPAYMENT
Dated as of:
Wells Fargo Bank, National Association,
as Administrative Agent
300 N. Meridian Street, Suite 1600
Indianapolis, Indiana 46204-1751
Attention: David ONeal
Ladies and Gentlemen:
This irrevocable Notice of Prepayment is delivered to you pursuant to Section 2.4(c) of the Credit Agreement dated as of December 19, 2012 (the Credit Agreement), by and among Supreme Industries, Inc., a Delaware corporation (the Borrower), the Lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
1. The Borrower hereby provides notice to the Administrative Agent that it shall repay the following [Base Rate Loans] and/or [LIBOR Rate Loans]: . (Complete with an amount in accordance with Section 2.4 of the Credit Agreement.)
2. The Loan(s) to be prepaid consist of: [check each applicable box]
o a Swingline Loan
o a Revolving Credit Loan
3. The Borrower shall repay the above-referenced Loans on the following Business Day: . (Complete with a date no earlier than (i) the same Business Day as of the date of this Notice of Prepayment with respect to any Swingline Loan, (ii) one (1) Business Day subsequent to the date of this Notice of Prepayment with respect to any Base Rate Loan (other than a Swingline Loan), and (ii) three (3) Business Days subsequent to date of this Notice of Prepayment with respect to any LIBOR Rate Loan.)
[Signature page follows]
IN WITNESS WHEREOF, the undersigned has executed this Notice of Prepayment as of the day and year first written above.
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SUPREME INDUSTRIES, INC. | |
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By: |
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Name: |
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Title: |
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EXHIBIT E
to
Credit Agreement
dated as of December 19, 2012
by and among
Supreme Industries, Inc.,
as Borrower,
the lenders party thereto,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF NOTICE OF CONVERSION/CONTINUATION
NOTICE OF CONVERSION/CONTINUATION
Dated as of:
Wells Fargo Bank, National Association,
as Administrative Agent
300 N. Meridian Street, Suite 1600
Indianapolis, Indiana 46204-1751
Attention: David ONeal
Ladies and Gentlemen:
This irrevocable Notice of Conversion/Continuation (this Notice) is delivered to you pursuant to Section 5.2 of the Credit Agreement dated as of December 19, 2012 (the Credit Agreement), by and among Supreme Industries, Inc., a Delaware corporation (the Borrower), the Lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
1. The Loan to which this Notice relates is a Revolving Credit Loan.
2. This Notice is submitted for the purpose of: (Check one and complete applicable information in accordance with the Credit Agreement.)
o Converting all or a portion of a Base Rate Loan into a LIBOR Rate Loan |
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Outstanding principal balance: |
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$ |
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Principal amount to be converted: |
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$ |
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Requested effective date of conversion: |
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Requested new Interest Period: |
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o Converting a portion of a LIBOR Rate Loan into a Base Rate Loan |
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Outstanding principal balance: |
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$ |
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Principal amount to be converted: |
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$ |
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Last day of the current Interest Period: |
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Requested effective date of conversion: |
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o Continuing all or a portion of a LIBOR Rate Loan as a LIBOR Rate Loan |
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Outstanding principal balance: |
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$ |
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Principal amount to be continued: |
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$ |
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Last day of the current Interest Period: |
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Requested effective date of continuation: |
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Requested new Interest Period: |
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3. The aggregate principal amount of all Loans and L/C Obligations outstanding as of the date hereof does not exceed the maximum amount permitted to be outstanding pursuant to the terms of the Credit Agreement.
[Signature page follows]
IN WITNESS WHEREOF, the undersigned has executed this Notice of Conversion/Continuation as of the day and year first written above.
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SUPREME INDUSTRIES, INC. | |
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By: |
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Name: |
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Title: |
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EXHIBIT F
to
Credit Agreement
dated as of December 19, 2012
by and among
Supreme Industries, Inc.,
as Borrower,
the lenders party thereto,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF OFFICERS COMPLIANCE CERTIFICATE
OFFICERS COMPLIANCE CERTIFICATE
Dated as of:
The undersigned, on behalf of Supreme Industries, Inc., a Delaware corporation (the Borrower), hereby certifies to the Administrative Agent and the Lenders, each as defined in the Credit Agreement referred to below, as follows:
1. This certificate is delivered to you pursuant to Section 8.2 of the Credit Agreement dated as of December 19, 2012 (the Credit Agreement), by and among the Borrower, the Lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
2. I have reviewed the financial statements of the Borrower and its Subsidiaries dated as of and for the period[s] then ended and such statements fairly present in all material respects the financial condition of the Borrower and its Subsidiaries as of the dates indicated and the results of their operations and cash flows for the period[s] indicated.
3. I have reviewed the terms of the Credit Agreement, and the related Loan Documents and have made, or caused to be made under my supervision, a review in reasonable detail of the transactions and the condition of the Borrower and its Subsidiaries during the accounting period covered by the financial statements referred to in Section 2 above. Such review has not disclosed the existence during or at the end of such accounting period of any condition or event that constitutes a Default or an Event of Default, nor do I have any knowledge of the existence of any such condition or event as at the date of this certificate [except, if such condition or event existed or exists, describe the nature and period of existence thereof and what action the Borrower has taken, is taking and proposes to take with respect thereto].
4. As of the date of this certificate, the Applicable Rate and calculations determining such figures are set forth on the attached Schedule 1, the Borrower and its Subsidiaries are in compliance with the financial covenants contained in Sections 9.14 and 9.15 of the Credit Agreement as shown on such Schedule 1 and the Borrower and its Subsidiaries are in compliance with the other covenants and restrictions contained in the Credit Agreement.
[Signature page follows]
WITNESS the following signature as of the day and year first written above.
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SUPREME INDUSTRIES, INC. | |
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By: |
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Name: |
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Title: |
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Schedule 1
to
Officers Compliance Certificate
For the Quarter/Year ended (the Statement Date)
A. |
Section 9.14 Maximum Capital Expenditures | |||||
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(I) |
Aggregate amount of all Capital Expenditures(1) actually made in the [portion of the](2) Fiscal Year ending on the Statement Date (such Fiscal Year, the Current Fiscal Year) |
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$ | ||
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(II) |
(a) The stated maximum permitted amount of Capital Expenditures set forth in Section 9.14 of the Credit Agreement applicable to the Fiscal Year preceding the Current Fiscal Year (such Fiscal Year, the Preceding Fiscal Year) |
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$ | ||
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(b) The aggregate amount of Capital Expenditures actually made during the Preceding Fiscal Year |
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$ | ||
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(c) Line A.(II)(a) less Line A.(II)(b) (such amount, to the extent positive, the Gross Carryover Amount) |
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$ | ||
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(d) The stated maximum percentage of the Gross Carryover Amount permitted to be carried over for expenditure in the Current Fiscal Year |
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% | |
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(e) Line A.(II)(c) multiplied by Line A.(II)(d) (such amount, the Net Carryover Amount)(3) |
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$ | ||
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(III) |
The stated maximum permitted amount of Capital Expenditures applicable to the Current Fiscal Year |
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$ |
7,000,000 |
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(IV) |
Aggregate permitted amount of Capital Expenditures (Line A.(III) plus Line A.(II)(e)) |
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$ | ||
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(V) |
Excess (deficiency) for covenant compliance (Line A.(IV) less Line A.(I)) |
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$ | ||
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(VI) |
In Compliance? |
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Yes/No | ||
(1) Exclude amounts financed with Net Cash Proceeds received from any (a) disposition of Capital Assets (to the extent permitted under the Credit Agreement) or (b) Insurance and Condemnation Event, in each case, that have actually been reinvested during such period (and within twelve (12) months after receipt of such Net Cash Proceeds) in other Capital Assets used or useful in the business of the Borrower and its Subsidiaries, as applicable.
(2) Use for the first three (3) quarterly reportings in any Fiscal Year.
(3) The Net Carryover Amount for the Fiscal Year ending December 29, 2012, shall be deemed to equal $0.
B. |
Section 9.15(a) Maximum Consolidated Total Leverage Ratio and Applicable Rate | |||
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(I) |
Consolidated Total Indebtedness as of the Statement Date |
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$ |
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(II) |
Consolidated EBITDA for the period of four (4) consecutive Fiscal Quarters ending on or immediately prior to the Statement Date (See Schedule 2) |
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$ |
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(III) |
Line B.(I) divided by Line B.(II) |
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to 1.00 |
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(IV) |
Maximum permitted Consolidated Total Leverage Ratio as set forth in Section 9.15(a) of the Credit Agreement |
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to 1.00 |
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(V) |
In Compliance? |
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Yes/No |
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(VI) |
Applicable Rate |
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Pricing Level |
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C. |
Section 9.15(b) Minimum Consolidated Fixed Charge Coverage Ratio | |||
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(I) |
Consolidated EBITDA for the period of four (4) consecutive Fiscal Quarters ending on or immediately prior to the Statement Date |
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$ |
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(II) |
Consolidated Fixed Charges for the period of four (4) consecutive Fiscal Quarters ending on or immediately prior to the Statement Date (See Schedule 3) |
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$ |
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(III) |
Line C.(I) divided by Line C.(II) |
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to 1.00 |
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(IV) |
Minimum permitted Consolidated Fixed Charge Coverage Ratio as set forth in Section 9.15(b) of the Credit Agreement |
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to 1.00 |
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(V) |
In Compliance? |
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Yes/No |
Schedule 2
to
Officers Compliance Certificate
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Consolidated EBITDA |
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Quarter 1 |
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Quarter 2 |
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Quarter 3 |
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Quarter 4 |
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Total | |
(1) |
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Consolidated Net Income for such period |
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(2) |
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The following amounts, without duplication, to the extent deducted in determining Consolidated Net Income for such period: |
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(a) |
income and franchise taxes payable during such period |
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(b) |
Consolidated Interest Expense for such period |
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(c) |
amortization expense for such period |
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(d) |
depreciation expense for such period |
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(e) |
other non-cash charges (except to the extent that such non-cash charges are reserved for cash charges to be taken in the future) for such period |
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(f) |
extraordinary losses (excluding extraordinary losses from discontinued operations) during such period |
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(g) |
Transaction Costs payable during such period |
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(3) |
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Line (2)(a) plus Line (2)(b) plus Line (2)(c) plus Line (2)(d) plus Line (2)(e) plus Line (2)(f) plus Line (2)(g) |
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(4) |
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The following amounts, without duplication, to the extent added in computing Consolidated Net Income for such period: |
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Consolidated EBITDA |
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Quarter 1 |
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Quarter 2 |
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Quarter 3 |
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Quarter 4 |
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Total | |
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(a) |
interest income during such period |
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(b) |
any extraordinary gains during such period |
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(5) |
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Line (4)(a) plus Line (4)(b) |
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(6) |
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Pro Forma Basis Adjustments to Consolidated EBITDA, if applicable(1) |
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(7) |
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Totals (Line (1) plus Line (3) less Line (5) plus or minus, as applicable, Line (6)) |
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(1) Pro Forma Basis means, for purposes of calculating Consolidated EBITDA for any period during which one or more Specified Transactions occurs, that such Specified Transaction (and all other Specified Transactions that have been consummated during the applicable period) shall be deemed to have occurred as of the first day of the applicable period of measurement and:
(a) all income statement items (whether positive or negative) attributable to the Property or Person disposed of in a Specified Disposition shall be excluded and all income statement items (whether positive or negative) attributable to the Property or Person acquired in a Permitted Acquisition shall be included (provided that such income statement items to be included are reflected in financial statements or other financial data reasonably acceptable to the Administrative Agent and based upon reasonable assumptions and calculations which are expected to have a continuous impact); and
(b) non-recurring costs, extraordinary expenses and other pro forma adjustments attributable to such Specified Transaction may be included to the extent that such costs, expenses or adjustments:
(i) are reasonably expected to be realized within twelve (12) months of such Specified Transaction as set forth in reasonable detail on a certificate of a Responsible Officer of the Borrower delivered to the Administrative Agent;
(ii) are calculated on a basis consistent with GAAP and Regulation S-X of the Exchange Act; and
(iii) are approved by the Administrative Agent;
provided that the foregoing costs, expenses and adjustments shall be without duplication of any costs, expenses or adjustments that are already included in the calculation of Consolidated EBITDA or clause (a) above.
Specified Disposition means any disposition of all or substantially all of the assets or Capital Stock of any Subsidiary of the Borrower or any division, business unit, product line or line of business.
Specified Transactions means (a) any Specified Disposition, (b) any Permitted Acquisition and (c) the Transactions.
Schedule 3
to
Officers Compliance Certificate
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Quarter 1 |
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Quarter 2 |
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Quarter 3 |
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Quarter 4 |
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Total |
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Consolidated Interest Expense |
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EXHIBIT G
to
Credit Agreement
dated as of December 19, 2012
by and among
Supreme Industries, Inc.,
as Borrower,
the lenders party thereto,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the Assignment and Assumption) is dated as of the Effective Date set forth below and is entered into by and between [INSERT NAME OF ASSIGNOR] (the Assignor) and the parties identified on the Schedules hereto and [the] [each](1) Assignee identified on the Schedules hereto as Assignee or as Assignees (collectively, the Assignees and each, an Assignee). [It is understood and agreed that the rights and obligations of the Assignees(2) hereunder are several and not joint.](3) Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the Credit Agreement), receipt of a copy of which is hereby acknowledged by [the] [each] Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the [Assignee] [respective Assignees], and [the] [each] Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignors rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including without limitation any letters of credit, guarantees, and swingline loans included in such facilities) and (ii) to the extent permitted to be assigned under Applicable Law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned to [the] [any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as, [the] [an] Assigned Interest). Each such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.
1. |
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Assignor: |
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[INSERT NAME OF ASSIGNOR] |
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2. |
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Assignee(s): |
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See Schedules attached hereto |
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3. |
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Borrower: |
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Supreme Industries, Inc. |
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4. |
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Administrative Agent: |
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Wells Fargo Bank, National Association, as the administrative agent under the Credit Agreement |
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5. |
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Credit Agreement: |
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The Credit Agreement dated as of December 19, 2012 among Supreme Industries, Inc., as Borrower, the Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative |
(1) For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language.
(2) Select as appropriate.
(3) Include bracketed language if there are multiple Assignees.
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Agent (as amended, restated, supplemented or otherwise modified) |
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6. |
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Assigned Interest: |
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See Schedules attached hereto |
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[7. |
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Trade Date: |
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](4) |
[Remainder of Page Intentionally Left Blank]
(4) To be completed if the Assignor and the Assignees intend that the minimum assignment amount is to be determined as of the Trade Date.
Effective Date: , 2 [TO BE INSERTED BY THE ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR]
The terms set forth in this Assignment and Assumption are hereby agreed to:
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ASSIGNOR | |
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[NAME OF ASSIGNOR] | |
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By: |
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Name: |
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Title: |
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ASSIGNEES | |
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See Schedules attached hereto |
[Consented to and](5) Accepted: |
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WELLS FARGO BANK, NATIONAL ASSOCIATION, |
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as Administrative Agent[, Issuing Lender and Swingline Lender] |
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By: |
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Name: |
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Title: |
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[Consented to:](6) |
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SUPREME INDUSTRIES, INC., |
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as Borrower |
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By: |
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Name: |
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Title: |
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(5) To be added only if the consent of the Administrative Agent and/or the Swingline Lender and Issuing Lender is required by the terms of the Credit Agreement.
(6) To be added only if the consent of the Borrower is required by the terms of the Credit Agreement.
SCHEDULE 1
To Assignment and Assumption
By its execution of this Schedule, the Assignee identified on the signature block below agrees to the terms set forth in the attached Assignment and Assumption.
Assigned Interests:
Facility Assigned(1) |
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Aggregate Amount |
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Amount of |
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Percentage |
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CUSIP Number |
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$ |
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$ |
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% |
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$ |
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$ |
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% |
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$ |
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$ |
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% |
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[NAME OF ASSIGNEE](5) | |
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[and is an Affiliate/Approved Fund of [identify Lender](6)] | |
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By: |
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Name: |
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Title: |
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(1) Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Agreement (e.g. Revolving Credit Commitment, etc.)
(2) Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.
(3) Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.
(4) Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.
(5) Add additional signature blocks, as needed.
(6) Select as appropriate.
ANNEX 1
to Assignment and Assumption
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the] [the relevant] Assigned Interest, (ii) [the] [such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it is [not] a Defaulting Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its respective Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.
1.2. Assignee[s]. [The] [Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets the requirements of an Eligible Assignee under the Credit Agreement (subject to such consents, if any, as may be required under Section 12.10(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the] [the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire [the] [such] Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to [Section 6.1] [Section 8.1](1) thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the] [such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the] [such] Assigned Interest, and (vii) if it is a Foreign Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the] [such] Assignee; and (b) agrees that (i) it will, independently and without reliance upon the Administrative Agent, [the] [any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.
2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the] [each] Assigned Interest (including payments of principal, interest, fees and
(1) Update as necessary to refer to appropriate financial statement delivery section in Credit Agreement.
other amounts) to [the] [the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the] [the relevant] Assignee for amounts which have accrued from and after the Effective Date.
3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.
EXHIBIT H-1
to
Credit Agreement
dated as of December 19, 2012
by and among
Supreme Industries, Inc.,
as Borrower,
the lenders party thereto,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(NON-PARTNERSHIP FOREIGN LENDERS)
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of December 19, 2012 (the Credit Agreement), by and among Supreme Industries, Inc., a Delaware corporation (the Borrower), the lenders who are or may become a party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
Pursuant to the provisions of Section 5.11 of the Credit Agreement, the undersigned hereby certifies that (a) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (b) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (c) it is not a ten percent (10%) shareholder of the Borrower within the meaning of Section 881(c)(3)(B) of the Code and (d) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (a) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent and (b) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two (2) calendar years preceding such payments.
[NAME OF LENDER] | ||
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By: |
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Name: |
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Title: |
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Date: , 20 |
EXHIBIT H-2
to
Credit Agreement
dated as of December 19, 2012
by and among
Supreme Industries, Inc.,
as Borrower,
the lenders party thereto,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(NON-PARTNERSHIP FOREIGN PARTICIPANTS)
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of December 19, 2012 (the Credit Agreement), by and among Supreme Industries, Inc., a Delaware corporation (the Borrower), the lenders who are or may become party a thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
Pursuant to the provisions of Section 5.11 of the Credit Agreement, the undersigned hereby certifies that (a) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (b) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (c) it is not a ten percent (10%) shareholder of the Borrower within the meaning of Section 881(c)(3)(B) of the Code and (d) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (a) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing and (b) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two (2) calendar years preceding such payments.
[NAME OF PARTICIPANT] | ||
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By: |
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Name: |
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Title: |
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Date: , 20 |
EXHIBIT H-3
to
Credit Agreement
dated as of December 19, 2012
by and among
Supreme Industries, Inc.,
as Borrower,
the lenders party thereto,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(FOREIGN PARTICIPANT PARTNERSHIPS)
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of December 19, 2012 (the Credit Agreement), by and among Supreme Industries, Inc., a Delaware corporation (the Borrower), the lenders who are or may become party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
Pursuant to the provisions of Section 5.11 of the Credit Agreement, the undersigned hereby certifies that (a) it is the sole record owner of the participation in respect of which it is providing this certificate, (b) its direct or indirect partners/members are the sole beneficial owners of such participation, (c) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (d) none of its direct or indirect partners/members is a ten percent (10%) shareholder of the Borrower within the meaning of Section 881(c)(3)(B) of the Code and (e) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (a) an IRS Form W-8BEN or (b) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of such partners/members beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (i) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (ii) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two (2) calendar years preceding such payments.
[NAME OF PARTICIPANT] | ||
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By: |
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Name: |
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Title: |
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Date: , 20 |
EXHIBIT H-4
to
Credit Agreement
dated as of December 19, 2012
by and among
Supreme Industries, Inc.,
as Borrower,
the lenders party thereto,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(FOREIGN LENDER PARTNERSHIPS)
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of December 19, 2012 (the Credit Agreement), by and among Supreme Industries, Inc., a Delaware corporation (the Borrower), the lenders who are or may become party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
Pursuant to the provisions of Section 5.11 of the Credit Agreement, the undersigned hereby certifies that (a) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (b) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (c) with respect to the extension of credit pursuant to this Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (d) none of its direct or indirect partners/members is a ten percent (10%) shareholder of the Borrower within the meaning of Section 881(c)(3)(B) of the Code and (e) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (a) an IRS Form W-8BEN or (b) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of such partners/members beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (i) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent and (ii) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two (2) calendar years preceding such payments.
[NAME OF LENDER] |
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By: |
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Name: |
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Title: |
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Date: , 20 |
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SCHEDULE 1.1A
EXISTING LETTERS OF CREDIT
The Travelers Indemnity Company, issued by Wells Fargo Bank, National Association, covering workers compensation claims; $3,500,000.
SCHEDULE 1.1B
SPECIFIED REAL PROPERTY
Description |
|
Mortgage required |
Real property and improvements with a street address of 25722581 East Kercher Road, Goshen, Indiana, and more particularly described in form substance reasonably satisfactory to Administrative Agent |
|
No |
Real property and improvements with a street address of 2051 Highway 41 and Etheridge Mill Road, Griffin, Georgia, and more particularly described in form substance reasonably satisfactory to Administrative Agent |
|
No |
Real property and improvements with a street address of 490 State Route 72, Jonestown, Pennsylvania, and more particularly described in form substance reasonably satisfactory to Administrative Agent |
|
No |
Real property and improvements with a street address of 25722592 East Kercher Road, Goshen, Indiana, and more particularly described in the applicable Real Property Acquisition documents and as otherwise more particularly described in form substance reasonably satisfactory to Administrative Agent |
|
No |
Real property and improvements with a street address of 2051 Highway 41, Griffin, Georgia, and more particularly described in the applicable Real Property Acquisition documents and as otherwise more particularly described in form substance reasonably satisfactory to Administrative Agent |
|
No |
Real property and improvements with a street address of 2213522211 Alessandro Boulevard, Moreno Valley, California, and more particularly described in the applicable Real Property Acquisition documents and as otherwise more particularly described in form substance reasonably satisfactory to Administrative Agent |
|
No |
SCHEDULE 7.1
JURISDICTIONS OF ORGANIZATION AND QUALIFICATION
Entity |
|
State of Organization |
|
States of Foreign |
Supreme Industries, Inc. |
|
Delaware |
|
N/A |
Supreme Indiana Operations, Inc. |
|
Delaware |
|
Colorado, Florida, Georgia, Indiana, Kentucky, Louisiana, Michigan, Missouri, Ohio, North Carolina, New Jersey, Pennsylvania, Rhode Island |
Supreme Mid-Atlantic Corporation |
|
Texas |
|
Pennsylvania, Rhode Island |
Supreme Corporation of Texas |
|
Texas |
|
Colorado |
Supreme Northwest, L.L.C. |
|
Texas |
|
Oregon |
Supreme Truck Bodies of California, Inc. |
|
California |
|
N/A |
Supreme STB, LLC |
|
California |
|
N/A |
SC Tower Structural Laminating, Inc. |
|
Texas |
|
Indiana |
Supreme\Murphy Truck Bodies, Inc. |
|
North Carolina |
|
N/A |
Silver Crown, LLC |
|
Delaware |
|
Indiana, Michigan |
Supreme Corporation |
|
Texas |
|
N/A |
Supreme Midwest Properties, Inc. |
|
Texas |
|
Indiana |
Supreme Corporation of Georgia |
|
Texas |
|
Georgia |
Supreme Southeast Properties, Inc. |
|
Texas |
|
Georgia |
Supreme Southwest Properties, Inc. |
|
Texas |
|
N/A |
Supreme Armored, Inc. |
|
Texas |
|
N/A |
Supreme West Properties, Inc. |
|
Texas |
|
California |
SCHEDULE 7.2
SUBSIDIARIES AND CAPITALIZATION
Name of Grantor |
|
Subsidiary |
|
Number of |
|
Class of |
|
Percentage |
|
Certificate |
|
Certificate |
Supreme Industries, Inc. |
|
Supreme Corporation |
|
1,000 Shares |
|
common |
|
100% |
|
01 |
|
01/31/2011 |
Supreme Industries, Inc. |
|
Supreme Insurance Company, Inc. |
|
1,000 Shares |
|
common |
|
100% |
|
1 |
|
04/04/2005 |
Supreme Corporation |
|
Supreme Indiana Operations, Inc. |
|
1,000 Shares |
|
common |
|
100% |
|
03 |
|
12/19/2012 |
Supreme Corporation |
|
Supreme Corporation of Georgia |
|
1,000 Shares |
|
common |
|
100% |
|
01 |
|
12/19/2012 |
Supreme Corporation |
|
Supreme Corporation of Texas |
|
1,000 Shares |
|
common |
|
100% |
|
03 |
|
12/19/2012 |
Supreme Corporation |
|
Supreme Truck Bodies of California, Inc. |
|
1,000 Shares |
|
common |
|
100% |
|
3 |
|
12/19/2012 |
Supreme Corporation |
|
Supreme Mid-Atlantic Corporation |
|
1,000 Shares |
|
common |
|
100% |
|
3 |
|
12/19/2012 |
Supreme Corporation |
|
SC Tower Structural Laminating, Inc. |
|
1,000 Shares |
|
common |
|
100% |
|
03 |
|
12/19/2012 |
Supreme Corporation |
|
Supreme\Murphy Truck Bodies, Inc. |
|
1,000 Shares |
|
common |
|
100% |
|
3 |
|
12/19/2012 |
Supreme Corporation |
|
Supreme Northwest, L.L.C. |
|
100 Units |
|
limited liability company membership interest |
|
100% |
|
05 |
|
12/19/2012 |
Supreme Corporation |
|
Silver Crown, LLC |
|
1,000 Units |
|
limited liability company membership interest |
|
100% |
|
03 |
|
12/19/2012 |
Supreme Indiana Operations, Inc. |
|
Supreme Midwest Properties, Inc. |
|
1,000 Shares |
|
common |
|
100% |
|
01 |
|
12/19/2012 |
Supreme Corporation of Georgia |
|
Supreme Southeast Properties, Inc. |
|
1,000 Shares |
|
common |
|
100% |
|
01 |
|
12/19/2012 |
Name of Grantor |
|
Subsidiary |
|
Number of |
|
Class of |
|
Percentage |
|
Certificate |
|
Certificate |
Supreme Corporation of Texas |
|
Supreme Southwest Properties, Inc. |
|
1,000 Shares |
|
common |
|
100% |
|
01 |
|
12/19/2012 |
Supreme Corporation of Texas |
|
Supreme Armored, Inc. |
|
1,000 Shares |
|
common |
|
100% |
|
01 |
|
12/19/2012 |
Supreme Truck Bodies of California, Inc. |
|
Supreme STB, LLC |
|
1,000 Units |
|
limited liability company membership interest |
|
100% |
|
02 |
|
12/19/2006 |
Supreme Truck Bodies of California, Inc. |
|
Supreme West Properties, Inc. |
|
1,000 Shares |
|
common |
|
100% |
|
01 |
|
12/19/2012 |
Supreme Indiana Operations, Inc. |
|
BFG2011 Limited Liability Company |
|
4,950 Common Units |
|
limited liability company membership interest |
|
35.48% |
|
4 |
|
05/2011 |
SCHEDULE 7.8
ENVIRONMENTAL MATTERS
Please see Phase I Environmental Site Assessment Reports dated as of October 31, 2012 prepared by Partner Engineering and Science, Inc.
SCHEDULE 7.9
ERISA PLANS
Supreme Industries, Inc. 401k Plan
Supreme Corporation Group Health Plan
SCHEDULE 7.12
MATERIAL CONTRACTS
1998 Stock Option Plan, filed as Exhibit 10.3 to the Companys annual report on Form 10-K for the fiscal year ended December 31, 1998.
Amendment No. 1 to the Companys 1998 Stock Option Plan, filed as Exhibit 10.4 to the Companys annual report on Form 10-K for the fiscal year ended December 31, 1999.
Amendment No. 2 to the Companys 1998 Stock Option Plan, filed as Exhibit 10.5 to the Companys annual report on Form 10-K for the fiscal year ended December 31, 2000.
2001 Stock Option Plan, filed as Exhibit 10.6 to the Companys annual report on Form 10-K for the fiscal year ended December 31, 2001.
Amendment No. 1 to the Companys 2001 Stock Option Plan, filed as Exhibit 10.7 to the Companys annual report on Form 10-K for the fiscal year ended December 31, 2001.
2004 Stock Option Plan, filed as Exhibit 4.1 to the Companys Registration Statement on Form S-8 effective on August 26, 2004.
Amended and Restated 2004 Stock Option Plan filed as Exhibit A to the Companys Revised Definitive Proxy Statement filed on April 5, 2006.
Amendment Number One to the Companys Amended and Restated 2004 Stock Option Plan dated October 25, 2006, included in the Companys Definitive Proxy Statement filed on April 2, 2007.
Amendment No. Two to the Companys Amended and Restated 2004 Stock Option Plan dated March 28, 2007, included in the Companys Definitive Proxy Statement filed on April 2, 2007.
Amendment No. 3 to the Companys Amended and Restated 2004 Stock Option Plan dated March 25, 2008, included in the Companys Definitive Proxy Statement filed on April 3, 2008.
Amendment No. Four to the Companys Amended and Restated 2004 Stock Option Plan dated August 25, 2009, filed as Exhibit 10.3 to the Companys quarterly report on Form 10-Q for the quarterly period ended September 26, 2009.
Form of Supreme Industries, Inc. Director and Officer Indemnification Agreement, filed as Exhibit 10.1 to the Companys Current Report on Form 8-K filed on October 6, 2008.
Indemnification Agreement by and among Supreme Industries, Inc. and Kim Korth dated February 16, 2011, filed as Exhibit 10.2 to the Companys Current Report on Form 8-K filed on February 22, 2011.
Special Vehicle Manufacturer Converters Agreement with General Motors Corporation, effective February 29, 2008, between General Motors Corporation and Supreme Corporation, filed as Exhibit 10.11 to the Companys annual report on Form 10-K for the fiscal year ended December 27, 2008.
Ford Authorized Converter Pool Agreement, effective May 1, 2008, among Ford Motor Company, Supreme Corporation and certain subsidiaries, filed as Exhibit 10.12 to the Companys annual report on Form 10-K for the fiscal year ended December 27, 2008.
Inventory Loan and Security Agreement by and between Supreme Indiana Operations, Inc. and Ally Bank dated March 4, 2011, filed on Form 10-Q for the quarterly period ended April 2, 2011.
Inventory Loan and Security Agreement by and between Supreme Indiana Operations, Inc. and Ally Financial, Inc. dated March 4, 2011, filed on Form 10-Q for the quarterly period ended April 2, 2011.
Guaranty Agreement by and between Supreme Indiana Operations, Inc. and Ally Bank dated March 4, 2011 filed on Form 10-Q for the quarterly period ended April 2, 2011.
Guaranty Agreement by and between Supreme Indiana Operations, Inc. and Ally Financial, Inc. dated March 4, 2011 filed on Form 10-Q for the quarterly period ended April 2, 2011.
Credit Balance Agreement by and between Supreme Indiana Operations, Inc. and Ally Financial, Inc. dated March 21, 2011, filed on Form 10-Q for the quarterly period ended April 2, 2011.
Option Agreement by and between Supreme Indiana Operations, Inc. and Barrett Gardner Associates, Inc. dated March 24, 2011, filed on Form 10-Q for the quarterly period ended April 2, 2011.
Lease dated July 25, 1988, between Supreme Corporation and G-2, Ltd., a Texas limited partnership, relating to Supremes Goshen, Indiana facilities, filed as Exhibit 10.22 to the Companys annual report on Form 10-K for the fiscal year ended December 31, 1988 [note: lease will terminate substantially concurrently with the closing date in connection with the real estate acquisition referenced on Schedule 9.7].
Lease dated July 25, 1988, between Supreme Corporation and G-2, Ltd., a Texas limited partnership, relating to Supreme Corporations Griffin, Georgia facilities, filed as Exhibit 10.23 to the Companys annual report on Form 10-K for the fiscal year ended December 31, 1988 [note: lease will terminate substantially concurrently with the closing date in connection with the real estate acquisition referenced on Schedule 9.7].
Amended and Restated Employment Contract by and among Supreme Industries, Inc. and Herbert M. Gardner dated to be effective January 1, 2005, filed as Exhibit 10.2 to the Companys Current Report on Form 8-K dated February 10, 2006.
Amended and Restated Employment Contract by and among Supreme Industries, Inc. and William J. Barrett dated to be effective January 1, 2005, filed as Exhibit 10.3 to the Companys Current Report on Form 8-K dated February 10, 2006.
Air Commercial Real Estate Association Standard Industrial/Commercial Single-Tenant Lease Net, by and between Supreme Indiana Operations, Inc. and BFG2011 Limited Liability Company, dated May 12, 2011.
Memorandum of Lease, Option to Purchase and Right of First Refusal, by and between Supreme Indiana Operations, Inc. and BFG2011 Limited Liability Company, dated May 12, 2011 [note: lease will terminate and option to purchase will be exercised substantially concurrently with the closing date in connection with the real estate acquisition referenced on Schedule 9.7].
Civil Settlement Agreement dated May 25, 2011, by and between The Armored Group, LLC and Supreme Indiana Operations, Inc., and Supreme Corporation of Texas, filed as Exhibit 10.3 on Form 10-Q for the quarterly period ended July 2, 2011.
Amendment to Civil Settlement Agreement dated June 7, 2011, by and between The Armored Group, LLC and Supreme Indiana Operations, Inc., and Supreme Corporation of Texas, filed as Exhibit 10.36 on Form 10-Q for the quarterly period ended July 2, 2011.
Employment Letter dated December 29, 2011 by and between Supreme Industries, Inc. and Matthew Long, filed as Exhibit 10.1 on Form 8-K filed December 29, 2011.
Indemnification Agreement dated December 29, 2011 by and between Supreme Industries, Inc. and Matthew Long, filed as Exhibit 10.2 on Form 8-K filed December 29, 2011.
Supreme Industries, Inc. Ownership Transaction Incentive Plan dated October 25, 2011, filed as Exhibit 10.1 on Form 10-K for the fiscal year ended December 31, 2011.
Separation Agreement and Release dated May 3, 2012 by and among Supreme Industries, Inc., Supreme Indiana Operations, Inc. and Kim Korth, filed as Exhibit 10.1 on Form 8-K filed May 3, 2012.
Supreme Industries, Inc. 2012 Long-Term Incentive Plan dated March 21, 2012 by Supreme Industries, Inc., filed as Exhibit 10.1 on Form 8-K dated May 23, 2012.
Amendment Number One to Employment Contract (William J. Barrett) dated June 29, 2012, by and between Supreme Industries, Inc. and William J. Barrett, filed as Exhibit 10.4 on Form 10-Q for the quarterly period ended June 30, 2012.
Amendment Number One to Employment Contract (Herbert M. Gardner) dated June 29, 2012, by and between Supreme Industries, Inc. and Herbert M. Gardner, filed as Exhibit 10.5 on Form 10-Q for the quarterly period ended June 30, 2012.
2012 Supreme Cash and Equity Bonus Plan, filed as Exhibit 10.1 on Form 10-Q for the quarterly period ended September 29, 2012.
SCHEDULE 7.13
LABOR AND COLLECTIVE BARGAINING AGREEMENTS
None.
SCHEDULE 7.18
REAL PROPERTY
|
|
Owner |
|
Address |
1. |
|
Supreme Midwest Properties, Inc. |
|
2572 - 2592 East Kercher Road, Goshen, Indiana 46528 |
2. |
|
SC Tower Structural Laminating, Inc. |
|
1491 Gerber Street, Ligonier, Indiana 46767 |
3. |
|
Supreme Southeast Properties, Inc. |
|
2051 U.S. Highway 41 & Etheridge Mill Road, Griffin, Georgia 30224 |
4. |
|
Supreme Mid-Atlantic Corporation |
|
24 Howard Lane, Jonestown, PA 17038 |
5. |
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Supreme Mid-Atlantic Corporation |
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401 Jonestown Road, Jonestown, Pennsylvania 17038 |
6. |
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Supreme Mid-Atlantic Corporation |
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411 Jonestown Road, Jonestown, Pennsylvania 17038 |
7. |
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Supreme Mid-Atlantic Corporation |
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NS Jonestown Road, Jonestown, Pennsylvania 17038 |
8. |
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Supreme Mid-Atlantic Corporation |
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2490 State Route 72, Jonestown, Pennsylvania 17038 |
9. |
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Supreme Southwest Properties, Inc. |
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500 Commerce Blvd., Cleburne, Texas 76033 |
10. |
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Supreme Armored Properties, Inc. |
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3001 Main St., Cleburne, Texas 76033 |
11. |
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Supreme West Properties, Inc. |
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22135-22211 Alessandro Blvd., Moreno Valley, California 92553 |
12. |
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Supreme Indiana Operations, Inc. |
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3352 Maple City Drive, Goshen, Indiana 46528 |
13. |
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Supreme Indiana Operations, Inc. |
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6577 - 6581 Romiss Court, Berkley, Missouri 63134 |
14. |
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Supreme Indiana Operations, Inc. |
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104 - 106 Miller Drive, White Pigeon, Michigan 49099 |
15. |
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Supreme Mid-Atlantic Corporation |
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135 Douglas Pike, Harrisville, Rhode Island 02830 |
16. |
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Supreme/Murphy Truck Bodies, Inc. |
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4000 Airport Drive, Wilson, North Carolina 27894 |
SCHEDULE 7.19
LITIGATION
Gendrolis (Supreme Industries, Inc.)
Personal injury litigation. United States District Court, District of Massachusetts. Docket No. 11-CV-11064-RBC. Complaint Filed: June 15, 2011. The Plaintiff alleges severe back injury as a result of falling out of a Supreme-manufactured truck body, allegedly due to a defective threshold. The complaint demands $10M in damages. This claim is covered by Supremes General Liability insurance policy, subject to a $250k deductible.
King County - (Supreme Corporation)
Product defect litigation. Superior Court of the State of Washington for King County. Cause Number: 12-2-06711-2 SEA. Complaint Filed: February 22, 2012. Supreme sold a fleet of 35 medium duty buses to King County, Washington which the County alleges contain numerous latent design and manufacturing defects. The County seeks the return of the purchase price for the fleet (approximately $7M), costs related to investigation and attempts to cure the alleged defects, as well as related incidental and consequential damages. There is a related declaratory judgment action that Supremes then-insurer, First Specialty Insurance Corp., has filed seeking to have a court declare that they have no duty to defend or indemnify Supreme for the King County litigation as it is not personal injury related. Supremes position is that one of the alleged defects of the buses is the emission of noxious fumes into the passenger compartment and the prayer demands all incidental and consequential damages, so personal injury may be at issue. The parties are awaiting ruling on summary judgment motions in this declaratory judgment action.
Talnage & Gerdes v. North County Transit District (Supreme Corporation)
Americans With Disabilities Act litigation. Superior Court for the State of California, County of San Diego Case Number: 37-2011-00055997-CU-CR-NC. Complaint filed: July 1, 2011. Supreme manufactured a fleet of kneeling buses equipped with ramps for wheelchair access which ultimately entered service in California. Plaintiffs allege that the ramps are not, in fact, ADA complaint. Supreme was brought into the litigation through a cross-complaint. Plaintiffs wish for the alleged defect to be remedied and damages.
Supreme Indiana Operations, Inc. v. Lisa Curie and Forest River, Inc.
Business Torts. Elkhart Superior Court, State of Indiana. Cause Number: 20D03-1201-PL-25. Complaint filed: January 25, 2012. Supreme alleges that, in January of 2012, a 22 year employee of Supremes bus division, Lisa Curie spent her final days of employment accessing confidential product pricing, vendor contact and pricing information, as well as other confidential information. Supreme believes the information was accessed ultimately to be used to benefit her new employer, Forest River, a primary competitor to Supreme in the bus market. Supreme sued under theories of misappropriation of trade secrets, unfair competition, tortious interference, breach of duty of loyalty, civil conspiracy, and replevin.
SCHEDULE 8.21
POST-CLOSING MATTERS
The Borrower will, and will cause each of its Subsidiaries to execute and deliver the following documents and complete the following tasks at the following times (or such later date as the Administrative Agent may agree in writing) in a manner reasonably satisfactory to the Administrative Agent:
Within 60 days after the Closing Date: |
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(a) Close deposit account nos. 000300001862236 and 000000633224753 maintained with JPMorgan Chase Bank; transfer all funds held in each such deposit account to one or more deposit accounts maintained with Wells Fargo; and provide the Administrative Agent such evidence thereof as the Administrative Agent may reasonably request; |
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Before March 29, 2013: |
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(b) Deliver to the Administrative Agent each of the following items for each item of Specified Real Property marked in Schedule 1.1B as not requiring a Mortgage on the Closing Date, in each case to the extent not received by the Administrative Agent on or before the Closing Date:
(i) a Mortgage, duly authorized, executed, and delivered to the Administrative Agent by the parties thereto;
(ii) a marked-up commitment for a policy of title insurance, insuring the Secured Parties first priority Liens and showing no Liens prior to the Secured Parties Liens other than for ad valorem taxes not yet due and payable, with title insurance companies acceptable to the Administrative Agent, on each property subject to the applicable Mortgage;
(iii) copies of all recorded documents creating exceptions to the title policy referred to in clause (ii);
(iv) a certification from the National Research Center, or any successor agency thereto, regarding each parcel of real property subject to the applicable Mortgage;
(v) copies of as-built surveys of a recent date not more than thirty (30) days prior to the Closing Date of each parcel of real property subject to the applicable Mortgage certified as of a recent date by a registered engineer or land surveyor, each of which surveys must (A) be accompanied by an affidavit of an authorized signatory of the owner of such property stating that there have been no improvements or encroachments to the property since the date of the respective survey such that the existing survey is no longer accurate; (B) show the area of such property, all boundaries of the land with courses and distances indicated, including chord bearings and arc and chord distances |
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for all curves, and dimensions and locations of all easements, private drives, roadways, and other facts materially affecting such property; (C) show such other details as the Administrative Agent may reasonably request, including, without limitation, any encroachment (and the extent thereof in feet and inches) onto the property or by any of the improvements on the property upon adjoining land or upon any easement burdening the property; any improvements, to the extent constructed, and the relation of the improvements by distances to the boundaries of the property, to any easements burdening the property, and to the established building lines and the street lines; and (D) if improvements are existing, show (1) a statement of the number of each type of parking space required by Applicable Laws, ordinances, orders, rules, regulations, restrictive covenants and easements affecting the improvement, and the number of each such type of parking space provided, and (2) the locations of all utilities serving the improvement;
(vi) a Phase I environmental assessment and such other environmental report reasonably requested by the Administrative Agent regarding each parcel of real property subject to the applicable Mortgage by an environmental engineering firm acceptable to the Administrative Agent showing no environmental conditions in violation of Environmental Laws or liabilities under Environmental Laws, either of which could reasonably be expected to have a Material Adverse Effect; and
(vii) such other certificates, documents and information as are reasonably requested by the Lenders, including, without limitation, landlord agreements/waivers, engineering and structural reports, permanent certificates of occupancy and evidence of zoning compliance, each in form and substance reasonably satisfactory to the Administrative Agent. |
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SCHEDULE 9.1
EXISTING INDEBTEDNESS
1. Ally Loan
Guaranty, dated as of March 4, 2011, executed by the Supreme Indiana Operations, Inc. as Guarantor, and accepted by Ally Bank.
Guaranty, dated as of March 4, 2011, executed by the Supreme Indiana Operations, Inc., as Guarantor, and accepted by Ally Financial, Inc.
Inventory Loan and Security Agreement, dated as of March 4, 2011, executed by Supreme Indiana Operations, Inc., as Manufacturer, and Ally Bank.
Inventory Loan and Security Agreement, dated as of March 4, 2011, executed by Supreme Indiana Operations, Inc., as Manufacturer, and Ally Financial, Inc.
Credit Balance Agreement, dated as of March 16, 2011, and signed as of March 21, 2011, executed by Supreme Indiana Operations, Inc., as Obligor, and Ally Financial, Inc.
2. Intercompany Note
Master Intercompany Demand Note, to be dated the date of this Agreement, by and among the Loan Parties party thereto.
3. Machinery and Equipment Loan Fund Documents
Loan Agreement, effective as of April 18, 2006, by and between Supreme Mid-Atlantic Corporation and The Commonwealth of Pennsylvania, acting by and through the Department of Community and Economic Development.
Note, effective as of April 18, 2006, executed by Supreme Mid-Atlantic Corporation payable to the Commonwealth of Pennsylvania acting through the Department of Community and Economic Development, in the original principal amount of $325,000.
Security Agreement, effective as of April, 2006, between Supreme Mid-Atlantic Corporation and the Commonwealth of Pennsylvania, acting through the Department of Community and Economic Development.
Guaranty and Surety Agreement, effective as of April 18, 2006, executed by Supreme Industries, Inc., in favor of the Commonwealth of Pennsylvania, acting by and through the Department of Community and Economic Development.
SCHEDULE 9.2
EXISTING LIENS
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Supreme Indiana Operations, Inc. |
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Ford Motor Company |
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Delaware |
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10/18/2010 |
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20103632548 |
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All motor vehicles owned by the Ford Motor Company as consignor/bailor/secured party on consignment/ bailment with the Debtor. |
Supreme Indiana Operations, Inc. |
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Ally Financial |
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Delaware |
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11/17/2010 |
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20104031955 |
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All chassis and/or vehicles manufactured or distributed by motor vehicle manufacturers and all other inventory owned or acquired; all reserves or other accounts held by Secured Party; all amounts due or to become due from any manufacturer, distributor or other seller of inventory including, factory holdbacks, warranty accounts, rebates, incentives or discounts; all proceeds of the foregoing including accounts, chattel paper or insurance proceeds. |
Supreme Indiana Operations, Inc. |
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Sutton Ford, Inc. |
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Delaware |
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11/22/2010 |
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20104091199 |
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All motor vehicles owned by the Secured Party as consignor/secured party and on consignment with or otherwise delivered to the Debtor as consignee/debtor for upfitting, modification or sale. |
Supreme Indiana Operations, Inc. |
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Sawgrass Ford, Inc. |
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Delaware |
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01/25/2011 |
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20110269251 |
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All motor vehicles owned by the Secured Party as consignor/secured party and on consignment with or otherwise delivered to the Debtor as consignee/debtor for upfitting, modification or sale. |
Supreme Indiana Operations, Inc. |
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Hooley Family Management, Inc. |
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Delaware |
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01/25/2011 |
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20110269384 |
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All motor vehicles owned by the Secured Party as consignor/secured party and on consignment with or otherwise delivered |
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to the Debtor as consignee/debtor for upfitting, modification or sale. |
Supreme Indiana Operations, Inc. |
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Brasada Ford, Ltd. |
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Delaware |
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01/25/2011 |
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20110269673 |
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All motor vehicles owned by the Secured Party as consignor/secured party and on consignment with or otherwise delivered to the Debtor as consignee/debtor for upfitting, modification or sale. |
Supreme Indiana Operations, Inc. |
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Watson Quality Ford, Inc. |
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Delaware |
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05/24/2011 |
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20111965147 |
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All motor vehicles owned by the Secured Party as consignor/secured party and on consignment with or otherwise delivered to the Debtor as consignee/debtor for upfitting, modification or sale. |
Supreme Indiana Operations, Inc. |
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Isuzu Corporation of America, Inc. |
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Delaware |
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08/23/2011 |
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20113272815 |
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Notice to put creditors of Supreme Corporation on notice of bailment arrangement between Supreme Corporation and the Secured Party |
Supreme Indiana Operations, Inc. |
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Trans Air Manufacturing Corporation |
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Delaware Secretary of |
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09/27/2012 |
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20123742469 |
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Specified collateral on consignment. |
Supreme Indiana Operations, Inc.
NOTE: filing was amended to change Debtors name from Supreme Corporation to Supreme Indiana Operations, Inc. |
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General Motors Acceptance Corporation |
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Texas |
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10/17/1988 |
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88-00239558 |
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All chasses and/or vehicles manufactured or distributed by General Motors owned or acquired; all reserves and other accounts held by Secured Party; all amounts due or to become due from Debtor from any manufacturer, distributor or other seller of chassis and/or vehicles manufactured or distributed by General Motors, including factory holdbacks, warranty accounts, rebates, incentives or discounts; and all proceeds including general intangibles, contract rights, chattel paper, insurance proceeds, accounts and assignments of accounts. |
Supreme Indiana |
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GMAC |
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Texas |
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01/08/2003 |
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03- |
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All chassis and/or vehicles manufactured |
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Operations, Inc.
NOTE: filing was amended to change Debtors name from Supreme Corporation to Supreme Indiana Operations, Inc. |
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Secretary of State |
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0013227199 |
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or distributed by General Motors owned or acquired; all reserves and other accounts held by Secured Party; all amounts due or to become due from Debtor from any manufacturer, distributor or other seller of chassis and/or vehicles manufactured or distributed by General Motors, including factory holdbacks, warranty accounts, rebates, incentives or discounts; and all proceeds including general intangibles, contract rights, chattel paper, insurance proceeds, accounts and assignments of accounts. |
Supreme Corporation |
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NMHG Financial Services, Inc. |
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Texas |
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03/31/2011 |
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11-0009608934 |
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All equipment leased to Debtor by Secured Party. |
Supreme Mid-Atlantic Corporation |
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Department of Community and Economic Development-MELF |
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Texas |
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09/29/2005 |
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05-0030345454 |
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Equipment financed with the proceeds of a loan from the Machinery and Equipment Loan Fund. |
Supreme Mid-Atlantic Corporation |
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Bayshore Ford Truck Sales, Inc. |
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Texas |
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12/16/2008 |
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08-0039809633 |
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All motor vehicles owned by the Secured Party as consignor/secured party and on consignment with or otherwise delivered to the Debtor as consignee/debtor for upfitting, modification or sale. |
Supreme Truck Bodies of California, Inc. |
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South Bay Ford, Inc. |
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California |
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11/28/2008 |
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08-7179811638 |
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All motor vehicles owned by the Secured Party as consignor/secured party and on consignment with or otherwise delivered to the Debtor as consignee/debtor for upfitting, modification or sale. |
Supreme Truck Bodies of California, Inc. |
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Five Star Ford, Inc. |
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California |
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08/28/2009 |
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09-7206902520 |
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All motor vehicles owned by the Secured Party as consignor/secured party and on consignment with or otherwise delivered to the Debtor as consignee/debtor for upfitting, modification or sale. |
SCHEDULE 9.3
EXISTING LOANS, ADVANCES AND INVESTMENTS
1. Supreme Indiana Operations, Inc. owns a 1% General Partnership interest in G-2, Ltd.
2. Supreme Indiana Operations, Inc. owns a 35.48% membership interest in BFG2011 Limited Liability Company.
SCHEDULE 9.5
REAL PROPERTY HELD FOR SALE
Owner |
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Address |
Supreme Indiana Operations, Inc. |
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3352 Maple City Drive, Goshen, Indiana 46528 |
Supreme Indiana Operations, Inc. |
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6577 - 6581 Romiss Court, Berkley, Missouri 63134 |
Supreme Indiana Operations, Inc. |
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104 - 106 Miller Drive, White Pigeon, Michigan 49099 |
Supreme Mid-Atlantic Corporation |
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135 Douglas Pike, Harrisville, Rhode Island 02830 |
Supreme/Murphy Truck Bodies, Inc. |
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4000 Airport Drive, Wilson, North Carolina 27894 |
SCHEDULE 9.7
TRANSACTIONS WITH AFFILIATES
G-2, Ltd., of which Supreme Indiana Operations, Inc. owns a 1% General Partnership Interest, to convey that certain real property in Indiana listed as Item 1 on Schedule 7.18 hereto to Supreme Midwest Properties, Inc. on or about the closing date.
G-2, Ltd., of which Supreme Indiana Operations, Inc. owns a 1% General Partnership Interest, to convey that certain real property in Georgia listed as Item 3 on Schedule 7.18 hereto to Supreme Southeast Properties, Inc. on or about the closing date.
BFG2011 Limited Liability Company, of which Supreme Indiana Operations, Inc. owns a 35.48% membership interest, to convey that certain tract of real property in California listed as Item 11 on Schedule 7.18 hereto to Supreme West Properties, Inc. on or about the closing date.
Exhibit 10.23
SUBSIDIARY GUARANTY AGREEMENT
dated as of December 19, 2012,
by and among
certain Subsidiaries of
SUPREME INDUSTRIES, INC.,
as Guarantors,
in favor of
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent
TABLE OF CONTENTS
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Page |
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ARTICLE I |
DEFINED TERMS |
1 |
SECTION 1.1 |
Definitions |
1 |
SECTION 1.2 |
Other Definitional Provisions |
1 |
ARTICLE II |
GUARANTY |
2 |
SECTION 2.1 |
Guaranty |
2 |
SECTION 2.2 |
Bankruptcy Limitations on Guarantors |
2 |
SECTION 2.3 |
Agreements for Contribution |
3 |
SECTION 2.4 |
Nature of Guaranty |
4 |
SECTION 2.5 |
Waivers |
5 |
SECTION 2.6 |
Modification of Loan Documents, etc. |
8 |
SECTION 2.7 |
Demand by the Administrative Agent |
9 |
SECTION 2.8 |
Remedies |
9 |
SECTION 2.9 |
Benefits of Guaranty |
9 |
SECTION 2.10 |
Termination; Reinstatement |
9 |
SECTION 2.11 |
Payments |
10 |
ARTICLE III |
REPRESENTATIONS AND WARRANTIES |
10 |
ARTICLE IV |
COVENANTS |
10 |
ARTICLE V |
MISCELLANEOUS |
10 |
SECTION 5.1 |
Notices |
10 |
SECTION 5.2 |
Amendments, Waivers and Consents |
11 |
SECTION 5.3 |
Expenses; Indemnification; Waiver of Consequential Damages, etc. |
11 |
SECTION 5.4 |
Right of Setoff |
11 |
SECTION 5.5 |
Governing Law; Jurisdiction; Venue; Service of Process |
12 |
SECTION 5.6 |
Waiver of Jury Trial |
12 |
SECTION 5.7 |
Injunctive Relief |
13 |
SECTION 5.8 |
No Waiver by Course of Conduct, Cumulative Remedies |
13 |
SECTION 5.9 |
Successors and Assigns |
13 |
SECTION 5.10 |
All Powers Coupled With Interest |
13 |
SECTION 5.11 |
Survival of Indemnities |
13 |
SECTION 5.12 |
Severability of Provisions |
14 |
SECTION 5.13 |
Counterparts |
14 |
SECTION 5.14 |
Integration |
14 |
SECTION 5.15 |
Advice of Counsel, No Strict Construction |
14 |
SECTION 5.16 |
Acknowledgements |
14 |
TABLE OF CONTENTS
(continued)
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Page |
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SECTION 5.17 |
Releases |
15 |
SECTION 5.18 |
Additional Guarantors |
15 |
SECTION 5.19 |
Secured Parties |
15 |
SUBSIDIARY GUARANTY AGREEMENT (this Guaranty), dated as of December 19, 2012, is made by certain Subsidiaries of Supreme Industries, Inc., a Delaware corporation (such Subsidiaries, collectively, the Guarantors and each, a Guarantor), in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent (in such capacity, the Administrative Agent) for the benefit of itself and the Secured Parties.
STATEMENT OF PURPOSE
Pursuant to the terms of the Credit Agreement dated of even date herewith (the Credit Agreement) by and among the Borrower, the Lenders and the Administrative Agent, the Lenders have agreed to make Extensions of Credit to the Borrower upon the terms and subject to the conditions set forth therein.
The Borrower and the Guarantors, though separate legal entities, comprise one integrated financial enterprise, and all Extensions of Credit to the Borrower will inure, directly or indirectly, to the benefit of each of the Guarantors.
It is a condition precedent to the obligation of the Lenders to make their respective Extensions of Credit to the Borrower under the Credit Agreement that the Guarantors shall have executed and delivered this Guaranty to the Administrative Agent, for the benefit of the Secured Parties.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, and to induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective Extensions of Credit to the Borrower thereunder, the Guarantors hereby, jointly and severally agree with the Administrative Agent, for the benefit of the Secured Parties, as follows:
ARTICLE I
DEFINED TERMS
SECTION 1.1 Definitions. The following terms when used in this Guaranty shall have the meanings assigned to them below:
Additional Guarantor means each Subsidiary of the Borrower which hereafter becomes a Guarantor pursuant to Section 5.18 hereof and Section 8.14 of the Credit Agreement.
Guaranteed Obligations has the meaning assigned thereto in Section 2.1 hereof.
SECTION 1.2 Other Definitional Provisions.
(a) Terms defined in the Credit Agreement and not otherwise defined herein shall have the meaning assigned thereto in the Credit Agreement.
(b) The terms of Sections 1.2, 1.6, 1.7, and 12.15 of the Credit Agreement are incorporated herein by reference as if fully set forth herein; provided that references therein to Agreement shall mean this Guaranty.
(c) Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Guarantor, shall refer to such Guarantors Collateral or the relevant part thereof.
ARTICLE II
GUARANTY
SECTION 2.1 Guaranty. Each Guarantor hereby, jointly and severally with the other Guarantors, absolutely, irrevocably and unconditionally guarantees as a primary obligor and not merely as a surety to the Administrative Agent for the benefit of the Secured Parties, and their respective permitted successors, endorsees, transferees and assigns, the prompt payment and performance of all Secured Obligations of the Borrower and its Subsidiaries, whether primary or secondary (whether by way of endorsement or otherwise), whether now existing or hereafter arising, whether or not from time to time reduced or extinguished (except by payment thereof) or hereafter increased or incurred, whether enforceable or unenforceable as against the Borrower or any of its Subsidiaries, whether or not discharged, stayed or otherwise affected by any Debtor Relief Law or proceeding thereunder, whether created directly with the Administrative Agent or any other Secured Party or acquired by the Administrative Agent or any other Secured Party through assignment or endorsement or otherwise, whether matured or unmatured, whether joint or several, as and when the same become due and payable (whether at maturity or earlier, by reason of acceleration, mandatory repayment or otherwise), in accordance with the terms of any such instruments evidencing any such obligations, including all renewals, extensions or modifications thereof (all of the foregoing being hereafter collectively referred to as the Guaranteed Obligations).
SECTION 2.2 Bankruptcy Limitations on Guarantors. Notwithstanding anything to the contrary contained in Section 2.1, it is the intention of each Guarantor and the Secured Parties that, in any proceeding involving the bankruptcy, reorganization, arrangement, adjustment of debts, relief of debtors, dissolution or insolvency or any similar proceeding with respect to any Guarantor or its assets, the amount of such Guarantors obligations with respect to the Guaranteed Obligations (or any other obligations of such Guarantor to the Secured Parties) shall be equal to, but not in excess of, the maximum amount thereof not subject to avoidance or recovery by operation of Debtor Relief Laws after giving effect to Section 2.3(a). To that end, but only in the event and to the extent that after giving effect to Section 2.3(a), such Guarantors obligations with respect to the Guaranteed Obligations (or any other obligations of such Guarantor to the Secured Parties) or any payment made pursuant to such Guaranteed Obligations (or any other obligations of such Guarantor to the Secured Parties) would, but for the operation of the first sentence of this Section 2.2, be subject to avoidance or recovery in any such proceeding under Debtor Relief Laws after giving effect to Section 2.3(a), the amount of such Guarantors obligations with respect to the Guaranteed Obligations (or any other obligations of such Guarantor to the Secured Parties) shall be limited to the largest amount which, after giving effect thereto, would not, under Debtor Relief Laws, render such Guarantors obligations with respect to the Guaranteed Obligations (or any other obligations of such Guarantor to the Secured Parties) unenforceable or avoidable or otherwise subject to recovery under Debtor Relief Laws. To the extent any payment actually made pursuant to the Guaranteed Obligations exceeds the limitation of the first sentence of this Section 2.2 and is otherwise subject to avoidance and recovery in any such proceeding under Debtor Relief Laws, the amount subject to avoidance shall in all events be limited to the amount by which such actual payment exceeds such limitation and the Guaranteed Obligations as limited by the first sentence of this Section 2.2 shall in all events remain in full force and effect and be fully enforceable against such Guarantor. The first sentence of this Section 2.2 is intended solely to preserve the rights of the Secured Parties hereunder against such Guarantor in such proceeding to the maximum extent permitted by Debtor Relief Laws and neither such Guarantor, the Borrower, any other Guarantor nor any other Person shall have any right or claim under such sentence that would not otherwise be available under Debtor Relief Laws in such proceeding.
SECTION 2.3 Agreements for Contribution.
(a) The Guarantors hereby agree among themselves that, if any Guarantor shall make an Excess Payment (as defined below), such Guarantor shall have a right of contribution from each other Guarantor in an amount equal to such other Guarantors Contribution Share (as defined below) of such Excess Payment. The payment obligations of any Guarantor under this Section 2.3(a) shall be subordinate and subject in right of payment to the Guaranteed Obligations until such time as the Guaranteed Obligations (other than (1) contingent indemnification obligations and (2) obligations and liabilities under Secured Cash Management Agreements or Secured Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made) have been indefeasibly paid in full in cash and the Commitments terminated, and none of the Guarantors shall exercise any right or remedy under this Section 2.3(a) against any other Guarantor until such Guaranteed Obligations have been indefeasibly paid in full in cash and the Commitments terminated. For purposes of this Section 2.3(a), (i) Excess Amount means, (for any Guarantor the amount by which the aggregate present fair salable value of its assets and properties exceeds the amount of its debts and liabilities and including probable, contingent, subordinated, unmatured, and unliquidated liabilities, but excluding its obligations hereunder) provided that if the fair salable value of the assets and properties of any Guarantor does not exceed such Guarantors debts and liabilities (including obligations hereunder) such Guarantors Excess Amount shall be zero (0); (ii) Excess Payment means the amount paid by any Guarantor in excess of its Ratable Share (as defined below) of any Guaranteed Obligations; (iii) Ratable Share means, for any Guarantor in respect of any payment of Guaranteed Obligations, the ratio (expressed as a percentage) as of the date of such payment of Guaranteed Obligations of (A) the Excess Amount to (B) the sum of the Excess Amounts of all of the Guarantors; provided, however, that, for purposes of calculating the Ratable Shares of the Guarantors in respect of any payment of Guaranteed Obligations, any Guarantor that became a Guarantor subsequent to the date of any such payment shall be deemed to have been a Guarantor on the date of such payment and the financial information for such Guarantor as of the date such Guarantor became a Guarantor shall be utilized for such Guarantor in connection with such payment; and (iv) Contribution Share means, for any Guarantor in respect of any Excess Payment made by any other Guarantor, the ratio (expressed as a percentage) as of the date of such Excess Payment of (A) the Excess Amount of such Guarantor to (B) the sum of the Excess Amounts of all of the Guarantors other than the maker of such Excess Payment; provided, however, that, for purposes of calculating the Contribution Shares of the Guarantors in respect of any Excess Payment, any Guarantor that became a Guarantor subsequent to the date of any such Excess Payment shall be deemed to have been a Guarantor on the date of such Excess Payment and the financial information for such Guarantor as of the date such Guarantor became a Guarantor shall be utilized for such Guarantor in connection with such Excess Payment. Each of the Guarantors recognizes and acknowledges that the rights to contribution arising hereunder shall constitute an asset in favor of the party entitled to such contribution. This Section 2.3 shall not be deemed to affect any right of subrogation, indemnity, reimbursement or contribution that any Guarantor may have under Applicable Law against the Borrower in respect of any payment of Guaranteed Obligations.
(b) Notwithstanding any payment or payments by any of the Guarantors hereunder, or any setoff or application of funds of any of the Guarantors by the Administrative Agent or any other Secured Party, or the receipt of any amounts by the Administrative Agent or any other Secured Party with respect to any of the Guaranteed Obligations, none of the Guarantors shall be entitled to be subrogated to any of the rights of the Administrative Agent or any other Secured Party against the Borrower or the other Guarantors or against any collateral security held by the Administrative Agent or any other Secured Party for the payment of the Guaranteed Obligations nor shall any of the Guarantors seek any reimbursement or contribution from the Borrower or any of the other Guarantors in respect of payments made by such Guarantor in connection with the Guaranteed Obligations, until all amounts owing to the Administrative Agent and the Secured Parties on account of the Guaranteed Obligations (other than (1) contingent
indemnification obligations and (2) obligations and liabilities under Secured Cash Management Agreements or Secured Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made) are indefeasibly paid in full in cash and the Commitments are terminated. If any amount shall be paid to any Guarantor on account of such subrogation reimbursement or contribution rights at any time when all of such Guaranteed Obligations shall not have been indefeasibly paid in full, such amount shall be held by such Guarantor in trust for the Administrative Agent, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Administrative Agent in the exact form received by such Guarantor (duly endorsed by such Guarantor to the Administrative Agent, if required) to be applied against the Guaranteed Obligations, whether matured or unmatured, in such order as set forth in the Credit Agreement.
SECTION 2.4 Nature of Guaranty.
(a) Each Guarantor agrees that this Guaranty is a continuing, unconditional guaranty of payment and performance and not of collection, and that its obligations under this Guaranty shall be primary, absolute and unconditional, irrespective of, and unaffected by:
(i) the genuineness, legality, validity, regularity, enforceability or any future amendment of, or change in, or supplement to, the Credit Agreement, any other Loan Document, any Cash Management Agreement or any Hedge Agreement or any other agreement, document or instrument to which the Borrower, any Guarantor or any of their respective Subsidiaries or Affiliates is or may become a party, (including any increase in the Secured Obligations resulting from any extension of additional credit or otherwise);
(ii) any action under or in respect of the Credit Agreement, any other Loan Document, any Cash Management Agreement or any Hedge Agreement in the exercise of any remedy, power or privilege contained therein or available to any of them at law, in equity or otherwise, or waiver or refraining from exercising any such remedies, power or privileges (including any manner of sale, disposition or any application of any sums by whomever paid or however realized to any Guaranteed Obligations owing by the Borrower or any Guarantor to the Administrative Agent or any other Secured Party in such manner as the Administrative Agent or any other Secured Party shall determine in its reasonable discretion);
(iii) the absence of any action to enforce this Guaranty, the Credit Agreement, any other Loan Document, any Cash Management Agreement or any Hedge Agreement or the waiver or consent by the Administrative Agent or any other Secured Party with respect to any of the provisions of this Guaranty, the Credit Agreement, any other Loan Document, any Cash Management Agreement or any Hedge Agreement;
(iv) the existence, value or condition of, or failure to perfect its Lien against, any security for or other guaranty of the Guaranteed Obligations or any action, or the absence of any action, by the Administrative Agent or any other Secured Party in respect of such security or guaranty (including, without limitation, the release of any such security or guaranty);
(v) any structural change in, restructuring of or other similar organizational change of the Borrower, any Guarantor, any other guarantors or any of their respective Subsidiaries or Affiliates; or
(vi) any other action or circumstances which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor;
it being agreed by each Guarantor that, subject to the first sentence of Section 2.2, its obligations under this Guaranty shall not be discharged until the final indefeasible payment and performance, in full, of the Guaranteed Obligations (other than (1) contingent indemnification obligations and (2) obligations and liabilities under Secured Cash Management Agreements or Secured Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made) and the termination of the Commitments.
(b) Each Guarantor represents, warrants and agrees that the Guaranteed Obligations and its obligations under this Guaranty are not and shall not be subject to any counterclaims, offsets or defenses of any kind (other than the defense of payment) against the Administrative Agent, the other Secured Parties or the Borrower whether now existing or which may arise in the future.
(c) Each Guarantor hereby agrees and acknowledges that the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guaranty, and all dealings among the Borrower and any of the Guarantors, on the one hand, and the Administrative Agent and the other Secured Parties, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon this Guaranty.
SECTION 2.5 Waivers.
(a) To the extent permitted by Applicable Law, each Guarantor expressly waives all of the following rights and defenses (and agrees not to take advantage of or assert any such right or defense):
(i) any rights it may now or in the future have under any statute, or at law or in equity, or otherwise, to compel the Administrative Agent or any other Secured Party to proceed in respect of the Guaranteed Obligations against the Borrower or any other Person or against any security for or other guaranty of the payment and performance of the Guaranteed Obligations before proceeding against, or as a condition to proceeding against, such Guarantor;
(ii) any defense based upon the failure of the Administrative Agent or any other Secured Party to commence an action in respect of the Guaranteed Obligations against the Borrower, such Guarantor, any other guarantor or any other Person or any security for the payment and performance of the Guaranteed Obligations;
(iii) any right to insist upon, plead or in any manner whatever claim or take the benefit or advantage of, any appraisal, valuation, stay, extension, marshalling of assets or redemption laws, or exemption, whether now or at any time hereafter in force, which may delay, prevent or otherwise affect the performance by such Guarantor of its obligations under, or the enforcement by the Administrative Agent or the other Secured Parties of this Guaranty;
(iv) any right of diligence, presentment, demand, protest and notice (except as specifically required herein or in the other Loan Documents) of whatever kind or nature with respect to any of the Guaranteed Obligations or any requirement that any Secured Party protect, secure, perfect or insure any Lien or any property subject thereto and waives, to the fullest extent permitted by Applicable Law, the benefit of all provisions of Applicable Law which are or might be in conflict with the terms of this Guaranty;
(v) any and all right to notice of the creation, renewal, extension or accrual of any of the Guaranteed Obligations (except as may be provided in the Credit Agreement) and notice of or
proof of reliance by the Administrative Agent or any other Secured Party upon, or acceptance of, this Guaranty; and
(vi) any right of setoff or recoupment or counterclaim against or in respect of the Guaranteed Obligations.
(b) Without limiting the generality of any other waiver or other provision set forth in this Guaranty, each Guarantor waives all rights and defenses that such Guarantor may have if all or part of the Guaranteed Obligations are secured by real property. This means, among other things:
(i) that the Administrative Agent or any other Secured Party may collect from any Guarantor without first foreclosing on any real or personal property collateral that may be pledged by such Guarantor, the Borrower, or any other Guarantor;
(ii) that if the Administrative Agent or any other Secured Party on any real property collateral that may be pledged by any Guarantor, the Borrower or any other Guarantor:
(A) the amount of the Guaranteed Obligations or any obligations of any Guarantor in respect thereof may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price;
(B) the Administrative Agent may collect from such Guarantor even if the Administrative Agent or any other Secured Party, by foreclosing on the real property collateral, has destroyed any right such Guarantor may have to collect from the Borrower or any other Guarantor.
This is an unconditional and irrevocable waiver of any rights and defenses any Guarantor may have if all or part of the Guaranteed Obligations are secured by real property. These rights and defenses are based upon Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure, North Carolina General Statutes Sections 26-7 and 26-9, and any similar law of New York or any other jurisdiction.
(c) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS GUARANTY, (i) EACH GUARANTOR, AS APPLICABLE, HEREBY WAIVES, TO THE MAXIMUM EXTENT SUCH WAIVER IS PERMITTED BY LAW, ANY AND ALL BENEFITS OR DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE §§ 2787, 2799, 2808, 2815, 2819, 2820, 2821, 2822, 2838, 2839, 2847, 2848, AND 2855, CALIFORNIA CODE OF CIVIL PROCEDURE §§ 580A, 580B, 580C, 580D, AND 726, AND CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL CODE OR ANY SIMILAR LAWS OF ANY OTHER APPLICABLE JURISDICTION, AND (ii) EACH GUARANTOR, AS APPLICABLE, HEREBY WAIVES, TO THE MAXIMUM EXTENT SUCH WAIVER IS PERMITTED BY LAW, ANY AND ALL BENEFITS OR DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF NORTH CAROLINA GENERAL STATUTES SECTIONS 26-7 AND 26-9 OR ANY SIMILAR LAWS OF ANY OTHER APPLICABLE JURISDICTION.
(d) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS GUARANTY, EACH GUARANTOR WAIVES ALL RIGHTS AND DEFENSES ARISING OUT OF AN ELECTION OF REMEDIES BY THE ADMINISTRATIVE AGENT OR ANY OTHER SECURED PARTY, EVEN THOUGH SUCH ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO SECURITY FOR THE GUARANTEED OBLIGATIONS, HAS DESTROYED SUCH GUARANTORS RIGHTS OF
SUBROGATION AND REIMBURSEMENT AGAINST THE BORROWER BY THE OPERATION OF APPLICABLE LAW, INCLUDING § 580D OF THE CALIFORNIA CODE OF CIVIL PROCEDURE, NORTH CAROLINA GENERAL STATUTES SECTIONS 26-7 AND 26-9, OR ANY SIMILAR LAWS OF ANY OTHER APPLICABLE JURISDICTION.
(e) Without limiting the generality of any other waiver or other provision set forth in this Guaranty, each Guarantor hereby also agrees to the following waivers:
(i) The Administrative Agents right to enforce this Guaranty is absolute and is not contingent upon the genuineness, validity, or enforceability of the Guaranteed Obligations or any of the Loan Documents. Each Guarantor, as applicable, hereby waives all benefits and defenses it may have under California Civil Code § 2810, North Carolina General Statutes Sections 26-7 and 26-9, or any similar laws in any other applicable jurisdiction, and each Guarantor agrees that the Administrative Agents rights under this Guaranty shall be enforceable even if the Borrower had no liability at the time of execution of the Loan Documents or the Guaranteed Obligations are unenforceable in whole or in part, or the Borrower ceases to be liable with respect to all or any portion of the Guaranteed Obligations.
(ii) Each Guarantor, as applicable, hereby waives all benefits and defenses it may have under California Civil Code § 2809 or any similar laws, North Carolina General Statutes Sections 26-7 and 26-9, or any similar laws in any other applicable jurisdiction with respect to its obligations under this Guaranty, and each Guarantor agrees that the Administrative Agents rights under the Loan Documents will remain enforceable even if the amount guaranteed hereunder is larger in amount and more burdensome than that for which the Borrower is responsible. The enforceability of this Guaranty against each Guarantor shall continue until all sums due under the Loan Documents have been paid in full and shall not be limited or affected in any way by any impairment or any diminution or loss of value of any security or collateral for the Borrowers obligations under the Loan Documents, from whatever cause, the failure of any security interest in any such security or collateral or any disability or other defense of the Borrower, any other Guarantor of the Borrowers obligations under any other Loan Document, any pledgor of collateral for any persons obligations to the Administrative Agent, or any other Person in connection with the Loan Documents.
(iii) Each Guarantor, as applicable, hereby waives all benefits and defenses it may have under California Civil Code §§ 2845, 2849, and 2850 North Carolina General Statutes Sections 26-7 and 26-9, or any similar laws of any other applicable jurisdiction with respect to its obligations under this Guaranty. Each Guarantor hereby waives the right to require the Administrative Agent to (A) proceed against the Borrower, any guarantor of the Borrowers obligations under any Loan Document, any other pledgor of collateral for any Persons obligations to the Administrative Agent, or any other Person in connection with the Guaranteed Obligations; (B) proceed against or exhaust any other security or collateral that the Administrative Agent may hold; or (C) pursue any other right or remedy for such Guarantors benefit. Each Guarantor agrees that the Administrative Agent may exercise its right under this Guaranty without taking any action against the Borrower, any other guarantor of the Borrowers obligations under the Loan Documents, any pledgor of collateral for any Persons obligations to the Administrative Agent, or any other Person in connection with the Guaranteed Obligations and without proceeding against or exhausting any security or collateral that the Administrative Agent holds.
(f) The clauses of this Section 2.5 that refer to certain sections of the California Civil Code and to certain sections of the North Carolina General Statutes are included in this Guaranty solely out of
an abundance of caution and shall not be construed to mean that any of the above-referenced provisions of California law or North Carolina law, as the case may be, are in any way applicable to this Guaranty.
(g) Each Guarantor agrees that any notice or directive given at any time to the Administrative Agent or any other Secured Party which is inconsistent with any of the foregoing waivers shall be null and void and may be ignored by the Administrative Agent or such Secured Party, and, in addition, may not be pleaded or introduced as evidence in any litigation relating to this Guaranty for the reason that such pleading or introduction would be at variance with the written terms of this Guaranty, unless the Administrative Agent and the Required Lenders have specifically agreed otherwise in writing. The foregoing waivers are of the essence of the transaction contemplated by the Credit Agreement, the other Loan Documents, the Cash Management Agreements and the Hedge Agreements and, but for this Guaranty and such waivers, the Administrative Agent and other Secured Parties would decline to enter into the Credit Agreement, the other Loan Documents, the Cash Management Agreements and the Hedge Agreements.
SECTION 2.6 Modification of Loan Documents, etc. Neither the Administrative Agent nor any other Secured Party shall incur any liability to any Guarantor as a result of any of the following, and none of the following shall impair or release this Guaranty or any of the obligations of any Guarantor under this Guaranty:
(a) any change or extension of the manner, place or terms of payment of, or renewal or alteration of all or any portion of, the Guaranteed Obligations;
(b) any action under or in respect of the Credit Agreement, any other Loan Document, any Cash Management Agreement or any Hedge Agreement in the exercise of any remedy, power or privilege contained therein or available to any of them at law, in equity or otherwise, or waiver or refraining from exercising any such remedies, powers or privileges;
(c) any amendment to, or modification of, in any manner whatsoever, any Loan Document, any Cash Management Agreement or any Hedge Agreement;
(d) any extension or waiver of the time for performance by any Guarantor, any other guarantor, the Borrower or any other Person of, or compliance with, any term, covenant or agreement on its part to be performed or observed under a Loan Document, a Cash Management Agreement or a Hedge Agreement, or waiver of such performance or compliance or consent to a failure of, or departure from, such performance or compliance;
(e) the taking and holding of security or collateral for the payment of the Guaranteed Obligations or the sale, exchange, release, disposal of, or other dealing with, any property pledged, mortgaged or conveyed, or in which the Administrative Agent or the other Secured Parties have been granted a Lien, to secure any Indebtedness of any Guarantor, any other guarantor or the Borrower to the Administrative Agent or the other Secured Parties;
(f) the release of anyone who may be liable in any manner for the payment of any amounts owed by any Guarantor, any other guarantor or the Borrower to the Administrative Agent or any other Secured Party;
(g) any modification or termination of the terms of any intercreditor or subordination agreement pursuant to which claims of other creditors of any Guarantor, any other guarantor or the Borrower are subordinated to the claims of the Administrative Agent or any other Secured Party; or
(h) any application of any sums by whomever paid or however realized to any Guaranteed Obligations owing by any Guarantor, any other guarantor or the Borrower to the Administrative Agent or any other Secured Party in such manner as the Administrative Agent or any other Secured Party shall determine in its reasonable discretion.
SECTION 2.7 Demand by the Administrative Agent. In addition to the terms set forth in this Article II and in no manner imposing any limitation on such terms, if all or any portion of the then outstanding Guaranteed Obligations are declared to be immediately due and payable, then the Guarantors shall, upon demand in writing therefor by the Administrative Agent to the Guarantors, pay all or such portion of the outstanding Guaranteed Obligations due hereunder then declared due and payable.
SECTION 2.8 Remedies. Upon the occurrence and during the continuance of any Event of Default, with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, enforce against the Guarantors their obligations and liabilities hereunder and exercise such other rights and remedies as may be available to the Administrative Agent hereunder, under the Credit Agreement, the other Loan Documents, the Cash Management Agreements, the Hedge Agreements or otherwise.
SECTION 2.9 Benefits of Guaranty. The provisions of this Guaranty are for the benefit of the Administrative Agent and the other Secured Parties and their respective permitted successors, transferees, endorsees and assigns, and nothing herein contained shall impair, as between the Borrower and its Subsidiaries, the Administrative Agent and the other Secured Parties, the obligations of the Borrower and its Subsidiaries under the Loan Documents, the Cash Management Agreements or the Hedge Agreements. In the event all or any part of the Guaranteed Obligations are transferred, endorsed or assigned by the Administrative Agent or any other Secured Party to any Person or Persons as permitted under the Credit Agreement, any reference to an Administrative Agent, or Secured Party herein shall be deemed to refer equally to such Person or Persons.
SECTION 2.10 Termination; Reinstatement.
(a) Subject to clause (c) below, this Guaranty shall remain in full force and effect until all the Guaranteed Obligations (other than (1) contingent indemnification obligations and (2) obligations and liabilities under Secured Cash Management Agreements or Secured Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made) and all the obligations of the Guarantors shall have been indefeasibly paid in full in cash and the Commitments terminated.
(b) No payment made by the Borrower, any Guarantor, any other guarantor or any other Person received or collected by the Administrative Agent or any other Secured Party from the Borrower, any Guarantor, any other guarantor or any other Person by virtue of any action or proceeding or any setoff or appropriation or application at any time or from time to time in reduction of or in payment of the Guaranteed Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the obligations of the Guarantors or any payment received or collected from such Guarantor in respect of the obligations of the Guarantors), remain liable for the obligations of the Guarantors up to the maximum liability of such Guarantor hereunder until the Guaranteed Obligations (other than (1) contingent indemnification obligations and (2) obligations and liabilities under Secured Cash Management Agreements or Secured Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made) and all the obligations of the Guarantors shall have been indefeasibly paid in full in cash and the Commitments terminated.
(c) Each Guarantor agrees that, if any payment made by the Borrower or any other Person applied to the Guaranteed Obligations is at any time avoided, annulled, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid, or is repaid in whole or in part pursuant to a good faith settlement of a pending or threatened avoidance claim, or the proceeds of any Collateral are required to be refunded by the Administrative Agent or any other Secured Party to the Borrower, its estate, trustee, receiver or any other Person, including, without limitation, any Guarantor, under any Applicable Law or equitable cause, then, to the extent of such payment or repayment, each Guarantors liability hereunder (and any Lien or Collateral securing such liability) shall be and remain in full force and effect, as fully as if such payment had never been made, and, if prior thereto, this Guaranty shall have been canceled or surrendered (and if any Lien or Collateral securing such Guarantors liability hereunder shall have been released or terminated by virtue of such cancellation or surrender), this Guaranty (and such Lien or Collateral) shall be reinstated in full force and effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligations of such Guarantor in respect of the amount of such payment (or any Lien or Collateral securing such obligation).
SECTION 2.11 Payments. Any payments by the Guarantors shall be made to the Administrative Agent, to be credited and applied to the Guaranteed Obligations in accordance with Section 10.4 of the Credit Agreement, in immediately available Dollars to an account designated by the Administrative Agent or at the Administrative Agents Office or at any other address that may be specified in writing from time to time by the Administrative Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Secured Parties to make their respective Extensions of Credit, Secured Cash Management Agreements and/or Secured Hedge Agreements, as applicable, to the Borrower or another Credit Party (as the case may be), each Guarantor hereby represents and warrants to the Administrative Agent and each Secured Party that each representation and warranty contained in Article VII of the Credit Agreement relating to such Guarantor is true and correct as if made by such Guarantor herein.
ARTICLE IV
COVENANTS
Until the Guaranteed Obligations (other than (1) contingent indemnification obligations and (2) obligations and liabilities under Secured Cash Management Agreements or Secured Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made) and all the obligations of the Guarantors shall have been indefeasibly paid in full in cash and the Commitments terminated each Guarantor covenants and agrees that it will perform and observe, and cause each of its Subsidiaries to perform and observe, all of the terms, covenants and agreements set forth in the Loan Documents that are required to be, or that the Borrower has agreed to cause to be, performed or observed by such Guarantor or Subsidiary.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Notices. All notices and communications hereunder shall be given to the addresses and otherwise made in accordance with Section 12.1 of the Credit Agreement; provided that notices and communications to the Guarantors shall be directed to the Guarantors, at the address of the Borrower set forth in Section 12.1 of the Credit Agreement.
SECTION 5.2 Amendments, Waivers and Consents. None of the terms or provisions of this Guaranty may be waived, amended, supplemented or otherwise modified, nor any consent be given, except in accordance with Section 12.2 of the Credit Agreement.
SECTION 5.3 Expenses; Indemnification; Waiver of Consequential Damages, etc.
(a) The Guarantors shall, jointly and severally, pay all reasonable out-of-pocket expenses (including, without limitation, reasonable attorneys fees and expenses) incurred by the Administrative Agent and each other Secured Party to the extent the Borrower would be required to do so pursuant to Section 12.3 of the Credit Agreement.
(b) The Guarantors shall, jointly and severally, pay and indemnify each Indemnitee against Indemnified Taxes and Other Taxes to the extent the Borrower would be required to do so pursuant to Section 5.11 of the Credit Agreement.
(c) The Guarantors shall, jointly and severally, indemnify each Indemnitee to the extent the Borrower would be required to do so pursuant to Section 12.3 of the Credit Agreement.
(d) Notwithstanding anything to the contrary contained in this Guaranty, to the fullest extent permitted by Applicable Law, each Guarantor agrees that it 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 Guaranty, any other Loan Document, any Cash Management Agreement, any Hedge Agreement 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.
(e) No Indemnitee referred to in this Section 5.3 shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Guaranty, the other Loan Documents, any Cash Management Agreements, any Hedge Agreements or the transactions contemplated hereby or thereby.
(f) All amounts due under this Section 5.3 shall be payable promptly after demand therefor.
(g) Each partys obligations under this Section 5.3 shall survive the termination of the Loan Documents and the payment of the Obligations thereunder.
SECTION 5.4 Right of Setoff. If an Event of Default (as defined in the Credit Agreement) shall have occurred and be continuing, each Secured Party and each of its respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to setoff 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 Secured Party or any such Affiliate to or for the credit or the account of such Guarantor to the same extent a Lender could do so under Section 12.4 of the Credit Agreement. The rights of each Secured Party and its respective Affiliates under this Section 5.4 are in addition to other rights and remedies (including other rights of setoff) that such Secured Party or its respective Affiliates may have. Each Secured Party agrees to notify such Guarantor 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.
SECTION 5.5 Governing Law; Jurisdiction; Venue; Service of Process.
(a) Governing Law. This Guaranty and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Guaranty and the transactions contemplated hereby shall be governed by, and construed in accordance with, the laws of the State of New York.
(b) Submission to Jurisdiction. Each Guarantor agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise against the Administrative Agent, or any other Secured Party or any Related Party of the foregoing, in any way relating to this Guaranty or the transactions relating hereto in any forum other than the courts of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York 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, litigation 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 Guaranty or in any other Loan Document shall affect any right that the Administrative Agent or any other Secured Party may otherwise have to bring any action, litigation or proceeding relating to this Guaranty or any other Loan Document against any Guarantor or its Properties in the courts of any jurisdiction.
(c) Waiver of Venue. Each Guarantor 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, litigation or proceeding arising out of or relating to this Guaranty or any other Loan Document in any court referred to in clause (b) of this Section 5.5. 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 12.1 of the Credit Agreement. Nothing in this Guaranty will affect the right of any party hereto to serve process in any other manner permitted by Applicable Law.
(e) Appointment of the Borrower as Agent for the Guarantors. Each Guarantor hereby irrevocably appoints and authorizes the Borrower to act as its agent for service of process and notices required to be delivered under this Guaranty or under the other Loan Documents, it being understood and agreed that receipt by the Borrower of any summons, notice or other similar item shall be deemed effective receipt by such Guarantor and its Subsidiaries.
SECTION 5.6 Waiver of Jury Trial.
(a) 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 GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (i) 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
(ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.6.
SECTION 5.7 Injunctive Relief. Each Guarantor recognizes that, in the event such Guarantor fails to perform, observe or discharge any of its obligations or liabilities under this Guaranty or any other Loan Document, any remedy of law may prove to be inadequate relief to the Administrative Agent and the other Secured Parties. Therefore, each Guarantor agrees that the Administrative Agent and the other Secured Parties, at the option of the Administrative Agent and the other Secured Parties, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.
SECTION 5.8 No Waiver by Course of Conduct, Cumulative Remedies. No course of dealing between any Guarantor, the Administrative Agent or any Secured Party or their respective agents or employees shall be effective to change, modify or discharge any provision of this Guaranty or any other Loan Documents or to constitute a waiver of any Event of Default. The enumeration of the rights and remedies of the Administrative Agent and the other Secured Parties set forth in this Guaranty is not intended to be exhaustive and the exercise by the Administrative Agent and the other Secured Parties of any right or remedy shall not preclude the exercise of any other rights or remedies, all of which shall be cumulative, and shall be in addition to any other right or remedy given hereunder or under the other Loan Documents or that may now or hereafter exist at law or in equity or by suit or otherwise. Neither the Administrative Agent nor any other Secured Party shall by any act (except by a written instrument pursuant to Section 5.2), delay, indulgence, omission, or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No delay or failure to take action on the part of the Administrative Agent or any other Secured Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any such right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege or shall be construed to be a waiver of any Event of Default. A waiver by the Administrative Agent or any other Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent or such Secured Party would otherwise have on any future occasion.
SECTION 5.9 Successors and Assigns. The provisions of this Guaranty shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; except that no Guarantor may assign or otherwise transfer any of its rights or obligations under this Guaranty without the prior written consent of the Administrative Agent and the other Secured Parties (except as otherwise provided by the Credit Agreement).
SECTION 5.10 All Powers Coupled With Interest. All powers of attorney and other authorizations granted to the Secured Parties, the Administrative Agent and any Persons designated by the Administrative Agent or any other Secured Party pursuant to any provisions of this Guaranty or any of the other Loan Documents shall be deemed coupled with an interest and shall be irrevocable so long as any of the Guaranteed Obligations (other than (1) contingent indemnification obligations and (2) obligations and liabilities under Secured Cash Management Agreements or Secured Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made) remain unpaid or unsatisfied, any of the Commitments remain in effect or the Credit Facility has not been terminated.
SECTION 5.11 Survival of Indemnities. Notwithstanding any termination of this Guaranty, the indemnities to which the Administrative Agent and the other Secured Parties are entitled under the provisions of Section 5.3 and any other provision of this Guaranty and the other Loan Documents shall
continue in full force and effect and shall protect the Administrative Agent and the other Secured Parties against events arising after such termination as well as before.
SECTION 5.12 Severability of Provisions. Any provision of this Guaranty or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.
SECTION 5.13 Counterparts. This Guaranty may be executed in any number of counterparts (and by different parties hereto in separate counterparts), each of which shall constitute an original, but all of which taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page to this Guaranty or any document or instrument delivered in connection herewith by facsimile or in electronic (i.e., pdf or tif) form shall be effective as delivery of a manually executed counterpart of this Guaranty or such other document or instrument, as applicable.
SECTION 5.14 Integration. This Guaranty and the other Loan Documents, and any separate letter agreements with respect to fees constitute the entire contract of the parties relating to the subject matter hereof and supersede all previous agreements and understandings, written or oral, relating to the subject matter hereof. In the event of any conflict between the provisions of this Guaranty and those of (a) the Credit Agreement, the provisions of the Credit Agreement shall control, (b) the Collateral Agreement, the provisions of the Collateral Agreement shall control and (c) any other Loan Document not referenced in clauses (a) and (b) above, the provisions of this Guaranty shall control; provided that the inclusion of supplemental rights or remedies in favor of the Administrative Agent or the other Secured Parties in any other Loan Document shall not be deemed a conflict with this Guaranty.
SECTION 5.15 Advice of Counsel, No Strict Construction. Each of the parties represents to each other party hereto that it has discussed this Guaranty with its counsel. The parties hereto have participated jointly in the negotiation and drafting of this Guaranty. In the event an ambiguity or question of intent or interpretation arises, this Guaranty shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Guaranty.
SECTION 5.16 Acknowledgements. Each Guarantor hereby acknowledges that:
(a) it has received a copy of the Credit Agreement and has reviewed and understands the same;
(b) neither the Administrative Agent nor any other Secured Party has any fiduciary relationship with or duty to any Guarantor arising out of or in connection with this Guaranty or any of the other Loan Documents, and the relationship between the Guarantors, on the one hand, and the Administrative Agent and the other Secured Parties, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby or thereby among the Secured Parties or among the Guarantors and the Secured Parties.
SECTION 5.17 Releases.
(a) Subject to Section 11.9 of the Credit Agreement, at such time as the Guaranteed Obligations (other than (1) contingent indemnification obligations and (2) obligations and liabilities under Secured Cash Management Agreements or Secured Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made) shall have been paid in full in cash and the Commitments have been terminated, this Guaranty and all obligations (other than those expressly stated to survive such termination or as may be reinstated after such termination) of the Administrative Agent and each Guarantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party.
(b) In the event that all the Capital Stock of any Guarantor owned by the Borrower shall be sold, transferred or otherwise disposed of in a transaction permitted by the Credit Agreement, then, at the request of the Borrower and at the expense of the Guarantor, such Guarantor shall be released from its obligations hereunder; provided that the Borrower shall have delivered to the Administrative Agent, at least five (5) Business Days prior to the date of the proposed release, a written request for release identifying the relevant Guarantor and a description of the sale or other disposition in reasonable detail, together with a certification by the Borrower stating that such transaction is in compliance with the Credit Agreement and the other Loan Documents.
SECTION 5.18 Additional Guarantors. Each Subsidiary of the Borrower that is required to become a party to this Guaranty pursuant to Section 8.14 of the Credit Agreement shall become a Guarantor for all purposes of this Guaranty upon execution and delivery by such Subsidiary of a supplement in form and substance satisfactory to the Administrative Agent.
SECTION 5.19 Secured Parties. Each Secured Party not a party to the Credit Agreement who obtains the benefit of this Guaranty shall be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of the Credit Agreement, and that with respect to the actions and omissions of the Administrative Agent hereunder or otherwise relating hereto that do or may affect such Secured Party, the Administrative Agent and each of its Affiliates shall be entitled to all the rights, benefits and immunities conferred under Article XI of the Credit Agreement.
[Signature pages to follow]
IN WITNESS WHEREOF, each of the Guarantors has executed and delivered this Subsidiary Guaranty Agreement under seal by their duly authorized officers, all as of the day and year first above written.
SUPREME CORPORATION, |
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SUPREME INDIANA OPERATIONS, INC., | ||
a Texas corporation, as a Guarantor |
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a Delaware corporation, as a Guarantor | ||
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By: |
/s/ Matthew W. Long |
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By: |
/s/ Matthew W. Long |
Name: |
Matthew W. Long |
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Name: |
Matthew W. Long |
Title: |
Chief Financial Officer |
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Title: |
Chief Financial Officer |
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SUPREME CORPORATION OF GEORGIA, |
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SUPREME CORPORATION OF TEXAS, | ||
a Texas corporation, as a Guarantor |
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a Texas corporation, as a Guarantor | ||
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By: |
/s/ Matthew W. Long |
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By: |
/s/ Matthew W. Long |
Name: |
Matthew W. Long |
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Name: |
Matthew W. Long |
Title: |
Chief Financial Officer |
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Title: |
Chief Financial Officer |
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SUPREME TRUCK BODIES OF CALIFORNIA, |
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SUPREME MID-ATLANTIC CORPORATION, | ||
a California corporation, as a Guarantor |
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a Texas corporation, as a Guarantor | ||
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By: |
/s/ Matthew W. Long |
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By: |
/s/ Matthew W. Long |
Name: |
Matthew W. Long |
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Name: |
Matthew W. Long |
Title: |
Chief Financial Officer |
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Title: |
Chief Financial Officer |
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SC TOWER STRUCTURAL |
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SUPREME\MURPHY TRUCK BODIES, INC., | ||
LAMINATING, INC., a Texas corporation, as a Guarantor |
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a North Carolina corporation, as a Guarantor | ||
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By: |
/s/ Matthew W. Long |
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By: |
/s/ Matthew W. Long |
Name: |
Matthew W. Long |
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Name: |
Matthew W. Long |
Title: |
Chief Financial Officer |
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Title: |
Chief Financial Officer |
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SUPREME NORTHWEST, L.L.C., |
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SILVER CROWN, LLC, a Delaware limited | ||
a Texas limited liability company, as a Guarantor |
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liability company, as a Guarantor | ||
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By: |
/s/ Matthew W. Long |
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By: |
/s/ Matthew W. Long |
Name: |
Matthew W. Long |
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Name: |
Matthew W. Long |
Title: |
Chief Financial Officer |
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Title: |
Chief Financial Officer |
Supreme Industries (CF) Subsidiary Guaranty Agreement
SUPREME MIDWEST PROPERTIES, INC., |
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SUPREME SOUTHEAST PROPERTIES, INC., | ||
a Texas corporation, as a Guarantor |
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a Texas corporation, as a Guarantor | ||
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By: |
/s/ Matthew W. Long |
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By: |
/s/ Matthew W. Long |
Name: |
Matthew W. Long |
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Name: |
Matthew W. Long |
Title: |
Chief Financial Officer |
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Title: |
Chief Financial Officer |
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SUPREME SOUTHWEST PROPERTIES, INC., |
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SUPREME ARMORED, INC., | ||
a Texas corporation, as a Guarantor |
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a Texas corporation, as a Guarantor | ||
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By: |
/s/ Matthew W. Long |
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By: |
/s/ Matthew W. Long |
Name: |
Matthew W. Long |
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Name: |
Matthew W. Long |
Title: |
Chief Financial Officer |
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Title: |
Chief Financial Officer |
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SUPREME WEST PROPERTIES, INC., |
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SUPREME STB, LLC, a California limited liability | ||
a Texas corporation, as a Guarantor |
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company, as a Guarantor | ||
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By: |
/s/ Matthew W. Long |
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By: |
/s/ Herbert M. Gardner |
Name: |
Matthew W. Long |
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Name: |
Herbert M. Gardner |
Title: |
Chief Financial Officer |
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Title: |
President and Chief Executive Officer |
Supreme Industries (CF) Subsidiary Guaranty Agreement
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Acknowledged by the Administrative Agent as of | |
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WELLS FARGO BANK, NATIONAL | |
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By: |
/s/ David W. ONeal |
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Name: |
David W. ONeal |
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Title: |
Senior Vice President |
Supreme Industries (CF) Subsidiary Guaranty Agreement
Exhibit 10.32
FIRST AMENDMENT TO DECEMBER 29, 2011 LETTER AGREEMENT
This First Amendment to December 29, 2011 Letter Agreement (Amendment), dated as of the 21st day of December, 2012 (Effective Date), is by and between Supreme Industries, Inc. (Supreme) and Matthew Long (Long) (collectively, the Parties).
WHEREAS, the Parties are parties to the December 29, 2011 letter agreement (Existing Agreement); and
WHEREAS, the Parties desire to amend certain terms of the Existing Agreement (as amended by this Amendment, the Agreement) as provided herein.
NOW, THEREFORE, the Parties agree as follows:
1. Definitions. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Existing Agreement.
2. Amendments.
(A) The first sentence of Section 6 of the Existing Agreement is modified by deleting April 17, 2013 and replacing April 17, 2013 with April 17, 2015.
(B) The following Section 16 is added to the Existing Agreement:
16. The term of the Agreement shall be until April 17, 2015, unless earlier terminated in accordance with Section 6 or 7 (the Initial Employment Term). The Agreement shall be automatically renewed for successive one (1) year terms after the Initial Employment Term (individually or collectively, the Renewal Term), unless terminated by either of the Parties upon written notice (Non-Renewal Notice) to the other of the Parties provided not less than 90 days before the end of the Initial Employment Term or any Renewal Term, as applicable, or unless earlier terminated in accordance with Section 6 or 7. Any termination of the Agreement by delivery of a Non-Renewal Notice is not a termination of Longs employment for Cause, without Cause, for Good Reason, or without Good Reason.
3. Effect on the Existing Agreement. Except as specifically amended by this Amendment, all terms of the Existing Agreement shall remain in full force and effect. The term Agreement or agreement as used in the Existing Agreement shall mean the Existing Agreement as amended by this Amendment.
4. Other.
(A) This Amendment shall in all respects be interpreted, enforced, and governed under the laws of the State of Indiana. The Parties agree that the language in this Amendment shall, in all cases, be construed as a whole, according to its fair meaning, and not strictly for, or against, either of the Parties. Venue of any litigation arising from this Amendment shall be in a court of competent jurisdiction in Elkhart County, Indiana or in any other county in which such litigation may be required by any mandatory venue provision.
(B) This Amendment may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract.
(C) This Amendment, along with the Existing Agreement, constitutes the entire agreement among the parties relating to the subject matter hereof and supersedes any and all previous agreements and understandings, oral or written, related to the subject matter hereof.
(D) This Amendment shall not be amended or revised except in a writing executed by both of the Parties.
(E) The obligations under Sections 8, 9, 10, 11, 13, 14 and 15 of the Existing Agreement and under Section 4 of the Amendment shall continue in effect after the termination of Longs employment or termination of the Agreement, no matter the reason for termination of employment or of the Agreement.
IN WITNESS WHEREOF, the Parties have executed this Amendment to be effective as of the Effective Date.
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SUPREME INDUSTRIES, INC. | ||
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By: |
/s/ Herbert M. Gardner | |
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Printed Name: Herbert M. Gardner | ||
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Title: |
Chairman of the Board | |
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/s/ Matthew Long | ||
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Matthew Long | ||
Exhibit 10.38
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AIR STANDARD OFFER, AGREEMENT AND ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE (Non-Residential) AIR Commercial Real Estate Association December 13, 2012 (Date for Reference Purposes) 1. Buyer. 1.1 Supreme Indiana Operations, Inc., a Delaware corporation, ( Buyer) hereby offers to purchase the real property, hereinafter described, from the owner thereof (Seller) (collectively, the Parties or individually, a Party), through an escrow (Escrow) to close 30 or see addendum days after the waiver or expiration of the Buyers Contingencies, (Expected Closing Date) to be held by Chicago Title Insurance Company (Escrow Holder) whose address is Chicago Commercial Center, 10 LaSalle St., Suite 3100, Chicago, IL 60603 Attn: Gerald Castro, Phone No. (312) 223-2470, Facsimile No. (312) 223-5800 upon the terms and conditions set forth in this agreement (Agreement). Buyer shall have the right to assign Buyers rights hereunder, but any such assignment shall not relieve Buyer of Buyers obligations herein unless Seller expressly releases Buyer. 1.2 The term Date of Agreement as used herein shall be the date when by execution and delivery (as defined in paragraph 20.2) of this document or a subsequent counteroffer thereto, Buyer and Seller have reached agreement in writing whereby Seller agrees to sell, and Buyer agrees to purchase, the Property upon terms accepted by both Parties. 2. Property. 2.1 The real property (Property) that is the subject of this offer consists of (insert a brief physical description) four existing buildings (containing a total of approximately 103,730 square feet, the Buildings) located on approximately 19.12 acres of land (the Land) is located in the City of Moreno Valley, County of Riverside State of California, is commonly known by the street address of 22201 and 22135 Alessandro and is legally described as: See Exhibit A attached hereto and incorporated by reference (APN: 297-130-034-1, 297-130-037-429, 297-130-038-5 ). 2.2 If the legal description of the Property is not complete or is inaccurate, this Agreement shall not be invalid and the legal description shall be completed or corrected to meet the requirements of Chicago Title Insurance Company (Title Company), which shall issue the title policy hereinafter described. 2.3 The Property includes, at no additional cost to Buyer, the permanent improvements thereon, including those items which pursuant to applicable law are a part of the property, as well as the following items, if any, owned by Seller and at present located on the Property: electrical distribution systems (power panel, bus ducting, conduits, disconnects, lighting fixtures); telephone distribution systems (lines, jacks and connections only); space heaters; heating, ventilating, air conditioning equipment (HVAC); air lines; fire sprinkler systems; security and fire detection systems; carpets; window coverings; wall coverings. ; and any personal property related to the use or operation of the Property (collectively, the Improvements). 2.4 The fire sprinkler monitor: is owned by Seller and included in the Purchase Price, q is leased by Seller, and Buyer will need to negotiate a new lease with the fire monitoring company, ownership will be determined during Escrow, or there is no fire sprinkler monitor. 2.5 Intentionally Omitted Except as provided in Paragraph 2.3, the Purchase Price does not include Sellers personal property, furniture and all of which shall be removed by Seller prior to Closing. 3. Purchase Price. 3.1 The purchase price (Purchase Price) to be paid by Buyer to Seller for the Property shall be $4,100,000.00, payable as follows: (a) Cash down payment, including the Deposit as defined in paragraph 4.3 (or if an all cash transaction, the Purchase Price): $100,000.00 INITIALS INITIALS PAGE 1 OF 11 FORM OFA-9-8/11E @2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION |
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(Strike if not applicable) (b) Amount of New Loan as defined in paragraph 5.1, if any:$4,000,000.00 (c) Buyer shall take title to the Property subject to and/or assume the following existing deed(s) of trust (Existing Deed(s) of Trust) securing the existing promissory note(s) (Existing Note(s)): $ (i) An Existing Note (First Note) with an unpaid principal balance as of the Closing of approximately: (Strike if not applicable) Said First Note is payable at $ per month, including interest at the rate of % per annum until paid (and/or the entire unpaid balance is due on ). (ii) An Existing Note (Second Note) with an unpaid principal balance as of the Closing of approximately: $ Said Second Nate is payable at $ per month, including interest at the rate of % per annum until paid (and/or the entire unpaid balance is due on ) (Strike if not applicable) (d) Buyer shall give Seller a deed of trust (Purchase Money Deed of Trust) on the - property, to secure the promissory note of Buyer to Seller described in paragraph 6 - (Purchase Money Note) in the amount of: $ Total Purchase Price: $4,100,000.00 3.2 If Buyer is taking title to the Property subject to, or assuming, an Existing Deed of Trust and such deed of trust permits the beneficiary to demand payment of fees including, but net limited to, points, processing fees, and appraisal fees as a condition to the transfer of the Property, Buyer agrees to pay such fees up to a maximum of 1.5% of the unpaid principal balance of the applicable Existing Note. 4. Deposits. 4.1 x Buyer has delivered to Escrow Holder Broker a check or wire in the sum of $100,000.00, payable to Escrow Holder, to be delivered by Broker to Escrow Holder within 2 or business days after both Parties have executed this Agreement and the executed Agreement has been delivered to Escrow Holder, or o within 2 or business days after both Parties have executed this Agreement and the executed Agreement has been delivered to Escrow Holder Buyer shall deliver to Escrow Holder a check in the sum of $ . If said check is not received by Escrow Holder within said time period then Seller may elect to unilaterally terminate this transaction by giving written notice of such election to Escrow Holder whereupon neither Party shall have any further liability to the ether under this Agreement. Should Buyer and Seller not enter into an agreement for purchase and sale, Buyers check or funds shall, upon request by Buyer, be promptly returned to Buyer. 4.2 Intentionally omitted. Additional deposits: (a) Within 5 business days after the Date of Agreement, Buyer shall deposit with Escrow Holder the additional sum of $ to be applied to the Purchase Price at the Closing. (b) Within 5 business days after the contingencies discussed in paragraph 9.1 (a) through (k) are approved or waived, Buyer shall deposit with Escrow Holder the additional sum of $ to be applied to the Purchase Price at the Closing. 4.3 Escrow Holder shall deposit any the funds deposited with it by Buyer pursuant to paragraphs 4.1 and 4.2 (collectively the Deposit), in a State or Federally chartered bank in an money market interest bearing account whose term is appropriate and consistent with the timing requirements of this transaction. The interest therefrom shall accrue to the benefit of Buyer, who hereby acknowledges that there may be penalties or interest forfeitures if the applicable instrument is redeemed prior to its specified maturity. Buyers Federal Tax Identification Number is as provided in Escrow. NOTE: Such interest bearing account cannot be opened until Buyers Federal Tax Identification Number is provided. 4.4 Notwithstanding the foregoing, within 5 days after Escrow Holder receives the monies described in paragraph 4.1 above, Escrow Holder shall release $100 of said monies to Seller as and for independent consideration for Sellers execution of this Agreement and the granting of the contingency period to Buyer as herein provided. Such independent consideration is non-refundable to Buyer but shall be credited to the Purchase Price in the event that the purchase of the Property is completed. 5. Intentionally omitted. Financing Contingency. (Strike if Rot applicable) 5.1 This after is contingent upon Buyer obtaining from an insurance company, financial institution or ether lender, a commitment to lend to Buyer a sum equal to at least % of the Purchase Price, on terms reasonably acceptable to Buyer. Such lean (New Loan) shall be sect, red by a first deed of trust or mortgage on the Property. If this Agreement provides for Seller to carry back junior financial, then Seller shall have the right to approve the terms of the New Loan. Seller shall have 7 days from receipt of the commitment setting forth the proposed terms of the New Loan to approve or disapprove of such proposed terms. If Seller fails to notify Escrow Holder, in writing, of the disapproval within said 7 days it shall be conclusively presumed that Seller has approved the terms of the New Loan. 5.2 Buyer hereby agrees to diligently pursue obtaining the New Loan. If Buyer shall fail to notify its Broker, Escrow Holder Seller, in writing within days following the Date of Agreement; that the New Loan has not been obtained, it shall be conclusively presumed that Buyer has either obtained said New Loan or has waived this New Loan contingency. 5.3 If, after due diligence, Buyer shall notify its Broker, Escrow Holder and Seller, in writing, within the time specified in paragraph 5.2 hereof, that Buyer has not obtained said New Loan, this Agreement shall be terminated, and Buyer shall be entitled to the prompt return of the Deposit, plus any interest earned thereon, less only Escrow Holder and Title Company cancellation fees and costs, which Buyer shall pay. 6. Intentionally omitted. Seller Financing (Purchase Money Note). (Strike if not applicable) 6.1 If Seller approved Buyers Financing (see paragraph 6.5) the Purchase Money Note shall provide for interest on unpaid principal at the rate of % per annum, with principal and interest paid as follows: INITIALS INITIALS ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OF A-9-8/11E PAGE 2 OF 11 |
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The Purchase Money Note and Purchase Money Deed of Trust shall be on the current forms commonly used by Escrow Holder and be junior and subordinate only to the Existing Note(s) and/or the New Loan expressly called for by this Agreement. 6.2 The Purchase Money Note and/or the Purchase Money Deed of Trust shall contain provisions regarding the following (see also paragraph 10.3 (b)): (a) Prepayment. Principal may be prepaid in whole or in part at any time without penalty, at the option of the Buyer. (b) Late Charge. A late charge of 6% shall be payable with respect to any payment of principal, interest, or other charges, not made within 10 days after it is due. (c) Due On Sale. In the event the Buyer sells or transfers title to the Property or any portion thereof, then the Seller may, at Sellers option, require the entire unpaid balance of said Note to be paid in full. 6.3 If the Purchase Money Deed of Trust is to be subordinate to other financing, Escrow Holder shall, at Buyers expense prepare and record on Sellers behalf a request for notice of default and/or sale with regard to each mortgage of deed of trust to which it will be subordinate. 6.4 WARNING CALIFORNIA LAW DOES NOT ALLOW DEFICIENCY JUDGMENTS ON SELLER FINANCING. IF BUYER ULTIMATELY DEFAULTS ON THE LOAN, SELLERS SOLE REMEDY IS TO FORECLOSE ON THE PROPERTY. 6.5 Sellers obligation to provide financing is contingent upon Sellers responsible approval of buyers financial condition. Buyer to provide a current financial statement and copies of its Federal tax returns for the last 3 years to Seller within 10 days following the Date of Agreement. Seller has 10 days following receipt of such documentation to satisfy itself with regard to Buyers financial condition and to notify Escrow Holder as to whether or not Buyers financial condition is acceptable. If Seller fails to notify Escrow Holder, in writing, of the disapproval of this contingency within said time period, it shall be conclusively presumed that Seller has approved Buyers financial condition. If seller is not satisfied with Buyers financial condition or if Buyer fails to deliver the required documentation then Seller may notify Escrow Holder, in writing that Seller Financing will not be available, and Buyer shall have the option, within 10 days of the receipt of such notice, to either terminate this transaction or to purchase the Property without Seller financing. If Buyer fails to notify Escrow Holder within said time period of its election to terminate this transaction then Buyer shall be conclusively presumed to have elected to purchase the Property without Seller financing. If Buyer elects to terminate, Buyers Deposit shall be refunded loss Title Company and Escrow Holder cancellation fees and costs, all of which shall be Buyers obligation. 7. Intentionally omitted. Real Estate Brokers. 7.1 The following real estate broker(s) (Brokers) and brokerage relationships exist in this transaction and are consented to by the Parties (check the applicable boxes): o represents Seller exclusively (Sellers Broker); o represents Buyer exclusively (Buyers Broker); or o represents both Seller and Buyer (Dual Agency). The Parties acknowledge that Brokers are the procuring cause of this Agreement. See paragraph 24 regarding the nature of a real estate agency relationship. Buyer shall use the services of Buyers Broker exclusively in connection with any and all negotiations and offers with respect to the Property for a period of 1 year from the date inserted for reference purposes at the top of page 1. 7.2 Buyer and Seller each represent and warrant to the other that he/she/it has had no dealings with any person, firm, broker or finder in connection with the negotiation of this Agreement and/or the consummation of the purchase and sale contemplated herein, other than the Brokers named in paragraph 7.1, and no broker or other person, firm or entity, other than said Brokers is/are entitled to any commission or finders fee in connection with this transaction as the result of any dealings of acts of such Party. Buyer and Seller do each hereby agree to indemnify, defend, protect broker, finder or other similar party, other than said named Brokers by reason of any dealings or act of the indemnifying Party. 8. Escrow and Closing. 8.1 Upon acceptance hereof by Seller, this Agreement, including any counteroffers incorporated herein by the Parties, shall constitute not only the agreement of purchase and sale between Buyer and Seller, but also instructions to Escrow Holder for the consummation of the Agreement through the Escrow. Escrow Holder shall not prepare any further escrow instructions restating or amending the Agreement unless specifically so instructed by the Parties or a Broker herein. Subject to the reasonable approval of the Parties, Escrow Holder may, however, include its standard general escrow provisions. 8.2 As soon as practical after the receipt of this Agreement and any relevant counteroffers, Escrow Holder shall ascertain the Date of Agreement as defined in paragraphs 1.2 and 20.2 and advise the Parties and Brokers, in writing, of the date ascertained. 8.3 Escrow Holder is hereby authorized and instructed to conduct the Escrow in accordance with this Agreement, applicable law and custom and practice of the community in which Escrow Holder is located, including any reporting requirements of the Internal Revenue Code. In the event of a conflict between the law of the state where the Property is located and the law of the state where the Escrow Holder is located, the law of the state where the Property is located shall prevail. 8.4 Subject to satisfaction of the contingencies herein described, Escrow Holder shall dose this escrow (the Closing) by recording a general warranty deed (a grant deed in California) and the other documents required to be recorded, and by disbursing the funds and documents in accordance with this Agreement. 8.5 Buyer and Seller shall each pay one half of the Escrow Holders charges and Buyer Seller shall pay the usual recording fees and any required documentary transfer taxes. Buyer Seller shall pay the premium for a standard coverage owners or joint protection policy of title insurance. (See also paragraph 11) Buyer shall pay all costs associated with the sale of the Property, including without limitation, (i) the cost of any lenders title insurance policy and any endorsements, (ii) any lender points or fees for any loan to be secured by the Property. See Addendum Paragraph 2. 8.6 Escrow Holder shall verify that all of Buyers contingencies have been satisfied or waived prior to Closing. The matters contained in paragraphs 9.1 subparagraphs (b), (c), (d), (e), (g), (i), (n), and (o), 9.4, 9.5, 12, 13, 14, 16, 18, 20, 21, 22, and 24 are, however, matters of agreement between the Parties only and are not instructions to Escrow Holder. 8.7 If this transaction is terminated for non-satisfaction and non-waiver of a Buyers Contingency, as defined in paragraph 9.2, then neither of the Parties shall thereafter have any liability to the other under this Agreement, except to the extent of a breach of any affirmative covenant or warranty in this Agreement. In the event of such termination, Buyer shall be promptly refunded all funds deposited by Buyer with Escrow Holder, less only the $100 provided for in paragraph 4.4 and the Title Company and Escrow Holder cancellation fees and costs, all of which shall be Buyers obligation. If this transaction is terminated as a result of Sellers breach of this Agreement then Seller shall pay the Title Company and Escrow Holder cancellation fees INITIALS INITIALS ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-9-8/11E PAGE 3 OF 11 |
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and costs. 8.8 The Closing shall occur on the Expected Closing Date, or as soon thereafter as the Escrow is in condition for Closing; provided, however, that if the Closing does not occur by the Expected Closing Date and said Date is not extended by mutual instructions of the Parties, a Party not then in default under this Agreement may notify the other Party, Escrow Holder, and Brokers, in writing that, unless the Closing occurs within 5 business days following said notice, the Escrow shall be deemed terminated without further notice or instructions. 8.9 Except as otherwise provided herein, the termination of Escrow shall not relieve or release either Party from any obligation to pay Escrow Holders fees and costs or constitute a waiver, release or discharge of any breach or default that has occurred in the performance of the obligations, agreements, covenants or warranties contained therein. 8.10 If this sale of the Property is not consummated for any reason other than Sellers breach or default, then at Sellers request, and as a condition to any obligation to return Buyers deposit (see paragraph 21), Buyer shall within 5 days after written request deliver to Seller, at no charge, copies of all surveys, engineering studies, soil reports, maps, master plans, feasibility studies and other similar items prepared by or for Buyer that pertain to the Property. Provided, however, that Buyer shall not be required to deliver any such report if the written contract which Buyer entered into with the consultant who prepared such report specifically forbids the dissemination of the report to others. 9. Contingencies to Closing. 9.1 The Closing of this transaction is contingent upon the satisfaction or waiver of the following contingencies. IF BUYER FAILS TO NOTIFY ESCROW HOLDER, IN WRITING, OF THE DISAPPROVAL OF ANY OF SAID CONTINGENCIES WITHIN THE TIME SPECIFIED THEREIN, IT SHALL BE CONCLUSIVELY PRESUMED THAT BUYER HAS APPROVED SUCH ITEM, MATTER OR DOCUMENT. Buyers-conditional approval shall constitute disapproval, unless provision is made by the Seller within the time specified therefore by the Buyer in such conditional approval or by this agreement, whichever is later, for the satisfaction of the condition imposed by the Buyer. Escrow Holder shall promptly provide all Parties with copies of any written disapproval or conditional approval which it receives. With regard to subparagraphs (a) through (m) the pre-printed time periods shall control unless a different number of days is inserted in the spaces provided. (a) Disclosure. Seller shall make to Buyer, through Escrow, all of the applicable disclosures required by law (See AIR Commercial Real Estate Association (AIR) standard form entitled Sellers Mandatory Disclosure Statement) and provide Buyer with a completed Property Information Sheet (Property Information Sheet) concerning the Property, duly executed by or on behalf of Seller in the current form or equivalent to that published by the AIR within 10 or 2 business days following the Date of Agreement. Buyer has 10 days from the receipt of said disclosures to approve or disapprove the matters disclosed. (b) Intentionally omitted. Physical Inspection. Buyer has 10 or days from the receipt of the Property Information Sheet or the Date of Agreement, whichever is later, to satisfy itself with regard to the physical aspects and size of the Property. (c) Intentionally omitted. Hazardous Substance Conditions Report. Buyer has 30 or days from the receipt of the Property Information Sheet or the Date of Agreement, whichever is later, to satisfy itself with regard to the environmental aspects of the Property. Seller recommends that Buyer obtain a hazardous Substance Conditions Report concerning the Property and relevant adjoining properties. Any such report shall be paid for by Buyer. A Hazardous Substance for purpose of this Agreement is defined as any substance whose nature and/or quantity of existence, use, manufacture, disposal or effect, render it subject to Federal, state or local regulation, investigation, remediation or removal as potentially injurious to public health or welfare. A Hazardous Substance Condition for purpose of this Agreement is defined as the existence on, under or relevantly adjacent to the property of a Hazardous Substance that would require remediation and/or removal under applicable Federal, state or local law. (d) Intentionally omitted. Soil Inspection. Buyer has 30 or days from the receipt of the Property Information Sheet or the Date of Agreement, whichever is later, to satisfy itself with regard to the condition of the soils on the Property. Seller recommends that Buyer obtain a soil test report. Any such report shall be paid for by Buyer. Seller shall provide Buyer copies of any soil report that Seller may have within 10 days of the Date of Agreement. (e) Intentionally omitted. Governmental Approvals. Buyer has 30 or days from Date of Agreement to satisfy itself with regard to approvals and permits from governmental agencies or departments which have jurisdiction over the Property and which Buyer deems necessary or desirable in connection with its intended use of the Property, including, but not limited to, permits and approvals required with respect to zoning, planning, building and safety, fire, police, handicapped and Americans with Disabilities Act requirements, transportation and environmental matters. (f) Intentionally omitted. Conditions of Title. Escrow Holder shall cause a current commitment for title insurance (Title Commitment) concerning the Property issued by the Title Company, as well as legible copies of all documents referred to in the Title Commitment (Underlying Documents), and a scaled and dimensioned plot showing the location of any easements to be delivered to Buyer within 10 or days following the Date of Agreement. Buyer has 10 days from the receipt of the Title Commitment, the Underlying Documents and the plot plan to satisfy itself with regard to the condition of title. The disapproval by Buyer of any monetary encumbrance, which by the terms of this Agreement is not to remain against the Property after the Closing, shall not be considered a failure of this contingency, as Seller shall have the obligation, at Sellers expense, to satisfy and remove such disapproved monetary encumbrance at or before the Closing. (g) Internationally omitted. Survey. Buyer has 30 or days from the receipt of the Title Commitment and Underlying Documents to satisfy itself with regard to any ALTA title supplement based upon a survey prepared to American Land. Title Association (ALTA) standards for an owners policy by a surveyor, showing the legal description and boundary lines of the Property, any easements of record, and any improvements, poles, structures and things located within 10 feet of either side of the Property boundary lines. Ay such survey shall be prepared at Buyers direction and expense. If Buyer has obtained a survey and approved the ALTA title supplement, Buyer may elect within the period allowed for Buyers approval of a survey to have and ALTA extended coverage owners from of title policy, in which event Buyer shall pay any additional premium attributable thereto. (h) Intentionally omitted. Existing Leases and Tenancy Statements. Seller shall within 10 or days of the Date of Agreement provide both Buyer and Escrow Holder with legible copies of all lease, subleases or rental arrangements (collectively, Existing Leases) affecting the Property, and with a tenancy statement (Estoppel Certificate) in the latest form or equivalent to that published by the AIR, executed by Seller and/or each tenant and subtenant of the Property. Seller shall use its best efforts to have each tenant complete and execute an Estoppel Certificate. If any tenant fails or refuses to provide an Existing Leases and Estoppel Certificates to satisfy itself with regard to the Estoppels Certificate for that tenancy. Buyer has 10 days from the receipt of said Existing Leases and Estoppel Certificates to satisfy itself with regarding to the Existing Leases and any other tenancy issues. (i) Intentionally omitted. Owners Association. Seller shall within 10 or days of the Date of Agreement provide Buyer with a statement and transfer package from any owners association servicing the Property. Such transfer package shall at a minimum include: copies of the associations bylaws, articles of incorporation, current budget and financial statement. Buyer has 10 days from the receipt of such documents to satisfy itself with regard to the association. INITIALS INITIALS ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-9-8/11E PAGE 4 OF 11 |
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(j) Intentionally omitted. Other Agreements. Seller shall within 10 or days of the Date of Agreement provide Buyer with legible copies of all other agreements (Other Agreements) known to Seller that will affect the Property after Closing. Buyer has 10 days from the receipt of said Other Agreements to satisfy itself with regard to such Agreements. (k) Intentionally omitted. Financing. If paragraph 5 hereof dealing with a financing contingency has not been stricken, the satisfaction or waiver of such New Loan contingency. (l) Intentionally omitted. Existing Notes. If paragraph 3.1(c) has not been stricken, Seller shall within 10 or days of the Date of Agreement provide Buyer with legible copies of the Existing Notes, Existing Deeds of Trust and related agreements (collectively Loan Documents) to which the Property will remain subject after the Closing. Escrow Holder shall promptly request from the holders of the Existing Notes a beneficiary statement (Beneficiary Statement) confirming: (1) the amount of the unpaid principal balance, the current interest rate, and the date to which interest is paid, and (2) the nature and amount of any impounds held by the beneficiary in connection with such loan. Buyer has 10 or days from the receipt of the Loan Documents and Beneficiary Statements to satisfy itself with regard to such financing. Buyers obligation to close is conditioned upon Buyer being able to purchase the Property without acceleration or change in the terms of any Existing Notes or charges to Buyer except as otherwise provided in this Agreement or approved by Buyer, provided, however, Buyer shall pay the transfer fee referred to in paragraph 3.2 hereof. Likewise if Seller is to carry back a Purchase Money Note then Seller shall within 10 or days of the Date of Agreement provide Buyer with a copy of the proposed Purchase Money Note and Purchase Money Deed of Trust. Buyer has 10 or days from the receipt of such documents to satisfy itself with regard to the form and content thereof. (m) Intentionally omitted. Personal Property. In the event that any personal property is included in the Purchase Price, Buyer has 10 or days from the Date of Agreement to satisfy itself with regard to the title condition of such personal property. Seller recommends that Buyer obtain a UCC 1 report. Any such report shall be paid for by Buyer. Seller shall provide Buyer copies of any liens or encumbrances affecting such personal property that is aware of within 10 or days of the Date of Agreement. (n) Destruction, Damage or Loss. There shall not have occurred prior to the Closing, a destruction of, or damage or loss to, the Property or any portion thereof, from any cause whatsoever, which would cost more than $10,000.00 to repair or cure. If the cost of repair or cure is $10,000.00 or less, Seller shall repair or cure the loss prior to the Closing. Buyer shall have the option, within 10 days after receipt of written notice of a loss costing more than $10,000.00 to repair or cure, to either terminate this Agreement or to purchase the Property notwithstanding such loss, but without deduction or offset against the Purchase Price as provided in this clause (n). If the cost to repair or cure is more than $10,000.00, and Buyer does not elect to terminate this Agreement, Buyer shall be entitled to any insurance proceeds applicable to such loss including without limitation, a deduction against the Purchase Price in an amount equal to the reasonable cost of the repair or cure which exceeds the insurance proceeds applicable to such loss (including without limitation, any deductibles or insurance proceeds payable to Sellers lenders)). Seller shall provide Buyer and Escrow Holder with written notice of any destruction of, damage or loss to the Property within one (1) business day following the date on which the Seller learns of of the same (but in all events at least one (1) business day before the Closing), which notice shall, to the extent possible, include a reasonably detailed description of the destruction, damage or loss. Unless otherwise notified in writing, Escrow Holder shall assume no such destruction, damage or loss has occurred prior to Closing. (o) Material Change. Buyer shall have 10 days following receipt of written notice of a Material Change within which to satisfy itself with regard to such change. Material Change shall mean a substantial adverse change in the use, occupancy, tenants, title, or condition of the Property that occurs after the date of this offer and prior to the Closing. Unless otherwise notified in writing, Escrow Holder shall assume that no Material Change has occurred prior to the Closing. (p) Seller Performance. The delivery of all documents and the due performance by Seller of each and every undertaking and agreement to be performed by Seller under this Agreement. (q) Intentionally omitted. Brokerage Fee. Payment at the Closing of such brokerage fee as is specified in this Agreement-or later written instructions to Escrow Holder executed by seller and Brokers (Brokerage Fee). It is agreed by the Parties and Escrow Holder that Brokers are a third party beneficiary of this Agreement insofar as the Brokerage Fee is concerned, and that no change shall be made with respect to the payment of the Brokerage Fee specified in this Agreement, without the written consent of Brokers. 9.2 All of the contingencies specified in subparagraphs (a) through (m) of paragraph 9.1 are for the benefit of, and may be waived by, Buyer, and may be elsewhere herein referred to a Buyers Contingencies. 9.3 Intentionally omitted. If any of Buyers Contingencies or any other matter subject to Buyers approval is disapproved as provided for herein in a timely manner (Disapproved Item), Seller shall have the right within 10 days following the receipt of notice of Buyers disapproval to elect to cure such Disapproved Item prior to the Expected Closing Date (Sellers Election). Sellers failure to give to Buyer within such period, written notice of Sellers commitment to cure such Disapproved Item on or before the Expected Closing Date shall be conclusively presumed to be Sellers Election not to cure such Disapproved Item, If Seller elects, either by written notice or failure to give written notice, not to cure a Disapproved Item. Buyer shall have the right, within 10 days after Sellers Election to either accept title to the Property subject to such Disapproved Item, or to terminate this Agreement. Buyers failure to notify Seller in writing of Buyers election to accept title to the Property subject to the Disapproved Item without deduction or offset shall constitute Buyers election to terminate this Agreement. Unless expressly provided otherwise herein, Sellers right to cure shall not apply to the remediation of Hazardous Substance Conditions or to the Financing Contingency. Unless the Parties mutually instruct otherwise, if the time periods for the satisfaction of contingencies or for Sellers and Buyers elections would expire on a date after the Expected Closing Date, the Expected Closing Date shall be deemed extended for 3 business days following the expiration of: (a) the applicable contingency period(s), (b) the period within which the Seller may elect to cure the Disapproved Item, or (c) if Seller elects not to cure, the period within which Buyer may elect to proceed with this transaction, whichever is later. 9.4 Buyer understands and agree that until such time as all Buyers Contingencies have been satisfied or waived, Seller and/or its agents may solicit, entertain and/or accept back-up offers to purchase the Property. 9.5 The Parties acknowledge that extensive local, state and Federal legislation establish broad liability upon owners and/or users of real property for the investigation and remediation of Hazardous Substances. The determination of the existence of a Hazardous Substance Condition and the evaluation of the impact of such a condition are highly technical and beyond the expertise of Brokers. The Parties acknowledge that they have been advised by Brokers to consult their own technical and legal experts with respect to the possible presence of Hazardous Substances on the Property or adjoining properties, and Buyer and Seller are not relying upon any investigation by or statement of Brokers with respect thereto. The parties hereby assume all responsibility for the impact of such Hazardous Substances upon their respective interests herein. 10. Documents Required at or Before Closing: 10.1 Five days prior Prior to the Closing date Escrow Holder shall obtain an updated Title Commitment concerning the Property from the Title Company and provide copies thereof to each of the Parties. 10.2 Seller shall deliver to Escrow Holder in time for delivery to Buyer at the Closing: ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-9-8/11E PAGE 5 OF 11 |
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(a) Grant or general warranty deed, duly executed and in recordable form, conveying fee title to the Property to Buyer, substantially in the form attached hereto and incorporated herein as Exhibit B. (b) Intentionally omitted. If applicable, the Beneficiary Statements concerning Existing Note (s). (C) Intentionally omitted. If applicable, the Existing Leases and Other Agreements together with duly executed assignment there of by Seller and Buyer. The assignment Leases shall be on the most recent Assignment and Assumption of Lessors Interest in Lease form published by the AIR or its equivalent. (d) Intentionally omitted. If applicable, Estoppel Certificates executed by Seller and/or the tenant(s) of the property. (e) An affidavit executed by Seller to the effect that Seller is not a foreign person within the meaning of Internal Revenue Code Section 1445 or successor statutes. If Seller does not provide such affidavit in form reasonably satisfactory to Buyer at least 3 business days prior to the Closing, Escrow Holder shall at the Closing deduct from Sellers proceeds and remit to the Internal Revenue Service such sum as is required by applicable Federal law with respect to purchases from foreign sellers. (f) If the Property is located in California, an affidavit executed by Seller to the effect that Seller is not a nonresident within the meaning of California Revenue and Tax Code Section 18662 or successor statutes. If Seller does not provide such affidavit in form reasonably satisfactory to Buyer at least 3 business days prior to the Closing, Escrow Holder shall at the Closing deduct from Sellers proceeds and remit to the Franchise Tax Board such sum as is required by such statute. (g) If applicable, a bill of sale, duly executed, conveying title to any included personal property to Buyer. (h) If the Seller is a corporation, a duly executed corporate resolution authorizing the execution of this Agreement and the sale of the Property. 10.3 Buyer shall deliver to Seller through Escrow: (a) The cash portion of the Purchase Price and such additional sums as are required of Buyer under this Agreement shall be deposited by Buyer with Escrow Holder, by federal funds wire transfer, or any other method acceptable to Escrow Holder in immediately collectable funds, no later than 2:00 P.M. on the business day prior to the Expected Closing Date provided, however, that Buyer shall not be required to deposit such monies into Escrow if at the time set for Closing Seller is in default or has indicated that it will not perform any of its obligations hereunder. (b) Intentionally omitted. If a Purchase Money Note and Purchase Money Deed of Trust are called for by this Agreement, the duly executed originals of those documents, the Purchase Money Deed of Trust being in recordable form, together with evidence of fire insurance on the improvement in the amount of the full replacement cost naming Seller as a mortgage loss payee, and a real estate tax service contract (at Buyers expense), assuring Seller of notice of the status of real property taxes during the life Purchase Money Note. (c) Intentionally omitted. The Assignment and Assumption of Lessors Interest in Lease form specified in paragraph 10.2(c) above, duly executed by Buyer. (d) Intentionally omitted. Assumptions duly executed by Buyer of the obligations of Seller that accrue after Closing under any other Agreements. (e) Intentionally omitted. If applicable, a written assumption duly executed by Buyer of the loan documents with respect to Existing Notes. (f) If the Buyer is a corporation, a duly executed corporate resolution authorizing the execution of this Agreement and the purchase of the Property. 10.4 At Closing, Escrow Holder shall cause to be issued to Buyer a standard coverage (or ALTA extended, if elected pursuant to 9.1(g)) owners form policy of title insurance effective as of the Closing, issued by the Title Company in the full amount of the Purchase Price, insuring title to the Property vested in Buyer, subject only to the exceptions approved by Buyer. In the event there is a Purchase Money Deed of Trust in this transaction, the policy of title insurance shall be a joint protection policy insuring both Buyer and Seller. IMPORTANT: IN A PURCHASE OR EXCHANGE OF REAL PROPERTY, IT MAY BE ADVISABLE TO OBTAIN TITLE INSURANCE IN CONNECTION WITH THE CLOSE OF ESCROW SINCE THERE MAY BE PRIOR RECORDED LIENS AND ENCUMBRANCES WHICH AFFECT YOUR INTEREST IN THE PROPERTY BEING ACQUIRED. A NEW POLICY OF TITLE INSURANCE SHOULD BE OBTAINED IN ORDER TO ENSURE YOUR INTEREST IN THE PROPERTY THAT YOU ARE ACQUIRING. 11. Prorations and Adjustments. 11.1 Taxes. Applicable real property taxes and special assessment bonds shall be prorated through Escrow as of the date of the Closing, based upon the latest tax bill available. Buyer agrees to pay The Parties agree to prorate as of the Closing any taxes assessed against the Property by supplemental bill levied by reason of events occurring prior to the Closing. Payment of the prorated amount shall be made promptly in cash upon receipt of a copy of any supplemental bill. 11.2 Intentionally omitted. Insurance. WARNING: Any insurance which Seller may have maintained will terminate on the Closing. Buyer is advised to obtain appropriate insurance to cover the property. 11.3 Intentionally omitted. Rentals, Interest and Expenses. Scheduled rentals, interest on Existing Notes, utilities, and operating expenses shall be prorated as of the date of Closing. The parties agree to promptly adjust between themselves outside of Escrow any rents received after the Closing. 11.4 Intentionally omitted. Security Deposit. Security Deposits held by Seller shall be given to Buyer as a credit to the cash required of Buyer at the Closing. 11.5 Intentionally omitted. Post Closing Matters. Any item to be prorated that is not determined or determinable at the Closing shall be promptly adjusted by the Parties by appropriate cash payment outside of the Escrow when the amount due is determined. 11.6 Intentionally omitted. Variations in Existing Note Balances. In the event that Buyer is purchasing the property subject to an Existing Deed of Trust(s), and in the event that a Beneficiary Statement as to the applicable Existing Note(s) discloses that the unpaid principal balance of such Existing Note(s) at the closing will be more or less then the amount set forth in paragraph 3.1(c) hereof (Existing Note Variation), then the purchase Money Note(s) shall be reduced or increased by an amount equal to such Existing Note Variation. If there is to be no purchase Money Note, the cash required at the Closing per paragraph 3.1(a) shall be reduced or increased by the amount of such Existing Note Variation. 11.7 Intentionally omitted. Variations in New Loan Balance. In the event Buyer is obtaining a New Loan and the amount ultimately obtained exceeds the amount set forth in paragraph 5.1, then the amount of the Purchase Money Note, if any, shall be reduced by the amount of such excess. 11.8 Intentionally omitted. Owners Association Fees. Escrow Holder shall: (i) bring Sellers account with the association current and pay any delinquencies or transfer fees from Sellers proceeds, and (ii) pay any up front fees required by the association from Buyers funds. 12. Representations and Warranties of Seller and Disclaimers. 12.1 Sellers warranties and representations shall survive the Closing and delivery of the deed for a period of 3 years, and, are true, material and relied upon by Buyer and Brokers in all respects. Seller hereby makes the following warranties and representations to Buyer and Brokers: (a) Authority of Seller. Seller is the owner of the Property and/or has the full right, power and authority to sell, convey and transfer the Property to Buyer as provided herein, and to perform Sellers obligations hereunder. ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-9-8/11E INITIALS INITIALS PAGE 6 OF 11 |
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(b) Maintenance During Escrow and Equipment Condition At Closing. Except as otherwise provided in paragraph 9.1(n) hereof, Seller shall maintain the Property until the Closing in its present condition, ordinary wear and tear excepted. (c) Hazardous Substances/Storage Tanks. Seller has no knowledge, except as otherwise disclosed to Buyer in writing, of the existence or prior existence on the Property of any Hazardous Substance, nor of the existence or prior existence of any above or below ground storage tank. (d) Compliance. Seller has no knowledge of any aspect or condition of the Property which violates applicable laws, rules, regulations, codes or covenants, conditions or restrictions, or of improvements or alterations made to the Property without a permit where one was required, or of any unfulfilled order or directive of any applicable governmental agency or casualty insurance company requiring any investigation, remediation, repair, maintenance or improvement be performed on the Property. (e) Changes in Agreements. Prior to the Closing, Seller will not violate or modify any Existing Lease or Other Agreement, or create any new leases or other agreements affecting the Property, without Buyers written approval, which approval will not be unreasonably withheld. (f) Possessory Rights. Seller has no knowledge that anyone will, at the Closing, have any right to possession of the Property, except as disclosed by this Agreement or otherwise in writing to Buyer (g) Mechanics Liens. There are no unsatisfied mechanics or materialmens lien rights concerning the Property. (h) Actions, Suits or Proceedings. Seller has no knowledge of any actions, suits or proceedings pending or threatened before any commission, board, bureau, agency, arbitrator, court or tribunal that would affect the Property or the right to occupy or utilize same. (i) Notice of Changes. Seller will promptly notify Buyer and Brokers in writing of any Material Change (see paragraph 9.1(o)) affecting the Property that becomes known to Seller prior to the Closing. (j) Intentionally omitted. No Tenant Bankruptcy Proceedings. Seller has no notice or knowledge that any tenant of the Property is the subject of a bankruptcy or insolvency proceeding. (k) No Seller Bankruptcy Proceedings. Seller is not the subject of a bankruptcy, insolvency or probate proceeding. (I) Intentionally omitted. Personal Property. Seller has no knowledge that anyone will, at the Closing, have any right to possession of any personal property included in the Purchase Price nor knowledge of any liens or encumbrances affecting such personal property, except as disclosed by this Agreement or otherwise in writing to Buyer. 12.2 Buyer hereby acknowledges that, except as otherwise stated in this Agreement, Buyer is purchasing the Property in its existing condition and will, by the time called for herein, make or have waived all inspections of the Property Buyer believes are necessary to protect its own interest in, and its contemplated use of, the Property. The Parties acknowledge that, except as otherwise stated in this Agreement, no representations, inducements, promises, agreements, assurances, oral or written, concerning the Property, or any aspect of the occupational safety and health laws, Hazardous Substance laws, or any other act, ordinance or law, have been made by either Party or Brokers, or relied upon by either Party hereto. 12.3 Intentionally omitted. In the event that Buyer learns that a Seller representations or warranty might be untrue prior to the Closing, and Buyer elects to purchase the Property anyway then, and in that event, Buyer waives any right that it may have to bring an action or proceeding against Seller or Brokers regarding said representation or warranty. 12.4 Any environmental reports, soils reports, surveys, and other similar documents which were prepared by third party consultants and provided to Buyer by Seller or Sellers representatives, have been delivered as an accommodation to Buyer and without any representation or warranty as to the sufficiency, accuracy, completeness, and/or validity of said documents, all of which Buyer relies on at its own risk. Seller believes said documents to be accurate, but Buyer is advised to retain appropriate consultants to review said documents and investigate the Property. 13. Possession. Possession of the Property shall be given to Buyer at the Closing subject to the rights of tenants under Existing Leases. 14. Buyers Entry. At any time during the Escrow period, Buyer, and its agents and representatives, shall have the right at reasonable times and subject to rights of tenants, to enter upon the Property for the purpose of making inspections and tests specified in this Agreement. No destructive testing shall be conducted, however, without Sellers prior approval which shall not be unreasonably withheld. Following any such entry or work, unless otherwise directed in writing by Seller, Buyer shall return the Property to the condition it was in prior to such entry or work, including the recompaction or removal of any disrupted soil or material as Seller may reasonably direct. All such inspections and tests and any other work conducted or materials furnished with respect to the Property by or for Buyer shall be paid for by Buyer as and when due and Buyer shall indemnify, defend, protect and hold harmless Seller and the Property of and from any and all claims, liabilities, losses, expenses (including reasonable attorneys fees), damages, including those for injury to person or property, arising out of or relating to any such work or materials or the acts or omissions of Buyer, its agents or employees in connection therewith; provided however, that Buyer shall have no obligation to indemnify, defend or protect or hold Seller harmless from any conditions which already exist on, under or about the Property which are discovered as a result of such acts or omissions of Buyer, its members, officers, agents or employees in connection therewith, except to the extent that such conditions are excerbated by Buyer. 15. Further Documents and Assurances. The Parties shall each, diligently and in good faith, undertake all actions and procedures reasonably required to place the Escrow in condition for Closing as and when required by this Agreement. The Parties agree to provide all further information, and to execute and deliver all further documents, reasonably required by Escrow Holder or the Title Company. 16. Attorneys Fees. If any Party or Broker brings an action or proceeding (including arbitration) involving the Property whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term Prevailing Party shall include, without limitation, a Party or-Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys fees reasonably incurred. 17. Prior Agreements/Amendments. 17.1 This Agreement supersedes any and all prior agreements between Seller and Buyer regarding the Property. 17.2 Amendments to this Agreement are effective only if made in writing and executed by Buyer and Seller. 18. Brokers Rights. 18.1 Intentionally omitted. If this sale is not consummated due to the default of either the Buyer or Seller, the defaulting Party shall be liable to and shall pay to Brokers the Brokerage Fee that Brokers would have received had the sale been consummated. If Buyer is the defaulting party, payment of said Brokerage Fee is in addition to any obligation with respect to liquidated or other damages. 18.2 Intentionally omitted. Upon the Closing, Brokers are authorized to publicize the facts of this transaction. 19. Notices. PAGE 7 OF 11 INITIALS INITIALS ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-9-8/11E |
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19.1 Whenever any Party, Escrow Holder or Brokers herein shall desire to give or serve any notice, demand, request, approval, disapproval or other communication, each such communication shall be in writing and shall be delivered personally, by messenger or by mail, postage prepaid, to the address set forth in this Agreement or by facsimile transmission. 19.2 Service of any such communication shall be deemed made on the date of actual receipt if personally delivered. Any such communication sent by regular mail shall be deemed given 48 hours after the same is mailed. Communications sent by United States Express Mail or overnight courier that guarantee next day delivery shall be deemed delivered 24 hours after delivery of the same to the Postal Service or courier. Communications transmitted by facsimile transmission shall be deemed delivered upon telephonic confirmation of receipt (confirmation report from fax machine is sufficient), provided a copy is also delivered via delivery or mail. If such communication is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next business day. 19.3 Any Party or Broker hereto may from time to time, by notice in writing, designate a different address to which, or a different person or additional persons to whom, all communications are thereafter to be made. The attorney for any party may give a notice on behalf of its client and any such notice shall be deemed to have been given from the attorneys client. 20. Intentionally omitted. Duration-of-Offer. 20.1 If this offer is not accepted by Seller on or before 5:00 P.M. according to the time standard applicable to the city of on the date of it shall be deemed automatically revoked. 20.2 Intentionally omitted. The acceptance of this offer, or of any subsequent counteroffer hereto, that creates an agreement between the Parties as described in paragraph 1.2, shall be deemed made upon delivery to the other Party or either Broker herein of a duty executed writing unconditionally accepting the last outstanding offer or counteroffer. 21. LIQUIDATED DAMAGES. (This Liquidated Damages paragraph is applicable only if initialed by both Parties). THE PARTIES AGREE THAT IT WOULD BE IMPRACTICABLE OR EXTREMELY DIFFICULT TO FIX, PRIOR TO SIGNING THIS AGREEMENT, THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED BY SELLER IF BUYER FAILS TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT. THEREFORE, IF, AFTER THE SATISFACTION OR WAIVER OF ALL CONTINGENCIES PROVIDED FOR THE BUYERS BENEFIT, BUYER BREACHES THIS AGREEMENT, SELLER SHALL BE ENTITLED TO LIQUIDATED DAMAGES IN THE AMOUNT OF $100,000.00. UPON PAYMENT OF SAID SUM TO SELLER, BUYER SHALL BE RELEASED FROM ANY FURTHER LIABILITY TO SELLER, AND ANY ESCROW CANCELLATION FEES AND TITLE COMPANY CHARGES SHALL BE PAID BY SELLER. Buyer Initials Seller Initials 22. ARBITRATION OF DISPUTES. (ThisArbitrationofDisputesparagraphisapplicableonlyifinitiatedbybothParties.) 22.1 ANY CONTROVERSY AS TO WHETHER SELLER IS ENTITLED TO THE LIQUIDATED DAMAGES AND/OR BUYER IS ENTITLED TO THE RETURN OF DEPOSIT MONEY, SHALL BE DETERMINED BY BINDING ARBITRATION BY, AND UNDER THE COMMERCIAL RULES OF THE AMERICAN ARBITRATION ASSOCIATION (COMMERCIAL RULES). ARBITRATION HEARINGS SHALL BE HELD IN THE COUNTY WHERE THE PROPERTY IS LOCATED. ANY SUCH CONTROVERSY SHALL BE ARBITRATED BY 3 ARBITRATORS WHO SHALL BE IMPARTIAL REAL ESTATE BROKERS WITH AT LEAST 5 YEARS OF FULL TIME EXPERIENCE IN BOTH THE AREA WHERE THE PROPERTY IS LOCATED AND THE TYPE OF REAL ESTATE THAT IS THE SUBJECT OF THIS AGREEMENT. THEY SHALL BE APPOINTED UNDER THE COMMERCIAL RULES. THE ARBITRATORS SHALL HEAR AND DETERMINE SAID CONTROVERSY IN ACCORDANCE WITH APPLICABLE LAW, THE INTENTION OF THE PARTIES AS EXPRESSED IN THIS AGREEMENT AND ANY AMENDMENTS THERETO, AND UPON THE EVIDENCE PRODUCED AT AN ARBITRATION HEARING. PRE-ARBITRATION DISCOVERY SHALL BE PERMITTED IN ACCORDANCE WITH THE COMMERCIAL RULES OR STATE LAW APPLICABLE TO ARBITRATION PROCEEDINGS. THE AWARD SHALL BE EXECUTED BY AT LEAST 2 OF THE 3 ARBITRATORS, BE RENDERED WITHIN 30 DAYS AFTER THE CONCLUSION OF THE HEARING, AND MAY INCLUDE ATTORNEYS FEES AND COSTS TO THE PREVAILING PARTY PER PARAGRAPH 16 HEREOF. JUDGMENT MAY BE ENTERED ON THE AWARD IN ANY COURT OF COMPETENT JURISDICTION NOTWITHSTANDING THE FAILURE OF A PARTY DULY NOTIFIED OF THE ARBITRATION HEARING TO APPEAR THEREAT. 22.2 BUYERS RESORT TO OR PARTICIPATION IN SUCH ARBITRATION PROCEEDINGS SHALL NOT BAR SUIT IN A COURT OF COMPETENT JURISDICTION BY THE BUYER FOR DAMAGES AND/OR SPECIFIC PERFORMANCE UNLESS AND UNTIL THE ARBITRATION RESULTS IN AN AWARD TO THE SELLER OF LIQUIDATED DAMAGES, IN WHICH EVENT SUCH AWARD SHALL ACT AS A BAR AGAINST ANY ACTION BY BUYER FOR DAMAGES AND/OR SPECIFIC PERFORMANCE. 22.3 NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE ARBITRATION OF DISPUTES PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE ARBITRATION OF DISPUTES PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. PAGE 8 OF 11 INITIALS INITIALS ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-9-8/11E |
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19.1 Whenever any Party, Escrow Holder or Brokers herein shall desire to give or serve any notice, demand, request, approval, disapproval or other communication, each such communication shall be in writing and shall be delivered personally, by messenger or by mail, postage prepaid, to the address set forth in this Agreement or by facsimile transmission. 19.2 Service of any such communication shall be deemed made on the date of actual receipt if personally delivered. Any such communication sent by regular mail shall be deemed given 48 hours after the same is mailed. Communications sent by United States Express Mail or overnight courier that guarantee next day delivery shall be deemed delivered 24 hours after delivery of the same to the Postal Service or courier. Communications transmitted by facsimile transmission shall be deemed delivered upon telephonic confirmation of receipt (confirmation report from fax machine is sufficient), provided a copy is also delivered via delivery or mail. If such communication is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next business day. 19.3 Any Party or Broker hereto may from time to time, by notice in writing, designate a different address to which, or a different person or additional persons to whom, all communications are thereafter to be made. The attorney for any party may give a notice on behalf of its client and any such notice shall be deemed to have been given from the attorneys client. 20. Intentionally omitted. Duration of Offer. 20.1 If this offer is not accepted by Seller on or before 5:00 P.M. according to the time standard applicable to the city of on the date of it shall be deemed automatically revoked. 20.2 Intentionally omitted. The acceptance of this offer, or of any subsequent counteroffer hereto, that creates an agreement between the Parties as described in paragraph 1.2, shall be deemed made upon delivery to the other Party or either Broker herein of a duly executed writing unconditionally accepting the last outstanding offer or counteroffer. 21. LIQUIDATED DAMAGES. (This Liquidated Damages paragraph is applicable only if initialed by both Parties) THE PARTIES AGREE THAT IT WOULD BE IMPRACTICABLE OR EXTREMELY DIFFICULT TO FIX, PRIOR TO SIGNING THIS AGREEMENT, THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED BY SELLER IF BUYER FAILS TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT. THEREFORE, IF, AFTER THE SATISFACTION OR WAIVER OF ALL CONTINGENCIES PROVIDED FOR THE BUYERS BENEFIT, BUYER BREACHES THIS AGREEMENT, SELLER SHALL BE ENTITLED TO LIQUIDATED DAMAGES IN THE AMOUNT OF $100,000.00. UPON PAYMENT OF SAID SUM TO SELLER, BUYER SHALL BE RELEASED FROM ANY FURTHER LIABILITY TO SELLER, AND ANY ESCROW CANCELLATION FEES AND TITLE COMPANY CHARGES SHALL BE PAID BY SELLER. Buyer Initials Seller Initials 22. ARBITRATION OF DISPUTES. (This Arbitration of Disputes paragraph is applicable only if initiated by both Parties.) 22.1 ANY CONTROVERSY AS TO WHETHER SELLER IS ENTITLED TO THE LIQUIDATED DAMAGES AND/OR BUYER IS ENTITLED TO THE RETURN OF DEPOSIT MONEY, SHALL BE DETERMINED BY BINDING ARBITRATION BY, AND UNDER THE COMMERCIAL RULES OF THE AMERICAN ARBITRATION ASSOCIATION (COMMERCIAL RULES). ARBITRATION HEARINGS SHALL BE HELD IN THE COUNTY WHERE THE PROPERTY IS LOCATED. ANY SUCH CONTROVERSY SHALL BE ARBITRATED BY 3 ARBITRATORS WHO SHALL BE IMPARTIAL REAL ESTATE BROKERS WITH AT LEAST 5 YEARS OF FULL TIME EXPERIENCE IN BOTH THE AREA WHERE THE PROPERTY IS LOCATED AND THE TYPE OF REAL ESTATE THAT IS THE SUBJECT OF THIS AGREEMENT. THEY SHALL BE APPOINTED UNDER THE COMMERCIAL RULES. THE ARBITRATORS SHALL HEAR AND DETERMINE SAID CONTROVERSY IN ACCORDANCE WITH APPLICABLE LAW, THE INTENTION OF THE PARTIES AS EXPRESSED IN THIS AGREEMENT AND ANY AMENDMENTS THERETO, AND UPON THE EVIDENCE PRODUCED AT AN ARBITRATION HEARING. PRE-ARBITRATION DISCOVERY SHALL BE PERMITTED IN ACCORDANCE WITH THE COMMERCIAL RULES OR STATE LAW APPLICABLE TO ARBITRATION PROCEEDINGS. THE AWARD SHALL BE EXECUTED BY AT LEAST 2 OF THE 3 ARBITRATORS, BE RENDERED WITHIN 30 DAYS AFTER THE CONCLUSION OF THE HEARING, AND MAY INCLUDE ATTORNEYS FEES AND COSTS TO THE PREVAILING PARTY PER PARAGRAPH 16 HEREOF. JUDGMENT MAY BE ENTERED ON THE AWARD IN ANY COURT OF COMPETENT JURISDICTION NOTWITHSTANDING THE FAILURE OF A PARTY DULY NOTIFIED OF THE ARBITRATION HEARING TO APPEAR THEREAT. 22.2 BUYERS RESORT TO OR PARTICIPATION IN SUCH ARBITRATION PROCEEDINGS SHALL NOT BAR SUIT IN A COURT OF COMPETENT JURISDICTION BY THE BUYER FOR DAMAGES AND/OR SPECIFIC PERFORMANCE UNLESS AND UNTIL THE ARBITRATION RESULTS IN AN AWARD TO THE SELLER OF LIQUIDATED DAMAGES, IN WHICH EVENT SUCH AWARD SHALL ACT AS A BAR AGAINST ANY ACTION BY BUYER FOR DAMAGES AND/OR SPECIFIC PERFORMANCE. 22.3 NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE ARBITRATION OF DISPUTES PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE ARBITRATION OF DISPUTES PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. INITIALS INITIALS ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-9-8/11E |
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WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE ARBITRATION OF DISPUTES PROVISION TO NEUTRAL ARBITRATION. Buyer initial Seller Initial 23. Miscellaneous. 23.1 Binding Effect. This Agreement shall be binding on the Parties without regard to whether or not paragraphs 21 and 22 are initialed by both of the Parties. Paragraphs 21 and 22 are each incorporated into this Agreement only if initialed by both Parties at the time that the Agreement is executed. 23.2 Applicable Law. This Agreement shall be governed by, and paragraph 22.3 is amended to refer to, the laws of the state in which the Property is located. 23.3 Time of Essence. Time is of the essence of this Agreement. 23.4 Counterparts. This Agreement may be executed by Buyer and Seller in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Escrow Holder, after verifying that the counterparts are identical except for the signatures, is authorized and instructed to combine the signed signature pages on one of the counterparts, which shall then constitute the Agreement. 23.5 Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT. 23.6 Conflict. Any conflict between the printed provisions of this Agreement and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions. 23.7 See Addendum, Paragraph 3 1031 Exchange. Both Seller and Buyer Agree to cooperate with each other in the event that either or both wish to participate in a 1031 exchange. Any party initiating an exchange shall bear all costs of such exchange. 23.8 Days. Unless otherwise specifically indicated to the contrary, the word days as used in this Agreement shall mean and refer to calendar days. 24. Disclosures Regarding The Nature of a Real Estate Agency Relationship. Intentionally omitted. 24.1 The Parties and Brokers agree that their relationship(s) shall be governed by the principles set forth in the applicable sections of the California Civil Code, as summarized in paragraph 24.2. 24.2 When entering into a discussion with a real estate agent regarding a real estate transaction, a Buyer or Seller should from the outset understand what type of agency relationship or representation it has with the agent or agents in the transaction. Buyer and Seller acknowledge being advised by the Brokers in this transaction, as follows: (a) Sellers Agent . A Sellers agent under a listing agreement with the Seller acts as the agent for the Seller only. A Sellers agent or subagent has the following affirmative obligations: (1) To the Seller. A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Seller. (2) To the Buyer and the Seller: a. Diligent exercise of reasonable skills and care in performance of the agents duties. b. A duty of honest and fair dealing and good faith. c. A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above. (b) Buyers Agent. A Selling agent can, with a Buyers consent, agree to act as agent for the Buyer only. In these situations, the agent is not the Sellers agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the Seller. An agent acting only for a Buyer has the following affirmative obligations. (1) To the Buyer: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Buyer. (2) To the Buyer and the Seller : a. Diligent exercise of reasonable skills and care in performance of the agents duties. b. A duty of honest and fair dealing and good faith. c. A duty to disclose all facts know to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above. (c) Agent Representing Both Seller and Buyer. A real estate agent, either acting directly or through one or more associate licenses, can legally be the agent of both the Seller and the Buyer in a transaction, but only with the knowledge and consent of both the Seller and the Buyer. (1) In a dual agency situation, the agent has the following affirmative obligations to both the Seller and the Buyer: a. A fiduciary duty of utmost care, integrity, honest and loyalty in the dealings with either Seller or the Buyer. b. Other duties to the Seller and the Buyer as stated above in their respective sections (a) or (b) of this paragraph 24.2. (2) In representing both Seller and Buyer, the agent may not without the express permission of the respective Party, disclose to the other Party that the Seller will accept a price less than the listing price or that the Buyer will pay a price grater than the price offered. (3) The above duties of the agent in a real estate transaction do not relieve a Seller or Buyer from the responsibility to protect their own interests. Buyer and Seller should carefully read all agreements to assure that they adequately express their understanding of the transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional. (d) Further Disclosures. Throughout this transaction Buyer and Seller may receive more than one disclosure, depending upon the number o agents assisting in the transaction. Buyer and Seller should each read its contents each time it is presented, considering the relationship between them and the real estate in the agent in this transaction and that disclosure. Brokers have no responsibility with respect to any default or breach hereof by either Party. The Parties agree that no lawsuit or other legal proceeding involving any breach of duty, error or omission relating to this transaction may be brought against Broker more than one year or after the Date of Agreement and that the liability (including court costs and attorneys feet), of any Broker with respect to any broach of duty, error or omission relating to this Agreement shall not exceed Agreement; provided, however, that the foregoing limitation on misconduct of such Broker. 24.3 Confidential Information: Buyer and Seller agree to identify to Brokers as Confidential any communication or information given Brokers that is considered by such Party to be confidential. 25. Construction of Agreement . In construing this Agreement, all headings and titles are for the convenience of the Parties only and shall not be considered a part of this Agreement. Whenever required by the context, the singular shall include the plural and vice versa. Unless otherwise specifically indicated to the contrary, the word days as used in this Agreement shall mean and refer to calendar days. This Agreement shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it. 26 Additional Provisions: Additional provisions of this offer, if any, are as follows or are attached hereto by an addendum consisting of paragraph 1 through 9. (If there are no additional provisions write NONE.) INITIALS INITIALS ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-9-8/11E |
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WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE ARBITRATION OF DISPUTES PROVISION TO NEUTRAL ARBITRATION. Buyer initial Seller Initial 23. Miscellaneous. 23.1 Binding Effect. This Agreement shall be binding on the Parties without regard to whether or not paragraphs 21 and 22 are initialed by both of the Parties. Paragraphs 21 and 22 are each incorporated into this Agreement only if initialed by both Parties at the time that the Agreement is executed. 23.2 Applicable Law. This Agreement shall be governed by, and paragraph 22.3 is amended to refer to, the laws of the state in which the Property is located. 23.3 Time of Essence. Time is of the essence of this Agreement. 23.4 Counterparts. This Agreement may be executed by Buyer and Seller in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Escrow Holder, after verifying that the counterparts are identical except for the signatures, is authorized and instructed to combine the signed signature pages on one of the counterparts, which shall then constitute the Agreement. 23.5 Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT. 23.6 Conflict. Any conflict between the printed provisions of this Agreement and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions. 23.7 See Addendum, Paragraph 3 1031 Exchange. Both Seller and Buyer agree° to cooperate with each other in the event that either or both wish to participate in a 1031 exchange. Any party initiating an exchange shall bear all costs of such exchange. 23.8 Days. Unless otherwise specifically indicated to the contrary, the word days as used in this Agreement shall mean and refer to calendar days. 24. Disclosures Regarding The Nature of a Real Estate Agency Relationship. Intentionally omitted. 24.1 The Parties and Brokers agree that their relationship(s) shall be governed by the principles set forth in the applicable sections of the California Civil Code, as summarized in paragraph 24.2. 24.2 When entering into a discussion with a real estate agent regarding a real estate transaction, a Buyer or Seller should from the outset understand what type of agency relationship or representation it has with the agent or agents in the transactions. Buyer and Seller acknowledge being advised by the Brokers in this transaction, as follows: (a) Sellers Agent. A Sellers agent under a listing agreement with the Seller acts as the agent for the Seller only. A Sellers agent or subagent has the following affirmative obligations: (1) To the Seller. A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Seller. (2) To the Buyer and the Seller. a. Diligent exercise o reasonable skills and care in performance of the agents duties. b. A duty of honest and fair dealing and good faith. c. A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above. (b) Buyers Agent. A selling agent can, with a Buyers consent, agree to act as agent for the Buyer only. In these situations, the agent is not the Sellers agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the Seller. An agent acting only for a Buyer has the following affirmative obligations. (1) To the Buyer: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Buyer. (2) To the Buyer and the Seller : a. Diligent exercise of reasonable skills and care in performance of the agents duties. b. A duty of honest and fair dealing and good faith. c. A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above. (c) Agent Representing Both Seller and Buyer. A real estate agent, either acting directly or through one or more associate licenses, can legally be the agent of both the Seller and the Buyer in a transaction, but only with the knowledge and consent of both the Seller and the Buyer. (1) In a dual agency situation, the agent has the following affirmative obligations to both the seller and the Buyer: a. A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either Seller or the Buyer. b. Other duties to the Seller and the Buyer as stated above in their respective sections (a) or (b) of this paragraph 24.2. (2). In representing both Seller and Buyer, the agent may not without the express permission of the respective Party, disclose to the other Party that the Seller will accept a price less than the listing price or that the Buyer will pay a price greater than the price offered. (3) The above duties of the agent in a real estate transaction do not relive a Seller or Buyer from the responsibility to perfect their own interests. Buyer and Seller should carefully read all agreements to assure that they adequately express their understanding of the transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional. (d) Further Disclosure. Throughout this transaction Buyer and Seller may receive more than one disclosure, depending upon the number o agents assisting in the transaction. Buyer and Seller should each read its contents each time it is presented, considering the relationship between them and the real estate agent in this transaction and that disclosure. Brokers have no responsibility with respect to any default or breach hereof by either Party. The Parties agree that no lawsuit or other legal proceeding involving any breach of duty, error or omission relating to this transaction may be brought against Broker more than one year after the Date of Agreement and that the liability (including court costs and attorneys fees, of any Broker with respect to any broach of duty, error or omission relating to this Agreement shall not exceed the fee received by such Broker pursuant to this Agreement; provided, however, that the foregoing limitation on each Brokers liability shall not be applicable to any gross negligence or willful misconduct of such Broker. 24.3 Confidential Information: Buyer and Seller agree to identify to Brokers as Confidential any communication or information given Brokers that is considered by such Party to be confidential. 25. Construction of Agreement. In construing this Agreement, all headings and titles are for the convenience of the Parties only and shall not be considered a part of this Agreement. Whenever required by the context, the singular shall include the plural and vice versa. Unless otherwise specifically indicated to the contrary, the word days as used in this Agreement shall mean and refer to calendar days. This Agreement shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it. 26 Additional Provisions: Additional provisions of this offer, if any, are as follows or are attached hereto by an addendum consisting of paragraphs 1 through 9. (If there are no additional provisions write NONE.) PAGE 9 OF 11 INITIALS INITIALS C1 2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OF A-9-8/11E |
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Also attached hereto are Exhibit A (Legal Description of the Property), Exhibit B (the Form of Grant Deed), and Exhibit C (copy of the title commitment for the Property) ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS AGREEMENT OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO: 1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS AGREEMENT. 2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PROPERTY. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF, THE PROPERTY, THE INTEGRITY AND CONDITION OF ANY STRUCTURES AND OPERATING SYSTEMS, AND THE SUITABILITY OF THE PROPERTY FOR BUYERS INTENDED USE. WARNING: IF THE PROPERTY IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THIS AGREEMENT MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED. NOTE: 1. THIS FORM IS NOT FOR USE IN CONNECTION WITH THE SALE OF RESIDENTIAL PROPERTY. 2. IF THE BUYER IS A CORPORATION, IT IS RECOMMENDED THAT THIS AGREEMENT BE SIGNED BY TWO CORPORATE OFFICERS. The undersigned Buyer offers and agrees to buy the Property on the terms and conditions stated and acknowledges receipt of a copy hereof. BROKER: BUYER: Supreme Indiana Operations, Inc., Delaware corporation Attn: By: Title: Date Address: Name Printed: Matthew W. Title: Chief Financial Officer Telephone: Telephone: () Facsimile: () Facsimile: () Email: Email: Federal ID No. By: Date: Broker/Agent DRE License #: Name Printed: Title: Address: Telephone:() Facsimile:() Email: INITIALS ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-9-8/11E PAGE 10 OF 11 |
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Federal ID No. 27. Acceptance. 27.1 Seller accepts the foregoing offer to purchase the Property and hereby agrees to sell the Property to Buyer on the terms and conditions therein specified. 27.2 Seller acknowledge that Brokers have been retained to locate a Buyer and are the procuring cause of the purchase and sale of the properly set forth in this Agreement. In consideration of real estate brokerage service rendered by the Brokers, Sellers agrees to pay Brokers a real estate Brokerage fee in a sum equal to % of the Purchase Price to be divided between the Brokers as follows : Sellers Broker % and Buyers Broker %. This Agreement shall serve as an irrecoverable instruction to Escrow Holder to pay such Brokerage Fee to Brokers out of the proceeds accruing to the account of Seller at the Closing. 27.3 Seller acknowledges receipt of a copy hereof and authorizes the delivery of Broker to deliver a signed copy to Buyer. NOTE: A PROPERTY INFORMATION SHEET IS REQUIRED TO BE DELIVERED TO BUYER BY SELLER UNDER THIS AGREEMENT. BROKER: SELLER: BFG2011 Limited Liability Company, New Jersey limited liability company, doing business in California as 22135 Alessandro, LLC Attn: By: Title: Date: 12.14.12 Address: Name Printed: William J. Barret Title: President Telephone: ( ) Telephone: (732) 741 1500 Facsimile: ( ) Facsimile: ( ) Email: ( ) Email: [illegible] Federal ID No. By: Broker/Agent DRE License #: Date: 12.14.12 Name Printed: Ann C. W. Green Title: Secretary Address: 636, RIVER RD, FAIR HAVEN N J 07704 Telephone: (732) 741 1500 Facsimile: ( ) Email: [illegible] Federal ID No.: 45-1583871 NOTICE: These forms are often modified to meet changing requirements of law and industry needs. Always write or call to make sure you are utilizing the most current form: AIR Commercial Real Estate Association, 800 W 6th Street, Suite 800, Los Angeles, CA 90017. Telephone No. (213) 687-8777. Fax No.: (213) 687-8616. © Copyright 2003 By AIR Commercial Real Estate Association. All rights reserved. No part of these works may be reproduced in any form without permission in writing. INITIALS INITIALS ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-9-8/11 PAGE 11 OF 11 |
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ADDENDUM TO STANDARD OFFER, AGREEMENT AND ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE THIS ADDENDUM TO STANDARD OFFER, AGREEMENT AND ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE (Addendum) is made and entered into as of this 13th of December, 2012 by and between BFG2011 LIMITED LIABILITY COMPANY, a New Jersey limited liability company, doing business in California as 22135 ALESSANDRO, LLC (Seller), and SUPREME INDIANA OPERATIONS, INC., a Delaware corporation (Buyer), and is attached to and incorporated into that certain Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate (the Form Agreement). The Form Agreement and this Addendum are collectively referred to as the Agreement. Except as otherwise defined herein, all capitalized terms used herein shall have the meanings ascribed to them in the Form Agreement. To the extent that the provisions of this Addendum are inconsistent with the terms and conditions of the Form Agreement, the terms of this Addendum shall control. 1. Independent Consideration. Buyer shall deliver to Seller, concurrently with Buyers execution and delivery of this Agreement, the sum of $100.00 as independent consideration (the Independent Consideration) for Sellers execution of this Agreement and granting to Buyer the right to inspect the Property prior to the Inspection Deadline as provided in this Agreement. The Independent Consideration shall be non-refundable to Buyer in all circumstances (including any termination of this Agreement due to a Seller default) and shall not be applicable to the Purchase Price at Closing. 2. Date and Manner of Closing. Escrow Holder shall close the Escrow, provided that all conditions to closing contained in this Agreement have been satisfied (or deemed satisfied) or waived in writing, no later than 11:00 a.m. Pacific time on December 20, 2012, by recording and delivering all documents and funds as set forth in Paragraph 8 of the Form Agreement. 3. Costs of Transaction. Notwithstanding any provision in this Agreement to the contrary, the parties agree that Buyer shall be responsible for all costs and expenses relating to the purchase and sale of the Property, including, without limitation: any county or city transfer taxes relating to the purchase and sale of the Property; any escrow charges; any recording fees; any title premium costs, any loan costs (including, without limitation, any points or fees payable for any loan secured by the Property, the Buyers title insurance policy, and the title insurance policy for Buyers lender and any endorsements to any of the foregoing); any brokerage commissions or finders fees relating to the purchase and sale of the Property and the transactions contemplated herein; any diligence costs incurred by Seller; and any costs incurred by Seller (including, without limitation, attorneys fees) relating to or arising out of the preparation, negotiation and closing of this Agreement and/or any other transactions contemplated under this Agreement. This Paragraph 3 shall not be deemed to limit Paragraph 8.5 of the Form Agreement. 4. Exchange. Either party may decide to have this transaction qualify as part of a tax deferred exchange under Section 1031 of the Internal Revenue Code, in which case the other party agrees to cooperate with such exchange; provided, however, the exchanging party(ies) shall |
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indemnify and hold the non-exchanging parties harmless from any additional third party cost or expense incurred in connection with such exchange, and no party will be required to any way act as a purchaser or seller of any property other than the Property. This indemnity and hold- harmless shall survive the Closing. The inability of any party to effect an exchange shall not relieve that party of its obligation to conclude the transactions contemplated by this Agreement. Subject to the preceding, this Agreement shall inure to the benefit of and be binding upon the parties and their respective heirs, successors and assigns. 5. AS-IS; Release. (a) It is expressly understood and agreed that Buyer is acquiring the Property AS-IS, WHERE-IS and WITH ALL FAULTS in its present state and condition, without any representations or warranties from Seller of any kind whatsoever, either express or implied, except as specifically provided in the Form Agreement. In particular, neither Seller nor any of Sellers employees, agents, or representatives (collectively, the Seller Parties) has made any representation or warranty respecting the use, condition, title, operation or management of the Property, or compliance with any applicable laws relating to zoning, subdivision, planning, building, fire, safety, earthquake, health or environmental matters, air quality, odors, the presence or absence of toxic or hazardous waste or materials, or compliance with any other covenants, conditions and restrictions (whether or not of record). No patent or latent condition affecting the Property in any way shall give rise to any right of damages, rescission, or otherwise against any of the Seller Parties. (b) Upon the Closing, except as expressly set forth in the Form Agreement, Buyer shall be deemed to have waived any and all objections to the Property, including any physical, legal, structural, economic and environmental characteristics and conditions of the Property, whether or not such conditions would be disclosed by a reasonable and diligent inspection. Except as expressly set forth in the Form Agreement, Buyer acknowledges that none of the Seller Parties have made any representations, warranties or agreements to or with Buyer on behalf of Seller as to any matters concerning the Property. Buyer is relying solely upon its own inspection, investigation and analysis of all of the foregoing matters in purchasing the Property. (c) Except for breaches of Sellers express representations, warranties and covenants expressly set forth in the Form Agreement, from and after the Closing, Buyer hereby waives, releases, remises, acquits, and forever discharges each of the Seller Parties and their respective attorneys and agents, and their respective partners and all of their managers, officers, directors, members, heirs, successors, personal representatives and assigns, of, for and from any and all action, suits, legal or administrative orders or proceedings, demands, damages, punitive damages, loss, costs, liabilities and expenses, which concern or in any way relate to the condition of the Property (including, without limitation, the physical, legal, structural, economic or environmental condition), the existence of any hazardous material thereon, or the release or threatened release of any hazardous material therefrom, whether known or unknown, and whether existing prior to, at or after the Closing, including, but not limited to, any claims, causes of action, rights, liabilities and remedies under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., amended by the Superfund Amendment of 1996, 42 U.S.C. 9613, as the same may be further amended (CERCLA). It is the intention of the parties pursuant to this release that any and all responsibilities and obligations of each of the Seller Parties, and any and all rights, claims, rights of action, causes of action, demands or legal rights of any kind of Buyer, its successors, assigns or any affiliated entity of Buyer or of any tenants of the Property, arising by virtue of the condition of the Property (including, without limitation, the physical, legal, structural, economic or environmental condition), the existence of any hazardous material thereon, or any |
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release or threatened release of any hazardous material therefrom, whether known or unknown, and whether existing prior to, at or after the Closing, including, but not limited to, any claims, causes of action, rights, liabilities and remedies under CERCLA, are by this release provision declared null and void and of no present or future force and effect as to the parties. Subject to the foregoing, Buyer expressly waives any and all rights, which it may have under Section 1542 of the California Civil Code, which provides as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. SUBJECT TO THE FOREGOING, BUYER BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTE OR COMMON LAW PRINCIPLE OF SIMILAR EFFECT. BUYER The agreement of the parties under this Paragraph 5 shall survive the Closing and shall not be deemed merged into the grant deed. 6. Conditions to the Closing. Without limiting or modifying any conditions set forth in the Form Agreement, the parties acknowledge and agree that Buyers obligation to consummate the purchase of the Property are subject to the satisfaction of the following additional conditions: (a) The issuance of (or the unconditional commitment to issue) a CLTA Standard Owners Policy of Title Insurance (Title Policy) by the Title Company insuring the interest of Buyer as owner of the Property in the full amount of the Purchase Price for the Property, showing title to the Property vested in Buyer subject only to the matters set forth in the commitment for title insurance attached hereto as Exhibit C and by this reference incorporated herein. Without limiting the foregoing, Seller agrees that, concurrently with the Close of Escrow and as a condition to the Close of Escrow, Seller shall cause the deed of trust in favor of Rumson-Fair Haven Bank & Trust encumbering the Property to be satisfied. In connection with this Paragraph 6(a), the parties acknowledge and reaffirm that Paragraph 4(d) of Rider 1 of the Lease. (b) Sellers execution and delivery of all of the documents and instruments required to consummate this purchase and sale of the Property (including, without limitation, any required grant deeds, certificates required under Paragraph 10.2 of the Form Agreement and transfers of any licenses and/or permits pursuant to which Seller is presently operating the Property). (c) The accuracy of all of the representations and warranties in any material respect made by Seller hereunder as of the Close of Escrow. (d) There has been no material adverse change in the Property from or after the expiration of Buyers Contingencies under Paragraph 9.1 of the Form Agreement. |
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(e) Buyer obtains financing for the purchase of the Property on terms and conditions acceptable to Buyer. If and to the extent that any condition to Buyers obligation to consummate the purchase of the Property fails to be satisfied, then Buyer may either (i) waive such condition and proceed with the close of escrow, or (ii) terminate the Agreement in which event Buyers earnest money deposit shall be immediately refunded and neither party shall have any further obligation to the other party. 7. Existing Lease Agreement. The parties acknowledge and understand that Buyer is presently leasing the Property from Seller pursuant to that certain Standard Industrial/Commercial Single-Tenant Lease Net dated as of May 12, 2011 (the Lease). The parties acknowledge and agree as follows concerning the Lease: (a) Buyer represents that Buyer is the tenant under the Lease and has not assigned, encumbered or otherwise transferred any of its rights under the Lease (including, without limitation, the option to purchase the Property under Paragraph 62 of the Lease. (b) This Agreement is being entered into in accordance with Paragraph 62 and Rider 1 to the Lease. In the event of any conflict or inconsistency between this Agreement and the terms of Paragraph 62 and Rider 1 to the Lease, the terms of this Agreement shall govern and control. (c) As of the Close of Escrow, the Lease will be terminated and the parties shall have no further obligations to each other than obligations under the Lease which are intended to survive the termination of the Lease (including, without limitation, Paragraphs 8.7 and 8.8 of the Lease). (d) If the Close of Escrow fails to occur and if this Agreement terminates, (i) the Lease shall remain in full force and effect and (ii) without limiting part (i), Buyer shall not be deemed to have executed the purchase option under Paragraph 62 of the Lease. (e) Without limiting any obligations of Buyer under the Lease and/or any other agreements between Seller and Buyer, Buyer shall indemnify, defend and hold harmless Buyer and Sellers managers, members, officers, directors, employees and agents from and against any losses, damages (whether general, punitive or otherwise), liabilities, claims, causes of action, judgments and other costs and expenses, including attorneys fees and court costs, incurred by or liability imposed on Buyer relating to or arising out the condition of the Property as of the Close of Escrow (including, without limitation, the existence of any Hazardous Materials on, under or about the Property) and/or relating to or arising out of any breach by Buyer of its obligations under the Lease. The indemnification under this Paragraph shall survive the Close of Escrow. Should Buyer at any time default in or fail to perform or observe any of its obligations under this Paragraph, after written notice thereof from Seller and reasonable opportunity to cure such default or failure to perform, Seller shall have the right, but not the duty, without limitation upon any of Sellers rights pursuant thereto, to perform the same, and Buyer agrees to pay to Seller, on demand, all costs and expenses reasonably incurred by Seller in connection therewith, including, without limitation, reasonable |
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attorneys fees, together with interest from the date of expenditure at the annual rate of interest of ten percent (10%). 8. Interpretation; Facsimile Execution. This Agreement shall be deemed to have been drafted by both parties and shall not be interpreted against any person as drafter. In addition, prior drafts of this Agreement shall not be used in any way to interpret the provisions hereof. A signature on this Agreement transmitted by facsimile shall be deemed the equivalent of an original wet ink signature for all purposes. 9. Exhibits. Attached hereto, and incorporated herein, are the legal description of the Property, the form of the Grant Deed, and the form of the title commitment for the Property as Exhibits A, B and C, respectively. IN WITNESS WHEREOF, the parties have executed this Addendum to Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate concurrently with the execution of the Standard Offer Agreement and Escrow Instructions for the Purchase of Real Estate. SELLER: BFG2011 Limited Liability Company, a New Jersey limited liability company, doing business in California as 22135 Alessandro, LLC By: Name: William J. Barrett Title: President By: Name. Ann C. W. Green Title: Secretary BUYER: Supreme Indiana Operations, Inc., a Delaware corporation By: Name: Matthew W. Long Title: Chief Financial Officer |
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attorneys fees, together with interest from the date of expenditure at the annual rate of interest of ten percent (10%). 8. Interpretation; Facsimile Execution. This Agreement shall be deemed to have been drafted by both parties and shall not be interpreted against any person as drafter. In addition, prior drafts of this Agreement shall not be used in any way to interpret the provisions hereof. A signature on this Agreement transmitted by facsimile shall be deemed the equivalent of an original wet ink signature for all purposes. 9. Exhibits. Attached hereto, and incorporated herein, are the legal description of the Property, the form of the Grant Deed, and the form of the title commitment for the Property as Exhibits A, B and C, respectively. IN WITNESS WHEREOF, the parties have executed this Addendum to Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate concurrently with the execution of the Standard Offer Agreement and Escrow Instructions for the Purchase of Real Estate. SELLER: BFG2011 Limited Liability Company, a New Jersey limited liability company, doing business in California as 22135 Alessandro, LLC By: Name: William J. Barrett Title: President By: Name: Ann C. W. Green Title: Secretary BUYER: Supreme Indiana Operations, Inc., a Delaware corporation By: Name: Matthew W. Long Title: Chief Financial Officer |
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EXHIBIT A Legal Description The land referred to in this Agreement is in the State of California, County of Riverside and is described as follows: PARCEL 1: THAT PORTION OF LOT 2 OF BLOCK 13 OF THE ALESSANDRO TRACT, IN THE CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY MAP ON FILE IN BOOK 6 PAGE 13 OF MAPS, RECORDS OF SAN BERNARDINO COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE EAST LINE OF SAID LOT 2 ALONG THE SOUTH LINE OF THE NORTHERLY RECTANGULAR 60.00 FEET CONVEYED TO THE COUNTY OF RIVERSIDE PER INSTRUMENT NO. 65695, RECORDED JUNE 18, 1971, SAID POINT ALSO SHOWN AS THE NORTHEAST CORNER OF SAID LOT AND DESCRIBED WITH A FOUND 1 I.P. AND PLASTIC PLUG RCE 13116.. . ON RECORD OF SURVEY RECORDED IN BOOK 84 PAGE 1, RECORDS OF RIVERSIDE COUNTY CALIFORNIA; THENCE SOUTH 88° 42 32 WEST ALONG THE NORTH LINE OF SAID LOT AS SHOWN ON SAID RECORD OF SURVEY A DISTANCE OF 495.56 FEET; THENCE SOUTH 01° 17 29 EAST A DISTANCE OF 80.00 FEET; THENCE SOUTH 56° 38 33 WEST A DISTANCE OF 161.29 FEET; THENCE SOUTH 00° 12 45 WEST A DISTANCE OF 424.18 FEET; THENCE NORTH 88° 43 24 EAST A DISTANCE OF 627.22 FEET TO A POINT ALONG THE EAST LINE OF SAID LOT 2; THENCE NORTH 0° 16 40 EAST ALONG SAID EAST LINE A DISTANCE OF 590.05 FEET TO THE POINT OF BEGINNING AND THE END OF THIS DESCRIPTION. SAID DESCRIPTION IS ALSO KNOWN AS PARCEL 1 OF PARCEL MAP WAIVER/CERTIFICATE OF COMPLIANCE NO. 2114, RECORDED JUNE 23, 1995 AS INSTRUMENT NO. 204095 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. PARCEL 2: THAT PORTION OF LOT 2 OF BLOCK 13 OF THE ALESSANDRO TRACT, IN THE CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY MAP ON FILE IN BOOK 6 PAGE 13 OF MAPS, RECORDS OF SAN BERNARDINO COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: COMMENCING AT A POINT ON THE EAST LINE OF SAID LOT 2 ALONG THE SOUTH LINE OF THE NORTHERLY RECTANGULAR 60.00 FEET CONVEYED TO THE COUNTY OF RIVERSIDE AS INSTRUMENT NO. 65695, RECORDED JUNE 18, 1971, SAID POINT ALSO SHOWN AS THE NORTHEAST CORNER OF SAID LOT AND DESCRIBED WITH A FOUND 1 I.P. AND PLASTIC PLUG RCE 13116. . ON RECORD OF SURVEY RECORDED IN BOOK 84 PAGE 1, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA; THENCE SOUTH 88° 42 32 WEST ALONG THE NORTH LINE OF SAID LOT AS SHOWN ON SAID RECORD OF SURVEY A DISTANCE OF 495.56 FEET; THENCE SOUTH 01° 17 29 EAST DISTANCE OF 80.00 FEET; THENCE SOUTH 56° 38 33 WEST A DISTANCE OF 161.29 FEET TO THE POINT OF BEGINNING; THENCE SOUTH 0° 12 45 WEST A DISTANCE OF 424.18 FEET; |
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THENCE NORTH 88° 43 24 EAST A DISTANCE OF 627.22 FEET TO A POINT ON THE EAST LINE OF SAID LOT 2; THENCE SOUTH 00° 16 40 WEST ALONG SAID EAST LINE A DISTANCE OF 656.41 FEET TO THE SOUTHEAST CORNER OF SAID LOT 2; THENCE SOUTH 89° 44 11 WEST ALONG THE SOUTH LINE OF SAID LOT 2 A DISTANCE OF 698.00 FEET TO A POINT LYING 624.81 FEET FROM THE SOUTHWEST CORNER OF SAID LOT 2, AS MEASURED ALONG SAID SOUTH LINE; THENCE NORTH 01° 1100 WEST A DISTANCE OF 613.83 FEET; THENCE NORTH 88° 43 24 EAST A DISTANCE OF 39.84 FEET; THENCE NORTH 00° 26 21 WEST A DISTANCE OF 455.44 FEET; THENCE SOUTH 89° 47 15 EAST A DISTANCE OF 52.02 FEET TO THE POINT OF BEGINNING AND THE END OF THIS DESCRIPTION. SAID DESCRIPTION IS ALSO KNOWN AS PARCEL 4 OF PARCEL MAP WAIVER/CERTIFICATE OF COMPLIANCE NO.2114, RECORDED JUNE 23, 1995 AS INSTRUMENT NO. 204095 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. PARCEL 3: AN UNDIVIDED 2/3RDS INTEREST IN AND TO THE FOLLOWING DESCRIBED PROPERTY: THAT PORTION OF LOT 2 OF BLOCK 13 OF THE ALESSANDRO TRACT, IN THE CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY MAP ON FILE IN BOOK 6 PAGE 13 OF MAPS, RECORDS OF SAN BERNARDINO COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: COMMENCING AT A POINT ON THE EAST LINE OF SAID LOT 2 ALONG THE SOUTH LINE OF THE NORTHERLY RECTANGULAR 60.00 FEET CONVEYED TO THE COUNTY OF RIVERSIDE, AS INSTRUMENT NO. 65695 RECORDED JUNE18, 1971, SAID POINT ALSO SHOWN AS THE NORTHEAST CORNER OF SAID LOT AND DESCRIBED WITH A FOUND 1 I.P. AND PLASTIC PLUG RCE 13116. . . ON RECORD OF SURVEY RECORDED IN BOOK 84 PAGE 1, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA; THENCE SOUTH 88° 42 32 WEST ALONG THE NORTH LINE OF SAID LOT AS SHOWN ON SAID RECORD OF SURVEY A DISTANCE OF 495.56 FEET TO THE TRUE POINT OF BEGINNING; THENCE SOUTH 01° 17 29 EAST A DISTANCE OF 80.00 FEET; THENCE SOUTH 56° 38 33 WEST A DISTANCE OF 161.29 FEET; THENCE NORTH 89° 47 15 WEST A DISTANCE OF 52.02 FEET; THENCE NORTH 47° 36 28 EAST A DISTANCE OF 170.77 FEET; THENCE NORTH 01° 17 29 WEST A DISTANCE OF 52.00 FEET TO A POINT ON SAID NORTH LINE; THENCE NORTH 88° 42 32 EAST ALONG SAID NORTH LINE A DISTANCE OF 60.00 FEET TO THE POINT OF BEGINNING AND THE END OF THIS DESCRIPTION. SAID DESCRIPTION IS ALSO KNOWN AS PARCEL A OF PARCEL MAP WAIVER/ CERTIFICATE OF COMPLIANCE NO.2114, RECORDED JUNE 23, 1995 AS INSTRUMENT NO. 204095 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. |
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EXHIBIT B Grant Deed RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Supreme Indiana Operations, Inc. 2581 Kercher Road Goshen, IN 46528 Attention: John Dorbin MAIL TAX STATEMENT TO: Supreme Indiana Operations, Inc. 2581 Kercher Road Goshen, IN 46528 Attention: Jeffrey D. Mowery (Space Above Line for Recorders Use Only) APN: 297-130-034-1, 297-130-037-429 and 297-130-038-5 GRANT DEED In accordance with Section 11932 of the California Revenue and Taxation Code, Grantor has declared the amount of the transfer tax which is due by a separate statement which is not being recorded with this Grant Deed. FOR VALUE RECEIVED, BFG2011 LIMITED LIABILITY COMPANY, a New Jersey limited liability company, doing business in California as 22135 Alessandro, LLC (Grantor), grants to SUPREME INDIANA OPERATIONS, INC., a Delaware corporation (Grantee), all that certain real property situated in the City of Moreno Valley, County of Riverside, State of California, described on Exhibit A attached hereto and by this reference incorporated herein (the Property). 1 |
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IN WITNESS WHEREOF, the Grantor has executed this Grant Deed on the date set forth below to be effective as of December , 2012. BFG2011 Limited Liability Company, a New Jersey limited liability company, doing business in California as 22135 Alessandro, LLC By: Name: Title: Date: STATE OF ) ) SS. COUNTY OF ) On December , 2012, before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) |
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Exhibit A LEGAL DESCRIPTION PARCEL 1: THAT PORTION OF LOT 2 OF BLOCK 13 OF THE ALESSANDRO TRACT, IN THE CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY MAP ON FILE IN BOOK 6 PAGE 13 OF MAPS, RECORDS OF SAN BERNARDINO COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE EAST LINE OF SAID LOT 2 ALONG THE SOUTH LINE OF THE NORTHERLY RECTANGULAR 60.00 FEET CONVEYED TO THE COUNTY OF RIVERSIDE PER INSTRUMENT NO. 65695, RECORDED JUNE 18, 1971, SAID POINT ALSO SHOWN AS THE NORTHEAST CORNER OF SAID LOT AND DESCRIBED WITH A FOUND 1 I.P. AND PLASTIC PLUG RCE 13116. ON RECORD OF SURVEY RECORDED IN BOOK 84 PAGE 1, RECORDS OF RIVERSIDE COUNTY CALIFORNIA; THENCE SOUTH 88° 42 32 WEST ALONG THE NORTH LINE OF SAID LOT AS SHOWN ON SAID RECORD OF SURVEY A DISTANCE OF 495.56 FEET; THENCE SOUTH 01° 17 29 EAST A DISTANCE OF 80.00 FEET; THENCE SOUTH 56° 38 33 WEST A DISTANCE OF 161.29 FEET; THENCE SOUTH 00° 12 45 WEST A DISTANCE OF 424.18 FEET; THENCE NORTH 88° 43 24 EAST A DISTANCE OF 627.22 FEET TO A POINT ALONG THE EAST LINE OF SAID LOT 2; THENCE NORTH 0° 16 40 EAST ALONG SAID EAST LINE A DISTANCE OF 590.05 FEET TO THE POINT OF BEGINNING AND THE END OF THIS DESCRIPTION. SAID DESCRIPTION IS ALSO KNOWN AS PARCEL 1 OF PARCEL MAP WAIVER/CERTIFICATE OF COMPLIANCE NO. 2114, RECORDED JUNE 23, 1995 AS INSTRUMENT NO. 204095 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. PARCEL 2: THAT PORTION OF LOT 2 OF BLOCK 13 OF THE ALESSANDRO TRACT, IN THE CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY MAP ON FILE IN BOOK 6 PAGE 13 OF MAPS, RECORDS OF SAN BERNARDINO COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: COMMENCING AT A POINT ON THE EAST LINE OF SAID LOT 2 ALONG THE SOUTH LINE OF THE NORTHERLY RECTANGULAR 60.00 FEET CONVEYED TO THE COUNTY OF RIVERSIDE AS INSTRUMENT NO. 65695, RECORDED JUNE 18, 1971, SAID POINT ALSO SHOWN AS THE NORTHEAST CORNER OF SAID LOT AND DESCRIBED WITH A FOUND 1 I.P. AND PLASTIC PLUG RCE 13116. ON RECORD OF SURVEY RECORDED IN BOOK 84 PAGE 1, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA; A-1 |
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THENCE SOUTH 88° 42 32 WEST ALONG THE NORTH LINE OF SAID LOT AS SHOWN ON SAID RECORD OF SURVEY A DISTANCE OF 495.56 FEET; THENCE SOUTH 01° 17 29 EAST A DISTANCE OF 80.00 FEET; THENCE SOUTH 56° 38 33 WEST A DISTANCE OF 161.29 FEET TO THE POINT OF BEGINNING; THENCE SOUTH 0° 12 45 WEST A DISTANCE OF 424.18 FEET; THENCE NORTH 88° 43 24 EAST A DISTANCE OF 627.22 FEET TO A POINT ON THE EAST LINE OF SAID LOT 2; THENCE SOUTH 00° 16 40 WEST ALONG SAID EAST LINE A DISTANCE OF 656.41 FEET TO THE SOUTHEAST CORNER OF SAID LOT 2; THENCE SOUTH 89° 44 11 WEST ALONG THE SOUTH LINE OF SAID LOT 2 A DISTANCE OF 698.00 FEET TO A POINT LYING 624.81 FEET FROM THE SOUTHWEST CORNER OF SAID LOT 2, AS MEASURED ALONG SAID SOUTH LINE; THENCE NORTH 01° 1100 WEST A DISTANCE OF 613.83 FEET; THENCE NORTH 88° 43 24 EAST A DISTANCE OF 39.84 FEET; THENCE NORTH 00° 26 21 WEST A DISTANCE OF 455.44 FEET; THENCE SOUTH 89° 47 15 EAST A DISTANCE OF 52.02 FEET TO THE POINT OF BEGINNING AND THE END OF THIS DESCRIPTION. SAID DESCRIPTION IS ALSO KNOWN AS PARCEL 4 OF PARCEL MAP WAIVER/CERTIFICATE OF COMPLIANCE NO. 2114, RECORDED JUNE 23, 1995 AS INSTRUMENT NO. 204095 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. PARCEL 3: AN UNDIVIDED 2/3RDS INTEREST IN AND TO THE FOLLOWING DESCRIBED PROPERTY: THAT PORTION OF LOT 2 OF BLOCK 13 OF THE ALESSANDRO TRACT, IN THE CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY MAP ON FILE IN BOOK 6 PAGE 13 OF MAPS, RECORDS OF SAN BERNARDINO COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: COMMENCING AT A POINT ON THE EAST LINE OF SAID LOT 2 ALONG THE SOUTH LINE OF THE NORTHERLY RECTANGULAR 60.00 FEET CONVEYED TO THE COUNTY OF RIVERSIDE, AS INSTRUMENT NO. 65695 RECORDED JUNE18, 1971, SAID POINT ALSO SHOWN AS THE NORTHEAST CORNER OF SAID LOT AND DESCRIBED WITH A FOUND 1 I.P. AND PLASTIC PLUG RCE 13116. ON RECORD OF SURVEY RECORDED IN BOOK 84 PAGE 1, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA; THENCE SOUTH 88° 42 32 WEST ALONG THE NORTH LINE OF SAID LOT AS SHOWN ON SAID RECORD OF SURVEY A DISTANCE OF 495.56 FEET TO THE TRUE POINT OF BEGINNING; THENCE SOUTH 01° 17 29 EAST A DISTANCE OF 80.00 FEET; THENCE SOUTH 56° 38 33 WEST A DISTANCE OF 161.29 FEET; THENCE NORTH 89° 47 15 WEST A DISTANCE OF 52.02 FEET; THENCE NORTH 47° 36 28 EAST A DISTANCE OF 170.77 FEET; THENCE NORTH 01° 17 29 WEST A DISTANCE OF 52.00 FEET TO A POINT ON SAID NORTH LINE; THENCE NORTH 88° 42 32 EAST ALONG SAID NORTH LINE A DISTANCE OF 60.00 FEET TO THE POINT OF BEGINNING AND THE END OF THIS DESCRIPTION. |
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SAID DESCRIPTION IS ALSO KNOWN AS PARCEL A OF PARCEL MAP WAIVER/ CERTIFICATE OF COMPLIANCE NO. 2114, RECORDED JUNE 23, 1995 AS INSTRUMENT NO. 204095 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. |
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Exhibit C Commitment for Title Insurance |
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Site No.: 05 NBU No.: 21203121 Local No.: 00000263-K26 Issued: 10/24/2012 CHICAGO COMMERCIAL CENTER CHICAGO TITLE INSURANCE COMPANY COMMITMENT FOR TITLE INSURANCE SCHEDULE A 1. The effective date of this Commitment is: October 16, 2012 at 7:30 am 2. The proposed form of policy (or policies) to be issued is: ALTA Owners (REV. 06/17/06) ALTA Loan (REV. 06/17/06) 3. The proposed insured value of the policy (or policies) to be issued is: Owners: To Be Determined Loan: To Be Determined 4. The proposed insured for the policy (or policies) is: Owners: To Be Determined Loan: To Be Determined 5. The estate or interest in the land described or referred to in the Commitment and covered herein is: A Fee 6. Title to said estate or interest at the date hereof is vested in: BFG2011, Limited Liability Company, a New Jersey limited liability company doing business in California as 22135 Alessandro, LLC 7. The land referred to in this policy is described as follows: (See Exhibit A attached) |
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Site No.: 05 NBU No.: 21203121 Local No.: 00000263-K26 Issued: 10/24/2012 EXHIBIT A LEGAL DESCRIPTION The land referred to in this report is situated in the State of California, County of Riverside and is described in the Legal Description, attached hereto: PARCEL 1: THAT PORTION OF LOT 2 OF BLOCK 13 OF THE ALESSANDRO TRACT, IN THE CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY MAP ON FILE IN BOOK 6 PAGE 13 OF MAPS, RECORDS OF SAN BERNARDINO COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE EAST LINE OF SAID LOT 2 ALONG THE SOUTH LINE OF THE NORTHERLY RECTANGULAR 60.00 FEET CONVEYED TO THE COUNTY OF RIVERSIDE PER INSTRUMENT NO. 65695, RECORDED JUNE 18, 1971, SAID POINT ALSO SHOWN AS THE NORTHEAST CORNER OF SAID LOT AND DESCRIBED WITH A FOUND 1 IP. AND PLASTIC PLUG RCE 13116. ON RECORD OF SURVEY RECORDED IN BOOK 84 PAGE 1, RECORDS OF RIVERSIDE COUNTY CALIFORNIA; THENCE SOUTH 88° 42 32 WEST ALONG THE NORTH LINE OF SAID LOT AS SHOWN ON SAID RECORD OF SURVEY A DISTANCE OF 495.56 FEET; THENCE SOUTH 01° 17 29 EAST A DISTANCE OF 80.00 FEET; THENCE SOUTH 56° 38 33 WEST A DISTANCE OF 161.29 FEET; THENCE SOUTH 00° 12 45 WEST A DISTANCE OF 424.18 FEET; THENCE NORTH 88° 43 24 EAST A DISTANCE OF 627.22 FEET TO A POINT ALONG THE EAST LINE OF SAID LOT 2; THENCE NORTH 0° 16 40 EAST ALONG SAID EAST LINE A DISTANCE OF 590.05 FEET TO THE POINT OF BEGINNING AND THE END OF THIS DESCRIPTION. SAID DESCRIPTION IS ALSO KNOWN AS PARCEL 1 OF PARCEL MAP WAIVER/CERTIFICATE OF COMPLIANCE NO. 2114, RECORDED JUNE 23, 1995 AS INSTRUMENT NO. 204095 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. PARCEL 2: THAT PORTION OF LOT 2 OF BLOCK 13 OF THE ALESSANDRO TRACT, IN THE CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY MAP ON FILE IN BOOK 6 PAGE 13 OF MAPS, RECORDS OF SAN BERNARDINO COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: COMMENCING AT A POINT ON THE EAST LINE OF SAID LOT 2 ALONG THE SOUTH LINE OF THE NORTHERLY RECTANGULAR 60.00 FEET CONVEYED TO THE COUNTY OF RIVERSIDE AS INSTRUMENT NO. 65695, RECORDED JUNE 18, 1971, SAID POINT ALSO SHOWN AS THE NORTHEAST CORNER OF SAID LOT AND DESCRIBED WITH A FOUND 1 I.P. AND PLASTIC PLUG RCE 13116. ON RECORD OF SURVEY RECORDED IN BOOK 84 PAGE 1, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA; THENCE SOUTH 88° 42 32 WEST ALONG THE NORTH LINE OF SAID LOT AS SHOWN ON SAID RECORD OF SURVEY A DISTANCE OF 495.56 FEET; THENCE SOUTH 01° 17 29 EAST A |
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Site No.: 05 NBU No.: 21203121 Local No.: 00000263-K26 Issued: 10/24/2012 DISTANCE OF 80.00 FEET; THENCE SOUTH 56° 38 33 WEST A DISTANCE OF 161.29 FEET TO THE POINT OF BEGINNING; THENCE SOUTH 0° 12 45 WEST A DISTANCE OF 424.18 FEET; THENCE NORTH 88° 43 24 EAST A DISTANCE OF 627.22 FEET TO A POINT ON THE EAST LINE OF SAID LOT 2; THENCE SOUTH 00° 16 40 WEST ALONG SAID EAST LINE A DISTANCE OF 656.41 FEET TO THE SOUTHEAST CORNER OF SAID LOT 2; THENCE SOUTH 89° 44 11 WEST ALONG THE SOUTH LINE OF SAID LOT 2 A DISTANCE OF 698.00 FEET TO A POINT LYING 624.81 FEET FROM THE SOUTHWEST CORNER OF SAID LOT 2, AS MEASURED ALONG SAID SOUTH LINE; THENCE NORTH 01° 1100 WEST A DISTANCE OF 613.83 FEET; THENCE NORTH 88° 43 24 EAST A DISTANCE OF 39.84 FEET; THENCE NORTH 00° 26 21 WEST A DISTANCE OF 455.44 FEET; THENCE SOUTH 89° 47 15 EAST A DISTANCE OF 52.02 FEET TO THE POINT OF BEGINNING AND THE END OF THIS DESCRIPTION. SAID DESCRIPTION IS ALSO KNOWN AS PARCEL 4 OF PARCEL MAP WAIVER/CERTIFICATE OF COMPLIANCE NO. 2114, RECORDED JUNE 23, 1995 AS INSTRUMENT NO. 204095 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. PARCEL 3: AN UNDIVIDED 2/3RDS INTEREST IN AND TO THE FOLLOWING DESCRIBED PROPERTY: THAT PORTION OF LOT 2 OF BLOCK 13 OF THE ALESSANDRO TRACT, IN THE CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY MAP ON FILE IN BOOK 6 PAGE 13 OF MAPS, RECORDS OF SAN BERNARDINO COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: COMMENCING AT A POINT ON THE EAST LINE OF SAID LOT 2 ALONG THE SOUTH LINE OF THE NORTHERLY RECTANGULAR 60.00 FEET CONVEYED TO THE COUNTY OF RIVERSIDE, AS INSTRUMENT NO. 65695 RECORDED JUNE18, 1971, SAID POINT ALSO SHOWN AS THE NORTHEAST CORNER OF SAID LOT AND DESCRIBED WITH A FOUND 1 I.P. AND PLASTIC PLUG RCE 13116. ON RECORD OF SURVEY RECORDED IN BOOK 84 PAGE 1, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA; THENCE SOUTH 88° 42 32 WEST ALONG THE NORTH LINE OF SAID LOT AS SHOWN ON SAID RECORD OF SURVEY A DISTANCE OF 495.56 FEET TO THE TRUE POINT OF BEGINNING; THENCE SOUTH 01° 17 29 EAST A DISTANCE OF 80.00 FEET; THENCE SOUTH 56° 38 33 WEST A DISTANCE OF 161.29 FEET; THENCE NORTH 89° 47 15 WEST A DISTANCE OF 52.02 FEET; THENCE NORTH 47° 36 28 EAST A DISTANCE OF 170.77 FEET; THENCE NORTH 01° 17 29 WEST A DISTANCE OF 52.00 FEET TO A POINT ON SAID NORTH LINE; THENCE NORTH 88° 42 32 EAST ALONG SAID NORTH LINE A DISTANCE OF 60.00 FEET TO THE POINT OF BEGINNING AND THE END OF THIS DESCRIPTION. SAID DESCRIPTION IS ALSO KNOWN AS PARCEL A OF PARCEL MAP WAIVER/ CERTIFICATE OF COMPLIANCE NO. 2114, RECORDED JUNE 23, 1995 AS INSTRUMENT NO. 204095 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. (Assessors Parcel Number: 297-130-034-1, 297-130-037-4, 297-130-038-5) |
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Site No.: 05 NBU No.: 21203121 Local No.: 00000263-K26 Issued: 10/24/2012 SCHEDULE B EXCEPTIONS At the date hereof, items to be considered and exceptions to coverage in addition to the printed Exceptions and Exclusions in said policy form would be as follows: A. Property taxes, including any assessments collected with taxes, for the fiscal year 2012 - 2013 1st Installment: $12,650.06 (Unpaid) Penalty: $1,264.98 (Due after December 10) 2nd Installment: $12,650.06 (Unpaid) Penalty and Cost: $1,295.98 (Due after April 10) Homeowners Exemption: NONE Code Area: 021-007 Assessors Parcel Number: 297-130-034-1 B. Property taxes, including any assessments collected with taxes, for the fiscal year 2012 - 2013 1st Installment: $8,308.01 (Unpaid) Penalty: $830.78 (Due after December 10) 2nd Installment: $8,308.01 (Unpaid) Penalty and Cost: Homeowners Exemption: $861.78 (Due after April 10) NONE Code Area: 021-007 Assessors Parcel Number: 297-130-037-4 C. Property taxes, including any assessments collected with taxes, for the fiscal year 2012 - 2013 1st Installment $229.93 (Unpaid) Penalty: $22.97 (Due after December 10) 2nd Installment: $229.93 (Unpaid) Penalty and Cost: $53.97 (Due after April 10) Homeowners Exemption: NONE Code Area: 021-007 Assessors Parcel Number: 297-130-038-5 D. The lien of supplemental or escaped assessments of property taxes, if any, made pursuant to the provisions of Part 0.5, Chapter 3.5 or Part 2, Chapter 3, Articles 3 and 4 respectively (commencing with Section 75) of the Revenue and Taxation Code of the State of California as a result of the transfer of title to the vestee named in Schedule A; or as a result of changes in ownership or new construction occurring prior to date of policy. 1. Water rights, claims or title to water, whether or not disclosed by the public records. |
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Site No.: 05 NBU No.: 21203121 Local No.: 00000263-K26 Issued: 10/24/2012 2. An easement for the purpose shown below and rights incidental thereto as set forth in a document. Purpose: pipelines Recorded: June 5, 1948 as Instrument No. 577 in Book 911 Page 345 of Official Records Affects: That portion of said land as described in the document attached hereto. Amendment to Right of Way, subject to all the terms, provisions and conditions therein contained, recorded June 29, 2001 as Instrument No. 2001-299177 of Official Records. Restrictions on the use, by the owners of said land, of the easement area as set forth in the easement shown above. Reference is hereby made to said document for full particulars. 3. An easement for the purpose shown below and rights incidental thereto as set forth in a document. Purpose: pipelines Recorded: January 10, 1958 as Instrument No. 2426 of Official Records Affects: That portion of said land as described in the document attached hereto. Restrictions on the use, by the owners of said land, of the easement area as set forth in the easement shown above. Reference is hereby made to said document for full particulars. 4. Covenants, conditions and restrictions (but omitting any covenant or restrictions, if any, based upon on race, color, religion, sex, sexual orientation, familial status, marital status, disability, handicap, national origin, ancestry, or source of income, as set forth in applicable state or federal laws, except to the extent that said covenant or restriction is permitted by applicable law) as set forth in the document Recorded: January 7, 1971 as Instrument No. 1391, of Official Records Note: Section 12956.1 of the government code provides the following: If this document contains any restriction based on race, color, religion, sex, sexual orientation, familial status, marital status, disability, national origin, source of income as defined in subdivision (p) of Section 12955, or ancestry, that restriction violates state and federal fair housing laws and is void, and may be removed pursuant to section 12956.2 of the Government Code. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status. |
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Site No.: 05 NBU No.: 21203121 Local No.: 00000263-K26 Issued: 10/24/2012 Said covenants, conditions and restrictions provide that a violation thereof shall not defeat the lien of any mortgage or deed of trust made in good faith and for value. 5. Easement(s) for the purpose(s) shown below and rights incidental thereto as delineated or as offered for dedication, on the recorded map shown below: Map of: Alessandro Tract Purpose: public street and utilities Affects: That portion of said land as shown on said map. 6. An easement for the purpose shown below and rights incidental thereto as set forth in a document. Purpose: road and utility Recorded: March 15, 1971 as Instrument No. 25666 of Official Records Affects: That portion of said land as described in the document attached hereto. 7. An easement for the purpose shown below and rights incidental thereto as set forth in a document. Purpose: public utilities Recorded: July 2, 1971 as Instrument No. 72758 of Official Records Affects: That portion of said land as described in the document attached hereto. Restrictions on the use, by the owners of said land, of the easement area as set forth in the easement shown above. Reference is hereby made to said document for full particulars. 8. An easement for the purpose shown below and rights incidental thereto as set forth in a document. Purpose: public utilities Recorded: April 17, 1972 as Instrument No. 49502 of Official Records Affects: That portion of said land as described in the document attached hereto. Restrictions on the use, by the owners of said land, of the easement area as set forth in the easement shown above. Reference is hereby made to said document for full particulars. 9. The fact that said land is included within the Moreno Valley Redevelopment Project Area, and that proceedings for redevelopment have been instituted. |
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Site No.: 05 NBU No.: 21203121 Local No.: 00000263-K26 Issued: 10/24/2012 Recorded: December 29, 1987 as Instrument No. 365197, of Official Records 10. A document subject to all the terms, provisions and conditions therein contained. Entitled: Agreement Containing Covenants Affecting Real Property Recorded: June 23, 1995 as Instrument No. 204097, of Official Records 11. Covenants, conditions and restrictions (but omitting any covenant or restrictions, if any, based upon on race, color, religion, sex, sexual orientation, familial status, marital status, disability, handicap, national origin, ancestry, or source of income, as set forth in applicable state or federal laws, except to the extent that said covenant or restriction is permitted by applicable law) as set forth in the document Recorded: June 23, 1995 as Instrument No. 204098, of Official Records Note: Section 12956.1 of the government code provides the following: If this document contains any restriction based on race, color, religion, sex, sexual orientation, familial status, marital status, disability, national origin, source of income as defined in subdivision (p) of Section 12955, or ancestry, that restriction violates state and federal fair housing laws and is void, and may be removed pursuant to section 12956.2 of the Government Code. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status. Said covenants, conditions and restrictions provide that a violation thereof shall not defeat the lien of any mortgage or deed of trust made in good faith and for value. |
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Site No.: 05 NBU No.: 21203121 Local No.: 00000263-K26 Issued: 10/24/2012 14. Matters which may be disclosed by an inspection and/or by a correct ALTA/ACSM Land Title Survey of said land that is satisfactory to this Company, and/or by inquiry of the parties in possession thereof. This office must be notified at least 7 business days prior to the scheduled closing in order to arrange for an inspection of the land; upon completion of this inspection you will be notified of the removal of specific coverage exceptions and/or additional exceptions to coverage. 15. Any rights of parties in possession of said land, based on any unrecorded lease, or leases. This Company will require a full copy of any unrecorded lease, together with all supplements, assignments, and amendments for review. |
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Site No.: 05 NBU No.: 21203121 Local No.: 00000263-K26 Issued: 10/24/2012 INFORMATIONAL NOTES Note No. 1. Section 12413.1, California Insurance Code became effective January 1, 1990. This legislation regulates the disbursement of funds deposited with any title entity acting in an escrow or sub-escrow capacity. The law requires that all funds be deposited and collected by the title entitys escrow and/or sub-escrow account prior to disbursement of any funds. Some methods of funding may be subject to a holding period, which must expire before any funds may be disbursed. In order to avoid any such delays, all funding should be done via wire transfer. Funds deposited with the Company via wire transfer may be disbursed upon receipt. Funds deposited by cashiers checks, certified checks, and tellers checks is one business day after the day deposited. Other checks may require hold periods from two to five business days after the day deposited, and may delay your closing. The Company may receive benefits from such banks based upon the balances in such accounts. Such benefits will be retained by the Company as part of its compensation for handling such funds. Note No. 2. This Company will require for review the following documents from the following Limited Liability Company: BFG2011, Limited Liability Company, a New Jersey limited liability company A. A copy of its Operating Agreement and any and all amendments, supplements and/or modifications thereto, certified by the appropriate manager. B. Confirmation that its Articles of Organization (LLC-1), and Certificate of Amendment (LLC-2), any restated Articles of Organization (LLC-10) and/or any Certificate of Correction (LLC-11) have been filed with the Secretary of State. C. If the Limited Liability Company is member-managed a full and complete list of members certified by the appropriate manager. D. If the Limited Liability Company was formed in a foreign jurisdiction, evidence, satisfactory to the Company, that it was validly formed, is in good standing and authorized to do business in the state of origin. E. If the Limited Liability Company was formed in a foreign jurisdiction, evidence satisfactory to the Company, that it has complied with California doing business laws, if applicable. Note No. 3. The charge where an order is cancelled after the issuance of the report of title, will be that amount which in the opinion of the Company is proper compensation for the services rendered or the purpose for which the report is used, but in no event shall said charge be less that the minimum amount required under Section 12404.1 of the Insurance Code of the State of California. If the report cannot be cancelled no fee pursuant to the provisions of said Insurance Code, then the minimum cancellation fee shall be that permitted by law. |
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Site No.: 05 NBU No.: 21203121 Local No.: 00000263-K26 Issued: 10/24/2012 Note No. 4. California Revenue and Taxation Code Section 18668, effective January 1, 1991, requires that the buyer in all sales of California Real Estate, withhold 3-1/3% of the total sales price as California State Income Tax, subject to the various provisions of the law as therein contained, and as amended. Note No. 5. Intentionally Deleted. Note No. 6. Your application for title insurance was placed by reference to a street address or assessors parcel number. Based upon our records, we believe that the description in this report covers the parcel that you requested. To prevent errors, we require written confirmation that the legal description contained herein covers the parcel that you requested. Note No. 7. The plat, (map), which is attached to this report, is to assist you in locating land with reference to streets and other parcels. While this plat is believed to be correct, the Company assumes no liability for any loss occurring by reason of reliance thereon. Note No. 8. The policy of title insurance will include an arbitration provision. The Company or the insured may demand arbitration. Arbitrable matters may include, but are not limited to, any controversy or claim between the Company and the insured arising out of or relating to this policy, any service of the Company in connection with its issuance or the breach of a policy provision or other obligation. Please ask your escrow or title officer for a sample copy of the policy to be issued if you wish to review the arbitration provisions and any other provisions pertaining to your Title Insurance coverage. Note No. 9. The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than the amount, if any, set forth in the arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. Note No. 10. Any documents being executed in conjunction with this transaction must be signed in the presence of an authorized Company employee, an authorized employee of an agent, an authorized employee of the insured lender, or by using Bancserv or other approved third-party service. If the above requirements cannot be met, please call the company at the number provided in this report. END |
Exhibit 10.39
Supreme Indiana Operations, Inc.
2581 East Kercher Road
Goshen, IN 46527
December 14, 2012
G-2, Ltd.
2581 East Kercher Road
Goshen, IN 46527
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Re: |
Exercise of Option to Purchase |
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(Indiana) |
Gentlemen:
Reference is made to that Lease Agreement dated July 25, 1988, between G-2, Ltd., a Texas limited partnership (Lessor), and Supreme Corporation, a Texas corporation. As a result of a merger transaction effective September 28, 2010, Supreme Indiana Operations, Inc., a Delaware corporation (Lessee), became the successor in interest to Supreme Corporation under the Lease Agreement.
The Lease Agreement covers certain real estate and improvements (the Leased Premises) located in Goshen, Elkhart County, Indiana.
Paragraph 20 of the original Lease Agreement granted to Lessee an option to purchase the Leased Premises. Paragraph 20 further provides as follows:
In the event of the exercise of this option as herein provided, Lessor agrees to convey the property to Lessee by Warranty Deed free and clear of all encumbrances except the taxes and assessments which under this Lease are to be paid by Lessee. Whenever Lessee desires to exercise this option, it shall give Lessor written notice thereof. Lessor will within reasonable time after receipt of such notice deliver, or cause to be delivered, to Lessee a preliminary title report. Defects in title, if any, shown by such report shall be remedied by Lessor within thirty (30) days of notice to Lessor of such defects, and it shall deliver to Lessee at the time of closing an owners policy of title insurance issued by an approved title company in the amount of the purchase price subject only to encumbrance, exceptions, and reservations herein mentioned. The purchase shall in any event be completed by conveyance of the property and payment of the purchase price within sixty (60) days from the delivery of notice of intent to exercise this option. The Lessee agrees to pay all fees and expenses incurred in connection with the exercise of this option and the subsequent conveyance of the leased premises.
There have been several extensions of this Lease Agreement with the most recent extension being the Fourth Extension dated to be effective July 25, 2010, which extends the term of the Lease through a period ending on July 25, 2015.
This letter represents Lessees written notification to Lessor that Lessee is hereby exercising its option under Paragraph 20 of the original Lease Agreement to purchase the Leased Premises.
The parties agree that the correct purchase price under the Fourth Extension of Lease Agreement is $3,568,426 with the calculation of such purchase price shown in Exhibit A attached hereto.
By signing where indicated below, Lessor agrees that Lessees written notification exercising its option to purchase the Leased Premises has been properly given and that the purchase price has been correctly calculated as shown in Exhibit A attached hereto.
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SUPREME INDIANA OPERATIONS, INC., | ||||||
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a Delaware corporation | ||||||
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By: |
/s/ Jeffery D. Mowery | |||||
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Jeffery D. Mowery | |||||
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Vice President-Finance | |||||
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ACCEPTED AND AGREED TO: |
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G-2, LTD., a Texas limited partnership |
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By: |
Supreme Indiana Operations, Inc., |
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General Partner |
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By |
/s/ Jeffery D. Mowery |
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Jeffery D. Mowery |
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Vice President-Finance |
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Exhibit A
Supreme Industries, Inc.
G-2 Real Estate Purchase Price
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Indiana |
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Georgia |
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Total |
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First Year Purchase Price Per Original Lease |
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$ |
1,829,000 |
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$ |
936,000 |
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$ |
2,765,000 |
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CPI |
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Valuation Date |
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Index |
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June 1988 (Base Year) |
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118.000 |
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$ |
1,829,000 |
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$ |
936,000 |
|
$ |
2,765,000 |
|
November 2012 |
|
230.221 |
|
$ |
3,568,426 |
|
$ |
1,826,160 |
|
$ |
5,394,585 |
|
Exhibit 10.40
Supreme Indiana Operations, Inc.
2581 East Kercher Road
Goshen, IN 46527
December 14, 2012
G-2, Ltd.
2581 East Kercher Road
Goshen, IN 46527
|
Re: |
Exercise of Option to Purchase |
|
(Georgia) |
Gentlemen:
Reference is made to that Lease Agreement dated July 25, 1988, between G-2, Ltd., a Texas limited partnership (Lessor), and Supreme Corporation, a Texas corporation. As a result of a merger transaction effective September 28, 2010, Supreme Indiana Operations, Inc., a Delaware corporation (Lessee), became the successor in interest to Supreme Corporation under the Lease Agreement.
The Lease Agreement covers certain real estate and improvements (the Leased Premises) located in Pike County, Georgia.
Paragraph 20 of the original Lease Agreement granted to Lessee an option to purchase the Leased Premises. Paragraph 20 further provides as follows:
In the event of the exercise of this option as herein provided, Lessor agrees to convey the property to Lessee by Warranty Deed free and clear of all encumbrances except the taxes and assessments which under this Lease are to be paid by Lessee. Whenever Lessee desires to exercise this option, it shall give Lessor written notice thereof. Lessor will within reasonable time after receipt of such notice deliver, or cause to be delivered, to Lessee a preliminary title report. Defects in title, if any, shown by such report shall be remedied by Lessor within thirty (30) days of notice to Lessor of such defects, and it shall deliver to Lessee at the time of closing an owners policy of title insurance issued by an approved title company in the amount of the purchase price subject only to encumbrance, exceptions, and reservations herein mentioned. The purchase shall in any event be completed by conveyance of the property and payment of the purchase price within sixty (60) days from the delivery of notice of intent to exercise this option. The Lessee agrees to pay all fees and expenses incurred in connection with the exercise of this option and the subsequent conveyance of the leased premises.
There have been several extensions of this Lease Agreement with the most recent extension being the Fourth Extension dated to be effective July 25, 2010, which extends the term of the Lease through a period ending on July 25, 2015.
This letter represents Lessees written notification to Lessor that Lessee is hereby exercising its option under Paragraph 20 of the original Lease Agreement to purchase the Leased Premises.
The parties agree that the correct purchase price under the Fourth Extension of Lease Agreement is $1,826,160 with the calculation of such purchase price shown in Exhibit A attached hereto.
By signing where indicated below, Lessor agrees that Lessees written notification exercising its option to purchase the Leased Premises has been properly given and that the purchase price has been correctly calculated as shown in Exhibit A attached hereto.
|
SUPREME INDIANA OPERATIONS, INC., | ||||||
|
a Delaware corporation | ||||||
|
| ||||||
|
| ||||||
|
By: |
/s/ Jeffery D. Mowery | |||||
|
|
Jeffery D. Mowery | |||||
|
|
Vice President-Finance | |||||
|
| ||||||
|
| ||||||
ACCEPTED AND AGREED TO: |
| ||||||
|
| ||||||
|
G-2, LTD., a Texas limited partnership |
| |||||
|
| ||||||
|
By: |
Supreme Indiana Operations, Inc., |
| ||||
|
|
General Partner |
| ||||
|
| ||||||
|
| ||||||
|
By: |
/s/ Jeffery D. Mowery |
|
| |||
|
|
Jeffery D. Mowery |
|
| |||
|
|
Vice President-Finance |
|
| |||
Exhibit A
Supreme Industries, Inc.
G-2 Real Estate Purchase Price
|
|
Indiana |
|
Georgia |
|
Total |
| |||||
|
|
|
|
|
|
|
| |||||
First Year Purchase Price Per Original Lease |
|
$ |
1,829,000 |
|
$ |
936,000 |
|
$ |
2,765,000 |
| ||
|
|
|
|
|
|
|
|
|
| |||
|
|
CPI |
|
|
|
|
|
|
| |||
Valuation Date |
|
Index |
|
|
|
|
|
|
| |||
June 1988 (Base Year) |
|
118.000 |
|
$ |
1,829,000 |
|
$ |
936,000 |
|
$ |
2,765,000 |
|
November 2012 |
|
230.221 |
|
$ |
3,568,426 |
|
$ |
1,826,160 |
|
$ |
5,394,585 |
|
Exhibit 21.1
Subsidiaries of the Registrant (a)
Supreme Corporation, a Texas corporation
Supreme Indiana Operations, Inc., a Delaware corporation
Supreme Corporation of Georgia, a Texas corporation
Supreme Corporation of Texas, a Texas corporation
Supreme Armored, Inc., a Texas corporation
Supreme Truck Bodies of California, Inc., a California corporation
Supreme Mid-Atlantic Corporation, a Texas corporation
SC Tower Structural Laminating, Inc., a Texas corporation
Supreme Insurance Company, Inc., a Nevada corporation
Supreme STB, LLC, a California limited liability company
Supreme Northwest, L.L.C., a Texas limited liability company
Supreme/Murphy Truck Bodies, Inc., a North Carolina corporation
Supreme Midwest Properties, Inc., a Delaware corporation
Supreme Southeast Properties, Inc., a Texas corporation
Supreme Southwest Properties, Inc., a Texas corporation
Supreme West Properties, Inc., a Texas corporation
(a) All subsidiaries are 100% owned by the Registrant.
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-185589, 333-157017, 333-143369, 333-118584, 333-104386 and 333-89867 on Form S-8 and 033-64047 on Form S-3 of Supreme Industries, Inc. and subsidiaries of our report dated March 22, 2013, relating to the consolidated financial statements and financial statement schedule appearing in this Annual Report on Form 10-K.
|
/s/ Crowe Horwath LLP |
|
|
South Bend, Indiana |
|
March 22, 2013 |
|
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
I, Matthew W. Long, certify that:
1. I have reviewed this Annual Report on Form 10-K of Supreme Industries, Inc. (the registrant);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: |
March 22, 2013 |
|
|
| |
|
| |
/s/ Matthew W. Long |
| |
Interim Chief Executive Officer and Chief Financial Officer |
|
Exhibit 32.1
Certification of Chief Executive Officer and Chief Financial Officer of
Supreme Industries, Inc. Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
This certification is furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and accompanies the Annual Report on Form 10-K (the Form 10-K) for the year ended December 29, 2012 of Supreme Industries, Inc. (the Company). I, Matthew W. Long, the Interim Chief Executive Officer and Chief Financial Officer of the Company, certify that, based on my knowledge:
(1) The Form 10-K fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in this report.
Dated: |
March 22, 2013 |
|
|
| |
|
| |
/s/ Matthew W. Long |
| |
Interim Chief Executive Officer and Chief Financial Officer |
|
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