Exhibit 10.3
[EXECUTION COPY]
CREDIT AGREEMENT
among
PACKAGING DYNAMICS, L.L.C.
as Borrower,
PACKAGING HOLDINGS, L.L.C.
and
THE SUBSIDIARIES OF THE BORROWER
as Guarantors,
THE LENDERS IDENTIFIED HEREIN,
and
NATIONSBANK, N.A.,
as Agent
DATED AS OF NOVEMBER 20, 1998
TABLE OF CONTENTS
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SECTION 1 DEFINITIONS AND ACCOUNTING TERMS .................................... 1
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1.1 Definitions ............................................................ 1
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1.2 Computation of Time Periods and Other Definitional Provisions .......... 26
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1.3 Accounting Terms ....................................................... 27
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SECTION 2 CREDIT FACILITIES ................................................... 27
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2.1 Revolving Loans ........................................................ 27
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2.2 Letter of Credit Subfacility ........................................... 31
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2.3 Tranche A Term Loans ................................................... 36
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2.4 Tranche B Term Loans ................................................... 39
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2.5 Continuations and Conversions .......................................... 41
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2.6 Minimum Amounts ........................................................ 41
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SECTION 3 GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT ........ 42
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3.1 Interest ............................................................... 42
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3.2 Place and Manner of Payments ........................................... 42
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3.3 Prepayments ............................................................ 43
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3.4 Fees ................................................................... 45
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3.5 Payment in full at Maturity ............................................ 46
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3.6 Computations of Interest and Fees ...................................... 46
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3.7 Pro Rata Treatment ..................................................... 47
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3.8 Sharing of Payments .................................................... 48
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3.9 Capital Adequacy ....................................................... 48
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3.10 Inability To Determine Interest Rate .................................. 49
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3.11 Illegality ............................................................ 49
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3.12 Requirements of Law ................................................... 50
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3.13 Taxes ................................................................. 51
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3.14 Compensation .......................................................... 53
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3.15 Evidence of Debt ...................................................... 53
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SECTION 4 GUARANTY ............................................................. 54
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4.1 Guaranty of Payment .................................................... 54
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4.2 Obligations Unconditional .............................................. 54
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4.3 Modifications .......................................................... 55
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4.4 Waiver of Rights ....................................................... 56
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4.5 Reinstatement .......................................................... 56
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4.6 Remedies ............................................................... 56
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4.7 Limitation of Guaranty ................................................. 57
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4.8 Rights of Contribution ................................................. 57
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SECTION 5 CONDITIONS PRECEDENT ................................................. 57
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5.1 Closing Conditions ..................................................... 57
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5.2 Conditions to All Extensions of Credit ................................. 63
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SECTION 6 REPRESENTATIONS AND WARRANTIES ...................................... 64
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6.1 Financial Condition ................................................... 64
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6.2 No Material Change .................................................... 65
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6.3 Organization and Good Standing ........................................ 66
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6.4 Due Authorization ..................................................... 66
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6.5 No Conflicts .......................................................... 66
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6.6 Consents .............................................................. 66
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6.7 Enforceable Obligations ............................................... 66
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6.8 No Default ............................................................ 67
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6.9 Ownership ............................................................. 67
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6.10 Indebtedness ......................................................... 67
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6.11 Litigation ........................................................... 67
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6.12 Taxes ................................................................ 67
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6.13 Compliance with Law .................................................. 68
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6.14 ERISA ................................................................ 68
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6.15 Subsidiaries as of the Closing Date .................................. 69
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6.16 Use of Proceeds ...................................................... 69
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6.17 Government Regulation ................................................ 69
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6.18 Environmental Matters ................................................ 70
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6.19 Intellectual Property ................................................ 71
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6.20 Solvency ............................................................. 71
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6.21 Investments .......................................................... 71
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6.22 Location of Collateral ............................................... 72
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6.23 Disclosure ........................................................... 72
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6.24 Licenses, etc ........................................................ 72
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6.25 Collateral Documents ................................................. 72
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6.26 Burdensome Restrictions .............................................. 72
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6.27 Year 2000 Compliance ................................................. 73
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6.28 Labor Contracts and Disputes ......................................... 73
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SECTION 7 AFFIRMATIVE COVENANTS ............................................... 73
7.1 Information Covenants ................................................. 73
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7.2 Financial Covenants ................................................... 79
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7.3 Preservation of Existence and Franchises .............................. 80
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7.4 Books and Records ..................................................... 80
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7.5 Compliance with Law ................................................... 80
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7.6 Payment of Taxes and Other Indebtedness ............................... 80
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7.7 Insurance ............................................................. 81
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7.8 Maintenance of Property ............................................... 82
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7.9 Performance of Obligations ............................................ 83
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7.10 Collateral ........................................................... 83
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7.11 Use of Proceeds ...................................................... 83
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7.12 Audits/Inspections ................................................... 83
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7.13 Additional Subsidiaries .............................................. 84
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7.14 Purchase Agreements .................................................. 84
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7.15 Post-Closing Requirements ............................................ 84
SECTION 8 NEGATIVE COVENANTS................................................. 85
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8.1 Indebtedness......................................................... 85
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8.2 Liens................................................................ 86
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8.3 Nature of Business................................................... 86
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8.4 Consolidation; Merger; Dissolution; Liquidation; Winding Up.......... 87
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8.5 Disposition of Assets................................................ 87
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8.6 Sale Leasebacks...................................................... 88
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8.7 Investments.......................................................... 88
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8.8 Restricted Payments.................................................. 88
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8.9 Restrictions on Modifications to and Payments of Certain Indebtedness 88
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8.10 Transactions with Affiliates......................................... 89
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8.11 Fiscal Year; Organizational Documents................................ 89
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8.12 No Limitations....................................................... 89
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8.13 Ownership of Subsidiaries; Limitations on Parent..................... 89
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8.14 No Other Negative Pledges............................................ 90
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8.15 No Foreign Subsidiaries.............................................. 90
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SECTION 9 EVENTS OF DEFAULT.................................................. 90
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9.1 Events of Default.................................................... 90
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9.2 Acceleration; Remedies............................................... 93
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9.3 Allocation of Payments After Event of Default........................ 94
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SECTION 10 AGENCY PROVISIONS.................................................. 95
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10.1 Appointment.......................................................... 95
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10.2 Delegation of Duties................................................. 95
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10.3 Exculpatory Provisions............................................... 96
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10.4 Reliance on Communications........................................... 96
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10.5 Notice of Default.................................................... 97
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10.6 Non-Reliance on Agent and Other Lenders.............................. 97
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10.7 Indemnification...................................................... 97
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10.8 Agent in its Individual Capacity..................................... 98
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10.9 Successor Agent...................................................... 98
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SECTION 11 MISCELLANEOUS...................................................... 99
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11.1 Notices.............................................................. 99
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11.2 Right of Set-Off..................................................... 99
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11.3 Benefit of Agreement................................................. 99
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11.4 No Waiver; Remedies Cumulative....................................... 102
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11.5 Payment of Expenses; Indemnification................................. 102
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11.6 Amendments, Waivers and Consents..................................... 103
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11.7 Counterparts/Telecopy................................................ 104
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11.8 Headings............................................................. 104
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11.9 Defaulting Lender.................................................... 104
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11.10 Survival of Indemnification and Representations and Warranties....... 105
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11.11 Governing Law; Jurisdiction.......................................... 105
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11.12 Waiver of Jury Trial................................................. 105
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11.13 Time................................................................. 106
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11.14 Severability............................................................. 106
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11.15 Further Assurances................................................... 106
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11.16 Confidentiality...................................................... 106
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11.17 Entirety............................................................. 106
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11.18 Binding Effect; Continuing Agreement................................. 107
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11.19 Regulation O......................................................... 107
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SCHEDULES
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Schedule 1.1(a) Commitment Percentages
Schedule 1.1(b) Investments
Schedule 1.1(c) Permitted Liens
Schedule 1.1(d) Financial Information
Schedule 5.1(e) Mortgage Properties
Schedule 5.1(h) Consents
Schedule 5.1(j) Corporate Structure
Schedule 6.10 Indebtedness
Schedule 6.15 Subsidiaries
Schedule 6.19 Intellectual Property
Schedule 6.22(a) Real Property Locations
Schedule 6.22(b) Personal Property Locations
Schedule 6.22(c) Chief Executive Offices
Schedule 6.28 Labor Contract and Disputes
Schedule 7.7 Insurance
Schedule 11.1 Notices
EXHIBITS
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Exhibit 1.1 Form of Security Agreement
Exhibit 2.1(b) Form of Notice of Borrowing
Exhibit 2.1(f) Form of Revolving Note
Exhibit 2.3(e) Form of Tranche A Term Note
Exhibit 2.4(e) Form of Tranche B Term Note
Exhibit 2.5 Form of Notice of Continuation/Conversion
Exhibit 7.1(d) Form of Officer's Certificate
Exhibit 7.13 Form of Joinder Agreement
Exhibit 11.3 Form of Assignment Agreement
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Credit Agreement"), is entered into as of
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November 20, 1998 among PACKAGING DYNAMICS, L.L.C., a Delaware limited liability
company (the "Borrower"), PACKAGING HOLDINGS, L.L.C., a Delaware limited
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liability company (the "Parent"), each of the Subsidiaries of the Borrower
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(together with the Parent, individually a "Guarantor" and collectively the
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"Guarantors"), the Lenders (as defined herein), NATIONSBANK, N.A., as Agent for
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the Lenders.
RECITALS
WHEREAS, the Borrower has requested the Lenders provide the Borrower
with a senior secured credit facility in an amount up to $85 million; and
WHEREAS, the Lenders have agreed to make the requested senior secured
credit facility available to the Borrower on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
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1.1 Definitions.
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As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms herein shall
include in the singular number the plural and in the plural the singular:
"Acquisition", by any Person, means the acquisition by such
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Person of all of the Capital Stock or all or substantially all of the
Property of another Person, whether or not involving a merger or
consolidation with such other Person.
"Adjusted Base Rate" means the Base Rate plus the Applicable
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Percentage.
"Adjusted Eurodollar Rate" means the Eurodollar Rate plus the
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Applicable Percentage.
"Affiliate" means, with respect to any Person, any other
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Person directly or indirectly controlling (including but not limited to
all directors and officers of such Person), controlled by or under
direct or indirect common control with such Person. A Person shall be
deemed
to control a corporation if such Person possesses, directly or
indirectly, the power (a) to vote 10% or more of the securities having
ordinary voting power for the election of directors of such corporation
or (b) to direct or cause direction of the management and policies of
such corporation, whether through the ownership of voting securities,
by contract or otherwise.
"Agency Services Address" means NationsBank, N.A.,
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NC1-001-15-04, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000,
Attn: Agency Services, or such other address as may be identified by
written notice from the Agent to the Borrower.
"Agent" means NationsBank, N.A. (or any successor thereto) or
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any successor administrative agent appointed pursuant to Section 10.9.
"Applicable Percentage" means the appropriate applicable
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percentages corresponding to the Leverage Ratio in effect as of the
most recent Calculation Date as shown below:
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Applicable Percentage
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Eurodollar Loans Base Rate Loans
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Revolving Revolving Standby Commercial
Loans and Loans and Letter Letter
Pricing Leverage Tranche A Term Tranche B Term Tranche A Term Tranche B Term of Credit of Credit Commitment
Level Ratio Loans Loans Loans Loans Fee Fee Fee
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I *2.5 to 1.0 2.25% 4.00% 1.25% 3.00% 2.25% 1.125% 0.50%
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* 3.0 to
II 1.0 but 2.50% 4.00% 1.50% 3.00% 2.50% 1.25% 0.50%
** 2.5 to
1.0
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* 3.5 to
III 1.0 but 2.75% 4.00% 1.75% 3.00% 2.75% 1.375% 0.50%
** 3.0 to
1.0
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IV ** 3.5 to 3.00% 4.00% 2.00% 3.00% 3.00% 1.50% 0.50%
1.0
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* Denotes Less than
** Denotes Greater than or equals to
The Applicable Percentage for purposes of calculating the
applicable interest rate for any day for any Loan, the applicable rate
of the Commitment Fee for any day for purposes of Section 3.4(a), the
applicable rate of the Standby Letter of Credit Fees for any day for
purposes of Section 3.4(b)(i) and the Commercial Letter of Credit Fees
for any day for purposes of Section 3.4(b)(ii) shall, in each case, be
determined and adjusted quarterly on the date (each a "Calculation
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Date") five Business Days after the date by which the Borrower is
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required to provide the officer's certificate in accordance with the
provisions of Section 7.1(d); provided that the initial Applicable
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Percentages shall be based on Pricing Level IV (as shown above) and
shall remain at Pricing Level IV until the first Calculation Date
subsequent to March 31, 1999, and, thereafter, the Pricing Level shall
be determined by the Leverage Ratio calculated as of the most recent
Calculation Date; and provided further that if the Borrower fails to
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provide the officer's certificate required by Section 7.1(d) on or
before the most recent Calculation Date, the Applicable Percentages for
such Calculation Date shall be based on Pricing Level IV from such
Calculation Date until such time that an appropriate officer's
certificate is provided whereupon the Pricing Level shall be determined
by the then current Leverage Ratio. Each Applicable Percentage shall be
effectivefrom one Calculation Date until the next Calculation Date. Any
adjustment in the
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Applicable Percentages shall be applicable to all existing Loans and
Letters of Credit as well as any new Loans made or Letters of Credit
issued.
The Borrower shall promptly deliver to the Agent, at the
address set forth on Schedule 11.1 and at the Agency Services Address,
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at the time the officer's certificate is required to be delivered by
Section 7.1(d), information regarding any change in the Leverage Ratio
that would change the existing Pricing Level pursuant to the preceding
paragraph.
"Application Period", in respect of any Asset Disposition,
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shall have the meaning assigned to such term in Section 8.5.
"Asset Disposition" means any disposition, other than pursuant
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to an Excluded Asset Disposition, of any or all of the Property
(including without limitation the Capital Stock of a Subsidiary) of any
Credit Party whether by sale, lease, transfer or otherwise.
"Asset Disposition Prepayment Event" means, with respect to
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any Asset Disposition, the failure of the Credit Parties to apply (or
cause to be applied) the Net Cash Proceeds of such Asset Disposition to
Eligible Reinvestments during the Application Period for such Asset
Disposition.
"Bagcraft" means Bagcraft Corporation of America, a Delaware
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corporation.
"Bagcraft Acquisition" means Bagcraft Acquisition, L.L.C.,
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a Delaware limited liability company and a wholly-owned Subsidiary of
the Borrower.
"Bagcraft Purchase Agreement" means that certain Asset
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Purchase Agreement by and among Artra Group Incorporated, BCA Holdings,
Inc., Bagcraft Acquisition, the Borrower, the principal shareholders
named therein and Bagcraft, dated as of August 26, 1998, as it may be
amended on or prior to the Closing Date.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
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United States Code, as amended, modified, succeeded or replaced from
time to time.
"Bankruptcy Event" has the meaning set forth in Section
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9.1(f).
"Base Rate" means, for any day, the rate per annum (rounded
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upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the greater of (a) the Federal Funds Rate in effect on such
day plus 1/2 of 1% or (b) the Prime Rate in effect on such day. If for
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any reason the Agent shall have determined (which determination shall
be conclusive absent manifest error) that it is unable after due
inquiry to ascertain the Federal Funds Rate for any reason, including
the inability or failure of the Agent to obtain sufficient quotations
in accordance with the terms hereof, the Base Rate shall be determined
without regard to clause (a) of the first sentence of this definition
until the circumstances giving rise to such inability no longer exist.
Any change in the Base Rate due to a change in the Prime Rate or
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the Federal Funds Rate shall be effective on the effective date of such
change in the Prime Rate or the Federal Funds Rate, respectively.
"Base Rate Loan" means any Loan bearing interest at a rate
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determined by reference to the Base Rate.
"Xxxxxx Springs" means the City of Xxxxxx Springs, Kansas.
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"Xxxxxx Springs Debt" means the Indebtedness described in
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Schedule 6.10.
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"Borrower" means Packaging Dynamics, L.L.C., a Delaware
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limited liability company, together with any successors and permitted
assigns.
"Business Day" means any day other than a Saturday, a Sunday,
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a legal holiday or a day on which banking institutions are authorized
or required by law or other governmental action to close in Charlotte,
North Carolina, Chicago, Illinois or New York, New York; provided that
in the case of Eurodollar Loans, such day is also a day on which
dealings between banks are carried on in U.S. dollar deposits in the
London interbank market.
"Calculation Date" has the meaning set forth in the definition
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of Applicable Percentage.
"Capital Expenditures" means all expenditures of the Borrower
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and its Subsidiaries on a consolidated basis which, in accordance with
GAAP, would be classified as capital expenditures, but excluding in any
event Capital Leases; provided, however, that Capital Expenditures for
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the fiscal quarters ended December 31, 1997, March 31, 1998, June 30,
1998 and September 30, 1998 shall be the amount indicated for such
period on Schedule 1.1(d).
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"Capital Lease" means, as applied to any Person, any lease of
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any Property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a
capital lease on the balance sheet of that Person and the amount of
such obligation shall be the capitalized amount thereof determined in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation,
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capital stock, (ii) in the case of an association or business entity,
any and all shares, interests, participations, rights or other
equivalents (however designated) of capital stock, (iii) in the case of
a partnership, partnership interests (whether general or limited), (iv)
in the case of a limited liability company, membership interests and
(v) 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 Property of, the issuing Person.
"Cash Equivalents" means (a) securities issued or directly and
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fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
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having maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time and demand deposits and
certificates of deposit of (i) any Lender, (ii) any domestic commercial
bank having capital and surplus in excess of $500,000,000 or (iii) any
bank whose short-term commercial paper rating from S&P is at least A-1
or the equivalent thereof or from Xxxxx'x is at least P-1 or the
equivalent thereof (any such bank being an "Approved Bank"), in each
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case with maturities of not more than 270 days from the date of
acquisition, (c) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any
variable rate notes issued by, or guaranteed by, any domestic
corporation rated A-1 (or the equivalent thereof) or better by S&P or
P-1 (or the equivalent thereof) or better by Moody's and maturing
within six months of the date of acquisition, (d) repurchase agreements
with a bank or trust company (including any of the Lenders) or
recognized securities dealer having capital and surplus in excess of
$500,000,000 for direct obligations issued by or fully guaranteed by
the United States of America in which the Borrower shall have a
perfected first priority security interest (subject to no other Liens)
and having, on the date of purchase thereof, a fair market value of at
least 100% of the amount of the repurchase obligations and (e)
Investments, classified in accordance with GAAP as current assets, in
money market investment programs registered under the Investment
Company Act of 1940, as amended, which are administered by reputable
financial institutions having capital of at least $500,000,000 and the
portfolios of which are limited to Investments of the character
described in the foregoing subdivisions (a) through (d).
"Cash Tax Payments" means, for any period, any payments of
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federal, state and other income taxes made by the Borrower and its
Subsidiaries; provided, however, that Cash Tax Payments for the fiscal
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quarters ended December 31, 1997, March 31, 1998, June 30, 1998,
September 30, 1998 and December 31, 1998 shall be the amount indicated
for such period on Schedule 1.1(d). The term "Cash Tax Payments" shall
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not include any Restricted Payments for Taxes.
"Change of Control" means any of the following events: (a) the
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sale, lease, transfer or other disposition (other than by way of merger
or consolidation), in one or a series of related transactions, of all
or substantially all of the assets of the Borrower and its Subsidiaries
taken as a whole to any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange Act) other than Ivex or
members of the Sponsor Group, (b) the Parent shall fail to own directly
100% of the outstanding Capital Stock in the Borrower, (c) Ivex and/or
members of the Sponsor Group shall fail to own beneficially, directly
or indirectly, in the aggregate at least 51% of the outstanding Voting
Stock of the Parent, (d) a "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange Act) other than Ivex or
members of the Sponsor Group shall have acquired beneficial ownership,
directly or indirectly, of, or shall have acquired by contract or
otherwise, or shall have entered into a contract or arrangement that,
upon consummation, will result in its or their acquisition of, control
over, 30% or more of the outstanding Voting Stock of the Parent or (e)
the failure of Ivex and members of the Sponsor Group to control,
whether through ownership of Voting Stock, by contract or otherwise, a
majority of the seats (excluding vacant seats) on the Parent's Board of
Directors. As used herein,
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"beneficial ownership" shall have the meaning provided in Rule 13d-3 of
the Securities and Exchange Commission under the Exchange Act.
"Closing Date" means the date hereof.
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"Code" means the Internal Revenue Code of 1986 and the rules
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and regulations promulgated thereunder, as amended, modified, succeeded
or replaced from time to time.
"Collateral" means all Property of the Credit Parties in
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which, pursuant to the Collateral Documents, a Lien has been granted in
favor of the Lenders.
"Collateral Documents" means the Security Agreement, the
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Mortgage Documents and such other documents executed and delivered in
connection with the attachment and perfection of the Lenders' security
interests in the Property of the Credit Parties, including without
limitation, UCC financing statements and patent and trademark filings
with respect to the Intellectual Property of the Credit Parties.
"Commercial Letter of Credit Fee" means the fee payable to the
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Lenders pursuant to Section 3.4(b)(ii).
"Commitment Fee" means the fee payable to the Lenders pursuant
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to Section 3.4(a).
"Commitments" means (i) with respect to each Lender, the
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Revolving Loan Commitment of such Lender, the Tranche A Term Loan
Commitment of such Lender and the Tranche B Term Loan Commitment of
such Lender, and (ii) with respect to the Issuing Lender, the LOC
Commitment.
"Construction Loan Documents" shall have the meaning assigned
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to such term in the Intercreditor Agreement.
"Credit Documents" means this Credit Agreement, the Notes, any
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Joinder Agreement, the Collateral Documents, the LOC Documents, and all
other related agreements and documents issued or delivered by any
Credit Party hereunder or thereunder or pursuant hereto or thereto.
"Credit Parties" means the Borrower and the Guarantors and
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"Credit Party" means any one of them.
"Credit Party Obligations" means, without duplication, (a) all
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of the obligations of the Credit Parties to the Lenders (including the
Issuing Lender) and the Agent, whenever arising, under this Credit
Agreement, the Notes, the Collateral Documents or any of the other
Credit Documents to which any Credit Party is a party (including, but
not limited to, any interest accruing after the occurrence of a
Bankruptcy Event with respect to any Credit Party, regardless of
whether such interest is an allowed claim under the Bankruptcy Code)
and (b) all liabilities and obligations owing from such Credit Party to
any Lender, or any Affiliate of a Lender, arising under Hedging
Agreements.
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"Debt Issuance" means the issuance of any Indebtedness for
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borrowed money by a Credit Party, other than Indebtedness permitted by
Section 8.1.
"Default" means any event, act or condition which with notice
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or lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, (a)
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has failed to make a Loan or purchase a Participation Interest required
pursuant to the terms of this Credit Agreement (but only for so long as
such Loan is not made or such Participation Interest is not purchased),
(b) has failed to pay to the Agent or any Lender an amount owed by such
Lender pursuant to the terms of this Credit Agreement (but only for so
long as such amount has not been repaid) or (c) has been deemed
insolvent or has become subject to a bankruptcy or insolvency
proceeding or to a receiver, trustee or similar official.
"Detroit Paper Mill Assets" means the assets purchased by IPMC
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Acquisition pursuant to the Detroit Paper Mill Purchase Agreement.
"Detroit Paper Mill Purchase Agreement" means that certain
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Asset Purchase Agreement by and among IPC, Inc., IPMC Acquisition, the
Borrower and IPMC, dated as of August 28, 1998, as it may be amended on
or prior to the Closing Date.
"Dollars" and "$" means dollars in lawful currency of the
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United States of America.
"EBITDA" means, for any period, with respect to the Borrower
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and its Subsidiaries on a consolidated basis, the sum of (a) Net Income
for such period (excluding the effect of any extraordinary or other
non-recurring gains or losses (including any gain or loss from the sale
of Property) or non-cash losses) plus (b) an amount which, in the
determination of Net Income for such period has been deducted for (i)
Interest Expense for such period, (ii) total Federal, state, foreign or
other income or franchise taxes and Restricted Payments for Taxes for
such period and (iii) all depreciation and amortization for such
period, all as determined in accordance with GAAP; provided, however,
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that (1) EBITDA for the fiscal quarter of the Borrower ending December
31, 1998 and March 31, 1999 (A) shall be determined without giving
effect to non-cash purchase price accounting adjustments of up to $2.5
million relating to the Transactions and (B) in the case of the fiscal
quarter of the Borrower ending December 31, 1998, shall be equal to the
amount determined for such period pursuant to the foregoing terms of
this definition plus $900,000 and (2) EBITDA for the fiscal quarters
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ended December 31, 1997, March 31, 1998, June 30, 1998 and September
30, 1998 shall be the amount indicated for such period on Schedule
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1.1(d).
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"Effective Date" means the date on which the conditions set
--------------
forth in Section 5.1 shall have been fulfilled (or waived in the sole
discretion of the Lenders) and on which the initial Loans shall have
been made and/or the initial Letters of Credit shall have been issued.
"Eligible Assets" means any assets or any business (or any
---------------
substantial part thereof) used or useful in the same or a similar line
of business as the Borrower and its
-7-
Subsidiaries were engaged in on the Closing Date (or any reasonable
extensions or expansions thereof).
"Eligible Assignee" means (a) any Lender; (b) an Affiliate of
-----------------
a Lender; and (c) any other Person approved by the Agent and the
Borrower (such approval not to be unreasonably withheld or delayed (it
being understood that the Borrower may refuse to consent to an
assignment to a potential competitor of the Borrower)); provided that
-------- ----
(i) the Borrower's consent is not required if at the time any
assignment is effected in accordance with Section 11.3(b) an Event of
Default has occurred and is continuing, (ii) approval by the Borrower
shall be deemed given if no objection is received by the assigning
Lender and the Agent from the Borrower within two Business Days after
notice of such proposed assignment has been received by the Borrower;
and (iii) neither the Borrower nor an Affiliate of the Borrower shall
qualify as an Eligible Assignee.
"Eligible Reinvestment" means (i) an acquisition (whether or
---------------------
not constituting a capital expenditure, but not constituting an
Acquisition) of long-term Eligible Assets and (ii) a Permitted
Acquisition.
"Environmental Claim" means any investigation, written notice,
-------------------
written violation, written demand, written allegation, action, suit,
injunction, judgment, order, consent decree, penalty, fine, lien,
proceeding, or written claim whether administrative, judicial, or
private in nature arising (a) pursuant to, or in connection with, an
actual or alleged violation of, any Environmental Law, (b) in
connection with any Hazardous Material, (c) from any assessment,
abatement, removal, remedial, corrective, or other response action in
connection with an Environmental Law or other order of a Governmental
Authority or (d) from any actual or alleged damage, injury, threat, or
harm to health, natural resources, or the environment.
"Environmental Laws" means any current or future legal
------------------
requirement of any Governmental Authority pertaining to (a) the
protection of health and the environment, (b) the conservation,
management, or use of natural resources and wildlife, (c) the
protection or use of surface water and groundwater or (d) the
management, manufacture, possession, presence, use, generation,
transportation, treatment, storage, disposal, release, threatened
release, abatement, removal, remediation or handling of, or exposure
to, any hazardous or toxic substance or material or (e) pollution
(including any release to land surface water and groundwater) and
includes, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 USC 9601 et seq., Solid
Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984,
42 USC 6901 et seq., Federal Water Pollution Control Act, as amended by
the Clean Water Act of 1977, 33 USC 1251 et seq., Clean Air Act of
1966, as amended, 42 USC 7401 et seq., Toxic Substances Control Act of
1976, 15 USC 2601 et seq., Hazardous Materials Transportation Act, 49
USC App. 1801 et seq., Occupational Safety and Health Act of 1970, as
amended, 29 USC 651 et seq., Oil Pollution Act of 1990, 33 USC 2701 et
seq., Emergency Planning and Community Right-to-Know Act of 1986, 42
USC 11001 et seq., National Environmental Policy Act of 1969, 42 USC
-8-
4321 et seq., Safe Drinking Water Act of 1974, as amended, 42 USC 300
(f) et seq., any analogous implementing or successor law, and any
amendment, rule, regulation, order, or directive issued thereunder.
"Equity Issuance" means any issuance by a Credit Party to any
---------------
Person (other than a Credit Party, a member of the Sponsor Group or
Ivex) of (a) shares of its Capital Stock, (b) any shares of its Capital
Stock pursuant to the exercise of options or warrants or (c) any shares
of its Capital Stock pursuant to the conversion of any debt securities
to equity (other than stock issued to managers, officers or directors
pursuant to stock plans or equity plans). The term "Equity Issuance"
shall not include any Asset Disposition.
"ERISA" means the Employee Retirement Income Security Act of
-----
1974, as amended, and any successor statute thereto, as interpreted by
the rules and regulations thereunder, all as the same may be in effect
from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
"ERISA Affiliate" means an entity, whether or not
---------------
incorporated, which is under common control with any Credit Party
within the meaning of Section 4001(a)(14) of ERISA, or is a member of a
group which includes any Credit Party and which is treated as a single
employer under Sections 414(b), (c), (m), or (o) of the Code.
"Eurodollar Loan" means a Loan bearing interest based at a
---------------
rate determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each
---------------
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
determined pursuant to the following formula:
Eurodollar Rate = London Interbank Offered Rate
-----------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that
-----------------------------
percentage (expressed as a decimal) which is in effect from time to
time under Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as such regulation may be amended
from time to time or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable with respect to
Eurocurrency liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by
reference to which the interest rate of Eurodollar Loans is
determined), whether or not a Lender has any Eurocurrency liabilities
subject to such reserve requirement at that time. Eurodollar Loans
shall be deemed to constitute Eurocurrency liabilities and as such
shall be deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be available from
time to time to a Lender. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
-9-
"Event of Default" means any of the events or circumstances
----------------
specified in Section 9.1.
"Excess Cash Flow" means, with respect to any fiscal year
----------------
period of the Borrower and its Subsidiaries on a consolidated basis, an
amount equal to, without duplication, (a) EBITDA for such period minus
-----
(b) Capital Expenditures for such period minus (c) the aggregate cash
-----
consideration paid during such period for Permitted Investments of the
types described in clauses (d), (e), (f) and (h) of the definition of
"Permitted Investments" set forth in this Section 1.1) minus (d)
--------------------- -----
Interest Expense for such period minus (e) Cash Tax Payments made
-----
during such period minus (f) Restricted Payments for Taxes made during
-----
such period minus (g) Scheduled Funded Debt Payments for such period
-----
minus (h) voluntary prepayments made with respect to the Term Loans
-----
made during such period.
"Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended, and the rules and regulations promulgated thereunder, as
amended, modified, succeeded or replaced from time to time.
"Excluded Asset Disposition" means (i) the sale of inventory
--------------------------
in the ordinary course of business, (ii) the sale or disposition of
machinery and equipment no longer used or useful in the conduct of such
Person's business, (iii) any Asset Disposition by one Credit Party to
another Credit Party other than the Parent if (a) the Credit Parties
shall cause to be executed and delivered such documents, instruments
and certificates as the Agent may request so as to cause the Credit
Parties to be in compliance with the terms of Section 7.10 after giving
effect to such Asset Disposition and (b) after giving effect to such
Asset Disposition, no Default or Event of Default exists, (iv) the
lease or sublease of real property interests in the ordinary course of
business, (v) the license of intellectual property in the ordinary
course of business, (vi) any casualty or condemnation event provided
that the Borrower shall comply with Section 7.7, (vii) the transfer of
Property constituting a Permitted Investment or permitted pursuant to
Section 8.4 and (viii) any Equity Issuance.
"Exempt Affiliate Transactions" means (a) advances of working
-----------------------------
capital to any Credit Party other than the Parent, (b) transfers of
cash and assets to any Credit Party other than the Parent (including
without limitation transfers of the types referred to in clause (iii)
of the definition of "Excluded Asset Dispositions" set forth in this
---------------------------
Section 1.1), (c) transactions permitted by Section 8.1, Section 8.4,
Section 8.5, Section 8.7 or Section 8.8, (d) normal compensation and
reimbursement of expenses of officers and directors, (e) provided that
no Default or Event of Default has occurred and is continuing or would
be directly or indirectly caused as a result thereof, payments by the
Credit Parties pursuant to that certain Consulting Agreement dated as
of November 20, 1998 between the Borrower and IPC, Inc. of an annual
consulting fee of up to $500,000 and reasonable out-of-pocket expenses
of IPC, Inc. incurred in connection with such Consulting Agreement and
(f) transactions contemplated by that certain Supply Agreement dated as
of November 20, 1998 between the Borrower and IPC, Inc.
-10-
"Extension of Credit" means, as to any Lender, the making of a
-------------------
Loan by such Lender (or a participation therein by a Lender) or the
issuance of, or participation in, a Letter of Credit by such Lender.
"Federal Funds Rate" means for any day the rate per annum
------------------
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day; provided
that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding
Business Day and (b) if no such rate is so published on such next
preceding Business Day, the Federal Funds Rate for such day shall be
the average rate quoted to the Agent on such day on such transactions
as determined by the Agent.
"Fee Letter" means that certain letter agreement between the
----------
Borrower, NMS and the Agent dated as of the Closing Date.
"Fixed Charge Coverage Ratio" means, for the Borrower and its
---------------------------
Subsidiaries as of the last day of any fiscal quarter for the twelve
month period then ended, the ratio of (a) EBITDA minus Capital
-----
Expenditures minus Restricted Payments for Taxes minus Cash Tax
----- -----
Payments to (b) cash Interest Expense plus Scheduled Funded Debt
----
Payments.
"Funded Debt" of any Person means, without duplication, (a)
-----------
all Indebtedness of such Person for borrowed money, excluding
intercompany items, (b) all purchase money Indebtedness of such Person,
(c) the principal portion of all obligations of such Person under (i)
Capital Leases and (ii) any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing
product of such Person where such transaction is considered borrowed
money indebtedness for tax purposes but is classified as an operating
lease in accordance with GAAP, (d) all obligations of such Person,
contingent or otherwise, relative to the face amount of all letters of
credit (other than letters of credit supporting trade payables in the
ordinary course of business), whether or not drawn, and banker's
acceptances issued for the account of such Person (it being understood
that, to the extent an undrawn letter of credit supports another
obligation consisting of Funded Debt, in calculating aggregated Funded
Debt only such other obligation shall be included), (e) all Guaranty
Obligations of such Person with respect to Funded Debt of another
Person, (f) all Funded Debt of another Person secured by a Lien on any
Property of such Person but only to the extent of the value of such
Property, whether or not such Funded Debt has been assumed and (g) all
Funded Debt of any partnership or unincorporated joint venture to the
extent such Person is legally obligated or has a reasonable expectation
of being liable with respect thereto, net of any Property of such
partnership or joint venture.
"GAAP" means generally accepted accounting principles in the
----
United States applied on a consistent basis and subject to Section 1.3.
"Governmental Authority" means any Federal, state, local,
----------------------
provincial or foreign court or governmental agency, authority,
instrumentality or regulatory body.
-11-
"Guarantor" means each of the Persons identified as a
---------
"Guarantor" on the signature pages hereto and each Person which may
hereafter execute a Joinder Agreement pursuant to Section 7.13.
"Guaranty Obligations" means, with respect to any Person,
--------------------
without duplication, any obligations (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing any Indebtedness, leases, dividends or other
obligations of any other Person in any manner, whether direct or
indirect, and including without limitation any obligation, whether or
not contingent, (a) to purchase any such Indebtedness or other
obligation or any Property constituting security therefor, (b) to
advance or provide funds or other support for the payment or purchase
of such Indebtedness or obligation or to maintain working capital,
solvency or other balance sheet condition of such other Person
(including, without limitation, maintenance agreements, comfort
letters, take or pay arrangements, put agreements or similar agreements
or arrangements) for the benefit of the holder of Indebtedness of such
other Person, (c) to lease or purchase Property, securities or services
primarily for the purpose of assuring the owner of such Indebtedness or
obligation or (d) to otherwise assure or hold harmless the owner of
such Indebtedness or obligation against loss in respect thereof. The
amount of any Guaranty Obligation hereunder shall (subject to any
limitations set forth therein) be deemed to be an amount equal to the
outstanding principal amount (or maximum principal amount, if larger)
of the Indebtedness in respect of which such Guaranty Obligation is
made.
"Hazardous Materials" means any substance, material or waste
-------------------
regulated under any Environmental Laws.
"Hedging Agreements" means collectively, interest rate
------------------
protection agreements, foreign currency exchange agreements, commodity
purchase or option agreements or other interest or exchange rate or
commodity price hedging agreements, in each case, entered into or
purchased by a Credit Party.
"Indebtedness" of any Person means, without duplication, (a)
------------
all obligations of such Person for borrowed money, (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, (c)
all obligations of such Person under conditional sale or other title
retention agreements relating to Property purchased by such Person to
the extent of the value of such Property (other than customary
reservations or retentions of title under agreements with suppliers
entered into in the ordinary course of business), (d) all obligations,
including without limitation intercompany items, of such Person issued
or assumed as the deferred purchase price of Property or services
purchased by such Person which would appear as liabilities on a balance
sheet of such Person (other than trade debt incurred in the ordinary
course of business and due within six months of the incurrence
thereof), (e) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on, or payable out of the
proceeds of production from, Property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (f)
all Guaranty Obligations of such Person, (g) the
-12-
principal portion of all obligations of such Person under (i) Capital
Leases and (ii) any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product
of such Person where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease
in accordance with GAAP, (h) all net obligations of such Person in
respect of hedging agreements, foreign currency exchange obligations,
and commodity futures agreements, (i) the maximum amount of all
performance and standby letters of credit issued or bankers'
acceptances facilities created for the account of such Person and,
without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (j) all preferred stock issued by such Person and
required by the terms thereof to be redeemed, or for which mandatory
sinking fund payments are due by a fixed date, (k) the aggregate amount
of uncollected accounts receivable of such Person subject at such time
to a sale of receivables (or similar transaction) regardless of whether
such transaction is effected without recourse to such Person or in a
manner that would not be reflected on the balance sheet of such Person
in accordance with GAAP and (l) all preferred Capital Stock issued by
such Person and which by the terms thereof could be (at the request of
the holders thereof or otherwise) subject to mandatory sinking fund
payments, redemption or other acceleration. The Indebtedness of any
Person shall include the Indebtedness of any partnership or
unincorporated joint venture in which such Person is legally obligated
net of any tangible Property of such partnership or joint venture.
"Intellectual Property" has the meaning set forth in Section
---------------------
6.19.
"Intercreditor Agreement" means that certain Intercreditor
-----------------------
Agreement dated as of the date hereof among the Agent, the Borrower,
Bagcraft Acquisition, LLC, Xxxxxx Springs and KDOCH, as amended,
modified, restated or supplemented from time to time.
"Interest Coverage Ratio" means, as of the last day of any
-----------------------
fiscal quarter, the ratio of (a) EBITDA of the Borrower and its
Subsidiaries on a consolidated basis for the twelve month period then
ended to (b) cash Interest Expense of the Borrower and its Subsidiaries
on a consolidated basis for the twelve month period then ended.
"Interest Expense" means, for any period, with respect to the
----------------
Borrower and its Subsidiaries on a consolidated basis, all cash
interest expense (paid or accrued to be paid), including the interest
component under Capital Leases, as determined in accordance with GAAP;
provided, however, that Interest Expense for the fiscal quarters ended
-------- -------
December 31, 1997, March 31, 1998, June 30, 1998, September 30, 1998
and December 31, 1998 shall be the amount indicated for such period on
Schedule 1.1(d).
---------------
"Interest Payment Date" means (a) as to Base Rate Loans, each
---------------------
March 31, June 30, September 30 and December 31 and the Maturity Date
and (b) as to Eurodollar Loans, the last day of each applicable
Interest Period and the Maturity Date; provided that if the applicable
Interest Period exceeds three months, at the end of each three month
interval during such period.
-13-
"Interest Period" means, as to Eurodollar Loans, a period of
---------------
one, two, three or six months' duration, as the Borrower may elect,
commencing, in each case, on the date of the borrowing (including
continuations and conversions thereof); provided, however, (a) if any
Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
(except that where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day),
(b) no Interest Period shall extend beyond the Maturity Date, (c) with
regard to Term Loans, no Interest Period shall extend beyond any
Principal Amortization Payment Date unless the portion of applicable
Term Loans comprised of Base Rate Loans, together with the portion of
applicable Term Loans comprised of Eurodollar Loans with Interest
Periods expiring prior to such Principal Amortization Payment Date is
greater than or equal to the Principal Amortization Payment due on such
Principal Amortization Payment Date and (d) where an Interest Period
begins on a day for which there is no numerically corresponding day in
the calendar month in which the Interest Period is to end, such
Interest Period shall end on the last Business Day of such calendar
month.
"Investment" in any Person means (a) the acquisition (whether
----------
for cash, Property, services, assumption of Indebtedness, securities or
otherwise) of Property, shares of Capital Stock, bonds, notes,
debentures, partnership, joint ventures or other ownership interests or
other securities of such other Person or (b) any deposit with, or
advance, loan or other extension of credit to, such Person (other than
deposits made in connection with the purchase of equipment or other
Property in the ordinary course of business) or (c) any other capital
contribution to or investment in such Person, including, without
limitation, any Guaranty Obligation (including any support for a Letter
of Credit issued on behalf of such Person) incurred for the benefit of
such Person.
"IPMC" means IPMC, Inc., a Delaware corporation.
----
"IPMC Acquisition" means IPMC Acquisition, L.L.C., a
-----------------
Delaware limited liability company and a wholly-owned Subsidiary of the
Borrower.
"Issuing Lender" means NationsBank, N.A. or any successor
--------------
Agent.
"Issuing Lender Fees" means the fee payable to the Issuing
-------------------
Lender pursuant to Section 3.4(c).
"Ivex" means Ivex Packaging Corporation, a Delaware
----
corporation.
"Joinder Agreement" means a Joinder Agreement substantially in
-----------------
the form of Exhibit 7.13.
------------
"KDOCH" means the Kansas Department of Commerce & Housing.
-----
"Leasehold Mortgage" has the meaning set forth in Section
------------------
5.1(e).
"Leasehold Mortgage Properties" has the meaning set forth in
-----------------------------
Section 5.1(e).
-14-
"Lender" means any of the Persons identified as a "Lender" on the
------
signature pages hereto, and any Eligible Assignee which may become a Lender
by way of assignment in accordance with the terms hereof, together with
their successors and permitted assigns.
"Letter of Credit" means a letter of credit issued for the account of
----------------
a Credit Party by the Issuing Lender pursuant to Section 2.2, as such
letter of credit may be amended, modified, extended, renewed or replaced.
"Leverage Ratio" means, as of the last day of any fiscal quarter, the
--------------
ratio of (a) total Funded Debt of the Borrower and its Subsidiaries on a
consolidated basis as of such date, to (b) EBITDA of the Borrower and its
Subsidiaries on a consolidated basis for the twelve month period then
ended.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind, including, without limitation,
any agreement to give any of the foregoing, any conditional sale or other
title retention agreement, and any lease in the nature thereof.
"Loan" or "Loans" means the Revolving Loans and the Term Loans (or a
---- -----
portion of any Revolving Loan or Term Loan), individually or collectively,
as appropriate.
"LOC Commitment" means the commitment of the Issuing Lender to issue
--------------
Letters of Credit for the account of a Credit Party in an aggregate face
amount at any time outstanding (together with the amounts of any
unreimbursed drawings thereon) of up to the LOC Committed Amount.
"LOC Committed Amount" shall have the meaning assigned to such term in
--------------------
Section 2.2(a).
"LOC Documents" means, with respect to any Letter of Credit, such
-------------
Letter of Credit, any amendments thereto, any documents delivered in
connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in application
or applicable only to such Letter of Credit) governing or providing for (a)
the rights and obligations of the parties concerned or at risk or (b) any
collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (a) the maximum
---------------
amount which is, or at any time thereafter may become, available to be
drawn under Letters of Credit then outstanding, assuming compliance with
all requirements for drawings referred to in such Letters of Credit plus
----
(b) the aggregate amount of all drawings under Letters of Credit honored by
the Issuing Lender but not theretofore reimbursed.
"LOC Participants" means the Lenders whose Revolving Loan Commitment
----------------
Percentage is greater than zero.
-15-
"London Interbank Offered Rate" means, with respect to any Eurodollar
-----------------------------
Loan for the Interest Period applicable thereto, the rate of interest per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing
on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 A.M. (London
time) two Business Days prior to the first day of such Interest Period for
a term comparable to such Interest Period; provided, however, if more than
one rate is specified on Telerate Page 3750, the applicable rate shall be
the arithmetic mean of all such rates. If, for any reason, such rate is not
available, the term "London Interbank Offered Rate" shall mean, with
-----------------------------
respect to any Eurodollar Loan for the Interest Period applicable thereto,
the rate of interest per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, however, if
more than one rate is specified on Reuters Screen LIBO Page, the applicable
rate shall be the arithmetic mean of all such rates.
"Management Notes" means the promissory notes referenced in Section
----------------
5.1(k).
"Mandatory Borrowing" has the meaning set forth in Section 2.2(e).
-------------------
"Material Adverse Effect" means a material adverse effect, after
-----------------------
taking into account applicable insurance, if any, on (a) the operations,
financial condition, business or prospects of the Credit Parties taken as a
whole, (b) the ability of a Credit Party to perform in any material respect
its obligations under this Credit Agreement or any of the other Credit
Documents, or (c) the validity or enforceability of this Credit Agreement,
any of the other Credit Documents, or the rights and remedies of the
Lenders hereunder or thereunder taken as a whole.
"Maturity Date" means (a) as to the Revolving Loans, Letters of Credit
-------------
(and the related LOC Obligations) and Tranche A Term Loans, November 20,
2004, and (b) as to the Tranche B Term Loans, November 20, 2005.
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor or
-------
assignee of the business of such company in the business of rating
securities.
"Mortgage Documents" means the Mortgages and the Leasehold Mortgages.
------------------
"Mortgage Policies" has the meaning set forth in Section 5.1(e).
-----------------
"Mortgages" has the meaning set forth in Section 5.1(e).
---------
"Mortgage Properties" has the meaning set forth in Section 5.1(e).
-------------------
"Multiemployer Plan" means a Plan covered by Title IV of ERISA which
------------------
is a multiemployer plan as defined in Section 3(37) or 4001(a)(3) of ERISA.
-16-
"Multiple Employer Plan" means a Plan covered by Title IV of ERISA,
----------------------
other than a Multiemployer Plan, which any Credit Party or any ERISA
Affiliate and at least one employer other than a Credit Party or any ERISA
Affiliate are contributing sponsors.
"NationsBank" means NationsBank, N.A. or any successor thereto.
-----------
"Net Cash Proceeds" means the aggregate cash proceeds received from an
-----------------
Asset Disposition, an Equity Issuance or a Debt Issuance net of (a)
reasonable transaction costs payable to third parties, (b) taxes paid or a
good faith estimate of the taxes payable with respect to such proceeds
(including, without duplication, withholding taxes, Cash Tax Payments and
Restricted Payments for Taxes) and (c) with respect to any Asset
Disposition, the outstanding Indebtedness (other than the Loans) required
to be repaid as a result of such Asset Disposition.
"Net Income" means, for any period, the net income after taxes for
----------
such period of the Borrower and its Subsidiaries on a consolidated basis,
as determined in accordance with GAAP.
"Net Worth" means, as of the last day of any fiscal quarter,
---------
shareholders' equity or net worth of the Borrower and its Subsidiaries on a
consolidated basis as of such date, as determined in accordance with GAAP.
"NMS" means NationsBanc Xxxxxxxxxx Securities LLC.
---
"Non-Excluded Taxes" has the meaning set forth in Section 3.13.
------------------
"Note" or "Notes" means the Revolving Loan Notes and the Term tNotes,
---- -----
individually or collectively, as appropriate.
"Notice of Borrowing" means a request by the Borrower for a Revolving
-------------------
Loan, in the form of Exhibit 2.1(b).
--------------
"Notice of Continuation/Conversion" means a request by the Borrower to
---------------------------------
continue an existing Eurodollar Loan to a new Interest Period or to convert
a Eurodollar Loan to a Base Rate Loan or a Base Rate Loan to a Eurodollar
Loan, in the form of Exhibit 2.5.
-----------
"Parent" means Packaging Holdings, L.L.C., a Delaware limited
------
liability company.
"Participation Interest" means the Extension of Credit by a Lender by
----------------------
way of a purchase of a participation in Letters of Credit or LOC
Obligations as provided in Section 2.2 or in any Loans as provided in
Section 3.8.
"PBGC" means the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA and any successor thereto.
-17-
"Permitted Acquisition" means any Acquisition by the Borrower or any
---------------------
of its Subsidiaries provided that (i) the Property acquired (or the
--------
Property of the Person acquired) in such Acquisition are used or useful in
the same or a similar line of business as the Borrower and its Subsidiaries
were engaged in on the Closing Date (or any reasonable extensions or
expansions thereof), (ii) the Agent shall have received all items in
respect of the Capital Stock or Property acquired in such Acquisition
(and/or the seller thereof) required to be delivered by the terms of
Section 7.10 and/or Section 7.13, (iii) in the case of an Acquisition of
the Capital Stock of another Person, the board of directors (or other
comparable governing body) of such other Person shall have duly approved
such Acquisition, (iv) the Borrower shall have delivered to the Agent a Pro
Forma Compliance Certificate demonstrating that, upon giving effect to such
Acquisition on a Pro Forma Basis, the Credit Parties shall be in compliance
with all of the covenants set forth in Section 7.2, (v) the representations
and warranties made by the Credit Parties in any Credit Document shall be
true and correct in all material respects at and as if made as of the date
of such Acquisition (after giving effect thereto) except to the extent such
representations and warranties expressly relate to an earlier date, (vi) if
such transaction involves the purchase of an interest in a partnership
between the Borrower (or a Subsidiary of the Borrower) as a general partner
and entities unaffiliated with the Borrower or such Subsidiary as the other
partners, such transaction shall be effected by having such equity interest
acquired by a corporate holding company directly or indirectly wholly-owned
by the Borrower newly formed for the sole purpose of effecting such
transaction, (vii) after giving effect to such Acquisition, there shall be
at least $5,000,000 of availability existing under the Revolving Committed
Amount and (ix) the aggregate consideration (including cash and non-cash
consideration and any assumption of liabilities (other than current working
capital liabilities not constituting Indebtedness)) for all such
Acquisitions occurring after the Closing Date shall not exceed $15,000,000.
"Permitted Investments" means Investments which are (a) cash or Cash
---------------------
Equivalents, (b) accounts receivable created, acquired or made in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms, (c) inventory, raw materials and general intangibles
acquired in the ordinary course of business, (d) Investments by a Credit
Party in another Credit Party other than the Parent, (e) loans to
directors, officers or employees (i) in the ordinary course of business for
reasonable business expenses, not to exceed $1,000,000 in aggregate
principal amount at any one time outstanding and (ii) in connection with
their acquisition of interests in the Parent, not to exceed $1,000,000 in
aggregate principal amount at any one time outstanding; (f) Investments in
Capital Expenditures; (g) the Transactions; (h) Permitted Acquisitions; and
(i) Investments existing as of the Closing Date and set forth in Schedule
--------
1.1(b).
------
"Permitted Liens" means (a) Liens securing Credit Party Obligations,
---------------
(b) Liens for taxes not yet due or Liens for taxes being contested in good
faith by appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which the Property
subject to any such Lien is not yet subject to foreclosure, sale,
collection, levy or loss on account thereof), (c) Liens in respect of
Property imposed by law arising in the ordinary course of business such as
materialmen's, mechanics', warehousemen's, carrier's, landlords' and other
nonconsensual statutory Liens which are not
-18-
yet due and payable or which are being contested in good faith by
appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which the Property
subject to any such Lien is not yet subject to foreclosure, sale or loss on
account thereof), (d) pledges or deposits made in the ordinary course of
business to secure payment of worker's compensation insurance, unemployment
insurance, pensions or social security programs, (e) Liens arising from
good faith deposits in connection with or to secure performance of tenders,
bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations incurred in the ordinary course of business
(other than obligations in respect of the payment of borrowed money), (f)
Liens arising from good faith deposits in connection with or to secure
performance of statutory obligations and surety and appeal bonds, (g)
easements, rights-of-way, restrictions (including zoning restrictions),
restrictive covenants, matters of plat, minor defects or irregularities in
title and other similar charges or encumbrances not, in any material
respect, impairing the use of the encumbered Property for its intended
purposes, (h) judgment Liens that would not constitute an Event of Default
if discharged within 30 days, (i) Liens on Property of any Person securing
purchase money Indebtedness (including Capital Leases and Synthetic Leases)
of such Person to the extent permitted under Section 8.1(d), provided that
-------------
any such Lien attaches to such Property concurrently with or within 90 days
after the acquisition thereof and any such Lien does not at any time
encumber Property other than the Property financed by such purchase money
Indebtedness, (j) Liens arising by virtue of any statutory or common law
provision relating to banker's liens, rights of setoff or similar rights as
to deposit accounts or other funds maintained with a creditor depository
institution, (k) Liens existing on the date hereof and identified on
Schedule 1.1(c); provided that no such Lien shall extend to any Property
--------------- -------------
other than the Property subject thereto on the Closing Date and (l) any
Lien granted in connection with any amendment, restatement, supplement,
renewal, replacement, extension or refunding (or successive amendments,
restatements, supplements, extensions or refundings) in whole or in part of
any Indebtedness permitted by Section 8.1(b) other than the Xxxxxx Springs
Debt; provided that the principal amount of Indebtedness secured by any
such Lien does not exceed the principal amount of such Indebtedness
outstanding immediately prior to such amendment, restatement, supplement,
renewal, replacement, extension or refunding.
"Person" means any individual, partnership, joint venture, firm,
------
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated), or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in Section 3(3) of
----
ERISA) which is covered by ERISA and with respect to which any Credit Party
or any ERISA Affiliate is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" within the
meaning of Section 3(5) of ERISA.
"Post-Closing Purchase Price Adjustments" means any reduction in the
---------------------------------------
aggregate purchase price paid by the Borrower or any of its Subsidiaries
(whether such purchase price is payable in cash, notes or other Property)
in connection with (i) either of the Transactions or (ii) any Permitted
Acquisition.
-19-
"Prime Rate" means the per annum rate of interest established from
----------
time to time by the Agent at its principal office in Charlotte, North
Carolina (or such other principal office of the Agent as communicated in
writing to the Borrower and the Lenders) as its Prime Rate. Any change in
the interest rate resulting from a change in the Prime Rate shall become
effective as of 12:01 a.m. of the Business Day on which each change in the
Prime Rate is announced by the Agent. The Prime Rate is a reference rate
used by the Agent in determining interest rates on certain loans and is not
intended to be the lowest rate of interest charged on any extension of
credit to any debtor.
"Principal Amortization Payment" means a principal payment on the Term
------------------------------
Loans as set forth in Sections 2.3(c) and 2.4(c).
"Principal Amortization Payment Date" means the date a Principal
-----------------------------------
Amortization Payment is due.
"Pro Forma Basis" means, for purposes of calculating (utilizing the
---------------
principles set forth in the second paragraph of Section 1.3) compliance
with each of the financial covenants set forth in Section 7.2 in respect of
a proposed Acquisition as referred to in the definition of "Permitted
---------
Acquisition" set forth in this Section 1.1, that such Acquisition shall be
-----------
deemed to have occurred as of the first day of the four fiscal-quarter
period ending as of the most recent fiscal quarter end preceding the date
of such transaction with respect to which the Agent has received the
financial statements and officers' certificate required to be delivered
pursuant to Section 7.1(a) or (b), as applicable, and Section 7.1(d). In
connection with any calculation of the financial covenants set forth in
Section 7.2 upon giving effect on a Pro Forma Basis to any Acquisition, (1)
any Indebtedness incurred by any Credit Party in connection with such
Acquisition (A) shall be deemed to have been incurred as of the first day
of the applicable period and (B) if such Indebtedness has a floating or
formula rate, shall have an implied rate of interest for the applicable
period for purposes of this definition determined by utilizing the rate
which is or would be in effect with respect to such Indebtedness as at the
relevant date of determination and (2) income statement items (whether
positive or negative) attributable to the Capital Stock or Property
acquired in such Acquisition shall be included to the extent relating to
the relevant period.
"Pro Forma Compliance Certificate" means a certificate of the chief
--------------------------------
financial officer or treasurer of the Borrower delivered to the Agent in
connection with any Acquisition as referred to in the definition of
"Permitted Acquisition" set forth in this Section 1.1 and containing
---------------------
reasonably detailed calculations, upon giving effect to such Acquisition on
a Pro Forma Basis, of each of the financial covenants set forth in Section
7.2 as of the most recent fiscal quarter end preceding the date of such
Acquisition with respect to which the Agent shall have received the
financial statements and officers' certificate required to be delivered
pursuant to Section 7.1(a) or (b), as applicable, and Section 7.1(d).
"Property" means any interest in any kind of property or asset,
--------
whether real, personal or mixed, or tangible or intangible.
-20-
"Purchase Agreements" means a collective reference to the Bagcraft
-------------------
Purchase Agreement and the Detroit Paper Mill Purchase Agreement.
"Real Properties" means the Mortgage Properties, the Leasehold
---------------
Mortgage Properties and such other real properties as the Credit Parties
may own or lease (as lessee or sublessee) from third parties from time to
time.
"Regulation D, U, T or X" means Regulation D, U, T or X, respectively,
------------------------
of the Board of Governors of the Federal Reserve System as from time to
time in effect and any successor to all or a portion thereof.
"Reportable Event" means a "reportable event" as defined in Section
----------------
4043 of ERISA with respect to which the notice requirements to the PBGC
have not been waived.
"Required Lenders" means Lenders whose aggregate Credit Exposure (as
----------------
hereinafter defined) constitutes more than 50% of the Credit Exposure of
all Lenders at such time; provided, however, that if any Lender shall be a
-------- -------
Defaulting Lender at such time then there shall be excluded from the
determination of Required Lenders the aggregate principal amount of Credit
Exposure of such Lender at such time. For purposes of the preceding
sentence, the term "Credit Exposure" as applied to each Lender shall mean
(a) at any time prior to the termination of the Commitments, the sum of (i)
the Revolving Loan Commitment Percentage of such Lender multiplied by the
Revolving Committed Amount plus the Tranche A Term Loan Commitment
Percentage of such Lender multiplied by aggregate Tranche A Term Loans
outstanding at such time plus the Tranche B Term Loan Commitment Percentage
of such Lender multiplied by the aggregate Tranche B Term Loans outstanding
at such time, and (b) at any time after the termination of the Commitments,
the sum of (i) the principal balance of the outstanding Loans of such
Lender plus (ii) such Lender's Participation Interests in the face amount
of the outstanding Letters of Credit.
"Requirement of Law" means, as to any Person, the articles or
------------------
certificate of incorporation, by-laws, articles of organization, operating
agreement or other organizational or governing documents of such Person,
and any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other Governmental Authority,
in each case applicable to or binding upon such Person or to which any of
its material property is subject.
"Reserve Amount" shall have the meaning assigned to such term in
--------------
Section 2.1(g).
"Restricted Payment" means (i) any dividend or other payment or
------------------
distribution, direct or indirect, on account of any shares of any Capital
Stock, now or hereafter outstanding, in any Credit Party, or to the
holders, in their capacity as such, of any shares of any Capital Stock, now
or hereafter outstanding, in any Credit Party (other than dividends or
distributions payable in the same class of Capital Stock in the applicable
Person or to any Credit Party other than the Parent (directly or indirectly
through Subsidiaries)), (ii) any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for
-21-
value, direct or indirect, of any shares of any Capital Stock, now or
hereafter outstanding, in any Credit Party, (iii) any payment made to
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire shares of any Capital Stock, now or hereafter
outstanding, in any Credit Party, (iv) any payment or prepayment of any
obligations (including without limitation principal, interest, premiums and
fees) evidenced by, arising under or relating to the Subordinated Note and
(v) any loan or advance to the Parent.
"Restricted Payments for Taxes" means:
-----------------------------
(i) in respect of the Borrower and its Subsidiaries on a
consolidated basis, for any period during which the Borrower or any
Subsidiary is treated as a flow-through entity for tax purposes, the
aggregate amount (without duplication) of Restricted Payments made by
the Borrower and its Subsidiaries during such period to enable the
payment of Federal, state and other income taxes with respect to such
Person; provided, however, that Restricted Payments for Taxes in
-------- -------
respect of the Borrower and its Subsidiaries for the fiscal quarters
ended December 31, 1997, March 31, 1998, June 30, 1998 and September
30, 1998 shall be the amount indicated for such period on Schedule
--------
1.1(d); and
------
(ii) in respect of the Parent, at any time that the Parent is
treated as a flow-through entity for tax purposes, the aggregate
amount of Restricted Payments made by the Parent during such period to
enable the payment of Federal, state and other income taxes with
respect to such Person.
The term "Restricted Payments for Taxes" shall not include any Cash Tax
Payments.
"Revolving Committed Amount" means TWENTY-TWO MILLION FIVE HUNDRED
--------------------------
THOUSAND DOLLARS ($22,500,000) or such lesser amount as the Revolving
Committed Amount may be reduced pursuant to Section 2.1(d) or 3.3(c).
"Revolving Lender" means any Lender holding a Revolving Loan
----------------
Commitment, as identified on Schedule 1.1(a), greater than zero, together
with permitted successors and assigns.
"Revolving Loan Commitment" means, with respect to each Revolving
-------------------------
Lender, the commitment of such Lender to make its portion of the Revolving
Loans in a principal amount equal to such Lender's Revolving Loan
Commitment Percentage of the Revolving Committed Amount.
"Revolving Loan Commitment Percentage" means, for each Lender, the
------------------------------------
percentage identified as its Revolving Loan Commitment Percentage on
Schedule 1.1(a), as such percentage may be modified in connection with any
---------------
assignment made in accordance with the provisions of Section 11.3.
-22-
"Revolving Loans" means the Revolving Loans made to the Borrower
---------------
pursuant to Section 2.1.
"Revolving Note" or "Revolving Notes" means the promissory notes of
-------------- ---------------
the Borrower in favor of each of the Revolving Lenders evidencing the
Revolving Loans provided pursuant to Section 2.1, individually or
collectively, as appropriate, as such promissory notes may be amended,
modified, supplemented, extended, renewed or replaced from time to time and
as evidenced in the form of Exhibit 2.1(g).
--------------
"S&P" means Standard & Poor's Ratings Services, a division of The
---
XxXxxx-Xxxx Companies, Inc. or any successor or assignee of the business of
such division in the business of rating securities.
"Scheduled Funded Debt Payments" means, as of the end of each fiscal
------------------------------
quarter of the Borrower, for the Borrower and its Subsidiaries on a
consolidated basis, the sum of all scheduled payments of principal on
Funded Debt for the applicable period ending on such date (including the
principal component of payments due on Capital Leases during the applicable
period ending on such date); it being understood that (a) Scheduled Funded
Debt Payments shall not include voluntary prepayments or the mandatory
prepayments required pursuant to Section 3.3 and (b) Scheduled Funded Debt
Payments for the fiscal quarters ended December 31, 1997, March 31, 1998,
June 30, 1998, September 30, 1998 and December 31, 1998 shall be the amount
indicated for such period on Schedule 1.1(d).
---------------
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
"Security Agreement" means the security agreement dated as of the
------------------
Closing Date in the form of Exhibit 1.1A to be executed in favor of the
------------
Agent by each of the Credit Parties, as amended, modified, restated or
supplemented from time to time.
"Single Employer Plan" means any Plan which is covered by Title IV of
--------------------
ERISA, but which is not a Multiemployer Plan.
"Solvent" means, with respect to any Person as of a particular date,
-------
that on such date (a) such Person is able to pay its debts and other
liabilities, contingent obligations and other commitments as they mature in
the normal course of business, (b) such Person does not intend to, and does
not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature in their ordinary
course, (c) such Person is not engaged in a business or a transaction, and
is not about to engage in a business or a transaction, for which such
Person's assets would constitute unreasonably small capital after giving
due consideration to the prevailing practice in the industry in which such
Person is engaged or is to engage, (d) the fair value of the assets of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person and (e) the present fair
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. In computing the amount of contingent
liabilities at any time, it is
-23-
intended that such liabilities will be computed at the amount which, in
light of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability.
"Sponsor Group" means any of FW Strategic Partners (or its designee),
-------------
L.P., Keystone, Inc. (or its designee), Packaging Investors, LLC, DCBS
Investors, L.L.C. and members of the executive management of the Borrower
or Ivex.
"Standby Letter of Credit Fee" means the fee payable to the Lenders
----------------------------
pursuant to Section 3.4(b)(i).
"Subordinated Indebtedness" means (i) the Indebtedness evidenced by
-------------------------
the Subordinated Note and (ii) any other Indebtedness incurred by the
Borrower which by its terms is specifically subordinated in right of
payment to the prior payment of the obligations of the Credit Parties under
this Credit Agreement and the other Credit Documents on terms and
conditions satisfactory to the Required Lenders. The term "Subordinated
Indebtedness" shall not include any of the Xxxxxx Springs Debt.
"Subordinated Note" means that certain $12,500,000 promissory note,
-----------------
dated November 20, 1998, executed by the Parent in favor of IPMC, as such
promissory note may be amended, modified, supplemented, extended, renewed,
refinanced or replaced from time to time.
"Subsidiary" means, as to any Person, (a) any corporation more than
----------
50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time, any class or
classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by such Person
directly or indirectly through Subsidiaries, and (b) any partnership,
association, limited liability company, joint venture or other entity in
which such person directly or indirectly through Subsidiaries has more than
a 50% equity interest at any time.
"Term Loans" means, collectively, the Tranche A Term Loans and the
----------
Tranche B Term Loans.
"Term Note" means any of the Tranche A Term Notes and the Tranche B
---------
Term Notes and "Term Notes" means collectively the Tranche A Term Notes and
----------
the Tranche B Term Notes.
"Termination Event" means (a) with respect to any Single Employer
-----------------
Plan, the occurrence of a Reportable Event or the substantial cessation of
operations (within the meaning of Section 4062(e) of ERISA); (b) the
withdrawal of any Credit Party or any ERISA Affiliate from a Multiple
Employer Plan during a plan year in which it was a substantial employer (as
such term is defined in Section 4001(a)(2) of ERISA), or the termination of
a Multiple Employer Plan; (c) the distribution of a notice of intent to
terminate or the actual termination of a Plan pursuant to Section
4041(a)(2) or 4041A of
-24-
ERISA; (d) the institution of proceedings to terminate or the actual
termination of a Plan by the PBGC under Section 4042 of ERISA; (e) any
event or condition which might reasonably constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; or (f) the complete or partial withdrawal of any
Credit Party or any ERISA Affiliate from a Multiemployer Plan.
"Title Insurance Company" means Chicago Title Insurance Company.
-----------------------
"Tranche A Term Lender" means any Lender holding a Tranche A Term Loan
---------------------
Commitment greater than zero, as identified on Schedule 1.1(a), together
---------------
with permitted successors and assigns.
"Tranche A Term Loans" means the term loans made to the Borrower by
--------------------
the Tranche A Term Lenders pursuant to Section 2.3.
"Tranche A Term Loan Commitment" means, with respect to each Tranche A
------------------------------
Term Lender, the commitment of such Lender to make its portion of the
Tranche A Term Loans in a principal amount equal to such Lender's Tranche A
Term Loan Commitment Percentage of the Tranche A Term Loan Committed
Amount.
"Tranche A Term Loan Commitment Percentage" means, for any Tranche A
-----------------------------------------
Term Lender, the percentage identified as its Tranche A Term Loan
Commitment Percentage on Schedule 1.1(a), as such percentage may be
---------------
modified in connection with any assignment made in accordance with the
provisions of Section 11.3.
"Tranche A Term Loan Committed Amount" means TWENTY MILLION DOLLARS
------------------------------------
($20,000,000).
"Tranche A Term Note" or "Tranche A Term Notes" means the promissory
------------------- --------------------
notes of the Borrower in favor of each of the Tranche A Term Lenders
evidencing the Tranche A Term Loans provided pursuant to Section 2.3,
individually or collectively, as appropriate, as such promissory notes may
be amended, modified, restated, supplemented, extended, renewed, or
replaced from time to time, as evidenced in the form of Exhibit 2.3(e).
--------------
"Tranche B Term Lender" means any Lender holding a Tranche B Term Loan
---------------------
Commitment, as identified on Schedule 1.1(a), greater than zero, together
---------------
with permitted successors and assigns.
"Tranche B Term Loans" means the term loans made to the Borrower by
--------------------
the Tranche B Term Lenders pursuant to Section 2.4.
"Tranche B Term Loan Commitment" means, with respect to each Tranche B
------------------------------
Term Lender, the commitment of such Lender to make its portion of the
Tranche B Term Loans in a principal amount equal to such Lender's Tranche B
Term Loan Commitment Percentage of the Tranche B Term Loan Committed
Amount.
-25-
"Tranche B Term Loan Commitment Percentage" means, for any Tranche B
-----------------------------------------
Term Lender, the percentage identified as its Tranche B Term Loan
Commitment Percentage on Schedule 1.1(a), as such percentage may be
---------------
modified in connection with any assignment made in accordance with the
provisions of Section 11.3.
"Tranche B Term Loan Committed Amount" means FORTY-TWO MILLION FIVE
------------------------------------
HUNDRED THOUSAND DOLLARS ($42,500,000).
"Tranche B Term Note" or "Tranche B Term Notes" means the promissory
------------------- --------------------
notes of the Borrower in favor of each of the Tranche B Term Lenders
evidencing the Tranche B Term Loans provided pursuant to Section 2.4,
individually or collectively, as appropriate, as such promissory notes may
be amended, modified, restated, supplemented, extended, renewed, or
replaced from time to time, as evidenced in the form of Exhibit 2.4(e).
--------------
"Transactions" means a collective reference to (i) the acquisition by
------------
Bagcraft Acquisition of substantially all of the assets and liabilities of
Bagcraft pursuant to the Bagcraft Purchase Agreement, and the transfers and
transactions necessary or incidental thereto and (ii) the acquisition by
IPMC Acquisition of the Detroit Paper Mill Assets pursuant to the Detroit
Paper Mill Purchase Agreement, and the transfers and transactions necessary
or incidental thereto.
"Unused Commitment" means, for any period, the amount by which (a) the
-----------------
then applicable aggregate Revolving Committed Amount exceeds (b) the daily
average sum for such period of the outstanding aggregate principal amount
of all Revolving Loans (but specifically excluding the Reserve Amount) plus
the aggregate amount of LOC Obligations outstanding with respect to Letters
of Credit.
"Voting Stock" of a corporation means all classes of the Capital Stock
------------
of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly-Owned Subsidiary" of any Person means any Subsidiary 100% of
-----------------------
whose Voting Stock is at the time owned by such Person directly or
indirectly through other Wholly-Owned Subsidiaries.
"Year 2000 Problem" means any risk that any computer hardware,
-----------------
software or other equipment used by a Credit Party will not function as
effectively and reliably on and after January 1, 2000 as it does prior to
January 1, 2000, to the extent such risk would cause or be reasonably
expected to cause a Material Adverse Effect.
1.2 Computation of Time Periods and Other Definitional Provisions.
-------------------------------------------------------------
For purposes of computation of periods of time hereunder, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding." References in this Agreement to "Articles", "Sections", "Schedules"
or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits of or to
this Agreement unless otherwise specifically provided.
-26-
1.3 Accounting Terms.
----------------
Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1 (or,
prior to the delivery of the first financial statements pursuant to Section 7.1,
consistent with the financial statements described in Section 6.1(a)); provided,
--------
however, if (a) the Borrower shall object to determining such compliance on such
-------
basis at the time of delivery of such financial statements due to any change in
GAAP or the rules promulgated with respect thereto or (b) the Agent or the
Required Lenders shall so object in writing within 30 days after delivery of
such financial statements, then such calculations shall be made on a basis
consistent with GAAP as in effect as of the date of the most recent financial
statements delivered by the Borrower to the Lenders to which no such objection
shall have been made.
Notwithstanding the above, the parties hereto acknowledge and agree that, for
purposes of all calculations made under the financial covenants set forth in
Section 7.2 (including without limitation for purposes of the definition of
"Applicable Percentage" set forth in Section 1.1), (i)(A) income statement items
(whether positive or negative) attributable to the property disposed of in any
Asset Disposition as contemplated by Section 8.5 shall be excluded to the extent
relating to any period occurring prior to the date of such transaction and (B)
Indebtedness which is retired in connection with any such Asset Disposition
shall be excluded and deemed to have been retired as of the first day of the
applicable period and (ii) income statement items (whether positive or negative)
attributable to any Person or property acquired in any Acquisition contemplated
by the definition of "Permitted Acquisition" set forth in Section 1.1 shall, to
---------------------
the extent not otherwise included in such income statements items for the Credit
Parties in accordance with GAAP or in accordance with any defined terms set
forth in Section 1.1, be included to the extent relating to any period
applicable in such calculations.
SECTION 2
CREDIT FACILITIES
-----------------
2.1 Revolving Loans.
---------------
(a) Revolving Loan Commitment. Subject to the terms and conditions set
-------------------------
forth herein, each Lender severally agrees to make revolving loans (each a
"Revolving Loan" and collectively the "Revolving Loans") to the Borrower,
-------------- ---------------
in Dollars, at any time and from time to time, during the period from and
including the Effective Date to but not including the Maturity Date (or
such earlier date if the Revolving Committed Amount has been terminated as
provided herein); provided, however, that (i) the sum of the aggregate
-------- -------
amount of Revolving Loans outstanding plus the aggregate amount of LOC
Obligations outstanding
-27-
plus the Reserve Amount shall not exceed the Revolving Committed Amount and
(ii) with respect to each individual Lender, the Lender's pro rata share of
outstanding Revolving Loans plus such Lender's pro rata share of
outstanding LOC Obligations shall not exceed such Lender's Revolving Loan
Commitment Percentage of the Revolving Committed Amount. Subject to the
terms of this Credit Agreement (including Section 3.3), the Borrower may
borrow, repay and reborrow Revolving Loans.
(b) Method of Borrowing for Revolving Loans. (i) By no later than
---------------------------------------
11:00 a.m. (A) on the date of the requested borrowing of Revolving Loans
that will be Base Rate Loans or (B) three Business Days prior to the date
of the requested borrowing of Revolving Loans that will be Eurodollar
Loans, the Borrower shall telephone the Agent with the information
described below as well as submit a written Notice of Borrowing in the form
of Exhibit 2.1(b) to the Agent setting forth (1) the amount requested, (2)
--------------
whether such Revolving Loans shall accrue interest at the Adjusted Base
Rate or the Adjusted Eurodollar Rate, (3) with respect to Revolving Loans
that will be Eurodollar Loans, the Interest Period applicable thereto and
(4) certification that the Borrower has complied in all respects with
Section 5.2. All Revolving Loans made on the Effective Date shall be Base
Rate Loans. Thereafter, all or any portion of such Revolving Loans may be
converted into Eurodollar Loans in accordance with the terms of Section
2.5.
(ii) Subject to the other terms and conditions set forth herein
(including without limitation satisfaction of the conditions precedent set
forth in Section 5.2), the Borrower hereby agrees that, until such time as
all of the obligations of the Borrower under the Construction Loan
Documents shall have been paid in full and Xxxxxx Springs shall have
released all of its Liens in any Property of the Borrower or any of the
other Credit Parties, Xxxxxx Springs (or KDOCH on behalf of Xxxxxx Springs)
shall be authorized to request that Revolving Loans be made on behalf of
the Borrower for application to any obligations which are past due under
the Construction Loan Documents. Requests for Revolving Loans pursuant to
this Section 2.1(b)(ii) shall be made pursuant to a written Notice of
Borrowing signed by either the Mayor of Xxxxxx Springs or the Secretary of
KDOCH, substantially in accordance with the terms of Section 2.1(b)(i)
above. The proceeds of each Revolving Loan made pursuant to this Section
2.1(b)(ii) shall be paid to the account and in accordance with the wiring
instructions set forth in the related Borrowing Notice for application to
the past due obligations of the Borrower under the Construction Loan
Documents. Revolving Loans made pursuant to this Section 2.1(b)(ii) on any
day shall not exceed the aggregate amount of amounts which are past due
under the Construction Loan Documents on such date. On the date that any
Revolving Loans are to be made pursuant to this Section 2.1(b)(ii), the
Agent shall so notify the Borrower and shall send to the Borrower a copy of
the related Borrowing Notice. The Borrower hereby agrees (A) that the Agent
shall be entitled to rely upon, and shall be fully protected in acting upon
and in accordance with, any Borrowing Notice delivered by or on behalf of
Xxxxxx Springs pursuant to this Section 2.1(b)(ii) and believed in good
faith by the Agent to be genuine and correct and to have been signed, sent
or made by or on behalf of the Mayor of Xxxxxx Springs or the Secretary of
KDOCH, even if such Borrowing Notice should in fact prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent or forged, (B)
that the Agent shall not be required to
-28-
confirm or verify with the Borrower or any other Person the appropriateness
or accuracy of any Borrowing Notice delivered by or on behalf of Xxxxxx
Springs pursuant to this Section 2.1(b)(ii), (C) to hold the Agent and the
Lenders harmless in respect of any Revolving Loan advances made available
to Xxxxxx Springs pursuant to and in accordance with the terms of this
Section 2.1(b)(ii), (D) that as between the Borrower and the Agent and the
Lenders, the Borrower shall assume all risks of the acts of Xxxxxx Springs
or KDOCH pursuant to this Section 2.1(b)(ii), (E) that any action taken or
omitted by the Agent or any Lender pursuant to or in connection with any
Borrowing Notice delivered by or on behalf of Xxxxxx Springs pursuant to
this Section 2.1(b)(ii), if taken or omitted in good faith, shall not put
the Agent or such Lender under any resulting liability to the Borrower or
any other Credit Party and (F) the provisions of this Section 2.1(b)(ii)
shall be construed and applied to protect and exculpate the Agent and the
Lenders against any and all risks involved in the making of Revolving Loan
advances pursuant to this Section 2.1(b)(ii), all of which risks are hereby
assumed by the Borrower (on behalf of itself and each of the other Credit
Parties), provided that such provisions shall not be deemed to protect or
exculpate the Agent or any Lender in respect of any action or inaction of
such Person constituting gross negligence or willful misconduct.
(c) Funding of Revolving Loans. Upon receipt of a Notice of Borrowing,
--------------------------
the Agent shall promptly inform the Lenders as to the terms thereof. Each
Lender shall make its Revolving Loan Commitment Percentage of the requested
Revolving Loans available to the Agent by 2:00 p.m. on the date specified
in the Notice of Borrowing by deposit, in Dollars, of immediately available
funds at the offices of the Agent at its principal office in Charlotte,
North Carolina or at such other address as the Agent may designate in
writing. The amount of the requested Revolving Loans will then be made
available to the Borrower by the Agent by crediting the account of the
Borrower on the books of such office of the Agent, to the extent the amount
of such Revolving Loans are made available to the Agent. No Lender shall be
responsible for the failure or delay by any other Lender in its obligation
to make Revolving Loans hereunder; provided, however, that the failure of
any Lender to fulfill its obligations hereunder shall not relieve any other
Lender of its obligations hereunder. Unless the Agent shall have been
notified by any Lender prior to the date of any such Revolving Loan that
such Lender does not intend to make available to the Agent its portion of
the Revolving Loans to be made on such date, the Agent may assume that such
Lender has made such amount available to the Agent on the date of such
Revolving Loans, and the Agent in reliance upon such assumption, may (in
its sole discretion but without any obligation to do so) make available to
the Borrower a corresponding amount. If such corresponding amount is not in
fact made available to the Agent, the Agent shall be able to recover such
corresponding amount from such Lender. If such Lender does not pay such
corresponding amount forthwith upon the Agent's demand therefor, the Agent
will promptly notify the Borrower, and the Borrower shall immediately pay
such corresponding amount to the Agent. The Agent shall also be entitled to
recover from the Lender or the Borrower, as the case may be, interest on
such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Borrower to the
date such corresponding amount is recovered by the Agent at a per annum
rate equal to (i) from the Borrower at the applicable rate for such
Revolving Loan pursuant to the Notice of Borrowing and (ii) from a Lender
at the Federal Funds Rate.
-29-
(d) Reductions of Revolving Committed Amount. Upon at least
----------------------------------------
three Business Days' notice, the Borrower shall have the right to
permanently reduce, without premium or penalty, all or part of the
aggregate unused amount of the Revolving Committed Amount at any time
or from time to time; provided that (i) each partial reduction shall be
in an aggregate amount at least equal to $5,000,000 and in integral
multiples of $1,000,000 above such amount and (ii) no reduction shall
be made which would reduce the Revolving Committed Amount to an amount
less than the aggregate amount of outstanding Revolving Loans plus the
aggregate amount of outstanding LOC Obligations plus the Reserve
Amount. Any reduction in (or termination of) the Revolving Committed
Amount shall be permanent and may not be reinstated. The Agent shall
immediately notify the Lenders of any reduction in the Revolving
Committed Amount.
(e) Interest. Subject to the provisions of Section 3.1,
--------
(i) Base Rate Loans. During such periods as Revolving Loans
---------------
shall be comprised in whole or in part of Base Rate Loans, such
Base Rate Loans shall bear interest at a per annum rate equal to
the Adjusted Base Rate.
(ii) Eurodollar Loans. During such periods as Revolving Loans
----------------
shall be comprised in whole or in part of Eurodollar Loans, such
Eurodollar Loans shall bear interest at a per annum rate equal to
the Adjusted Eurodollar Rate.
(f) Revolving Notes. The Revolving Loans made by each Revolving
---------------
Lender shall be evidenced by a duly executed promissory note of the
Borrower to such Lender in an original principal amount equal to such
Lender's Revolving Commitment Percentage of the Revolving Committed
Amount and in substantially the form of Exhibit 2.1(f).
--------------
(g) Reserve for Xxxxxx Springs Debt. Until such time as all of the
-------------------------------
obligations of the Borrower under the Construction Loan Documents shall
have been paid in full and Xxxxxx Springs shall have released all of
its Liens in any Property of the Borrower or any of the other Credit
Parties, a portion of the Revolving Committed Amount in an amount equal
to the Reserve Amount shall be reserved to finance amounts which become
due and payable under the Construction Loan Documents as provided in
paragraph 19 of the Intercreditor Agreement. For purposes of this
subsection (g), the term "Reserve Amount" shall mean, at any time, an
amount equal to the lesser of (i) the then outstanding principal amount
of the Indebtedness under the Construction Loan Documents and (ii) (A)
at any time prior to payment in full of all obligations of the Borrower
in respect of the Indebtedness referred to in item 2 on Schedule 6.10,
-------------
$1,200,000 and (B) at any time thereafter, $700,000. The Reserve Amount
shall not be available for Revolving Loans made pursuant to Section
2.1(b)(i). The Reserve Amount shall not be reduced by the making of any
Revolving Loans pursuant to Section 2.1(b)(ii) (except, as contemplated
by the immediately preceding sentence, to the extent that the making of
such Revolving Loans reduces the outstanding principal amount of the
Indebtedness under the Construction Loan Documents).
-30-
2.2 Letter of Credit Subfacility.
----------------------------
(a) Issuance. Subject to the terms and conditions hereof and
--------
of the LOC Documents, if any, and any other terms and conditions which
the Issuing Lender may reasonably require (so long as such terms and
conditions do not impose any financial obligation on or require any
Lien (not otherwise contemplated by this Credit Agreement) to be given
by any Credit Party or conflict with any obligation of, or detract from
any action which may be taken by, any Credit Party under this Credit
Agreement), the Issuing Lender shall from time to time upon request
issue (from the Effective Date to the Maturity Date and in a form
reasonably acceptable to the Issuing Lender), in Dollars, and the LOC
Participants shall participate in, Letters of Credit for the account of
a Credit Party; provided, however, that (i) the aggregate amount of LOC
-------- -------
Obligations shall not at any time exceed FIVE MILLION DOLLARS
($5,000,000) (the "LOC Committed Amount"), (ii) the sum of the
aggregate amount of LOC Obligations outstanding plus Revolving Loans
outstanding plus the Reserve Amount shall not exceed the Revolving
Committed Amount and (iii) with respect to each individual LOC
Participant, the LOC Participant's pro rata share of outstanding
Revolving Loans plus its pro rata share of outstanding LOC Obligations
shall not exceed such LOC Participant's Revolving Loan Commitment
Percentage of the Revolving Committed Amount. The Issuing Lender may
require the issuance and expiry date of each Letter of Credit to be a
Business Day. Each Letter of Credit shall be either (x) a standby
letter of credit issued to support the obligations (including pension
or insurance obligations), contingent or otherwise, of a Credit Party,
or (y) a commercial letter of credit in respect of the purchase of
goods or services by the Borrower or any of its Subsidiaries in the
ordinary course of business. Except as otherwise expressly agreed upon
by all the LOC Participants, no Letter of Credit shall have an original
expiry date more than one year from the date of issuance, or as
extended, shall have an expiry date extending beyond the Maturity Date.
Each Letter of Credit shall comply with the related LOC Documents.
(b) Notice and Reports. The request for the issuance of a
------------------
Letter of Credit shall be submitted to the Issuing Lender at least
three Business Days prior to the requested date of issuance. The
Issuing Lender will, at least quarterly and more frequently upon
request, provide to the Agent for dissemination to the Lenders a
detailed report specifying the Letters of Credit which are then issued
and outstanding and any activity with respect thereto which may have
occurred since the date of the prior report, and including therein,
among other things, the account party, the beneficiary, the face
amount, and the expiry date as well as any payments or expirations
which may have occurred. The Issuing Lender will further provide to the
Agent, promptly upon request, copies of the Letters of Credit and the
other LOC Documents.
(c) Participations. Each LOC Participant, upon issuance of a
--------------
Letter of Credit, shall be deemed to have purchased without recourse a
risk participation from the Issuing Lender in such Letter of Credit and
each LOC Document related thereto and the rights and obligations
arising thereunder and any collateral relating thereto, in each case in
an amount equal to its Revolving Loan Commitment Percentage of the
obligations under such Letter of Credit, and shall absolutely,
unconditionally and irrevocably assume, as primary obligor and not as
surety, and be obligated to pay to the Issuing Lender therefor and
discharge when due,
-31-
its Revolving Loan Commitment Percentage of the obligations arising
under such Letter of Credit. Without limiting the scope and nature of
each LOC Participant's participation in any Letter of Credit, to the
extent that the Issuing Lender has not been reimbursed as required
hereunder or under any such Letter of Credit, each such LOC Participant
shall pay to the Issuing Lender its Revolving Loan Commitment
Percentage of such unreimbursed drawing in same day funds on the day of
notification by the Issuing Lender of an unreimbursed drawing pursuant
to the provisions of subsection (d) or (e) hereof. The obligation of
each LOC Participant to so reimburse the Issuing Lender shall be
absolute and unconditional and shall not be affected by the occurrence
of a Default, an Event of Default or any other occurrence or event. Any
such reimbursement shall not relieve or otherwise impair the obligation
of the Borrower or any other Credit Party to reimburse the Issuing
Lender under any Letter of Credit, together with interest as
hereinafter provided.
(d) Reimbursement. In the event of any drawing under any
-------------
Letter of Credit, the Issuing Lender will promptly notify the Borrower.
Unless the Borrower shall immediately notify the Issuing Lender of its
intent to otherwise reimburse the Issuing Lender, the Borrower shall be
deemed to have requested a Revolving Loan at the Adjusted Base Rate in
the amount of the drawing as provided in subsection (e) hereof, the
proceeds of which will be used to satisfy the reimbursement
obligations. The Borrower shall reimburse the Issuing Lender on the day
of drawing under any Letter of Credit either with the proceeds of a
Revolving Loan obtained hereunder or otherwise in same day funds as
provided herein or in the LOC Documents. If the Borrower shall fail to
reimburse the Issuing Lender as provided hereinabove, the unreimbursed
amount of such drawing shall bear interest at a per annum rate equal to
the Base Rate plus the Applicable Percentage for the Base Rate Loans
that are Revolving Loans plus two percent (2%). The Borrower's
reimbursement obligations hereunder shall be absolute and unconditional
under all circumstances irrespective of (but without waiver of) any
rights of set-off, counterclaim or defense to payment the applicable
account party or the Borrower may claim or have against the Issuing
Lender, the Agent, the Lenders, the beneficiary of the Letter of Credit
drawn upon or any other Person, including without limitation, any
defense based on any failure of the applicable account party, the
Borrower or any other Credit Party to receive consideration or the
legality, validity, regularity or unenforceability of the Letter of
Credit; provided, however, that the Borrower may have a claim against
-------- -------
the Issuing Lender, and the Issuing Lender may be liable to the
Borrower, to the extent of any actual damages suffered by the Borrower
as a result of the Issuing Lender's gross negligence or willful
misconduct in failing to pay a drawing under a Letter of Credit
presented in strict conformity therewith. The Issuing Lender will
promptly notify the LOC Participants of the amount of any unreimbursed
drawing and each LOC Participant shall promptly pay to the Issuing
Lender, in accordance with the terms of Section 2.2(e), in Dollars and
in immediately available funds, the amount of such LOC Participant's
Revolving Loan Commitment Percentage of such unreimbursed drawing. Such
payment shall be made on the day such notice is received by such Lender
from the Issuing Lender if such notice is received at or before 12:00
Noon, otherwise such payment shall be made at or before 12:00 Noon on
the Business Day next succeeding the day such notice is received. If
such LOC Participant does not pay such amount to the Issuing Lender in
full upon such request, such LOC Participant shall, on demand, pay to
the Issuing Lender interest on the unpaid amount during the period from
the date the LOC Participant received the notice
-32-
regardingthe unreimbursed drawing until such LOC Participant pays such
amount to the Issuing Lender in full at a rate per annum equal to, if
paid within two Business Days of the date of drawing, the Federal Funds
Rate and thereafter at a rate equal to the Base Rate. Each LOC
Participant's obligation to make such payment to the Issuing Lender,
and the right of the Issuing Lender to receive the same, shall be
absolute and unconditional, shall not be affected by any circumstance
whatsoever and without regard to the termination of this Credit
Agreement or the Commitments hereunder, the existence of a Default or
Event of Default or the acceleration of the obligations hereunder and
shall be made without any offset, abatement, withholding or reduction
whatsoever. Simultaneously with the making of each such payment by a
LOC Participant to the Issuing Lender, such LOC Participant shall,
automatically and without any further action on the part of the Issuing
Lender or such LOC Participant, acquire a participation in an amount
equal to such payment (excluding the portion of such payment
constituting interest owing to the Issuing Lender) in the related
unreimbursed drawing portion of the LOC Obligation and in the interest
thereon and in the related LOC Documents, and shall have a claim
against the Borrower and the other Credit Parties with respect thereto.
(e) Repayment with Revolving Loans. On any day on which the
------------------------------
Borrower shall have requested, or been deemed to have requested in
accordance with the terms of Section 2.2(d), a Revolving Loan borrowing
to reimburse a drawing under a Letter of Credit (as set forth in clause
(d) above), the Agent shall give notice to the applicable Lenders that
a Revolving Loan has been requested or deemed requested in connection
with a drawing under a Letter of Credit, in which case a Revolving Loan
borrowing comprised solely of Base Rate Loans (each such borrowing, a
"Mandatory Borrowing") shall be immediately made from all applicable
-------------------
Lenders (without giving effect to any termination of the Commitments
pursuant to Section 9.2) pro rata based on each Lender's respective
--- ----
Revolving Loan Commitment Percentage and the proceeds thereof shall be
paid directly to the Issuing Lender for application to the respective
LOC Obligations. Each such Lender hereby irrevocably agrees to make
such Revolving Loans immediately upon any such request or deemed
request on account of each such Mandatory Borrowing in the amount and
in the manner specified in the preceding sentence and on the same such
date notwithstanding (i) the amount of Mandatory Borrowing may not
---------------
comply with the minimum amount for borrowings of Revolving Loans
otherwise required hereunder, (ii) whether any conditions specified in
Section 5.2 are then satisfied, (iii) whether a Default or Event of
Default then exists, (iv) failure of any such request or deemed request
for Revolving Loans to be made by the time otherwise required
hereunder, (v) the date of such Mandatory Borrowing, or (vi) any
reduction in the Revolving Committed Amount or any termination of the
Commitments. In the event that any Mandatory Borrowing cannot for any
reason be made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower or any other Credit
Party), then each such Lender hereby agrees that it shall forthwith
fund (as of the date the Mandatory Borrowing would otherwise have
occurred, but adjusted for any payments received from the Borrower on
or after such date and prior to such purchase) its Participation
Interest in the outstanding LOC Obligations; provided, further, that in
-------- -------
the event any Lender shall fail to fund its Participation Interest on
the day the Mandatory Borrowing would otherwise have occurred, then the
amount of such Lender's unfunded Participation
-33-
Interest therein shall bear interest payable to the Issuing Lender upon
demand, at the rate equal to, if paid within two Business Days of such
date, the Federal Funds Rate, and thereafter at a rate equal to the
Base Rate.
(f) Modification and Extension. The issuance of any
--------------------------
supplement, modification, amendment (which increases the face amount or
extends the expiry date), renewal, or extensions to any Letter of
Credit shall, for purposes hereof, be treated in all respects the same
as the issuance of a new Letter of Credit hereunder.
(g) Uniform Customs and Practices. The Issuing Lender may
-----------------------------
have the Letters of Credit be subject to The Uniform Customs and
Practice for Documentary Credits, as published as of the date of issue
by the International Chamber of Commerce (Publication No. 500 or the
most recent publication, the "UCP"), in which case the UCP may be
---
incorporated therein and deemed in all respects to be a part thereof.
(h) Responsibility of Issuing Lender. It is expressly
--------------------------------
understood and agreed as between the Lenders that the obligations of
the Issuing Lender hereunder to the LOC Participants are only those
expressly set forth in this Credit Agreement and that the Issuing
Lender shall be entitled to assume that the conditions precedent set
forth in Section 5.2 have been satisfied unless it shall have acquired
actual knowledge that any such condition precedent has not been
satisfied; provided, however, that nothing set forth in this Section
2.2 shall be deemed to prejudice the right of any LOC Participant to
recover from the Issuing Lender any amounts made available by such LOC
Participant to the Issuing Lender pursuant to this Section 2.2 in the
event that it is determined by a court of competent jurisdiction that
the payment with respect to a Letter of Credit constituted gross
negligence or willful misconduct on the part of the Issuing Lender.
(i) Conflict with LOC Documents. In the event of any conflict
---------------------------
between this Credit Agreement and any LOC Document, this Credit
Agreement shall govern.
(j) Indemnification of Issuing Lender.
---------------------------------
(i) In addition to its other obligations under this
Credit Agreement, the Borrower hereby agrees to protect,
indemnify, pay and save the Issuing Lender harmless from and
against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable
attorneys' fees) that the Issuing Lender may incur or be
subject to as a consequence, direct or indirect, of (A) the
issuance of any Letter of Credit or (B) the failure of the
Issuing Lender to honor a drawing under a Letter of Credit as
a result of any act or omission, whether rightful or wrongful,
of any present or future de jure or de facto Governmental
Authority (all such acts or omissions, herein called
"Government Acts").
---------------
(ii) As between the Borrower and the Issuing Lender, the
Borrower shall assume all risks of the acts, omissions or
misuse of any Letter of Credit by the beneficiary thereof. The
Issuing Lender shall not be responsible for (except in the
case of (A), (B) and (C) below if the Issuing Lender has
actual knowledge to the
-34-
contrary): (A) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any
party in connection with the application for and issuance of
any Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer
or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, that may
prove to be invalid or ineffective for any reason; (C) failure
of the beneficiary of a Letter of Credit to comply fully with
conditions required in order to draw upon a Letter of Credit;
(D) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex
or otherwise, whether or not they be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in
the transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of the
proceeds thereof; and (G) any consequences arising from causes
beyond the control of the Issuing Lender, including, without
limitation, any Government Acts. None of the above shall
affect, impair, or prevent the vesting of the Issuing Lender's
rights or powers hereunder.
(iii) In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth,
any action taken or omitted by the Issuing Lender, under or in
connection with any Letter of Credit or the related
certificates, if taken or omitted in good faith, shall not put
the Issuing Lender under any resulting liability to the
Borrower or any other Credit Party. It is the intention of the
parties that this Credit Agreement shall be construed and
applied to protect and indemnify the Issuing Lender against
any and all risks involved in the issuance of the Letters of
Credit, all of which risks are hereby assumed by the Borrower,
including, without limitation, any and all risks of the acts
or omissions, whether rightful or wrongful, of any present or
future Government Acts. The Issuing Lender shall not, in any
way, be liable for any failure by the Issuing Lender or anyone
else to pay any drawing under any Letter of Credit as a result
of any Government Acts or any other cause beyond the control
of the Issuing Lender.
(iv) Nothing in this subsection (j) is intended to
limit the reimbursement obligation of the Borrower contained
in this Section 2.2. The obligations of the Borrower under
this subsection (j) shall survive the termination of this
Credit Agreement. No act or omission of any current or prior
beneficiary of a Letter of Credit shall in any way affect or
impair the rights of the Issuing Lender to enforce any right,
power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary
contained in this subsection (j), the Borrower shall have no
obligation to indemnify the Issuing Lender in respect of any
liability incurred by the Issuing Lender arising solely out of
the gross negligence or willful misconduct of the Issuing
Lender, as determined by a court of competent jurisdiction.
Nothing in this Agreement shall relieve the Issuing Lender of
any liability to the Borrower in respect of any action taken
by the Issuing Lender which action constitutes gross
negligence or willful misconduct of the Issuing
-35-
Lender or a violation of the UCP or Uniform Commercial Code (as
applicable), as determined by a court of competent jurisdiction.
2.3 Tranche A Term Loans.
--------------------
(a) Tranche A Term Loans. Subject to the terms and conditions
--------------------
set forth herein, each Tranche A Term Lender severally agrees, on the
Effective Date, to make a term loan to the Borrower, in Dollars, in an
amount equal to such Lender's Tranche A Term Loan Commitment Percentage
of the Tranche A Term Loan Committed Amount; provided that the
aggregate amount of such Tranche A Term Loans made on the Effective
Date shall not exceed the Tranche A Term Loan Committed Amount. Once
repaid, Tranche A Term Loans cannot be reborrowed.
(b) Funding of Tranche A Term Loans. On the Effective Date, each
-------------------------------
Tranche A Term Lender will make its Tranche A Term Loan Commitment
Percentage of the Tranche A Term Loan Committed Amount available to the
Agent by deposit, in Dollars and in immediately available funds, at the
offices of the Agent at its principal office in Charlotte, North
Carolina or at such other address as the Agent may designate in
writing. The amount of the Tranche A Term Loans will then be made
available to the Borrower by the Agent by crediting the account of the
Borrower on the books of such office of the Agent, to the extent the
amount of such Tranche A Term Loans are made available to the Agent.
All Tranche A Term Loans on the Effective Date shall be Base Rate
Loans. Thereafter, all or any portion of the Tranche A Term Loans may
be converted into Eurodollar Loans in accordance with the terms of
Section 2.5.
No Tranche A Term Lender shall be responsible for the failure or
delay by any other Tranche A Term Lender in its obligation to make a
Tranche A Term Loan hereunder; provided, however, that the failure of
any Tranche A Term Lender to fulfill its obligations hereunder shall
not relieve any other Tranche A Term Lender of its obligations
hereunder. If the Agent shall have received an executed signature page
to this Credit Agreement (whether an original or via telecopy) from a
Tranche A Term Lender, the Agent may assume that such Tranche A Term
Lender has or will make the amount of its Tranche A Term Loans
available to the Agent on the Effective Date, and the Agent in reliance
upon such assumption, may (in its sole discretion but without any
obligation to do so) make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to
the Agent, the Agent shall be able to recover such corresponding amount
from such Tranche A Term Lender. If such Tranche A Term Lender does not
pay such corresponding amount forthwith upon the Agent's demand
therefor, the Agent will promptly notify the Borrower, and the Borrower
shall immediately pay such corresponding amount to the Agent. The Agent
shall also be entitled to recover from the Tranche A Term Lender or the
Borrower, as the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount was made
available by the Agent to the Borrower to the date such corresponding
amount is recovered by the Agent at a per annum rate equal to (i) from
the Borrower at the applicable rate for such Tranche A Term Loan and
(ii) from a Tranche A Term Lender at the Federal Funds Rate.
-36-
(c) Amortization. The principal amount of the Tranche A Term
------------
Loans shall be repaid in quarterly payments on the dates set forth
below, with the remaining outstanding balance of the Tranche A Term
Loans being due and payable on the Maturity Date:
-37-
===========================================================
Tranche A Term Loan
Principal Amortization Principal Amortization
Payment Dates Payment
-----------------------------------------------------------
March 31, 1999,
June 30, 1999,
September 30, 1999,
December 31, 1999,
March 31, 2000, $625,000
June 30, 2000,
September 30, 2000 and
December 31, 2000
-----------------------------------------------------------
March 31, 2001,
June 30, 2001,
September 30, 2001,
December 31, 2001,
March 31, 2002, $750,000
June 30, 2002,
September 30, 2002 and
December 31, 2002
-----------------------------------------------------------
March 31, 2003,
June 30, 2003,
September 30, 2003 and $1,000,000
December 31, 2003
-----------------------------------------------------------
March 31, 2004,
June 30, 2004,
September 30, 2004 and $1,250,000
Maturity Date
===========================================================
(d) Interest. Subject to the provisions of Section 3.1, the Tranche A
--------
Term Loans shall bear interest at a per annum rate equal to:
(i) Base Rate Loans. During such periods as the Tranche A Term
---------------
Loans shall be comprised in whole or in part of Base Rate Loans, such
Base Rate Loans shall bear interest at a per annum rate equal to the
Adjusted Base Rate.
(ii) Eurodollar Loans. During such periods as the Tranche A Term
----------------
Loans shall be comprised in whole or in part of Eurodollar Loans, such
Eurodollar Loans shall bear interest at a per annum rate equal to the
Adjusted Eurodollar Rate.
(e) Tranche A Term Notes. The portion of the Tranche A Term Loans
--------------------
made by each Tranche A Term Lender shall be evidenced by a duly executed
promissory note of the Borrower to such Lender in an original principal
amount equal to such Lender's Tranche A Term Loan Commitment Percentage of
the Tranche A Term Loan Committed Amount, and substantially in the form of
Exhibit 2.3(e).
--------------
-38-
2.4 Tranche B Term Loans.
--------------------
(a) Tranche B Term Loans. Subject to the terms and conditions set
--------------------
forth herein, each Tranche B Term Lender severally agrees, on the Effective
Date, to make a term loan to the Borrower, in Dollars, in an amount equal
to such Lender's Tranche B Term Loan Commitment Percentage of the Tranche B
Term Loan Committed Amount; provided that the aggregate amount of such
Tranche B Term Loans made on the Effective Date shall not exceed the
Tranche B Term Loan Committed Amount. Once repaid, Tranche B Term Loans
cannot be reborrowed.
(b) Funding of Tranche B Term Loans. On the Effective Date, each
-------------------------------
Tranche B Term Lender will make its Tranche B Term Loan Commitment
Percentage of the Tranche B Term Loan Committed Amount available to the
Agent by deposit, in Dollars and in immediately available funds, at the
offices of the Agent at its principal office in Charlotte, North Carolina
or at such other address as the Agent may designate in writing. The amount
of the Tranche B Term Loans will then be made available to the Borrower by
the Agent by crediting the account of the Borrower on the books of such
office of the Agent, to the extent the amount of such Tranche B Term Loans
are made available to the Agent. All Tranche B Term Loans on the Effective
Date shall be Base Rate Loans. Thereafter, all or any portion of the
Tranche B Term Loans may be converted into Eurodollar Loans in accordance
with the terms of Section 2.5.
No Tranche B Term Lender shall be responsible for the failure or delay
by any other Tranche B Term Lender in its obligation to make a Tranche B
Term Loan hereunder; provided, however, that the failure of any Tranche B
Term Lender to fulfill its obligations hereunder shall not relieve any
other Tranche B Term Lender of its obligations hereunder. If the Agent
shall have received an executed signature page to this Credit Agreement
(whether an original or via telecopy) from a Tranche B Term Lender, the
Agent may assume that such Tranche B Term Lender has or will make the
amount of its Tranche B Term Loans available to the Agent on the Effective
Date, and the Agent in reliance upon such assumption, may (in its sole
discretion but without any obligation to do so) make available to the
Borrower a corresponding amount. If such corresponding amount is not in
fact made available to the Agent, the Agent shall be able to recover such
corresponding amount from such Tranche B Term Lender. If such Tranche B
Term Lender does not pay such corresponding amount forthwith upon the
Agent's demand therefor, the Agent will promptly notify the Borrower, and
the Borrower shall immediately pay such corresponding amount to the Agent.
The Agent shall also be entitled to recover from the Tranche B Term Lender
or the Borrower, as the case may be, interest on such corresponding amount
in respect of each day from the date such corresponding amount was made
available by the Agent to the Borrower to the date such corresponding
amount is recovered by the Agent at a per annum rate equal to (i) from the
Borrower at the applicable rate for such Tranche B Term Loan and (ii) from
a Tranche B Term Lender at the Federal Funds Rate.
-39-
(c) Amortization. The principal amount of the Tranche B Term Loans
------------
shall be repaid in quarterly payments on the dates set forth below, with
the remaining outstanding balance of the Tranche B Term Loans being due and
payable on the Maturity Date:
=======================================================
Tranche B Term Loan
Principal Amortization Principal Amortization
Payment Dates Payment
-------------------------------------------------------
March 31, 1999,
June 30, 1999,
September 30, 1999,
December 31, 1999,
March 31, 2000,
June 30, 2000,
September 30, 2000,
December 31, 2000,
March 31, 2001,
June 30, 2001,
September 30, 2001,
December 31, 2001, $125,000
March 31, 2002,
June 30, 2002,
September 30, 2002,
December 31, 2002,
March 31, 2003,
June 30, 2003,
September 30, 2003 and
December 31, 2003
-------------------------------------------------------
March 31, 2004,
June 30, 2004,
September 30, 2004 and $5,000,000
December 31, 2004
-------------------------------------------------------
March 31, 2005,
June 30, 2005,
September 30, 2005 and $5,000,000
Maturity Date
=======================================================
(d) Interest. Subject to the provisions of Section 3.1, the Tranche B
--------
Term Loans shall bear interest at a per annum rate equal to:
(i) Base Rate Loans. During such periods as the Tranche B Term
---------------
Loans shall be comprised in whole or in part of Base Rate Loans, such
Base Rate Loans shall bear interest at a per annum rate equal to the
Adjusted Base Rate.
-40-
(ii) Eurodollar Loans. During such periods as the Tranche B
----------------
Term Loans shall be comprised in whole or in part of Eurodollar Loans,
such Eurodollar Loans shall bear interest at a per annum rate equal to
the Adjusted Eurodollar Rate.
(e) Tranche B Term Notes. The portion of the Tranche B Term Loans
--------------------
made by each Tranche B Term Lender shall be evidenced by a duly executed
promissory note of the Borrower to such Lender in an original principal
amount equal to such Lender's Tranche B Term Loan Commitment Percentage of
the Tranche B Term Loan Committed Amount, and substantially in the form of
Exhibit 2.4(e).
--------------
2.5 Continuations and Conversions.
-----------------------------
The Borrower shall have the option, on any Business Day, to continue
existing Eurodollar Loans for a subsequent Interest Period, to convert Base Rate
Loans into Eurodollar Loans or to convert Eurodollar Loans into Base Rate Loans;
provided, however, that (i) each such continuation or conversion must be
requested by the Borrower pursuant to a written Notice of
Continuation/Conversion, in the form of Exhibit 2.5, in compliance with the
-----------
terms set forth below, (ii) except as provided in Section 3.11, Eurodollar Loans
may only be continued or converted into Base Rate Loans on the last day of the
Interest Period applicable thereto, (iii) Eurodollar Loans may not be continued
nor may Base Rate Loans be converted into Eurodollar Loans if on the date of
such conversion or continuation a Default or an Event of Default has occurred
and is continuing and (iv) any request to continue a Eurodollar Loan that fails
to comply with the terms hereof or any failure to request a continuation of a
Eurodollar Loan at the end of an Interest Period shall constitute a conversion
to a Base Rate Loan on the last day of the applicable Interest Period. Each
continuation or conversion must be requested by the Borrower no later than 11:00
a.m. (A) on the date for a requested conversion of a Eurodollar Loan to a Base
Rate Loan or (B) three Business Days prior to the date for a requested
continuation of a Eurodollar Loan or conversion of a Base Rate Loan to a
Eurodollar Loan, in each case pursuant to a written Notice of
Continuation/Conversion submitted to the Agent which shall set forth (x) whether
the Borrower wishes to continue or convert such Loans and (y) if the request is
to continue a Eurodollar Loan or convert a Base Rate Loan to a Eurodollar Loan,
the Interest Period applicable thereto.
2.6 Minimum Amounts.
---------------
Each request for a borrowing (other than a Revolving Loan borrowing the
proceeds of which are to be applied to make a payment under the Construction
Loan Documents on behalf of the Borrower in accordance with the terms of Section
2.1(b)(ii)), conversion or continuation shall be subject to the requirements
that (a) each Eurodollar Loan shall be in a minimum amount of $5,000,000 and in
integral multiples of $500,000 in excess thereof, (b) each Base Rate Loan shall
be in a minimum amount of the lesser of $1,000,000 (and integral multiples of
$100,000 in excess thereof) or the remaining amount available under the
Revolving Committed Amount, the Tranche A Term Loan Committed Amount or the
Tranche B Term Loan Committed Amount, as applicable, and (c) no more than seven
(7) Eurodollar Loans shall be outstanding hereunder at any one time. For the
purposes of this Section, all Eurodollar Loans with the same Interest Periods
that begin and end on the same date shall be considered as one Eurodollar Loan,
but Eurodollar Loans with
-41-
different Interest Periods, even if they begin on the same date, shall be
considered as separate Eurodollar Loans.
SECTION 3
GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT
------------------------------------------------------------
3.1 Interest.
--------
(a) Default Rate of Interest. Upon the occurrence, and during the
------------------------
continuance, of an Event of Default, the principal of and, to the extent
permitted by law, interest on the Loans and any other amounts owing
hereunder or under the other Credit Documents (including without limitation
fees and expenses) shall, after written notice of same to the Borrower,
bear interest, payable on demand, at a per annum rate equal to 2% plus the
rate which would otherwise be applicable (or if no rate is applicable, then
the rate for Revolving Loans that are Base Rate Loans plus two percent (2%)
per annum).
(b) Interest Payments. Interest on Loans shall be due and payable in
-----------------
arrears on each Interest Payment Date. If an Interest Payment Date falls on
a date which is not a Business Day, such Interest Payment Date shall be
deemed to be the next succeeding Business Day, except that in the case of
Eurodollar Loans where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding day.
3.2 Place and Manner of Payments.
----------------------------
All payments of principal, interest, fees, expenses and other amounts to be
made by a Credit Party under this Agreement shall be received not later than
2:00 p.m. on the date when due, in Dollars and in immediately available funds,
by the Agent at its offices in Charlotte, North Carolina. Payments received
after such time shall be deemed to have been received on the next Business Day.
The Borrower shall, at the time it makes any payment under this Credit
Agreement, specify to the Agent the Loans, Letters of Credit, fees or other
amounts payable by the Borrower hereunder to which such payment is to be applied
(and in the event that it fails to specify, or if such application would be
inconsistent with the terms hereof, the Agent shall, subject to Section 3.7,
distribute such payment to the Lenders in such manner as the Agent may deem
appropriate). The Agent will distribute such payments to the applicable Lenders
on the same Business Day if any such payment is received prior to 2:00 p.m.;
otherwise the Agent will distribute such payment to the applicable Lenders on
the next succeeding Business Day. Whenever any payment hereunder shall be stated
to be due on a day which is not a Business Day, the due date thereof shall be
extended to the next succeeding Business Day (subject to accrual of interest and
fees for the period of such extension), except that in the case of Eurodollar
Loans, if the extension would cause the payment to be made in the next following
calendar month, then such payment shall instead be made on the next preceding
Business Day.
-42-
3.3 Prepayments.
-----------
(a) Voluntary Prepayments. The Borrower shall have the right to
---------------------
prepay Loans in whole or in part from time to time without premium or penalty;
provided, however, that (i) Eurodollar Loans may only be prepaid on three
Business Days' prior written notice to the Agent, (ii) each such partial
prepayment of Loans shall be in the minimum principal amount of $1,000,000 and
integral multiples of $100,000 in excess thereof for Revolving Loans and Term
Loans and (iii) voluntary prepayments with respect to the Term Loans shall be
applied pro rata between the outstanding Tranche A Term Loans and the Tranche B
Term Loans and within each tranche pro rata among the remaining Principal
Amortization Payments. One or more holders of the Tranche B Term Loans may
decline to accept a voluntary prepayment under Sections 3.3(a) to the extent
there are sufficient Tranche A Term Loans outstanding to be paid with such
prepayment, in which case such declined prepayments shall be allocated pro rata
among the Tranche A Term Loans and the Tranche B Term Loans held by Lenders
accepting such prepayments. All prepayments under this Section shall be subject
to Section 3.14 and be accompanied by interest on the principal amount prepaid
through the date of prepayment.
(b) Mandatory Prepayments.
---------------------
(i) Revolving Committed Amount. If at any time the sum of the
--------------------------
aggregate amount of Revolving Loans outstanding plus LOC Obligations
outstanding plus the Reserve Amount exceeds the Revolving Committed
Amount, the Borrower shall immediately make a principal payment to the
Agent in the manner and in an amount such that the sum of the
aggregate amount of Revolving Loans outstanding plus LOC Obligations
outstanding plus the Reserve Amount is less than or equal to the
Revolving Committed Amount (such prepayment to be applied as set forth
in Section 3.3(c) below).
(ii) Excess Cash Flow. Within 10 days after the date the
----------------
audited financial statements are required to be delivered pursuant to
Section 7.1(a) for each fiscal year, commencing with the fiscal year
ending December 31, 1999, the Borrower shall prepay the Loans in an
amount equal to 75% (if, as of such fiscal year end, the current
Leverage Ratio is equal to or greater than 3.0 to 1.0) or 50% (if, as
of such fiscal year end, the current Leverage Ratio is less than 3.0
to 1.0) of the Excess Cash Flow earned during the preceding fiscal
year (such prepayment to be applied as set forth in Section 3.3(c)
below).
(iii) (A) Asset Dispositions. Immediately upon the
------------------
occurrence of any Asset Disposition Prepayment Event, the
Borrower shall prepay the Loans in an aggregate amount equal to
100% of the Net Cash Proceeds of the related Asset Disposition
not applied (or caused to be applied) by the Credit Parties
during the related Application Period to make Eligible
Reinvestments as contemplated by the terms of Section 8.5(e)
(such prepayment to be applied as set forth in Section 3.3(c)
below).
-43-
(B) Casualty and Condemnation Events. Immediately upon
--------------------------------
the occurrence of any event requiring application of any
insurance proceeds to the prepayment of Loans (and cash
collateralization of LOC Obligations) pursuant to Section 7.7(d),
the Borrower shall prepay the Loans in the amount required by
such Section 7.7(d) (such prepayment to be applied as set forth
in Section 3.3(c) below).
(iv) Issuances of Equity. Immediately upon receipt by a Credit
-------------------
Party of proceeds from any Equity Issuance, the Borrower shall prepay
the Loans in an amount equal to 75% (if, as of the most recent fiscal
quarter end with respect to which the Credit Parties shall have
delivered to the Agent and the Lenders the financial statements and
officers' certificate required to be delivered pursuant to Section
7.1(a) or (b), as applicable, and Section 7.1(d), the current Leverage
Ratio is equal to or greater than 3.0 to 1.0) or 50% (if, as of the
most recent fiscal quarter end with respect to which the Credit
Parties shall have delivered to the Agent and the Lenders the
financial statements and officers' certificate required to be
delivered pursuant to Section 7.1(a) or (b), as applicable, and
Section 7.1(d), the current Leverage Ratio is less than 3.0 to 1.0) of
the Net Cash Proceeds of such Equity Issuance (such prepayment to be
applied as set forth in Section 3.3(c) below).
(v) Issuance of Debt. Immediately upon receipt by a Credit
----------------
Party of proceeds from any Debt Issuance, the Borrower shall prepay
the Loans in an amount equal to 100% of the Net Cash Proceeds of such
Debt Issuance (such prepayment to be applied as set forth in Section
3.3(c) below).
(vi) Post-Closing Purchase Price Adjustments. Immediately upon
---------------------------------------
the occurrence of a Post-Closing Purchase Price Adjustment, the
Borrower shall prepay the Loans in an amount equal to 100% of the
related purchase price reduction (such prepayment to be applied as set
forth in Section 3.3(c) below).
(c) Application of Prepayments. All amounts required to be paid
--------------------------
pursuant to Section 3.3(b)(i) shall be applied first to Revolving Loans and
-----
second to a cash collateral account in respect of LOC Obligations. All
------
amounts required to be paid pursuant to Sections 3.3(b)(ii), (iv), (v) and
(vi) above shall be applied first, pro rata to the outstanding Tranche A
-----
Term Loans and the Tranche B Term Loans and within each tranche pro rata
among the remaining Principal Amortization Payments, until the Term Loans
have been paid in full, second, to the Revolving Loans (without a
------
corresponding reduction in the Revolving Committed Amount), and third, to a
-----
cash collateral account in respect of LOC Obligations. All amounts required
to be paid pursuant to Section 3.3(b)(iii) above shall be applied first pro
-----
rata to the outstanding Revolving Loans (with a corresponding reduction in
the Revolving Committed Amount), Tranche A Term Loans and Tranche B Term
Loans (and within each tranche pro rata among the remaining Principal
Amortization Payments), and second, to a cash collateral account in respect
------
of LOC Obligations. Within the parameters of the applications set forth
above, prepayments shall be applied first to Base Rate Loans and then to
Eurodollar Loans in direct order of
-44-
Interest Period maturities. All prepayments hereunder shall be subject
to Section 3.14 and shall be accompanied by interest on the principal
amount prepaid through the date of prepayment. One or more holders of
the Tranche B Term Loans may decline to accept a mandatory prepayment
under Sections 3.3(b)(ii), (iii), (iv), (v) or (vi) to the extent there
are sufficient Tranche A Term Loans outstanding (and/or, in the case of
a mandatory prepayment under Sections 3.3(b)(iii), sufficient Revolving
Loans or LOC Obligations outstanding) to be paid with such prepayment,
in which case such declined prepayments shall be allocated pro rata
among the Tranche A Term Loans (and, in the case of a mandatory
prepayment under Sections 3.3(b)(iii), the Revolving Loans and LOC
Obligations outstanding) and the Tranche B Term Loans held by Lenders
accepting such prepayments.
3.4 Fees.
----
(a) Commitment Fee. In consideration of the Revolving
--------------
Commitments being made available by the Revolving Lenders hereunder,
the Borrower agrees to pay to the Agent, for the pro rata benefit of
each Revolving Lender, a per annum fee (the "Commitment Fee") equal to
--------------
the Applicable Percentage for the Commitment Fee multiplied by the
Unused Commitment. The Commitment Fee shall commence to accrue on the
Effective Date and shall be due and payable in arrears on the last day
of each fiscal quarter of the Borrower (as well as on the Maturity Date
and on any date that the Revolving Committed Amount is reduced) for the
immediately preceding fiscal quarter (or portion thereof), beginning
with the first of such dates to occur after the Closing Date.
(b) Letter of Credit Fees.
---------------------
(i) In consideration of the issuance of standby Letters of
Credit hereunder, the Borrower agrees to pay to the Issuing
Lender for the pro rata benefit of the Revolving Lenders a per
annum fee (the "Standby Letter of Credit Fee") equal to the
----------------------------
Applicable Percentage for the Standby Letter of Credit Fee on the
average daily maximum amount available to be drawn under each
such standby Letter of Credit from the date of issuance to the
date of expiration. The Standby Letter of Credit Fee will be
payable in arrears on the last day of each fiscal quarter of the
Borrower (as well as on the Maturity Date) for the immediately
preceding fiscal quarter (or portion thereof), beginning with the
first of such dates to occur after the Closing Date.
(ii) In consideration of the issuance of commercial Letters
of Credit hereunder, the Borrower agrees to pay to the Issuing
Lender for the pro rata benefit of the Revolving Lenders a per
annum fee (the "Commercial Letter of Credit Fee") equal to the
-------------------------------
Applicable Percentage for the Commercial Letter of Credit Fee on
the average daily maximum amount available to be drawn under each
such commercial Letter of Credit from the date of issuance to the
date of expiration. The Commercial Letter of Credit Fee will be
payable in arrears on the last day of each fiscal quarter of the
Borrower (as well as on the Maturity Date) for the immediately
preceding fiscal
-45-
quarter (or portion thereof), beginning with the first of such
dates to occur after the Closing Date.
(c) Issuing Lender Fees. In addition to the Standby Letter of
-------------------
Credit Fee and the Commercial Letter of Credit Fee payable pursuant to
clause (b) above, the Borrower shall pay to the Issuing Lender for its
own account, without sharing by the other Lenders, (i) the customary
charges from time to time to the Issuing Lender for its services in
connection with the issuance, amendment, payment, transfer,
administration, cancellation and conversion of, and drawings under,
Letters of Credit, and (ii) a letter of credit fronting fee of 0.125%
of the face amount of each Letter of Credit (collectively, the "Issuing
-------
Lender Fees"). The Issuing Lender Fees will be payable on the date of
-----------
issuance of each Letter of Credit.
(d) Administrative Fees. The Borrower agrees to pay to the
-------------------
Agent, for its own account, an annual fee in accordance with the terms
of the Fee Letter.
3.5 Payment in full at Maturity.
---------------------------
On the Maturity Date, the entire outstanding principal balance of all
Loans and all LOC Obligations, together with accrued but unpaid interest and all
other sums owing with respect thereto, shall be due and payable in full, unless
accelerated sooner pursuant to Section 9.2.
3.6 Computations of Interest and Fees.
---------------------------------
(a) Except for Base Rate Loans, in which case interest shall
be computed on the basis of a 365 or 366 day year as the case may be,
all computations of interest and fees hereunder shall be made on the
basis of the actual number of days elapsed over a year of 360 days.
Interest shall accrue from and include the date of borrowing (or
continuation or conversion) but exclude the date of payment.
(b) It is the intent of the Lenders and the Credit Parties to
conform to and contract in strict compliance with applicable usury law
from time to time in effect. All agreements between the Lenders and the
Borrower are hereby limited by the provisions of this paragraph which
shall override and control all such agreements, whether now existing or
hereafter arising and whether written or oral. In no way, nor in any
event or contingency (including but not limited to prepayment or
acceleration of the maturity of any obligation), shall the interest
taken, reserved, contracted for, charged, or received under this Credit
Agreement, under the Notes or otherwise, exceed the maximum nonusurious
amount permissible under applicable law. If, from any possible
construction of any of the Credit Documents or any other document,
interest would otherwise be payable in excess of the maximum
nonusurious amount, any such construction shall be subject to the
provisions of this paragraph and such documents shall be automatically
reduced to the maximum nonusurious amount permitted under applicable
law, without the necessity of execution of any amendment or new
document. If any Lender shall ever receive anything of value which is
characterized as interest on the Loans under applicable law and which
would, apart from this provision, be in excess of the maximum lawful
amount, an amount equal to the amount which would have been excessive
interest shall, without penalty, be applied to the reduction
-46-
of the principal amount owing on the Loans and not to the payment of
interest, or refunded to the Borrower or the other payor thereof if and
to the extent such amount which would have been excessive exceeds such
unpaid principal amount of the Loans. The right to demand payment of
the Loans or any other indebtedness evidenced by any of the Credit
Documents does not include the right to accelerate the payment of any
interest which has not otherwise accrued on the date of such demand,
and the Lenders do not intend to charge or receive any unearned
interest in the event of such demand. All interest paid or agreed to be
paid to the Lenders with respect to the Loans shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full stated term (including any renewal or
extension) of the Loans so that the amount of interest on account of
such indebtedness does not exceed the maximum nonusurious amount
permitted by applicable law.
3.7 Pro Rata Treatment.
------------------
Except to the extent otherwise provided herein:
(a) Loans. Each Revolving Loan borrowing (including, without
-----
limitation, each Mandatory Borrowing), each payment or prepayment of
principal of any Loan, each payment of fees (other than the fees
payable to the Issuing Lender for its own account pursuant to Section
3.4(c) and the fees payable to the Agent for its own account pursuant
to Section 3.4(d)), each reduction of the Revolving Committed Amount,
and each conversion or continuation of any Loan, shall (except as
otherwise provided in Section 3.11) be allocated pro rata among the
relevant Lenders in accordance with the respective Revolving Loan
Commitment Percentages, Tranche A Term Loan Commitment Percentages or
Tranche B Term Loan Commitment Percentages of such Lenders, as
applicable, (or, if the Commitments of such Lenders have expired or
been terminated, in accordance with the respective principal amounts of
the outstanding Loans and Participation Interests of such Lenders);
provided that, if any Lender shall have failed to pay its applicable
--------
pro rata share of any Revolving Loan, any Tranche A Term Loan or any
Tranche B Term Loan, then any amount to which such Lender would
otherwise be entitled pursuant to this subsection (a) shall instead be
payable to the Agent until the share of such Loan not funded by such
Lender has been repaid; provided further, that in the event any amount
-------- -------
paid to any Lender pursuant to this subsection (a) is rescinded or must
otherwise be returned by the Agent, each Lender shall, upon the request
of the Agent, repay to the Agent the amount so paid to such Lender,
with interest for the period commencing on the date such payment is
returned by the Agent until the date the Agent receives such repayment
at a rate per annum equal to, during the period to but excluding the
date two Business Days after such request, the Federal Funds Rate, and
thereafter, the Base Rate plus two percent (2%) per annum; and
----
(b) Letters of Credit. Each payment of unreimbursed drawings
-----------------
in respect of LOC Obligations shall be allocated to each LOC
Participant pro rata in accordance with its Revolving Loan Commitment
Percentage; provided that, if any LOC Participant shall have failed to
--------
pay its applicable pro rata share of any drawing under any Letter of
Credit, then any amount to which such LOC Participant would otherwise
be entitled pursuant to this subsection (b) shall instead be payable to
the Issuing Lender until the share of such
-47-
unreimbursed drawing not funded by such Lender has been repaid;
provided further, that in the event any amount paid to any LOC
-------- -------
Participant pursuant to this subsection (b) is rescinded or must
otherwise be returned by the Issuing Lender, each LOC Participant
shall, upon the request of the Issuing Lender, repay to the Agent for
the account of the Issuing Lender the amount so paid to such LOC
Participant, with interest for the period commencing on the date such
payment is returned by the Issuing Lender until the date the Issuing
Lender receives such repayment at a rate per annum equal to, during the
period to but excluding the date two Business Days after such request,
the Federal Funds Rate, and thereafter, the Base Rate plus two percent
----
(2%) per annum.
3.8 Sharing of Payments.
-------------------
The Lenders agree among themselves that, except to the extent otherwise
provided herein, in the event that any Lender shall obtain payment in respect of
any Loan, unreimbursed drawing with respect to any LOC Obligations or any other
obligation owing to such Lender under this Credit Agreement through the exercise
of a right of setoff, banker's lien or counterclaim, or pursuant to a secured
claim under Section 506 of the Bankruptcy Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, in excess of its pro rata share of such payment as provided for
in this Credit Agreement, such Lender shall promptly pay in cash or purchase
from the other Lenders a participation in such Loans, LOC Obligations, and other
obligations in such amounts, and make such other adjustments from time to time,
as shall be equitable to the end that all Lenders share such payment in
accordance with their respective ratable shares as provided for in this Credit
Agreement. The Lenders further agree among themselves that if payment to a
Lender obtained by such Lender through the exercise of a right of setoff,
banker's lien, counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which shall have shared the benefit of
such payment shall, by payment in cash or a repurchase of a participation
theretofore sold, return its share of that benefit (together with its share of
any accrued interest payable with respect thereto) to each Lender whose payment
shall have been rescinded or otherwise restored. The Borrower agrees that any
Lender so purchasing such a participation may, to the fullest extent permitted
by law, exercise all rights of payment, including setoff, banker's lien or
counterclaim, with respect to such participation as fully as if such Lender were
a holder of such Loan, LOC Obligation or other obligation in the amount of such
participation. Except as otherwise expressly provided in this Credit Agreement,
if any Lender or the Agent shall fail to remit to the Agent or any other Lender
an amount payable by such Lender or such Agent to such Agent or such other
Lender pursuant to this Credit Agreement on the date when such amount is due,
such payments shall be made together with interest thereon for each date from
the date such amount is due until the date such amount is paid to such Agent or
such other Lender at a rate per annum equal to the Federal Funds Rate. If under
any applicable bankruptcy, insolvency or other similar law, any Lender receives
a secured claim in lieu of a setoff to which this Section 3.8 applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders under this
Section 3.8 to share in the benefits of any recovery on such secured claim.
3.9 Capital Adequacy.
----------------
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If, after the date hereof, any Lender has determined that the adoption
or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital adequacy, or
compliance by such Lender, or its parent corporation, with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's (or parent corporation's)
capital or assets as a consequence of its commitments or obligations hereunder
to a level below that which such Lender, or its parent corporation, could have
achieved but for such adoption, effectiveness, change or compliance (taking into
consideration such Lender's (or parent corporation's) policies with respect to
capital adequacy), then, upon notice from such Lender to the Borrower, the
Borrower shall be obligated to pay to such Lender such additional amount or
amounts as will compensate such Lender on an after-tax basis (after taking into
account applicable deductions and credits in respect of the amount indemnified)
for such reduction. Each determination by any such Lender of amounts owing under
this Section shall, absent manifest error, be conclusive and binding on the
parties hereto. This covenant shall survive the termination of this Credit
Agreement and the payment of the Loans and all other amounts payable hereunder.
3.10 Inability To Determine Interest Rate.
------------------------------------
If prior to the first day of any Interest Period, the Agent shall have
determined in good faith (which determination shall be conclusive and binding
upon the Borrower) that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, the Agent shall give telecopy or
telephonic notice thereof to the Borrower and the Lenders as soon as practicable
thereafter, and will also give prompt written notice to the Borrower when such
conditions no longer exist. If such notice is given (a) any Eurodollar Loans
requested to be made on the first day of such Interest Period shall be made as
Base Rate Loans, (b) any Loans that were to have been converted on the first day
of such Interest Period to or continued as Eurodollar Loans shall be converted
to or continued as Base Rate Loans and (c) any outstanding Eurodollar Loans
shall be converted, on the first day of such Interest Period, to Base Rate
Loans. If any such conversion of a Eurodollar Loan occurs on a day which is not
the last day of the then current Interest Period with respect thereto, the
Borrower shall pay to such Lender such amounts, if any, as may be required
pursuant to Section 3.14. Until such notice is withdrawn by the Agent, no
further Eurodollar Loans shall be made or continued as such, nor shall the
Borrower have the right to convert Base Rate Loans to Eurodollar Loans.
3.11 Illegality.
----------
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
occurring after the Closing Date shall make it unlawful for any Lender to make
or maintain Eurodollar Loans as contemplated by this Credit Agreement, (a) such
Lender shall promptly give written notice of such circumstances to the Borrower
and the Agent (which notice shall be withdrawn whenever such circumstances no
longer exist), (b) the commitment of such Lender hereunder to make Eurodollar
Loans, continue Eurodollar Loans as such and convert a Base Rate Loan to
Eurodollar Loans shall forthwith be canceled and, until such time as it shall no
longer be unlawful for such Lender to make or maintain
-49-
Eurodollar Loans, such Lender shall then have a commitment only to make a Base
Rate Loan when a Eurodollar Loan is requested and (c) such Lender's Loans then
outstanding as Eurodollar Loans, if any, shall be converted automatically to
Base Rate Loans on the respective last days or the then current Interest Periods
with respect to such Loans or within such earlier period as required by law. If
any such conversion of a Eurodollar Loan occurs on a day which is not the last
day of the then current Interest Period with respect thereto, the Borrower shall
pay to such Lender such amounts, if any, as may be required pursuant to Section
3.14.
3.12 Requirements of Law.
-------------------
If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof applicable to any Lender, or compliance by
any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority, in each case made
subsequent to the Closing Date (or, if later, the date on which such Lender
becomes a Lender):
(a) shall subject such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit, any Eurodollar Loans
made by it or its obligation to make Eurodollar Loans, or change the
basis of taxation of payments to such Lender in respect thereof (except
for Non-Excluded Taxes covered by Section 3.13 (including Non-Excluded
Taxes imposed solely by reason of any failure of such Lender to comply
with its obligations under Section 3.13(b)) and changes in taxes
measured by or imposed upon the overall net income, or franchise tax
(imposed in lieu of such net income tax), of such Lender or its
applicable lending office, branch, or any affiliate thereof);
(b) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(c) shall impose on such Lender any other condition
(excluding any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrower from such Lender,
through the Agent, in accordance herewith, the Borrower shall be obligated to
promptly pay such Lender, upon its demand, any additional amounts necessary to
compensate such Lender on an after-tax basis (after taking into account
applicable deductions and credits in respect of the amount indemnified) for such
increased cost or reduced amount receivable, provided that, in any such case,
the Borrower may elect to convert the Eurodollar Loans made by such Lender
hereunder to Base Rate Loans by giving the Agent at least one Business Day's
notice of such election, in which case the Borrower shall promptly pay to such
Lender, upon demand, without duplication, such amounts, if any, as may be
required pursuant to Section 3.14. If any Lender becomes entitled to claim any
additional
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amounts pursuant to this Section 3.12, it shall provide prompt notice thereof to
the Borrower, through the Agent, certifying (x) that one of the events described
in this Section 3.12 has occurred and describing in reasonable detail the nature
of such event, (y) as to the increased cost or reduced amount resulting from
such event and (z) as to the additional amount demanded by such Lender and a
reasonably detailed explanation of the calculation thereof. Such a certificate
as to any additional amounts payable pursuant to this Section 3.12 submitted by
such Lender, through the Agent, to the Borrower shall be conclusive and binding
on the parties hereto in the absence of manifest error. This covenant shall
survive the termination of this Credit Agreement and the payment of the Loans
and all other amounts payable hereunder.
3.13 Taxes.
-----
(a) Except as provided below in this Section 3.13, all
payments made by the Borrower under this Credit Agreement and any Notes
shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any court, or governmental body, agency or other official,
excluding taxes measured by or imposed upon the net income of any
Lender or its applicable lending office, or any branch or affiliate
thereof, and all franchise taxes, branch taxes, taxes on doing business
or taxes on the capital or net worth of any Lender or its applicable
lending office, or any branch or affiliate thereof, in each case
imposed in lieu of net income taxes: (i) by the jurisdiction under the
laws of which such Lender, applicable lending office, branch or
affiliate is organized or is located, or in which its principal
executive office is located, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii)
by reason of any connection between the jurisdiction imposing such tax
and such Lender, applicable lending office, branch or affiliate other
than a connection arising solely from such Lender having executed,
delivered or performed its obligations, or received payment under or
enforced, this Credit Agreement or any Notes. If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from
------------------
any amounts payable to the Agent or any Lender hereunder or under any
Notes, (A) the amounts so payable to the Agent or such Lender shall be
increased to the extent necessary to yield to the Agent or such Lender
(after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in
this Credit Agreement and any Notes, provided, however, that the
-------- -------
Borrower shall be entitled to deduct and withhold any Non-Excluded
Taxes and shall not be required to increase any such amounts payable to
any Lender that is not organized under the laws of the United States of
America or a state thereof if such Lender fails to comply with the
requirements of paragraph (b) of this Section 3.13 whenever any
Non-Excluded Taxes are payable by the Borrower, and (B) as promptly as
possible after requested the Borrower shall send to such Agent for its
own account or for the account of such Lender, as the case may be, a
certified copy of an original official receipt received by the Borrower
showing payment thereof. If the Borrower fails to pay any Non-Excluded
Taxes when due to the appropriate taxing authority or fails to remit to
the Agent the required receipts or other required documentary evidence,
the Borrower shall indemnify the Agent and any Lender for any
incremental Non-Excluded Taxes,
-51-
interest or penalties that may become payable by the Agent or any Lender as
a result of any such failure. The agreements in this subsection shall
survive the termination of this Credit Agreement and the payment of the
Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) (A) on or before the date of any payment by the Borrower
under this Credit Agreement or Notes to such Lender, deliver to the
Borrower and the Agent (x) two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, or successor applicable
form, as the case may be, certifying that it is entitled to receive
payments under this Credit Agreement and any Notes without deduction
or withholding of any United States federal income taxes and (y) an
Internal Revenue Service Form W-8 or W-9, or successor applicable
form, as the case may be, certifying that it is entitled to an
exemption from United States backup withholding tax;
(B) deliver to the Borrower and the Agent two further copies
of any such form or certification on or before the date that any such
form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(C) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrower or the Agent; or
(ii) in the case of any such Lender that is not a "bank" within
the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (A)
represent to the Borrower (for the benefit of the Borrower and the
Agent) that it is not a bank within the meaning of Section
881(c)(3)(A) of the Internal Revenue Code, (B) agree to furnish to the
Borrower, on or before the date of any payment by the Borrower, with a
copy to the Agent, two accurate and complete original signed copies of
Internal Revenue Service Form W-8, or successor applicable form
certifying to such Lender's legal entitlement at the date of such
certificate to an exemption from U.S. withholding tax under the
provisions of Section 881(c) of the Internal Revenue Code with respect
to payments to be made under this Credit Agreement and any Notes (and
to deliver to the Borrower and the Agent two further copies of such
form on or before the date it expires or becomes obsolete and after
the occurrence of any event requiring a change in the most recently
provided form and, if necessary, obtain any extensions of time
reasonably requested by the Borrower or the Agent for filing and
completing such forms), and (C) agree, to the extent legally entitled
to do so, upon reasonable request by the Borrower, to provide to the
Borrower (for the benefit of the Borrower and the Agent) such other
forms as may be reasonably required in order to establish the legal
entitlement of such Lender to an exemption from withholding with
respect to payments under this Credit Agreement and any Notes.
-52-
Notwithstanding the above, if any change in treaty, law or regulation has
occurred after the date such Person becomes a Lender hereunder which
renders all such forms inapplicable or which would prevent such Lender from
duly completing and delivering any such form with respect to it and such
Lender so advises the Borrower and the Agent, then such Lender shall be
exempt from such requirements. Each Person that shall become a Lender or a
participant of a Lender pursuant to Section 11.3 shall, upon the
effectiveness of the related transfer, be required to provide all of the
forms, certifications and statements required pursuant to this subsection
(b); provided that in the case of a participant of a Lender, the
--------
obligations of such participant of a Lender pursuant to this subsection (b)
shall be determined as if the participant of a Lender were a Lender except
that such participant of a Lender shall furnish all such required forms,
certifications and statements to the Lender from which the related
participation shall have been purchased.
3.14 Compensation.
------------
The Borrower promises to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur as a
consequence of (a) default by the Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Credit Agreement,
(b) default by the Borrower in making any prepayment of a Eurodollar Loan after
the Borrower has given a notice thereof in accordance with the provisions of
this Credit Agreement and (c) the making of a prepayment of Eurodollar Loans for
any reason (including, without limitation, (i) in connection with any assignment
by NationsBank pursuant to Section 11.3(b) as part of the syndication of the
Loans during the 180-day period immediately following the Closing Date and (ii)
the acceleration of the Loans pursuant to Section 9.2) on a day which is not the
last day of an Interest Period with respect thereto. Such indemnification shall
be equal to (i) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or continue to the
last day of the applicable Interest Period (or, in the case of a failure to
borrow, convert or continue, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable rate of interest for
such Eurodollar Loans provided for herein (excluding, however, the Applicable
Percentage included therein, if any) minus (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank Eurodollar market. The agreements in this Section
shall survive the termination of this Credit Agreement and the payment of the
Loans and all other amounts payable hereunder.
3.15 Evidence of Debt.
----------------
(a) Each Lender shall maintain an account or accounts evidencing each
Loan made by such Lender to the Borrower from time to time, including the
amounts of principal and interest payable and paid to such Lender from time
to time under this Credit Agreement. Each Lender will make reasonable
efforts to maintain the accuracy of its account or accounts and to promptly
update its account or accounts from time to time, as necessary.
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(b) The Agent shall maintain the Register pursuant to Section 11.3(c),
and a subaccount for each Lender, in which Register and subaccounts (taken
together) shall be recorded (i) the amount, type and Interest Period of
each such Loan hereunder, (ii) the amount of any principal or interest due
and payable or to become due and payable to each Lender hereunder, and
(iii) the amount of any sum received by the Agent hereunder from or for the
account of the Borrower and each Lender's share thereof, if any. The Agent
will make reasonable efforts to maintain the accuracy of the subaccounts
referred to in the preceding sentence and to promptly update such
subaccounts from time to time, as necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.15 (and, if
consistent with the entries of the Agent, subsection (a)) shall be prima
facie evidence of the existence and amounts of the obligations of the
Borrower therein recorded; provided, however, that the failure of any
-------- -------
Lender or the Agent to maintain such account, such Register, or such
subaccount, as applicable, or any error therein, shall not in any manner
affect the obligation of the Borrower to repay the Loans made by such
Lender in accordance with the terms hereof.
SECTION 4
GUARANTY
--------
4.1 Guaranty of Payment.
-------------------
Subject to Section 4.7 below, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Lender, each Affiliate of a Lender
that enters into a Hedging Agreement and the Agent, the prompt payment of the
Credit Party Obligations in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration or otherwise). The Guarantors
additionally, jointly and severally, unconditionally guarantee to each Lender,
each Affiliate of a Lender that enters into a Hedging Agreement and the Agent,
the timely performance of all other obligations under the Credit Documents and
such Hedging Agreements. This Guaranty is a guaranty of payment and not of
collection and is a continuing guaranty and shall apply to all Credit Party
Obligations whenever arising.
4.2 Obligations Unconditional.
-------------------------
The obligations of the Guarantors hereunder are absolute and unconditional,
irrespective of the value, genuineness, validity, regularity or enforceability
of any of the Credit Documents or the Hedging Agreements, or any other agreement
or instrument referred to therein, to the fullest extent permitted by applicable
law, irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
Each Guarantor agrees that this Guaranty may be enforced by the Lenders without
the necessity at any time of resorting to or exhausting any other security or
collateral and without the necessity at any time of having recourse to the Notes
or any other of the Credit Documents or any collateral, if any,
-54-
hereafter securing the Credit Party Obligations or otherwise and each Guarantor
hereby waives the right to require the Lenders to proceed against the Borrower
or any other Person (including a co-guarantor) or to require the Lenders to
pursue any other remedy or enforce any other right. Each Guarantor further
agrees that it shall have no right of subrogation, indemnity, reimbursement or
contribution against the Borrower or any other Guarantor of the Credit Party
Obligations for amounts paid under this Guaranty until such time as the Lenders
(and any Affiliates of Lenders entering into Hedging Agreements) have been paid
in full, all Commitments under the Credit Agreement have been terminated and no
Person or Governmental Authority shall have any right to request any return or
reimbursement of funds from the Lenders in connection with monies received under
the Credit Documents. Each Guarantor further agrees that nothing contained
herein shall prevent the Lenders from suing on the Notes or any of the other
Credit Documents or any of the Hedging Agreements or foreclosing its security
interest in or Lien on any collateral, if any, securing the Credit Party
Obligations or from exercising any other rights available to it under this
Credit Agreement, the Notes, any other of the Credit Documents, or any other
instrument of security, if any, and the exercise of any of the aforesaid rights
and the completion of any foreclosure proceedings shall not constitute a
discharge of any Guarantor's obligations hereunder; it being the purpose and
intent of each Guarantor that its obligations hereunder shall be absolute,
independent and unconditional under any and all circumstances. Neither any
Guarantor's obligations under this Guaranty nor any remedy for the enforcement
thereof shall be impaired, modified, changed or released in any manner
whatsoever by an impairment, modification, change, release or limitation of the
liability of the Borrower or by reason of the bankruptcy or insolvency of the
Borrower. Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Credit Party Obligations and notice of or
proof of reliance by any Agent or any Lender upon this Guarantee or acceptance
of this Guarantee. The Credit Party Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon this Guarantee. All dealings
between the Borrower and any of the Guarantors, on the one hand, and the Agent
and the Lenders, on the other hand, likewise shall be conclusively presumed to
have been had or consummated in reliance upon this Guarantee. The Guarantors
further agree to all rights of set-off as set forth in Section 11.2.
4.3 Modifications.
-------------
Each Guarantor agrees that (a) all or any part of the Collateral now or
hereafter held for the Credit Party Obligations, if any, may be exchanged,
compromised or surrendered from time to time; (b) the Lenders shall not have any
obligation to protect, perfect, secure or insure any such security interests,
liens or encumbrances now or hereafter held, if any, for the Credit Party
Obligations or the properties subject thereto; (c) the time or place of payment
of the Credit Party Obligations may be changed or extended, in whole or in part,
to a time certain or otherwise, and may be renewed or accelerated, in whole or
in part; (d) the Borrower and any other party liable for payment under the
Credit Documents may be granted indulgences generally; (e) any of the provisions
of the Notes or any of the other Credit Documents may be modified, amended or
waived; (f) any party (including any co-guarantor) liable for the payment
thereof may be granted indulgences or be released; and (g) any deposit balance
for the credit of the Borrower or any other party liable for the payment of the
Credit Party Obligations or liable upon any security therefor may be released,
in whole or in part, at, before or after the stated, extended or accelerated
maturity of the Credit Party Obligations, all without notice to or further
assent by such Guarantor, which shall remain bound thereon,
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notwithstanding any such exchange, compromise, surrender, extension, renewal,
acceleration, modification, indulgence or release.
4.4 Waiver of Rights.
----------------
Each Guarantor expressly waives to the fullest extent permitted by
applicable law: (a) notice of acceptance of this Guaranty by the Lenders and of
all extensions of credit to the Borrower by the Lenders; (b) presentment and
demand for payment or performance of any of the Credit Party Obligations; (c)
protest and notice of dishonor or of default (except as specifically required in
the Credit Agreement) with respect to the Credit Party Obligations or with
respect to any security therefor; (d) notice of the Lenders obtaining, amending,
substituting for, releasing, waiving or modifying any security interest, lien or
encumbrance, if any, hereafter securing the Credit Party Obligations, or the
Lenders' subordinating, compromising, discharging or releasing such security
interests, liens or encumbrances, if any; (e) all other notices to which such
Guarantor might otherwise be entitled; and (f) demand for payment under this
Guaranty.
4.5 Reinstatement.
-------------
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit Party
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable costs and expenses
(including, without limitation, reasonable fees of counsel) incurred by the
Agent or such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.
4.6 Remedies.
--------
The Guarantors agree that, as between the Guarantors, on the one hand, and
the Agent and the Lenders, on the other hand, the Credit Party Obligations may
be declared to be forthwith due and payable as provided in Section 9 (and shall
be deemed to have become automatically due and payable in the circumstances
provided in Section 9) notwithstanding any stay, injunction or other prohibition
preventing such declaration (or preventing such Credit Party Obligations from
becoming automatically due and payable) as against any other Person and that, in
the event of such declaration (or such Credit Party Obligations being deemed to
have become automatically due and payable), such Credit Party Obligations
(whether or not due and payable by any other Person) shall forthwith become due
and payable by the Guarantors. The Guarantors acknowledge and agree that their
obligations hereunder are secured in accordance with the terms of the Security
Agreement and the other Collateral Documents and that the Lenders may exercise
their remedies thereunder in accordance with the terms thereof.
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4.7 Limitation of Guaranty.
----------------------
Notwithstanding any provision to the contrary contained herein or in any of
the other Credit Documents, to the extent the obligations of any Guarantor shall
be adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of such Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
Bankruptcy Code).
4.8 Rights of Contribution.
----------------------
The Credit Parties agree among themselves that, in connection with payments
made hereunder, each Credit Party shall have contribution rights against the
other Credit Parties as permitted under applicable law. Such contribution rights
shall be subordinate and subject in right of payment to the obligations of the
Credit Parties under the Credit Documents and no Credit Party shall exercise
such rights of contribution until all Credit Party Obligations have been paid in
full and the Commitments terminated.
SECTION 5
CONDITIONS PRECEDENT
--------------------
5.1 Closing Conditions.
------------------
The obligation of the Lenders to enter into this Credit Agreement and make
the initial Extension of Credit is subject to satisfaction (or waiver by each of
the Lenders) of the following conditions:
(a) Executed Credit Documents. Receipt by the Agent of duly executed
-------------------------
copies of (i) this Credit Agreement, (ii) the Notes, (iii) the Collateral
Documents, (iv) all other Credit Documents and (v) the Intercreditor
Agreement, each in form and substance reasonably acceptable to the Agent in
its sole discretion.
(b) Corporate Documents. Receipt by the Agent of the following:
-------------------
(i) Charter Documents. Copies of the articles or certificates of
-----------------
incorporation, articles of organization or other charter documents of
each Credit Party certified to be true and complete as of a recent
date by the appropriate Governmental Authority of the state or other
jurisdiction of its incorporation and certified by a secretary or
assistant secretary of such Credit Party to be true and correct as of
the Effective Date.
(ii) Bylaws; Operating Agreement. A copy of the bylaws or
---------------------------
operating agreement of each Credit Party certified by a secretary or
assistant secretary of such Credit Party to be true and correct as of
the Effective Date.
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(iii) Resolutions. Copies of resolutions of the Board of
-----------
Directors or their equivalent of each Credit Party approving and
adopting the Credit Documents to which it is a party, the transactions
contemplated therein and authorizing execution and delivery thereof,
certified by a secretary or assistant secretary of such Credit Party
to be true and correct and in force and effect as of the Effective
Date.
(iv) Good Standing. Copies of (A) certificates of good standing,
-------------
existence or its equivalent (including, with respect to the State of
Illinois only, an application for a certificate of good standing filed
with the Illinois Secretary of State for each of the Borrower and
Bagcraft Acquisition, L.L.C.) with respect to each Credit Party
certified as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of incorporation and
each other jurisdiction in which the failure to so qualify and be in
good standing would have a Material Adverse Effect and (B) to the
extent available, a certificate indicating payment of all corporate
franchise taxes certified as of a recent date by the appropriate
governmental taxing authorities.
(v) Incumbency. An incumbency certificate of each Credit Party
----------
certified by a secretary or assistant secretary to be true and correct
as of the Effective Date.
(c) Opinions of Counsel. The Agent shall have received, in each case
-------------------
dated as of the Closing Date:
(i) a legal opinion of Xxxxxxx Xxxx Slate Xxxxxxx & Xxxx
(Illinois) in form and substance reasonably satisfactory to the Agent;
(ii) a legal opinion of special local counsel for each Credit
Party not incorporated in the States of Delaware or New York, in each
case in form and substance reasonably satisfactory to the Agent; and
(iii) a legal opinion of special local counsel for the Credit
Parties for each State in which any Collateral is located, in each
case in form and substance reasonably satisfactory to the Agent.
(d) Personal Property Collateral. The Agent shall have received, in
----------------------------
form and substance reasonably satisfactory to the Agent:
(i) searches of Uniform Commercial Code ("UCC") filings in the
jurisdiction of the chief executive office of each Credit Party and
each jurisdiction where any Collateral is located or where a filing
would need to be made in order to perfect the Lenders' security
interest in the Collateral, copies of the financing statements on file
in such jurisdictions and evidence that no Liens exist other than
Permitted Liens;
-58-
(ii) duly executed UCC financing statements for each
appropriate jurisdiction as is necessary, in the Agent's sole
discretion, to perfect the Lenders' security interest in the
Collateral;
(iii) searches of ownership of intellectual property
in the appropriate governmental offices as requested by the
Agent and such patent, trademark and copyright filings as are
reasonably necessary to perfect the security interest of the
Agent therein in the United States of America;
(iv) all certificates, if any, evidencing any
certificated Capital Stock pledged to the Agent pursuant to
the Security Agreement, together with duly executed in blank
undated stock powers attached thereto;
(v) to the extent valued in excess of $100,000, each
instrument or chattel paper in the possession of a Credit
Party (including, without limitation, the Management Notes),
as required by the Security Agreement, together with allonges
or assignments as may be necessary to perfect the Lenders'
security interest in such Collateral; and
(vi) asset appraisal reports on the personal property
of the Borrower and its Subsidiaries, the terms of which are
reasonably acceptable to the Agent.
(e) Real Property Collateral. The Agent shall have
------------------------
received, in form and substance reasonably satisfactory tothe Agent:
(i) Mortgages. Fully executed and notarized
---------
mortgages, deeds of trust or deeds to secure debt (each a
"Mortgage" and collectively the "Mortgages") encumbering the
-------- ---------
fee interest of the Credit Parties in each real property asset
owned by a Credit Party set forth on Schedule 5.1(e) (each a
---------------
"Mortgage Property" and collectively the "Mortgage
----------------- --------
Properties"), together with such UCC-1 financing statements as
----------
are necessary with respect to each such Mortgage Property;
(ii) Leasehold Mortgages. Fully executed and
-------------------
notarized leasehold mortgages, deeds of trust or deeds to
secure debt (each a "Leasehold Mortgage" and collectively the
------------------
"Leasehold Mortgages") encumbering the leasehold interest of
-------------------
the Credit Parties in each real property asset leased by a
Credit Party set forth on Schedule 5.1(e) (each a "Leasehold
---------
Mortgage Property" and collectively the "Leasehold Mortgage
----------------- ------------------
Properties"), together with such UCC-1 financing statements as
----------
are necessary with respect to each such Leasehold Mortgage
Property;
(iii) Local Counsel Opinions. An opinion of counsel
----------------------
(which counsel shall be satisfactory to the Agent) in the
state in which each Mortgage Property and Leasehold Mortgage
Property is located with respect to the enforceability of the
Mortgages and Leasehold Mortgages, standard remedies with
respect thereto and sufficiency of the form of UCC-1 financing
statements to be recorded or filed in
-59-
such state and such other matters as the Agent may request, in
form and substance reasonably satisfactory to the Agent;
(iv) Title Policies. ALTA or other
--------------
appropriate form mortgagee title insurance policies (the
"Mortgage Policies") issued by the Title Insurance Company, in
-----------------
an amount satisfactory to the Agent with respect to each Real
Property (which amount shall not, in any event, exceed the
fair market value of such Real Property), assuring the Agent
that the applicable Mortgages or Leasehold Mortgages, as
applicable, create valid and enforceable mortgage liens on the
respective Real Properties, free and clear of all defects and
encumbrances except Permitted Liens, which Mortgage Policies
shall be in form and substance reasonably satisfactory to the
Agent and containing such endorsements as shall be reasonably
satisfactory to the Agent and for any other matters that the
Agent may request, and providing affirmative insurance and
such reinsurance as the Agent may request, all of the
foregoing in form and substance reasonably satisfactory to the
Agent;
(v) Surveys. Maps or plats of an as-built
-------
survey of the sites of the Real Properties certified to the
Agent and the Title Insurance Company in a manner reasonably
satisfactory to them, dated a date satisfactory to the Agent
and the Title Insurance Company by an independent professional
licensed land surveyor reasonably satisfactory to the Agent
and the Title Insurance Company, which maps or plats and the
surveys on which they are based shall be sufficient to delete
any standard printed survey exception contained in the
applicable title policy and be made in accordance with the
Minimum Standard Detail Requirements for Land Title Surveys
jointly established and adopted by the American Land Title
Association and the American Congress on Surveying and Mapping
in 1992, and, without limiting the generality of the
foregoing, there shall be surveyed and shown on such maps,
plats or surveys the following: (A) the locations on such
sites of all the buildings, structures and other improvements
and the established building setback lines; (B) the lines of
streets abutting the sites and width thereof; (C) all access
and other easements appurtenant to the sites necessary to use
the sites; (D) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar
encumbrances affecting the site, whether recorded, apparent
from a physical inspection of the sites or otherwise known to
the surveyor; (E) any encroachments on any adjoining property
by the building structures and improvements on the sites; and
(F) if the site is described as being on a filed map, a legend
relating the survey to said map;
(vi) Flood Certificates. Certification from
------------------
a registered engineer or land surveyor or other evidence
reasonably acceptable to the Agent that none of the
improvements on the Real Properties are located within any
area designated by the Director of the Federal Emergency
Management Agency as a "special flood hazard" area or if any
improvements on the Real Properties are located within a
"special flood hazard" area, evidence of a flood insurance
policy from a company and in an amount reasonably satisfactory
to the Agent for the applicable portion of the premises,
naming the Agent, for the benefit of the Lenders, as
mortgagee;
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(vii) Environmental Reports. Environmental
---------------------
assessment reports and related documents with respect to all
Real Properties reasonably acceptable to the Agent; and
(viii) Valuations. A real estate valuation
----------
for each of the Real Properties reasonably acceptable to the
Agent.
(f) Evidence of Insurance. Receipt by the Agent of copies of
---------------------
insurance policies or certificates of insurance of the Credit Parties
evidencing liability and casualty insurance meeting the requirements
set forth in the Credit Documents, including, but not limited to,
naming the Agent as additional insured or loss payee on behalf of the
Lenders.
(g) Year 2000 Problem. The Agent shall be satisfied that (i)
-----------------
the Credit Parties are taking all necessary and appropriate steps to
ascertain the extent of, and to quantify and successfully address,
business and financial risks facing the Credit Parties as a result of
what is commonly referred to as the "Year 2000 Problem" (i.e., the
inability of certain computer applications to recognize correctly and
perform date-sensitive functions involving certain dates prior to and
after December 31, 1999), and (ii) the Credit Parties' material
computer applications will, on a timely basis, adequately address the
Year 2000 Problem except where the failure to do so will not have, or
reasonably be expected to have, a Material Adverse Effect.
(h) Consents. Receipt by the Agent of evidence that all
--------
governmental, shareholder and material third party consents and
approvals necessary or, in the opinion of the Agent, desirable in
connection with the Transactions and the related financings and
transactions contemplated thereby have been received (including,
without limitation, (i) Xxxx-Xxxxx-Xxxxxx clearance and (ii) all
consents and approvals necessary to transfer any rights, interests or
obligations of Bagcraft under each of the agreements set forth on
Schedule 5.1(h) attached hereto), and expiration of all applicable
waiting periods without any action being taken by any authority that
could restrain, prevent or impose any material adverse conditions on
the Transactions 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 judgment of the Agent could have such effect.
(i) Consummation of Acquisition Transactions; Purchase
--------------------------------------------------
Agreements. Each of the Purchase Agreements (i) shall have been
----------
consummated in accordance with the terms thereof and in compliance with
applicable law and regulatory approvals, and all conditions precedent
to the obligations of the buyer thereunder shall have been satisfied
and (ii) shall not have been altered, amended or otherwise changed or
supplemented in any material respect or any condition therein waived,
without the prior written consent of the Agent. The Agent shall have
received a copy, certified by an officer of the Borrower as true and
complete, of each of the Purchase Agreements as originally executed and
delivered, together with all exhibits and schedules.
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(j) Corporate Structure. The corporate capital and ownership
--------------------
structure of the Parent, the Borrower and their Subsidiaries (after
giving effect to the Transactions) shall be as described in Schedule
--------
5.1(j).
------
(k) Equity Investment. Receipt by the Agent of evidence that
-----------------
an equity investment of at least $15.3 million (consisting of at least
$14.5 million in cash, with the remainder consisting of promissory
notes of Ivex and/or Bagcraft management in favor of the Borrower
satisfactory in form and substance to the Agent (the "Management
Notes")) and shall have been made in the Parent by members of the
Sponsor Group (and that immediately thereafter the Parent shall have
contributed such amount, net of reasonable expenses payable to third
parties, in the Borrower in exchange for common Capital Stock in the
Borrower) on terms that are satisfactory to the Agent.
(l) Subordinated Debt. Receipt by the Agent of copies of all
-----------------
documentation evidencing or governing the Indebtedness arising under
the Subordinated Note, in each case certified by an officer of the
Borrower to be true and correct.
(m) Solvency Opinion. Receipt by the Agent of an opinion from
----------------
an independent auditor or appraiser acceptable to the Agent as to the
financial condition, solvency and related matters of the Credit Parties
on a consolidated basis after giving effect to the Transactions and the
initial borrowings under the Credit Documents.
(n) Availability. After giving effect to the initial Loans
------------
made and Letters of Credit issued hereunder on the Effective Date,
there shall be at least $11.0 million of availability existing under
the Revolving Committed Amount.
(o) Officer's Certificates. The Agent shall have received a
----------------------
certificate or certificates executed by the chief financial officer or
treasurer of the Borrower as of the Effective Date stating that (i) the
Parent, the Borrower and each of the Borrower's Subsidiaries are in
compliance with all existing financial obligations after giving effect
to the Transactions, (ii) all governmental, shareholder and material
third party consents and approvals necessary in connection with the
Transactions and the Credit Documents have been obtained, (iii) no
action, suit, investigation or proceeding is pending or, to the best
knowledge of such chief financial officer or treasurer, threatened in
any court or before any arbitrator or governmental instrumentality that
purports to affect the Parent, the Borrower, any of the Borrower's
Subsidiaries or any transaction contemplated by the Credit Documents,
if such action, suit, investigation or proceeding would have or could
be reasonably expected to have a Material Adverse Effect, (iv) no event
or condition has occurred since December 31, 1997 which has had or
could be reasonably expected to have a Material Adverse Effect and (v)
immediately after giving effect to this Credit Agreement, the other
Credit Documents and all the transactions contemplated therein to occur
on such date, (A) the Parent, the Borrower and each of the Borrower's
Subsidiaries is Solvent, (B) no Default or Event of Default exists, (C)
all representations and warranties contained herein and in the other
Credit Documents are true and correct in all material respects, and (D)
the Credit Parties are in compliance with each of the financial
covenants set forth in Section 7.2.
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(p) Fees and Expenses. Payment by the Credit Parties of the
-----------------
fees and expenses owed by them to the Lenders and the Agent, as set
forth in the Fee Letter.
(q) Payoff Letters and Release of Liens. The Agent shall have
-----------------------------------
received (i) a payoff letter with respect to any outstanding
Indebtedness or Lien in favor of General Electric Capital Corporation
and (ii) a UCC-3 release of lien executed by Rescuers, Inc. (successor
to Arcar Graphics, Inc.).
(r) Payoff of Certain Xxxxxx Springs Debt. The Agent shall
-------------------------------------
have received evidence that all Indebtedness of the Bagcraft to Xxxxxx
Springs in respect of the $250,000 loan made on January 19, 1994 and
the $250,000 loan made on January 20, 1994 shall have been paid in
full.
(s) Retirement of GECC Letter of Credit. The Agent shall have
-----------------------------------
received evidence of the retirement of that certain letter of credit
issued by General Electric Capital Corporation on behalf of Bagcraft.
5.2 Conditions to All Extensions of Credit.
--------------------------------------
In addition to the conditions precedent stated elsewhere herein, the
Lenders shall not be obligated to make Loans nor shall the Issuing Lender be
required to issue or extend a Letter of Credit unless:
(a) Notice. The Borrower shall have delivered (i) in the case
------
of any new Revolving Loan, a Notice of Borrowing, duly executed and
completed, by the time specified in Section 2.1 and (ii) in the case of
any Letter of Credit, the Issuing Lender shall have received an
appropriate request for issuance in accordance with the provisions of
Section 2.2;
(b) Representations and Warranties. The representations and
------------------------------
warranties made by the Credit Parties in any Credit Document are true
and correct in all material respects at and as if made as of such
date except to the extent they expressly relate to an earlier date;
(c) No Default. No Default or Event of Default shall exist or
----------
be continuing either prior to or after giving effect thereto; provided,
--------
however, that the existence of any Default or Event of Default
-------
resulting from the failure of the Borrower to timely make a payment
under the Construction Loan Documents shall not, in and of itself,
constitute a failure to satisfy the conditions set forth in this
subsection (c) in connection with a requested Revolving Loan the
proceeds of which are to be applied to make such payment under the
Construction Loan Documents on behalf of the Borrower in accordance
with the terms of Section 2.1(b)(ii); and
(d) No Material Adverse Effect. There shall not have occurred
--------------------------
any Material Adverse Effect since December 31, 1997.
-63-
(e) Availability. Immediately after giving effect to the
------------
making of a Loan (and the application of the proceeds thereof) or to
the issuance of a Letter of Credit, as the case may be, the sum of the
Revolving Loans outstanding plus LOC Obligations outstanding shall not
exceed the Revolving Commitment Amount.
The delivery of each Notice of Borrowing and each request for a Letter of Credit
shall constitute a representation and warranty by the Borrower of the
correctness of the matters specified in subsections (b), (c), (d) and (e) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
------------------------------
The Credit Parties hereby represent to the Agent and each Lender that:
6.1 Financial Condition.
-------------------
(a) (i) The audited consolidated balance sheets and income
statements of Bagcraft and its Subsidiaries for fiscal years
1996 and 1997 have heretofore been furnished to each Lender.
Such financial statements (including the notes thereto) (i)
have been audited by Coopers & Xxxxxxx, (ii) have been
prepared in accordance with GAAP consistently applied
throughout the periods covered thereby and (iii) present
fairly (on the basis disclosed in the footnotes to such
financial statements) the consolidated financial condition,
results of operations and cash flows of Bagcraft and its
Subsidiaries as of such date and for such periods. The
unaudited interim consolidated balance sheets of Bagcraft and
its Subsidiaries as of the end of, and the related unaudited
interim consolidated statements of earnings and of cash flows
for, each fiscal month and quarterly period ended after
October 31, 1998 and prior to the Closing Date have heretofore
been furnished to each Lender. Such interim financial
statements for each such quarterly period, (i) have been
prepared in accordance with GAAP consistently applied
throughout the periods covered thereby and (ii) present fairly
(on the basis disclosed in the footnotes to such financial
statements) the consolidated financial condition, results of
operations and cash flows of Bagcraft and its Subsidiaries as
of such date and for such periods. During the period from
October 31, 1998 to and including the Closing Date, there has
been no sale, transfer or other disposition by Bagcraft or any
of its Subsidiaries of any material part of the business or
property of Bagcraft and its Subsidiaries taken as a whole,
and no purchase or other acquisition by any of them of any
business or property (including any Capital Stock of any other
Person) material in relation to the consolidated financial
condition of Bagcraft and its Subsidiaries taken as a whole,
in each case, which is not reflected in the foregoing
financial statements or in the notes thereto and has not
otherwise been disclosed in writing to the Lenders on or prior
to the Closing Date.
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(ii) The unaudited balance sheets and income
statements of IPMC for fiscal years 1995, 1996 and 1997 have
heretofore been furnished to each Lender. Such financial
statements (including the notes thereto) (i) have been
prepared in accordance with GAAP consistently applied
throughout the periods covered thereby (except as otherwise
indicated in Section 5.7(a) of the Detroit Paper Mill Purchase
Agreement) and (ii) present fairly the financial condition,
results of operations and cash flows of IPMC as of such date
and for such periods. The unaudited interim balance sheet of
IPMC as of June 30, 1998 and the related unaudited income
statements for the six-month period then ended have heretofore
been furnished to each Lender. Such interim financial
statement (i) has been prepared in accordance with GAAP
consistently applied throughout the period covered thereby
(except as otherwise indicated in Section 5.7(b) of the
Detroit Paper Mill Purchase Agreement) and (ii) presents
fairly the financial condition, results of operations and cash
flows of IPMC as of such date and for such period. The Closing
Balance Sheet (as defined in the Detroit Paper Mill Purchase
Agreement) has heretofore been furnished to each Lender. Such
Closing Balance Sheet (i) has been prepared in accordance with
GAAP consistently applied throughout the period covered
thereby (except as otherwise indicated in Section 3.3(b) of
the Detroit Paper Mill Purchase Agreement) and (ii) presents
fairly the financial condition, assets and liabilities of IPMC
as of such date. During the period from October 31, 1998 to
and including the Closing Date, there has been no sale,
transfer or other disposition by IPMC of any material part of
the business or property of IPMC, and no purchase or other
acquisition by IPMC of any business or property (including any
Capital Stock of any other Person) material in relation to the
financial condition of IPMC which is not reflected in the
foregoing financial statements or in the notes thereto and has
not otherwise been disclosed in writing to the Lenders on or
prior to the Closing Date.
(b) The pro forma consolidated balance sheet of the Borrower
and its Subsidiaries as of the Closing Date giving effect to the
Transactions in accordance with the terms of the Purchase Agreements
and reflecting estimated purchase price accounting adjustments, has
heretofore been furnished to each Lender. Such pro forma balance sheet
is based upon reasonable assumptions made known to the Lenders and upon
information not known to be incorrect or misleading in any material
respect.
(c) The financial statements delivered to the Lenders pursuant
to Section 7.1(a) and (b), (i) have been prepared in accordance with
GAAP (except as may otherwise be permitted under Section 7.1(a) and
(b)) and (ii) present fairly (on the basis disclosed in the footnotes
to such financial statements) the consolidated financial condition,
results of operations and cash flows of the Credit Parties as of such
date and for such periods.
6.2 No Material Change.
------------------
Since December 31, 1997, there has been no development or event
relating to or affecting a Credit Party which has had or would be reasonably
expected to have a Material Adverse Effect.
-65-
6.3 Organization and Good Standing.
------------------------------
Each Credit Party (a) is a corporation or limited liability company
duly incorporated or organized, validly existing and in good standing under the
laws of the State (or other jurisdiction) of its incorporation or organization,
(b) is duly qualified and in good standing as a foreign corporation or limited
liability company and authorized to do business in every jurisdiction unless the
failure to be so qualified, in good standing or authorized would have a Material
Adverse Effect and (c) has the requisite corporate or limited liability company
power and authority to own its properties and to carry on its business as now
conducted and as proposed to be conducted.
6.4 Due Authorization.
-----------------
Each Credit Party (a) has the requisite corporate or limited liability
company power and authority to execute, deliver and perform this Credit
Agreement and the other Credit Documents to which it is a party and to incur the
obligations herein and therein provided for and (b) is duly authorized to, and
has been authorized by all necessary corporate or limited liability company
action, to execute, deliver and perform this Credit Agreement and the other
Credit Documents to which it is a party.
6.5 No Conflicts.
------------
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Credit Party will (a)
violate or conflict with any provision of its articles or certificate of
incorporation, bylaws, articles of organization or operating agreement, as
applicable, (b) materially violate, contravene or materially conflict with any
Requirement of Law or any other law, regulation (including, without limitation,
Regulation U or Regulation X), order, writ, judgment, injunction, decree or
permit applicable to it, (c) violate, contravene or materially conflict with
contractual provisions of, or cause an event of default under, any indenture,
loan agreement, mortgage, deed of trust, contract or other agreement or
instrument to which it is a party or by which it may be bound, the violation of
which would have or might be reasonably expected to have a Material Adverse
Effect, or (d) result in or require the creation of any Lien (other than those
contemplated in or created in connection with the Credit Documents) upon or with
respect to its properties.
6.6 Consents.
--------
Except for consents, approvals and authorizations which have been
obtained and consents, approvals and authorizations the failure of which to
obtain would not reasonably be expected to have a Material Adverse Effect, no
consent, approval, authorization or order of, or filing, registration or
qualification with, any court or Governmental Authority or third party in
respect of any Credit Party is required in connection with the execution,
delivery or performance of this Credit Agreement or any of the other Credit
Documents by such Credit Party.
6.7 Enforceable Obligations.
-----------------------
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This Credit Agreement and the other Credit Documents have been duly
executed and delivered and constitute legal, valid and binding obligations of
each Credit Party enforceable against such Credit Party in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization or moratorium laws or similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
6.8 No Default.
----------
No Credit Party is in default in any respect under any contract, lease,
loan agreement, indenture, mortgage, security agreement or other agreement or
obligation to which it is a party or by which any of its properties is bound
which default would have or would be reasonably expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and continues to
exist except as previously disclosed in writing to the Lenders.
6.9 Ownership.
---------
Other than Permitted Liens, each Credit Party is the owner of (free and
clear of all Liens) and has good and marketable title to, or has a valid license
to use, (a) all of its Mortgage Properties and Leasehold Mortgage Properties
(except as indicated on the Mortgage Policies accepted by the Agent) and (b) all
of its other Property.
6.10 Indebtedness.
------------
The Credit Parties have no Indebtedness except (a) as disclosed in the
financial statements referenced in Section 6.1, (b) as set forth on Schedule
--------
6.10 and (c) as otherwise permitted by this Credit Agreement.
----
6.11 Litigation.
----------
There are no actions, suits or legal, equitable, arbitration or
administrative proceedings, pending or, to the knowledge of any Credit Party,
threatened against any Credit Party which would have or would be reasonably
expected to have a Material Adverse Effect.
6.12 Taxes.
-----
Each Credit Party has filed, or caused to be filed, all material tax
returns (federal, state, local and foreign) required to be filed and paid (a)
all amounts of taxes shown thereon to be due and payable (including interest and
penalties) and (b) all other taxes, fees, assessments and other governmental
charges (including mortgage recording taxes, documentary stamp taxes and
intangibles taxes) that are due and payable, except for such taxes (i) which are
not yet delinquent or (ii) that are being contested in good faith and by proper
proceedings, and against which adequate reserves are being maintained in
accordance with GAAP. To the knowledge of the Credit Parties, there are no
material amounts claimed to be due against any of them by any Governmental
Authority.
-67-
6.13 Compliance with Law.
-------------------
Each Credit Party is in compliance with all Requirements of Law and all
other laws, rules, regulations, orders and decrees (including without limitation
Environmental Laws) applicable to it, or to its properties, unless such failure
to comply would not have or would not be reasonably expected to have a Material
Adverse Effect.
6.14 ERISA.
-----
Except as would not result or be reasonably expected to result in a
Material Adverse Effect:
(a) During the five-year period prior to the date on which
this representation is made or deemed made: (i) no Termination Event
has occurred, and, to the knowledge of the Credit Parties, no event or
condition has occurred or exists as a result of which any Termination
Event could reasonably be expected to occur, with respect to any Plan;
(ii) no "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or not
waived, has occurred with respect to any Plan; (iii) each Plan has been
maintained, operated, and funded in compliance with its own terms and
in material compliance with the provisions of ERISA, the Code, and any
other applicable federal or state laws; and (iv) no lien in favor of
the PBGC or a Plan has arisen or is reasonably likely to arise on
account of any Plan.
(b) The actuarial present value of all "benefit liabilities"
under each Single Employer Plan (determined within the meaning of
Section 401(a)(2) of the Code, utilizing the actuarial assumptions used
to fund such Plans), whether or not vested, did not, as of the last
annual valuation date prior to the date on which this representation is
made or deemed made, exceed the current value of the assets of such
Plan allocable to such accrued liabilities.
(c) Neither a Credit Party nor any ERISA Affiliate has
incurred, or, to the knowledge of the Credit Parties, are reasonably
expected to incur, any withdrawal liability under ERISA to any
Multiemployer Plan or Multiple Employer Plan. Neither the Borrower, any
of its Subsidiaries nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization (within
the meaning of Section 4241 of ERISA), is insolvent (within the meaning
of Section 4245 of ERISA), or has been terminated (within the meaning
of Title IV of ERISA), and no Multiemployer Plan is, to the best
knowledge of the Credit Parties, reasonably expected to be in
reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility has occurred with respect to a Plan which has subjected
or is reasonably likely to subject the Borrower or any of its
Subsidiaries or any ERISA Affiliate to any liability under Sections
406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or
under any agreement or other instrument pursuant to which the Borrower
or any of its Subsidiaries or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability.
-68-
(e) The present value (determined using actuarial and other
assumptions which are reasonable with respect to the benefits provided
and the employees participating) of the liability of the Borrower and
its Subsidiaries and each ERISA Affiliate for post-retirement welfare
benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(1) of
ERISA), net of all assets under all such Plans allocable to such
benefits, are reflected on the Financial Statements in accordance with
FASB 106.
(f) Each Plan which is a welfare plan (as defined in Section
3(1) of ERISA) to which Sections 601-609 of ERISA and Section 4980B of
the Code apply has been administered in material compliance with such
sections.
6.15 Subsidiaries as of the Closing Date.
-----------------------------------
Set forth on Schedule 6.15 is a complete and accurate list as of the
-------------
Closing Date of all Subsidiaries of each Credit Party. Information on Schedule
--------
6.15 includes as of the Closing Date jurisdiction of incorporation or
----
organization, the number of shares of each class of Capital Stock outstanding,
the number and percentage of outstanding shares of each class owned (directly or
indirectly) by such Credit Party; and the number and effect, if exercised, of
all outstanding options, warrants, rights of conversion or purchase and all
other similar rights with respect thereto as of the Closing Date. The
outstanding Capital Stock of all such Subsidiaries is validly issued, fully paid
and non-assessable and is, to the extent owned by each such Credit Party,
directly or indirectly, free and clear of all Liens (other than those arising
under or contemplated in connection with the Credit Documents). Other than as
set forth in Schedule 6.15, as of the Closing Date neither any Credit Party nor
-------------
any Subsidiary thereof has outstanding any securities convertible into or
exchangeable for its Capital Stock nor does any such Person have outstanding any
rights to subscribe for or to purchase or any options for the purchase of, or
any agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to its Capital Stock. As
of the Closing Date, none of the Credit Parties owns any shares of Capital Stock
in any Foreign Subsidiaries.
6.16 Use of Proceeds.
---------------
The proceeds of the Loans hereunder will be used solely for the
purposes specified in Section 7.11. No proceeds of the Loans hereunder have been
or will be used (a) to acquire, directly or indirectly, any security in any
transaction which is subject to Sections 13 or 14 of the Securities Exchange Act
of 1934, as amended, (including, without limitation, Sections 13(d) and 14(d)
thereof) or to refinance any Indebtedness used to acquire any such securities or
(b) for the acquisition of another Person unless the board of directors (or
other comparable governing body) or stockholders, as appropriate, of such Person
has approved such acquisition.
6.17 Government Regulation.
---------------------
(a) No part of the Letters of Credit or proceeds of the Loans
will be used, directly or indirectly, for the purpose of purchasing or
carrying any "margin stock" within the meaning of Regulation U, or for
the purpose of purchasing or carrying or trading in
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any securities. If requested by any Lender or the Agent, the Borrower
will furnish to the Agent and each Lender a statement to the foregoing
effect in conformity with the requirements of FR Form U-1 referred to
in Regulation U. No Indebtedness being reduced or retired out of the
proceeds of the Loans was or will be incurred for the purpose of
purchasing or carrying any margin stock within the meaning of
Regulation U or any "margin security" within the meaning of Regulation
T. "Margin stock" within the meaning of Regulation U does not
constitute more than 25% of the value of the consolidated assets of the
Credit Parties. None of the transactions contemplated by the Credit
Documents (including, without limitation, the direct or indirect use of
the proceeds of the Loans) will violate or result in a violation of the
Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, or regulations issued pursuant thereto, or Regulation
T, U or X.
(b) No Credit Party is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act or the
Investment Company Act of 1940, each as amended. In addition, no Credit
Party is (i) an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, and is
not controlled by such a company, or (ii) a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as
amended.
6.18 Environmental Matters.
---------------------
(a) Except as would not cause or reasonably be expected
to cause a Material Adverse Effect:
(i) Each of the Real Properties and all operations
at the Real Properties are in compliance with all applicable
Environmental Laws, and there is no violation of any
Environmental Law with respect to the Real Properties or the
businesses operated by the Credit Parties (the "Businesses"),
----------
and there are no conditions relating to the Businesses or Real
Properties that would reasonably be expected to give rise to
liability under any applicable Environmental Laws.
(ii) No Credit Party has received any written notice
of, or inquiry from any Governmental Authority regarding, any
violation, alleged violation, non-compliance, liability or
potential liability regarding Hazardous Materials or
compliance with Environmental Laws with regard to any of the
Real Properties or the Businesses, nor, to the knowledge of a
Credit Party, is any such notice being threatened.
(iii) Hazardous Materials have not been transported
or disposed of from the Real Properties, or generated,
treated, stored or disposed of at, on or under any of the Real
Properties or any other location, in each case by, or on
behalf or with the permission of, a Credit Party in a manner
that would give rise to liability under any applicable
Environmental Laws.
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(iv) No judicial proceeding or governmental or
administrative action is pending or, to the knowledge of a
Credit Party, threatened, under any Environmental Law to which
a Credit Party is or will be named as a party, nor are there
any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental
Law with respect to a Credit Party, the Real Properties or the
Businesses.
(v) There has been no release (including, without
limitation, disposal) or threat of release of Hazardous
Materials at or from the Real Properties, or arising from or
related to the operations of a Credit Party in connection with
the Real Properties or otherwise in connection with the
Businesses.
(vi) No Credit Party has assumed any liability of any
Person (other than another Credit Party) under any
Environmental Law.
(b) Each Credit Party has adopted procedures that are designed
to (i) ensure that such Credit Party, any of its operations and each of
the properties owned or leased by such Credit Party comply with
applicable Environmental Laws and (ii) minimize any liabilities or
potential liabilities that such Credit Party, any of its operations and
each of the properties owned or leased by such Credit Party may have
under applicable Environmental Laws.
6.19 Intellectual Property.
---------------------
Each Credit Party owns, or has the legal right to use, all material
trademarks, tradenames, copyrights, technology, know-how and processes (the
"Intellectual Property") owned or licensed by it. Set forth on Schedule 6.19 is
--------------------- -------------
a list as of the Closing Date of all registrations and applications for material
Intellectual Property owned by each Credit Party or that any Credit Party has
the right to use and a list of all license agreements to which a Credit Party is
a party relating to material Intellectual Property that any Credit Party has the
right to use as of the Closing Date. Except as provided on Schedule 6.19 or
-------------
except as would not result or be reasonably expected to result in a Material
Adverse Effect, no claim has been asserted by any Person against any Credit
Party in writing and is pending challenging or questioning the use of any
Intellectual Property owned by a Credit Party or that any Credit Party has a
right to use or the validity or effectiveness of any such Intellectual Property,
nor does any Credit Party have knowledge of any such claim, and to the Credit
Parties' knowledge the use of any Intellectual Property by the Credit Parties
does not infringe on the rights of any Person. Except as set forth on Schedule
--------
6.19, none of the material Intellectual Property owned by a Credit Party is the
----
subject of any licensing or franchise agreement.
6.20 Solvency.
--------
Each Credit Party is and, after consummation of the transactions
contemplated by this Credit Agreement, will be Solvent.
6.21 Investments.
-----------
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All Investments of each Credit Party are either Permitted Investments
or otherwise permitted by the terms of this Credit Agreement.
6.22 Location of Collateral.
----------------------
Set forth on Schedule 6.22(a) is a list as of the Closing Date of all
----------------
Real Properties with street address, county and state where located. Set forth
on Schedule 6.22(b) is a list as of the Closing Date of all locations where any
----------------
personal property of a Credit Party is located, including county and state where
located. Set forth on Schedule 6.22(c) is a list as of the Closing Date of the
----------------
chief executive office and principal place of business of each Credit Party.
6.23 Disclosure.
----------
Neither this Agreement nor any financial statements delivered to the
Lenders nor any other document, certificate or written statement on the date as
of which such document, certificate or statement is made, certified or furnished
to the Lenders by any Credit Party (including any officer or director of a
Credit Party) in connection with the transactions contemplated hereby contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained therein or herein (in light
of the circumstances in which they were made), taken as a whole, not misleading;
provided that projections and assumptions expressed in the information,
exhibits, reports, certificates, statements and documents so furnished were
reasonable based on the information available at the time so furnished, but no
Credit Party makes any representation or warranty that such projections or
assumptions will prove in the future to be accurate or that any Credit Party
will achieve the financial results reflected therein.
6.24 Licenses, etc.
-------------
The Credit Parties have obtained and hold in full force and effect, all
franchises, licenses, permits, certificates, authorizations, qualifications,
accreditations, easements, rights of way and other rights, consents and
approvals which are necessary for the operation of their respective businesses
as presently conducted, except where the failure to obtain same would not have a
Material Adverse Effect.
6.25 Collateral Documents.
--------------------
The Collateral Documents create valid security interests in, and Liens
on, the Collateral purported to be covered thereby, which security interests and
Liens shall be perfected security interests and Liens to the extent required
under the Collateral Documents, prior to all other Liens other than Permitted
Liens. Each of the representations and warranties made by the Credit Parties in
the Collateral Documents is true and correct in all material respects.
Notwithstanding the foregoing, it is understood that certain Collateral can only
be perfected upon the filing of adequate financing statements in appropriate
filing offices.
6.26 Burdensome Restrictions.
-----------------------
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No Credit Party is a party to any agreement or instrument or any charter or
corporate restriction which, individually or in the aggregate, would have or be
reasonably expected to have a Material Adverse Effect.
6.27 Year 2000 Compliance.
--------------------
Each Credit Party reasonably believes that the Year 2000 Problem has been
appropriately addressed by it and the Year 2000 Problem will not exist with
respect to it on and after January 1, 2000, to the extent such Year 2000 Problem
would cause or be reasonably expected to cause a Material Adverse Effect.
6.28 Labor Contracts and Disputes.
----------------------------
Except as disclosed on Schedule 6.28 or except as would not cause or
-------------
reasonably be expected to cause a Material Adverse Effect, (i) there is no
collective bargaining agreement or other labor contract covering employees of
any Credit Party; (ii) no union or other labor organization is seeking to
organize, or be recognized as, a collective bargaining unit of employees of any
Credit Party; (iii) there is no pending, or to any Credit Party's knowledge,
threatened, strike, work stoppage, material unfair lease practice claim or other
material labor dispute against or effecting any Credit Party or its employees.
SECTION 7
AFFIRMATIVE COVENANTS
---------------------
Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Loans and LOC Obligations, together with
interest and fees and other obligations then due and payable hereunder, have
been paid in full and the Commitments and Letters of Credit hereunder shall have
terminated:
7.1 Information Covenants.
---------------------
The Credit Parties will furnish, or cause to be furnished, to the Agent and
(except as otherwise specifically provided below) each of the Lenders:
(a) Annual Financial Statements.
---------------------------
(i) (A) As soon as available, and in any event within 120 days
after the close of the fiscal year ending December 31, 1998, a
consolidated balance sheet and income statement of Bagcraft and its
Subsidiaries as of the end of such fiscal year, together with related
consolidated statements of operations and consolidated statements of
retained earnings and of cash flows for such fiscal year, setting
forth in comparative form consolidated figures for the preceding
fiscal year, all such consolidated financial information described
above to be in reasonable form and detail and audited by independent
certified public accountants of recognized national
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standing reasonably acceptable to the Agent and whose opinion shall
be to the effect that such financial statements have been prepared in
accordance with GAAP (except for changes with which such accountants
concur) and shall not be limited as to the scope of the audit or
qualified in any manner.
(B) As soon as available, and in any event within 120 days after
the close of the fiscal year ending December 31, 1998, a consolidated
balance sheet and income statement of IPMC as of the end of such
fiscal year, together with related consolidated statements of
operations and consolidated statements of retained earnings and of
cash flows for such fiscal year, setting forth in comparative form
consolidated figures for the preceding fiscal year, all such
consolidated financial information described above to be in
reasonable form and detail and audited by independent certified
public accountants of recognized national standing reasonably
acceptable to the Agent and whose opinion shall be to the effect that
such financial statements have been prepared in accordance with GAAP
(except for changes with which such accountants concur) and shall not
be limited as to the scope of the audit or qualified in any manner.
(C) As soon as available, and in any event within 90 days after
the close of each fiscal year of the Borrower commencing with the
fiscal year ending December 31, 1999, a consolidated and
consolidating balance sheet and income statement of the Borrower and
its Subsidiaries as of the end of such fiscal year, together with
related consolidated and consolidating statements of operations and
consolidated and consolidating statements of retained earnings and of
cash flows for such fiscal year, setting forth in comparative form
consolidated and consolidating figures for the preceding fiscal year
(except to the extent that such financial information relates to any
of the first four fiscal quarters of the Borrower following the
Closing Date, in which case such financial information shall set
forth in comparative form consolidating figures only), all such
consolidated and consolidating financial information described above
to be in reasonable form and detail and audited by independent
certified public accountants of recognized national standing
reasonably acceptable to the Agent and whose opinion shall be to the
effect that such financial statements have been prepared in
accordance with GAAP (except for changes with which such accountants
concur) and shall not be limited as to the scope of the audit or
qualified in any manner.
(ii) As soon as available, and in any event within 90 days after
the close of each fiscal year of the Parent and its Subsidiaries
commencing with the fiscal year ending December 31, 1999, a
consolidated balance sheet and income statement of the Parent and its
Subsidiaries as of the end of such fiscal year, together with related
consolidated statements of operations and consolidated statements of
retained earnings and of cash flows for such fiscal year, setting
forth in comparative form consolidated figures for the preceding
fiscal year (except to the extent that such financial information
relates to any of the first four fiscal quarters of the Parent
following the Closing Date), all such consolidated financial
information described above to be in reasonable form and detail and
audited by independent certified
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public accountants of recognized national standing reasonably
acceptable to the Agent and whose opinion shall be to the effect that
such financial statements have been prepared in accordance with GAAP
(except for changes with which such accountants concur) and shall not
be limited as to the scope of the audit or qualified in any manner.
(b) Quarterly Financial Statements.
------------------------------
(i) As soon as available, and in any event within 45 days after
the close of each of the first three fiscal quarters of the Borrower
(other than the fourth fiscal quarter, in which case 90 days after
the end thereof), (i) a consolidated and consolidating balance sheet
and income statement of the Borrower and its Subsidiaries as of the
end of such fiscal quarter, together with related consolidated and
consolidating statements of operations and retained earnings and of
cash flows for such fiscal quarter in each case setting forth in
comparative form consolidated and consolidating figures for the
corresponding period of the preceding fiscal year (except to the
extent that such financial information relates to any of the first
four fiscal quarters of the Borrower following the Closing Date, in
which case such financial information shall set forth in comparative
form consolidating figures only), all such financial information
described above to be in reasonable form and detail and reasonably
acceptable to the Agent, and accompanied by a management discussion
as to such financial information and a certificate of the chief
financial officer or treasurer of the Borrower to the effect that
such quarterly financial statements fairly present in all material
respects the financial condition and results of operations of the
Borrower and its Subsidiaries and have been prepared in accordance
with GAAP, subject to changes resulting from audit and normal
year-end audit adjustments.
(ii) As soon as available, and in any event within 45 days after
the close of each of the first three fiscal quarters of the Parent
and its Subsidiaries (other than the fourth fiscal quarter, in which
case 90 days after the end thereof), (i) a consolidated balance sheet
and income statement of the Parent as of the end of such fiscal
quarter, together with related consolidated statements of operations
and retained earnings and of cash flows for such fiscal quarter in
each case setting forth in comparative form consolidated figures for
the corresponding period of the preceding fiscal year (except to the
extent that such financial information relates to any of the first
four fiscal quarters of the Parent following the Closing Date), all
such financial information described above to be in reasonable form
and detail and reasonably acceptable to the Agent, and accompanied by
a management discussion as to such financial information and a
certificate of the chief financial officer or treasurer of the Parent
to the effect that such quarterly financial statements fairly present
in all material respects the financial condition and results of
operations of the Parent and its Subsidiaries and have been prepared
in accordance with GAAP, subject to changes resulting from audit and
normal year-end audit adjustments.
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(c) Monthly Financial Statements. As soon as available, and in any
----------------------------
event within 30 days after the end of each of the first eleven calendar
months of the fiscal year of the Borrower and 45 days after the end of the
last calendar month of the fiscal year of the Borrower, (i) a consolidated
and consolidating balance sheet and income statement of the Parent and its
Subsidiaries and of the Borrower and its Subsidiaries, as of the end of
such month, together with related consolidated and consolidating statements
of operations and consolidated and consolidating statements of retained
earnings and of cash flows for such month in each case setting forth in
comparative form consolidated and consolidating figures for the
corresponding period of the preceding fiscal year (except, with respect to
the consolidated statements, to the extent that such financial information
relates to any of the first four fiscal quarters of the Borrower following
the Closing Date), and such other financial information as reasonably
requested by the Agent or the Required Lenders, all such financial
information described above to be in reasonable form and detail and
reasonably acceptable to the Agent, and accompanied by a certificate of the
chief financial officer or treasurer of the Borrower to the effect that
such monthly financial statements fairly present in all material respects
the financial condition of the Parent, the Borrower and their Subsidiaries
and have been prepared in accordance with GAAP, subject to changes
resulting from audit and normal year-end audit adjustments.
(d) Officer's Certificate. At the time of delivery of the financial
---------------------
statements provided for in Sections 7.1(a) and 7.1(b) above, a certificate
of the chief financial officer or treasurer of the Borrower substantially
in the form of Exhibit 7.1(d), (i) demonstrating compliance with the
--------------
financial covenants contained in Section 7.2 by calculation thereof as of
the end of each such period, (ii) demonstrating compliance with any other
terms of this Credit Agreement as requested by the Agent and (iii) stating
that no Default or Event of Default exists, or if any Default or Event of
Default does exist, specifying the nature and extent thereof and what
action the Borrower proposes to take with respect thereto.
(e) Compliance With Certain Provisions of the Credit Agreement. Within
----------------------------------------------------------
90 days after the end of each fiscal year of the Borrower, the Borrower
shall deliver a certificate containing information regarding (i) the
calculation of Excess Cash Flow, and (ii) the amount of any Asset
Dispositions, Debt Issuances and Equity Issuances that were made during the
prior fiscal year.
(f) Annual Business Plan and Budgets. Within 45 days after the end of
--------------------------------
each fiscal year of the Borrower, an annual business plan and budget of the
Borrower and its Subsidiaries containing, among other things, pro forma
monthly financial projections for the next fiscal year.
(g) Accountant's Certificate. Within the period for delivery of the
------------------------
annual financial statements provided in Section 7.1(a), a certificate of
the accountants conducting the annual audit stating that they have reviewed
this Credit Agreement and stating further whether, in the course of their
audit, they have become aware of any Default or Event of Default and, if
any such Default or Event of Default exists, specifying the nature and
extent thereof.
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(h) Auditor's Reports. Promptly upon receipt thereof, a copy of any
-----------------
"management letter" submitted by independent accountants to the Parent or
to the Borrower or any of its Subsidiaries in connection with any annual,
interim or special audit of the books of the Parent or of the Borrower and
its Subsidiaries.
(i) Reports. Promptly upon transmission or receipt thereof, (a) copies
-------
of any public filings and registrations with, and reports to or from, the
Securities and Exchange Commission, or any successor agency, and copies of
all financial statements, proxy statements, notices and reports as the
Parent, the Borrower or any of their Subsidiaries shall send to its
shareholders generally and (b) upon the written request of the Agent, all
reports and written information to and from the United States Environmental
Protection Agency, or any state or local agency responsible for
environmental matters, the United States Occupational Health and Safety
Administration, or any state or local agency responsible for health and
safety matters, or any successor agencies or authorities concerning
environmental, health or safety matters.
(j) Notices. Upon a Credit Party obtaining knowledge thereof, the
-------
Borrower will give written notice to the Agent immediately of (a) the
occurrence of an event or condition constituting a Default or Event of
Default, specifying the nature and existence thereof and what action the
Borrower proposes to take with respect thereto, and (b) the occurrence of
any of the following with respect to any Credit Party or any of its
Subsidiaries: (i) the pendency or commencement of any litigation, arbitral
or governmental proceeding against a Credit Party which if adversely
determined would have or would be reasonably expected to have a Material
Adverse Effect, (ii) the institution of any proceedings against a Credit
Party with respect to, or the receipt of written notice by such Person of
potential liability or responsibility for violation, or alleged violation
of any federal, state or local law, rule or regulation, (including but not
limited to, Environmental Laws) the violation of which would have or would
be reasonably expected to have a Material Adverse Effect, or (iii) any
information that a Credit Party may have a Year 2000 Problem on or after
January 1, 2000.
(k) ERISA. Upon any of the Credit Parties or any ERISA Affiliate
-----
obtaining knowledge thereof, the Borrower will give written notice to the
Agent promptly (and in any event within two Business Days) of any of the
following which would have or reasonably be expected to have a Material
Adverse Effect: (i) any event or condition, including, but not limited to,
any Reportable Event, that constitutes, or might reasonably lead to, a
Termination Event; (ii) with respect to any Multiemployer Plan, the receipt
of notice as prescribed in ERISA or otherwise of any withdrawal liability
assessed against the Credit Parties or any of their ERISA Affiliates, or of
a determination that any Multiemployer Plan is in reorganization or
insolvent (both within the meaning of Title IV of ERISA); (iii) the failure
to make full payment on or before the due date (including extensions)
thereof of all amounts which a Credit Party or ERISA Affiliates is required
to contribute to each Plan pursuant to its terms and as required to meet
the minimum funding standard set forth in ERISA and the Code with respect
thereto; or (iv) any change in the funding status of any Plan that could
have a Material Adverse Effect; together, with a description of any such
event or condition or a copy of any such notice and a statement by the
principal financial officer of the
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Borrower briefly setting forth the details regarding such event, condition,
or notice, and the action, if any, which has been or is being taken or is
proposed to be taken by the Credit Parties with respect thereto. Promptly
upon request, a Credit Party shall furnish the Agent with such additional
information concerning any Plan as may be reasonably requested (and, in the
case of a Multiemployer Plan, is reasonably available to the Credit
Parties), including, but not limited to, copies of each annual
report/return (Form 5500 series), as well as all schedules and attachments
thereto required to be filed with the Department of Labor and/or the
Internal Revenue Service pursuant to ERISA and the Code, respectively, for
each "plan year" (within the meaning of Section 3(39) of ERISA).
(l) Environmental.
-------------
(i) Upon the written request of the Agent following the
occurrence of any event or the discovery of any condition which the
Agent or the Required Lenders reasonably believe has caused (or could
be reasonably expected to cause) the representations and warranties
set forth in Section 6.18 to be untrue in any material respect, the
Borrower will furnish or cause to be furnished to the Agent, at the
Borrower's expense, a report of an environmental assessment of
reasonable scope, form and depth, including, where appropriate,
invasive soil or groundwater sampling, by a consultant reasonably
acceptable to the Agent as to the nature and extent of the presence of
any Hazardous Materials on any property owned, leased or operated by a
Credit Party and as to the compliance by the Credit Parties with
Environmental Laws. If the Borrower fails to deliver such an
environmental report within seventy-five (75) days after receipt of
such written request, then the Agent may arrange for same, and the
Credit Parties hereby grant to the Agent and its representatives
access to the Real Properties and a license of a scope reasonably
necessary to undertake such an assessment (including, where
appropriate, invasive soil or groundwater sampling). The reasonable
cost of any assessment arranged for by the Agent pursuant to this
provision will be payable by the Borrower on demand and added to the
obligations secured by the Collateral Documents.
(ii) Each Credit Party will conduct and complete all
investigations, studies, sampling, and testing and all remedial,
removal, and other actions reasonably necessary with respect to all
Hazardous Materials on, from, or affecting any real property owned or
leased by a Credit Party to the extent necessary to be in compliance
with all Environmental Laws and all other applicable federal, state,
and local laws, regulations, rules and policies and with the orders
and directives of all Governmental Authorities exercising jurisdiction
over such real property to the extent any failure to do so would cause
or be reasonably expected to cause a Material Adverse Effect.
(m) Other Information. With reasonable promptness upon any such
-----------------
request, such other information regarding the business, properties or
financial condition of the Credit Parties and their Subsidiaries as the
Agent or the Required Lenders may reasonably request.
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7.2 Financial Covenants.
-------------------
(a) Leverage Ratio. The Credit Parties shall cause the Leverage
--------------
Ratio, measured as of the last day of each fiscal quarter, to be less than
or equal to the ratio shown below for the period corresponding thereto:
(i) for the period from the Closing Date to and including the
next to last day of fiscal year 1999, 4.00 to 1.00;
(ii) for the period from the last day of fiscal year 1999 to and
including the next to last day of fiscal year 2000, 3.75 to 1.00;
(iii) for the period from the last day of fiscal year 2000 to and
including the next to last day of fiscal year 2001, 3.00 to 1.00;
(iv) for the period from the last day of fiscal year 2001 to and
including the next to last day of fiscal year 2002, 2.75 to 1.00;
(v) for the period from the last day of fiscal year 2002 to and
including the next to last day of fiscal year 2003, 2.50 to 1.00; and
(vi) for the period from the last day of fiscal year 2003 and
thereafter, 2.00 to 1.0.
(b) Interest Coverage Ratio. The Credit Parties shall cause the
-----------------------
Interest Coverage Ratio, measured as of the last day of each fiscal
quarter, to be greater than or equal to the ratio shown below for the
period corresponding thereto:
(i) for the period from the Closing Date to and including the
next to last day of fiscal year 1999, 2.75 to 1.00;
(ii) for the period from the last day of fiscal year 1999 to and
including the next to last day of fiscal year 2000, 3.00 to 1.00;
(iii) for the period from the last day of fiscal year 2000 to and
including the next to last day of fiscal year 2001, 3.50 to 1.00; and
(iv) for the period from the last day of fiscal year 2001 and
thereafter, 4.00 to 1.0.
(c) Net Worth. The Credit Parties shall cause Net Worth, measured as
---------
of the last day of each fiscal quarter of the Borrower, to be greater than
or equal to the sum of $27,500,000, increased on a cumulative basis by (i)
as of the end of each fiscal quarter of the Borrower commencing with the
fiscal quarter ending December 31, 1998, an amount equal to 50% of Net
Income of the Borrower and its Subsidiaries (to the extent positive) for
the
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fiscal quarter then ended and (ii) as of the date of any Equity Issuance,
50% of the amount of Net Cash Proceeds from such Equity Issuance.
(d) Fixed Charge Coverage Ratio. The Credit Parties shall cause the
---------------------------
Fixed Charge Coverage Ratio, for the twelve month period ending on the last
day of each fiscal quarter of the Borrower, to be greater than or equal to
the ratio shown below for the period corresponding thereto:
(i) for the period from the Closing Date to and including the
next to last day of fiscal year 1999, 1.15 to 1.00;
(ii) for the period from the last day of fiscal year 1999 to and
including the next to last day of fiscal year 2000, 1.20 to 1.00; and
(iii) for the period from the last day of fiscal year 2000 and
thereafter, 1.35 to 1.0.
7.3 Preservation of Existence and Franchises.
----------------------------------------
Each of the Credit Parties will, and will cause each of its Subsidiaries
to, do all things necessary to preserve and keep in full force and effect its
existence, rights, franchises and authority except as permitted by Section 8.4
or Section 8.5 or unless any such Person determines that any such rights,
franchises or authority is no longer necessary to the conduct of its business.
7.4 Books and Records.
-----------------
Each of the Credit Parties will, and will cause each of its Subsidiaries
to, keep complete and accurate books and records of its transactions in
accordance with GAAP (including the establishment and maintenance of appropriate
reserves).
7.5 Compliance with Law.
-------------------
Each of the Credit Parties will, and will cause each of its Subsidiaries
to, comply with all material laws, rules, regulations and orders, and all
applicable material restrictions imposed by all Governmental Authorities,
applicable to it and its property (including, without limitation, Environmental
Laws, and ERISA laws) if non-compliance with any such law, rule, regulation,
order or restriction would have or would be reasonably expected to have a
Material Adverse Effect.
7.6 Payment of Taxes and Other Indebtedness.
---------------------------------------
Each of the Credit Parties will, and will cause each of its Subsidiaries
to, pay, settle or discharge (a) all taxes, assessments and governmental charges
or levies imposed upon it, or upon its income or profits, or upon any of its
properties, before they shall become delinquent, (b) all lawful claims
(including claims for labor, materials and supplies) which, if unpaid, might
give rise to a Lien upon any of its properties, and (c) all of its other
Indebtedness as it shall become due (to the extent such repayment is not
otherwise prohibited by this Credit Agreement); provided, however,
-------- -------
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that a Credit Party or its Subsidiary shall not be required to pay any such tax,
assessment, charge, levy, claim or Indebtedness which is being contested in good
faith by appropriate proceedings and as to which adequate reserves therefor have
been established in accordance with GAAP, unless the failure to make any such
payment (i) would give rise to an immediate right to foreclose or collect on a
Lien securing such amounts or (ii) would have or reasonably be expected to have
a Material Adverse Effect.
7.7 Insurance.
---------
(a) Each Credit Party will, and will cause each of its Subsidiaries
to, at all times maintain in full force and effect insurance (including
worker's compensation insurance, liability insurance, casualty insurance
and business interruption insurance) in such amounts, covering such risks
and liabilities and with such deductibles or self-insurance retentions as
are in accordance with normal industry practice (or as otherwise required
by the Collateral Documents). The Agent shall be named as loss payee or
mortgagee, as its interest may appear, and/or additional insured with
respect to any such insurance providing coverage in respect of any
Collateral, and each provider of any such insurance shall agree, by
endorsement upon the policy or policies issued by it or by independent
instruments furnished to the Agent, that it will give the Agent thirty (30)
days prior written notice before any such policy or policies shall be
altered or canceled, and that no act or default of any Credit Party, any of
its Subsidiaries or any other Person shall affect the rights of the Agent
or the Lenders under such policy or policies. The present insurance
coverage of the Credit Parties is outlined as to carrier, policy number,
expiration date, type and amount on Schedule 7.7.
------------
(b) In case of any material loss of, damage to or destruction of any
Collateral, such Credit Party (i) shall promptly give written notice
thereof to the Agent generally describing the nature and extent of such
damage or destruction, (ii) in the event that such Credit Party receives
insurance proceeds on account of any such loss of, damage to or destruction
of such Collateral in a net amount in excess of $500,000 (in respect of any
insurance event, the "Excess Proceeds"), such Credit Party will immediately
pay over such Excess Proceeds to the Agent as cash collateral for the
Credit Party Obligations and (iii) whether or not the insurance proceeds,
if any, received on account of such damage or destruction shall be
sufficient for that purpose, at such Credit Party's cost and expense, will
promptly repair or replace the Collateral of such Credit Party so lost,
damaged or destroyed; provided, however, that (A) such Credit Party need
-------- -------
not repair or replace the Collateral of such Credit Party so lost, damaged
or destroyed to the extent the failure to make such repair or replacement
(1) is desirable to the proper conduct of the business of such Credit Party
in the ordinary course and otherwise in the best interest of such Credit
Party and (2) would not materially impair the rights and benefits of the
Agent or the Lenders under the Collateral Documents, any other Credit
Document or any Hedging Agreement and (B) in the event that such Credit
Party receives insurance proceeds on account of any such loss of, damage to
or destruction of Collateral in a net amount in excess of $500,000, such
Credit Party shall not undertake replacement or restoration of any lost,
damaged or destroyed Collateral of such Credit Party with insurance
proceeds in respect thereof unless the Agent has received evidence
reasonably satisfactory to it that the Collateral lost, damaged or
destroyed has been
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or will be replaced or restored to its condition immediately prior to such
loss, destruction or other event giving rise to the payment of such
insurance proceeds; provided further, however, if such Credit Party elects
-------------------------
not to repair or replace any lost, damaged or destroyed Collateral in
accordance with clause (A) above or is not permitted to repair or replace
such lost, damaged or destroyed Collateral pursuant to clause (B) above,
such Credit Party may apply any related insurance proceeds to an Eligible
Reinvestment.
(c) With respect to any Excess Proceeds deposited with the Agent by
any Credit Party as provided in the subsection (b) above, the Agent agrees
to release such Excess Proceeds to such Credit Party for replacement or
restoration of the portion of the Collateral of such Credit Party lost,
damaged or destroyed or, subject to the terms of such subsection (b), to
make an Eligible Reinvestment, provided that, within 90 days from the date
--------
that the Agent receives such Excess Proceeds, the Agent shall have received
a written application for release of such Excess Proceeds from such Credit
Party establishing satisfaction of the conditions set forth in clause (B)
of subsection (b) above or that, subject to the terms of such subsection
(b), such Credit Party plans to apply such proceeds to make an Eligible
Reinvestment.
(d) Any insurance proceeds received by any Credit Party on account of
any such loss of, damage to or destruction of Collateral that (i) are not
applied pursuant to subsection (b) above within the period of 180 days
following the date the applicable Credit Party receives such proceeds to
repair or replace the Collateral or, subject to the terms of such
subsection (b), to make an Eligible Reinvestment, (ii) are not permitted to
be applied pursuant to clause (B) of such subsection (b) to repair or
replace the Collateral and are not otherwise applied to make an Eligible
Reinvestment in accordance with the terms of such subsection (b) or (iii)
constitute Excess Proceeds which have been deposited with the Agent and
with respect to which the conditions for application to replacement or
restoration or for making an Eligible Reinvestment set forth in subsection
(c) above shall not have been met on or before the first Business Day
following the date 90 days from the date the Agent receives such Excess
Proceeds, shall be applied (by the Credit Parties or, in the case of Excess
Proceeds held by the Agent, by the Agent) to prepay the Loans (and cash
collateralize the LOC Obligations) in accordance with the terms of Section
3.3(b)(iii)(B).
(e) All insurance proceeds shall be subject to the security interest
of the Agent (for the ratable of the Lenders) under the Collateral
Documents.
7.8 Maintenance of Property.
-----------------------
Each of the Credit Parties will, and will cause each of its Subsidiaries
to, maintain and preserve its properties and equipment material to the conduct
of its business in good repair, working order and condition, normal wear and
tear excepted, and will make, or cause to be made, in such properties and
equipment from time to time all repairs, renewals, replacements, extensions,
additions, betterments and improvements thereto as may be needed or proper, to
the extent and in the manner customary for companies in similar businesses
unless any such Credit Party determines any such properties or equipment are no
longer necessary to the conduct of its business.
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7.9 Performance of Obligations.
--------------------------
Each of the Credit Parties will, and will cause each of its Subsidiaries
to, perform in all material respects all of its obligations under the terms of
all material agreements, indentures, mortgages, security agreements or other
debt instruments to which it is a party or by which it is bound.
7.10 Collateral.
----------
If, subsequent to the Closing Date, a Credit Party or any of its
Subsidiaries shall (a) acquire any Property, any Intellectual Property or any
securities, in each case required to be delivered to the Agent as Collateral
hereunder or under any of the Collateral Documents or (b) enter into any lease
agreement with respect to any real property not part of the Real Properties as
of the Closing Date, the Borrower shall immediately notify the Agent of same.
Each Credit Party will, and will cause each of its Subsidiaries to, take such
action (including, but not limited to, the actions set forth in Sections 5.1(d)
and (e)), as reasonably requested by the Agent and at its own expense, to ensure
that the Lenders have a perfected Lien in all owned real property and such
personal property of the Credit Parties and their Subsidiaries as set forth in
the Security Agreement (whether now owned or hereafter acquired), subject only
to Permitted Liens. Each Credit Party will, and will cause each of its
Subsidiaries to, adhere to the covenants regarding the location of personal
property as set forth in the Security Agreement.
7.11 Use of Proceeds.
---------------
The Credit Parties will, and will cause their Subsidiaries to, use the
proceeds of the Loans solely (a) to finance the cash portion of the purchase
price for the Transactions, (b) to pay related fees and expenses in connection
with the Transactions in an amount not to exceed $4.0 million, (c) to provide
working capital for the Borrower and its Subsidiaries, (d) to finance Permitted
Investments (including without limitation Permitted Acquisitions), (e) to make
any payment when due under the Construction Loan Documents in accordance with
Section 2.1(b)(ii) and (f) for general corporate purposes of the Borrower and
its Subsidiaries. The Credit Parties will use the Letters of Credit solely for
the purposes set forth in Section 2.2(a).
7.12 Audits/Inspections.
------------------
Upon reasonable notice and during normal business hours, each Credit Party
will, and will cause each of its Subsidiaries to, permit representatives
appointed by the Agent, including, without limitation, independent accountants,
agents, attorneys and appraisers to visit and inspect such Person's property,
including its books and records, its accounts receivable and inventory, its
facilities and its other business assets, and to make photocopies or photographs
thereof and to write down and record any information such representative obtains
and shall permit the Agent, the Required Lenders or their representatives to
investigate and verify the accuracy of information provided to the Lenders, and
to discuss all such matters with the officers, employees and representatives of
the Credit Parties. The Credit Parties agree that the Agent and its
representatives may conduct an annual audit of the Collateral (or may audit the
Collateral at any time during the existence of an Event of Default), at the
expense of the Borrower.
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7.13 Additional Subsidiaries.
-----------------------
At the time any Person becomes a direct or indirect Subsidiary of a Credit
Party, the Borrower shall so notify the Agent and promptly thereafter (but in
any event within 60 days after the date thereof) the Credit Parties shall cause
such Person to (a) execute a Joinder Agreement in substantially the same form as
Exhibit 7.13, (b) cause all of the Capital Stock of such Person to be delivered
------------
to the Agent (together with undated stock powers signed in blank) and pledged to
the Agent pursuant to an appropriate pledge agreement (or a joinder to the
existing Security Agreement) and otherwise in a form reasonably acceptable to
the Agent, (c) pledge all of its Property to the Agent pursuant to a security
agreement in substantially the form of the Security Agreement (or a joinder to
the existing Security Agreement) and otherwise in a form reasonably acceptable
to the Agent, and (d) if such Person has any Subsidiaries, (A) deliver all of
the Capital Stock of such Subsidiaries owned by it (together with undated stock
powers signed in blank) to the Agent and (B) execute an appropriate pledge
agreement (or a joinder to the existing Security Agreement) and otherwise in a
form acceptable to the Agent, (e) if such Person owns or leases any real
property, execute any and all necessary mortgages, deeds of trust, deeds to
secure debt or other appropriate real estate collateral documentation in a form
acceptable to the Agent or use its commercially reasonable best efforts to cause
to be delivered to the Agent a landlord waiver or estoppel letter with respect
thereto in a form reasonably acceptable to the Agent and (f) deliver such other
documentation as the Agent may reasonably request in connection with the
foregoing, including, without limitation, appropriate UCC-1 financing
statements, real estate title insurance policies, environmental reports,
landlord's waivers, certified resolutions and other organizational and
authorizing documents of such Person and favorable opinions of counsel to such
Person (which shall cover, among other things, the legality, validity, binding
effect and enforceability of the documentation referred to above), all in form,
content and scope reasonably satisfactory to the Agent.
7.14 Purchase Agreements.
-------------------
The Credit Parties agree, upon the request of the Agent, to promptly
enforce their rights with respect to the indemnification provisions set forth in
the Purchase Agreements.
7.15 Post-Closing Requirements.
-------------------------
(a) Within 5 days after the Closing Date, the Credit Parties shall
cause at least $800,000 to be repaid to the Borrower under the Management
Notes.
(b) Within 15 days after the Closing Date, (i) the Credit Parties
shall deliver to the Agent copies of (A) with respect to each of the
Borrower and Bagcraft Acquisition, L.L.C., certificates of good standing
certified as of a recent date by the Illinois Secretary of State and (B) to
the extent available, a certificate indicating payment of all corporate
franchise taxes certified as of a recent date by the Illinois Secretary of
State, (ii) the Borrower shall enter into Hedging Agreements, in form and
substance satisfactory to the Agent, which shall provide coverage against
fluctuations in interest rates in an amount equal to at least $40 million
and for a duration of at least 3 years from the Closing Date and (iii)
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the Credit Parties shall deliver to the Agent evidence of the satisfaction
of any tax lien existing on the Closing Date encumbering any Property of a
Credit Party.
(c) Within 30 days after the Closing Date, the Agent and the Required
Lenders shall be satisfied that the Credit Parties shall have resolved (i)
any technical violations under the documents governing the Xxxxxx Springs
Debt resulting from the assignment by Bagcraft to the Borrower of the
Xxxxxx Springs Debt, (ii) any restrictions under the documents governing
the Xxxxxx Springs Debt on the ability of the Credit Parties to conduct
their businesses, operations and affairs (including without limitation
intercompany transactions) in the manner contemplated by this Credit
Agreement, and (iii) any required consents of the Federal Department of
Housing and Urban Development to the assignment by Bagcraft to the Borrower
of the Xxxxxx Springs Debt and to the granting to the Agent of a security
interest in any Property securing the Xxxxxx Springs Debt.
(d) Notwithstanding any provision contained in the documents governing
the Indebtedness referred to in item 2 on Schedule 6.10 providing for any
-------------
automatic extension of the maturity date for such Indebtednss, the Borrower
shall, subject to the terms of Section 8.8, pay in full all amounts
outstanding in respect of such Indebtedness on or before June 30, 1999.
SECTION 8
NEGATIVE COVENANTS
------------------
Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Loans and LOC Obligations, together with
interest, fees and other obligations then due and payable hereunder, have been
paid in full and the Commitments and Letters of Credit hereunder shall have
terminated:
8.1 Indebtedness.
------------
No Credit Party will, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Indebtedness, except the
following:
(a) Indebtedness arising under this Credit Agreement and the other
Credit Documents;
(b) Indebtedness of the Borrower or any of its Subsidiaries existing
as of the Closing Date as referenced in Section 6.10 (and, except in
respect of the Xxxxxx Springs Debt), renewals, refinancings, replacements
or extensions thereof on terms and conditions no less favorable, in the
aggregate, to the Borrower or such Subsidiary, as applicable, than such
existing Indebtedness and in a principal amount not in excess of that
outstanding as of the date of such renewal, refinancing, replacement or
extension; provided, however, that the Xxxxxx Springs Debt referred to in
-------- -------
item 2 on Schedule 6.10 may be extended automatically
-------------
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in December, 1998 in accordance with the terms of the documents governing
such Indebtedness);
(c) Indebtedness owing by a Credit Party other than the Parent to
another Credit Party other than the Parent;
(d) purchase money Indebtedness of the Borrower or any of its
Subsidiaries (including Capital Leases and Synthetic Leases) to finance the
purchase of fixed assets (including equipment); provided that (i) the total
--------
of all such Indebtedness for all such Persons shall not exceed an aggregate
principal amount of $2,500,000 at any one time outstanding (in addition to
any such Indebtedness referred to in subsection (b) above); (ii) no such
Indebtedness when incurred shall exceed the purchase price of the asset(s)
financed; and (iii) no such Indebtedness shall be refinanced for a
principal amount in excess of the principal balance outstanding thereon at
the time of such refinancing;
(e) (i) Indebtedness arising under the Subordinated Note; and
(ii) other Subordinated Indebtedness hereafter incurred by the
Borrower in favor of Ivex, FW Strategic Partners (or its designee),
L.P., Keystone, Inc. (or its designee), Packaging Investors, LLC, DCBS
Investors, L.L.C. or members of the executive management of the
Borrower or Ivex in an aggregate principal amount not to exceed
$20,000,000;
(f) Indebtedness of the Borrower arising from Hedging Agreements
entered into in the ordinary course of business and not for speculative
purposes; and
(g) other unsecured Indebtedness hereafter incurred by the Borrower
or any of its Subsidiaries provided that (i) the loan documentation with
--------
respect to such Indebtedness shall not contain covenants or default
provisions relating to any Credit Party that are more restrictive than the
covenants and default provisions contained in the Credit Documents and (ii)
the aggregate principal amount of such Indebtedness shall not exceed
$2,500,000 at any time.
8.2 Liens.
-----
No Credit Party will, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Lien with respect to any
of its Property of any kind (whether real or personal, tangible or intangible),
whether now owned or after acquired, except for Permitted Liens.
8.3 Nature of Business.
------------------
No Credit Party will, nor will it permit any of its Subsidiaries to, alter
the character of its business from that conducted as of the Effective Date or
engage in any business other than the business conducted as of the Effective
Date and activities which are substantially similar or related thereto or
logical extensions thereof.
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8.4 Consolidation; Merger; Dissolution; Liquidation; Winding Up.
-----------------------------------------------------------
Except in connection with an Asset Disposition permitted by the terms of
Section 8.5, no Credit Party will, nor will it permit any of its Subsidiaries
to, enter into any transaction of merger or consolidation or liquidate, wind up
or dissolve itself (or suffer any liquidation or dissolution); provided that,
--------
notwithstanding the foregoing provisions of this Section 8.4, (a) the Borrower
may merge or consolidate with any of its Subsidiaries and any Subsidiary of the
Borrower may merge or consolidate with any other Subsidiary of the Borrower or
with the Borrower provided that in any such case (i) if such transaction
--------
involves the Borrower, the Borrower shall be the continuing or surviving Person
and (ii) the Credit Parties shall cause to be executed and delivered such
documents, instruments and certificates as the Agent may request so as to cause
the Credit Parties to be in compliance with the terms of Section 7.10 after
giving effect to such transaction, (b) the Borrower or any Subsidiary of the
Borrower may merge with any Person that is not a Credit Party in connection with
a Permitted Acquisition if (i) the Borrower or such Subsidiary shall be the
continuing or surviving Person and (ii) the Credit Parties shall cause to be
executed and delivered such documents, instruments and certificates as the Agent
may request so as to cause the Credit Parties to be in compliance with the terms
of Section 7.10 after giving effect to such transaction and (c) any Wholly-Owned
Subsidiary of the Borrower may dissolve, liquidate or wind up its affairs at any
time.
8.5 Disposition of Assets.
---------------------
No Credit Party will, nor will it permit any of its Subsidiaries to, make
any Asset Disposition (including, without limitation, any Sale and Leaseback
Transaction) unless (a) the consideration paid in connection therewith shall be
cash or Cash Equivalents, (b) if such transaction is a Sale and Leaseback
Transaction, such transaction is permitted by the terms of Section 8.6, (c) such
transaction does not involve the sale or other disposition of a minority equity
interest in any Credit Party, (d) the aggregate net book value of all of the
assets sold or otherwise disposed of by the Credit Parties in all such
transactions after the Closing Date shall not exceed $5,000,000 and (e) no later
than 30 days after such Asset Disposition, the Agent and the Lenders shall have
received a certificate of an officer of the Borrower specifying the date of such
Asset Disposition, briefly describing the assets sold or otherwise disposed of
and setting forth the net book value of such assets, the aggregate consideration
and the Net Cash Proceeds to be received for such assets in connection with such
Asset Disposition, and thereafter the Credit Parties shall, within the period of
180 days following the consummation of such Asset Disposition (with respect to
any such Asset Disposition, the "Application Period"), apply (or cause to be
------------------
applied) an amount equal to the Net Cash Proceeds of such Asset Disposition to
(i) make Eligible Reinvestments or (ii) prepay the Loans (and cash collateralize
LOC Obligations) in accordance with the terms of Section 3.3(b)(iii). Pending
final application of the Net Cash Proceeds of any Asset Disposition, the Credit
Parties may apply such Net Cash Proceeds to temporarily reduce the Revolving
Loans or to make Investments in Cash Equivalents.
Upon a sale of Property permitted by this Section 8.5, the Agent shall
promptly deliver to the Borrower, upon the Borrower's request and at the
Borrower's expense, such documentation as is reasonably necessary to evidence
the release of the Lenders' security interest in such Property, including,
without limitation, amendments or terminations of UCC financing statements.
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8.6 Sale Leasebacks.
---------------
No Credit Party will, nor will it permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as guarantor or
other surety with respect to any lease of any Property, whether now owned or
hereafter acquired, (a) which such Credit Party has sold or transferred or is to
sell or transfer to any other Person other than a Credit Party or (b) which such
Credit Party intends to use for substantially the same purpose as any other
Property which has been sold or is to be sold or transferred by such Credit
Party to any Person in connection with such lease.
8.7 Investments.
-----------
No Credit Party will, nor will it permit any of its Subsidiaries to, make
any Investments except for Permitted Investments.
8.8 Restricted Payments.
-------------------
No Credit Party will, nor will it permit any of its Subsidiaries to,
directly or indirectly, declare, order, make or set apart any sum for or pay any
Restricted Payment, except (a) to make Restricted Payments for Taxes, (b) as
permitted by Section 8.9 or Section 8.10 and (c) the purchase of Capital Stock
(or options to purchase Capital Stock) of the Parent from employees upon the
termination (voluntarily or involuntarily) of their employment with Ivex or the
Borrower.
8.9 Restrictions on Modifications to and Payments of Certain Indebtedness.
---------------------------------------------------------------------
No Credit Party will, nor will it permit any of its Subsidiaries to, (a) if
any Default or Event of Default has occurred and is continuing or would be
directly or indirectly caused as a result thereof, (i) amend or modify (or
permit the amendment or modification of) any of the terms of any Indebtedness if
such amendment or modification would add or change any terms in a manner adverse
to the issuer of such Indebtedness, or shorten the final maturity or average
life to maturity or require any payment to be made sooner than originally
scheduled or increase the interest rate applicable thereto or change any
subordination provision thereof, or (ii) make (or give any notice with respect
thereto) any voluntary or optional payment or prepayment or redemption or
acquisition for value of (including, without limitation, by way of depositing
money or securities with the trustee with respect thereto before due for the
purpose of paying when due), refund, refinance or exchange of, any other
Indebtedness (including, without limitation, the Indebtedness arising under the
Subordinated Note), (b) amend or modify any of the terms of any Subordinated
Indebtedness, without the prior written consent of the Required Lenders or (c)
prior to the maturity date thereof, make any payment or prepayment of principal
of, premium or interest on, or on account of any other obligations arising
under, relating to or in respect of, any Subordinated Indebtedness, except for
payments of interest in kind. Notwithstanding anything to the contrary contained
in this Section 8.9, (A) the Borrower shall be permitted to prepay any of the
Xxxxxx Springs Debt at any time that a Default or Event of Default has occurred
and is continuing under Section 9.1(g)(ii)(A)(2) in respect of the Xxxxxx
Springs Debt and no other Default or Event of Default is then existing and (B)
this Section 8.9 shall not restrict a prepayment of any Xxxxxx
-00-
Xxxxxxx Xxxx requested by the Agent or the Required Lenders as a result of the
Borrower's failure to comply with the provisions of Section 7.15(c).
8.10 Transactions with Affiliates.
----------------------------
No Credit Party will, nor will it permit any of its Subsidiaries to, enter
into any transaction or series of transactions, whether or not in the ordinary
course of business, with any officer, director, shareholder, Subsidiary or
Affiliate other than (i) Exempt Affiliate Transactions and (ii) on terms and
conditions substantially as favorable as would be obtainable in a comparable
arm's-length transaction with a Person other than an officer, director,
shareholder, Subsidiary or Affiliate.
8.11 Fiscal Year; Organizational Documents.
-------------------------------------
No Credit Party will, nor will it permit any of its Subsidiaries to, (a)
change its fiscal year or (b) in any manner that would reasonably be likely to
adversely affect the rights of the Lenders, change its articles or certificate
of incorporation or its bylaws.
8.12 No Limitations.
--------------
Except as contemplated by Section 8.1(g), no Credit Party will, nor will it
permit any of its Subsidiaries to, directly or indirectly create or otherwise
cause, incur, assume, suffer or permit to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of any such
Person to (a) pay dividends or make any other distribution on any of such
Person's Capital Stock, (b) pay any Indebtedness owed to any other Credit Party,
(c) make loans or advances to any other Credit Party or (d) transfer any of its
property to any other Credit Party, except (in respect of any of the matters
referred to in clauses (a)-(d) above) for encumbrances or restrictions existing
under or by reason of (i) customary non-assignment or net worth provisions in
any lease governing a leasehold interest or customary non-assignment provisions
in any other contracts which are not material to the business and operations of
the Credit Parties, (ii) this Credit Agreement and the other Credit Documents,
(iii) any agreement governing the Xxxxxx Springs Debt, as in effect as the
Closing Date and as amended to the extent contemplated by Section 7.15(c), (iv)
applicable law and (v) 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.
8.13 Ownership of Subsidiaries; Limitations on Parent.
------------------------------------------------
Notwithstanding any other provisions of this Credit Agreement to the
contrary:
(a) The Credit Parties will not permit any direct or indirect
Subsidiary of the Borrower to (i) permit any Person (other than the
Borrower or any Wholly-Owned Subsidiary of the Borrower) to own any Capital
Stock in any Subsidiary of the Borrower, (ii) permit any Subsidiary of the
Borrower to issue Capital Stock (except to the Borrower or to a
Wholly-Owned Subsidiary of the Borrower), (iii) permit, create, incur,
assume or suffer to exist any Lien on any Capital Stock in such Subsidiary,
in each case and (iv)
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notwithstanding anything to the contrary contained in clause (ii) above,
permit any Subsidiary of the Borrower to issue any shares of preferred
Capital Stock.
(b) The Parent shall not (i) own or lease any Property other than the
Capital Stock of the Borrower and cash to pay operating expenses as
permitted hereunder, (ii) have any liabilities other than (A) the
liabilities under the Credit Documents, (B) the liabilities under the
Subordinated Note, (C) tax liabilities in the ordinary course of business
and (D) corporate, administrative and operating expenses in the ordinary
course of business and (iii) engage in any business other than (A) owning
the Capital Stock of the Borrower and activities incidental or related
thereto and (B) acting as a Guarantor hereunder and pledging its Property
to the Agent, for the benefit of the Lenders, pursuant to the Collateral
Documents to which it is a party.
8.14 No Other Negative Pledges.
-------------------------
No Credit Party will, nor will it permit any of its Subsidiaries to, enter
into, assume or become subject to any agreement prohibiting or otherwise
restricting the creation or assumption of any Lien upon its Property, whether
now owned or hereafter acquired, or requiring the grant of any security for any
obligation if security is given for any other obligation, except (i) pursuant to
customary non-assignment or net worth provisions in any lease governing a
leasehold interest or customary non-assignment any other contracts which are not
material to the business and operations of the Credit Parties, (ii) pursuant to
this Credit Agreement and the other Credit Documents, (iii) pursuant to any
agreement governing the Xxxxxx Springs Debt, as in effect as the Closing Date
and as amended to the extent contemplated by Section 7.15(c) and (iv) 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.
8.15 No Foreign Subsidiaries.
-----------------------
No Credit Party will, nor will it permit any of its Subsidiaries to,
create, acquire or permit to exist any Subsidiary which is not incorporated or
organized under the laws of any State of the United States or the District of
Columbia.
SECTION 9
EVENTS OF DEFAULT
-----------------
9.1 Events of Default.
-----------------
An Event of Default shall exist upon the occurrence, and during the
continuance, of any of the following specified events (each an "Event of
--------
Default"):
-------
(a) Payment. Any Credit Party shall default in the payment (i) when
-------
due of any principal of any of the Loans or any reimbursement obligation
arising from drawings under
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Letters of Credit or (ii) within three Business Days of when due of any
interest on the Loans or any fees or other amounts owing hereunder, under
any of the other Credit Documents or in connection herewith.
(b) Representations. Any representation, warranty or statement made
---------------
or deemed to be made by any Credit Party herein, in any of the other Credit
Documents, or in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove untrue in any material
respect on the date as of which it was made or deemed to have been made.
(c) Covenants. Any Credit Party shall:
---------
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.2, 7.3, 7.10, 7.11, 7.15
or 8.1 through 8.15 inclusive;
(ii) default in the due performance or observance by it of any
term, covenant or agreement contained in Sections 7.1 and such default
shall continue unremedied for a period of at least five Business Days
after the earlier of an officer of a Credit Party becoming aware of
such default or notice thereof being given by the Agent; or
(iii) default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in
subsections (a), (b) or (c)(i) or (ii) of this Section 9.1) contained
in this Credit Agreement and such default shall continue unremedied
for a period of at least 30 days after the earlier of an officer of a
Credit Party becoming aware of such default or notice thereof being
given by the Agent.
(d) Other Credit Documents; Failure of Agreements. (i) Any Credit
---------------------------------------------
Party shall default in the due performance or observance of any term,
covenant or agreement in any of the other Credit Documents (other than the
Credit Agreement) and such default shall continue unremedied for a period
of at least 30 days after the earlier of a Credit Party becoming aware of
such default or notice thereof given by the Agent, or (ii) any Credit
Document shall fail to be in full force and effect or any Credit Party
shall so assert or any Credit Document shall fail to give the Agent and/or
the Lenders the security interests, liens, rights, powers and privileges
purported to be created thereby.
(e) Guaranties. The guaranty given by any Guarantor hereunder
----------
(including any Person after the Closing Date in accordance with Section
7.13) or any provision thereof shall cease to be in full force and effect,
or any guarantor thereunder or any Person acting by or on behalf of such
guarantor shall deny or disaffirm such Guarantor's obligations under such
guaranty.
(f) Bankruptcy, etc. The occurrence of any of the following: (i) a
---------------
court or governmental agency having jurisdiction in the premises shall
enter a decree or order for
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relief in respect of any Credit Party in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or appoint a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of any Credit Party or for any substantial
part of its property or ordering the winding up or liquidation of its
affairs; or (ii) an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect is commenced
against any Credit Party and such petition remains unstayed and in effect
for a period of 60 consecutive days; or (iii) any Credit Party shall
commence a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or consent to the entry of an
order for relief in an involuntary case under any such law, or consent to
the appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of such Person or any
substantial part of its property or make any general assignment for the
benefit of creditors; or (iv) any Credit Party shall admit in writing its
inability to pay its debts generally as they become due or any action shall
be taken by such Person in furtherance of any of the aforesaid purposes.
(g) Defaults under Other Agreements.
-------------------------------
(i) A Credit Party shall default in the due performance or
observance (beyond the applicable grace period with respect thereto)
of any material obligation or condition of any contract or lease to
which it is a party and such default would have or would be reasonably
expected to have a Material Adverse Effect; or
(ii) With respect to any Indebtedness in excess of $500,000
(other than Indebtedness outstanding under this Credit Agreement) of a
Credit Party (A) such Person shall (1) default in any payment (beyond
the applicable grace period with respect thereto, if any) with respect
to any such Indebtedness, or (2) default (after giving effect to any
applicable grace period) in the observance or performance of any term,
condition or agreement relating to such Indebtedness or contained in
any instrument or agreement evidencing, securing or relating thereto,
or any other event or condition shall occur or condition exist, the
effect of which default or other event or condition is to cause, or
permit, the holder or holders of such Indebtedness (or trustee or
agent on behalf of such holders) to cause (determined without regard
to whether any notice or lapse of time is required) any such
Indebtedness to become due prior to its stated maturity; or (B) any
such Indebtedness shall be declared due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment prior
to the stated maturity thereof; or (C) any such Indebtedness shall
mature and remain unpaid.
(h) Judgments. One or more judgments, orders, or decrees shall be
---------
entered against any one or more of the Credit Parties involving a liability
of $500,000 or more, in the aggregate, (to the extent not paid or covered
by insurance provided by a carrier who has acknowledged coverage) and such
judgments, orders or decrees (i) are the subject of any enforcement
proceeding commenced by any creditor or (ii) shall continue unsatisfied,
undischarged and unstayed for a period ending on the first to occur of (A)
the last day on which such judgment, order or decree becomes final and
unappealable or (B) 60 days.
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(i) ERISA. The occurrence of any of the following events or conditions
-----
which in the aggregate would have a Material Adverse Effect: (A) any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived, shall exist with
respect to any Plan, or any lien shall arise on the assets of any Credit
Party or any ERISA Affiliate in favor of the PBGC or a Plan; (B) a
Termination Event shall occur with respect to a Single Employer Plan, which
is, in the reasonable opinion of the Agent, likely to result in the
termination of such Plan for purposes of Title IV of ERISA; (C) a
Termination Event shall occur with respect to a Multiemployer Plan or
Multiple Employer Plan, which is, in the reasonable opinion of the Agent,
likely to result in (i) the termination of such Plan for purposes of Title
IV of ERISA, or (ii) any Credit Party or any ERISA Affiliate incurring any
liability in connection with a withdrawal from, reorganization of (within
the meaning of Section 4241 of ERISA), or insolvency (within the meaning of
Section 4245 of ERISA) of such Plan; or (D) any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) or
breach of fiduciary responsibility shall occur which may subject any Credit
Party or any ERISA Affiliate to any liability under Sections 406, 409,
502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which any Credit Party or any
ERISA Affiliate has agreed or is required to indemnify any person against
any such liability.
(j) Ownership. There shall occur a Change of Control.
---------
9.2 Acceleration; Remedies.
----------------------
Upon the occurrence, and during the continuance, of an Event of Default,
and at any time thereafter unless and until such Event of Default has been
waived in writing by, or cured to the satisfaction of, the Required Lenders (or
the Lenders as may be required hereunder), the Agent shall, upon the request and
direction of the Required Lenders, by written notice to the Borrower, take the
following actions without prejudice to the rights of the Agent or any Lender to
enforce its claims against the Credit Parties, except as otherwise specifically
provided for herein:
(a) Termination of Commitments. Declare the Commitments terminated
--------------------------
whereupon the Commitments shall be immediately terminated.
(b) Acceleration of Loans. Declare the unpaid principal of and any
---------------------
accrued interest in respect of all Loans, any reimbursement obligations
arising from drawings under Letters of Credit and any and all other
indebtedness or obligations of any and every kind owing by a Credit Party
to any of the Lenders hereunder to be due whereupon the same shall be
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Credit Parties.
(c) Cash Collateral. Direct the Borrower to pay (and the Borrower
---------------
agrees that upon receipt of such notice, or upon the occurrence of an Event
of Default under Section 9.1(f), it will immediately pay) to the Agent
additional cash, to be held by the Agent, for the benefit of the Lenders,
in a cash collateral account as additional security for the LOC Obligations
in respect of subsequent drawings under all then outstanding Letters of
Credit in
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an amount equal to the maximum aggregate amount which may be drawn
under all Letters of Credits then outstanding.
(d) Enforcement of Rights. Enforce any and all rights and
---------------------
interests created and existing under the Credit Documents, including,
without limitation, all rights and remedies existing under the
Collateral Documents, all rights and remedies against a Guarantor and
all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations under Letters of Credit, all accrued
interest in respect thereof, all accrued and unpaid fees and other indebtedness
or obligations owing to the Lenders hereunder shall immediately become due and
payable without the giving of any notice or other action by the Agent or the
Lenders, which notice or other action is expressly waived by the Credit Parties.
Notwithstanding the fact that enforcement powers reside primarily with the
Agent, each Lender has, to the extent permitted by law, a separate right of
payment and shall be considered a separate "creditor" holding a separate "claim"
within the meaning of Section 101(5) of the Bankruptcy Code or any other
insolvency statute.
9.3 Allocation of Payments After Event of Default.
---------------------------------------------
Notwithstanding any other provisions of this Credit Agreement, after
the occurrence and during the continuance of an Event of Default, all amounts
collected or received by the Agent or any Lender on account of amounts
outstanding under any of the Credit Documents or in respect of the Collateral
shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation reasonable attorneys' fees)
of the Agent or any of the Lenders in connection with enforcing the
rights of the Lenders under the Credit Documents and any protective
advances made by the Agent or any of the Lenders with respect to the
Collateral under or pursuant to the terms of the Collateral Documents;
SECOND, to payment of any fees owed to the Agent, the Issuing
Lender or any Lender;
THIRD, to the payment of all accrued interest payable to the
Lenders hereunder and all other obligations which shall have become due
and payable under the Credit Documents and not repaid pursuant to
clauses "FIRST" and "SECOND" above;
FOURTH, to the payment of the outstanding principal amount of
the Loans and unreimbursed drawings under Letters of Credit, to the
payment or cash collateralization of the outstanding LOC Obligations,
pro rata as set forth below;
FIFTH, to any principal amounts outstanding under Hedging
Agreements between a Credit Party and a Lender, pro rata, as set forth
below; and
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SIXTH, to the payment of the surplus, if any, to whoever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (b) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans, LOC
Obligations and net payment obligations under Hedging Agreements held by such
Lender bears to the aggregate then outstanding Loans, LOC Obligations and
obligations under Hedging Agreements) of amounts available to be applied; and
(c) to the extent that any amounts available for distribution pursuant to clause
"FOURTH" above are attributable to the issued but undrawn amount of outstanding
Letters of Credit, such amounts shall be held by the Agent in a cash collateral
account and applied (x) first, to reimburse the Issuing Lender or, to the extent
participated to the Lenders, the Lenders from time to time for any drawings
under such Letters of Credit and (y) then, following the expiration of all
Letters of Credit, to all other obligations of the types described in clauses
"FOURTH," and "FIFTH" above in the manner provided in this Section 9.3.
SECTION 10
AGENCY PROVISIONS
-----------------
10.1 Appointment.
-----------
Each Lender hereby designates and appoints NationsBank, N.A. as Agent
of such Lender to act as specified herein and the other Credit Documents, and
each such Lender hereby authorizes the Agent, as the agent for such Lender, to
take such action on its behalf under the provisions of this Credit Agreement and
the other Credit Documents and to exercise such powers and perform such duties
as are expressly delegated by the terms hereof and of the other Credit
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere herein and in the other
Credit Documents, the Agent shall not have any duties or responsibilities,
except those expressly set forth herein and therein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Credit Agreement or any of the other Credit Documents, or shall otherwise exist
against the Agent. The provisions of this Section are solely for the benefit of
the Agent and the Lenders and none of the Credit Parties shall have any rights
as a third party beneficiary of the provisions hereof. In performing its
functions and duties under this Credit Agreement and the other Credit Documents,
the Agent shall act solely as an agent of the Lenders and does not assume and
shall not be deemed to have assumed any obligation or relationship of agency or
trust with or for any Credit Party.
10.2 Delegation of Duties.
--------------------
The Agent may execute any of its duties hereunder or under the other
Credit Documents by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all
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matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
10.3 Exculpatory Provisions.
----------------------
Neither the Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection
herewith or in connection with any of the other Credit Documents (except for its
or such Person's own gross negligence or willful misconduct) or responsible in
any manner to any of the Lenders for any recitals, statements, representations
or warranties made by any of the Credit Parties contained herein or in any of
the other Credit Documents or in any certificate, report, document, financial
statement or other written or oral statement referred to or provided for in, or
received by the Agent under or in connection herewith or in connection with the
other Credit Documents, or enforceability or sufficiency therefor of any of the
other Credit Documents, or for any failure of the Borrower to perform its
obligations hereunder or thereunder. The Agent shall not be responsible to any
Lender for the effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Credit Agreement, or any of the other
Credit Documents or for any representations, warranties, recitals or statements
made herein or therein or made by a Borrower or any Credit Party in any written
or oral statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Agent to the Lenders or by or on behalf of the Credit
Parties to the Agent or any Lender or be required to ascertain or inquire as to
the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds of the Loans or the use of the Letters of Credit or of the existence or
possible existence of any Default or Event of Default or to inspect the
properties, books or records of the Credit Parties. The Agent is not trustee for
the Lenders and owes no fiduciary duty to the Lenders.
10.4 Reliance on Communications.
--------------------------
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation reasonably believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to any of the Credit Parties, independent
accountants and other experts selected by the Agent with reasonable care). The
Agent may deem and treat the Lenders as the owner of its interests hereunder for
all purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Agent in accordance with Section 11.3(b).
The Agent shall be fully justified in failing or refusing to take any action
under this Credit Agreement or under any of the other Credit Documents unless it
shall first receive such advice or concurrence of the Required Lenders as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder or
under any of the other Credit Documents in accordance with a request of the
Required Lenders (or to the extent specifically provided in Section 11.6, all
the Lenders) and such request and
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any action taken or failure to act pursuant thereto shall be binding upon all
the Lenders (including their successors and assigns).
10.5 Notice of Default.
-----------------
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received notice from a Lender or a Credit Party referring to the Credit
Document, describing such Default or Event of Default and stating that such
notice is a "notice of default." In the event that the Agent receives such a
notice, the Agent shall give prompt notice thereof to the Lenders. The Agent
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders and as is permitted by the Credit
Documents.
10.6 Non-Reliance on Agent and Other Lenders.
---------------------------------------
Each Lender expressly acknowledges that neither the Agent, NMS nor any
of their officers, directors, employees, agents, attorneys-in-fact or affiliates
has made any representations or warranties to it and that no act by the Agent or
any affiliate thereof hereinafter taken, including any review of the affairs of
any Credit Party, shall be deemed to constitute any representation or warranty
by the Agent to any Lender. Each Lender represents to the Agent and NMS that it
has, independently and without reliance upon the Agent or NMS or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Credit Parties and made its own decision to make its
Loans hereunder and enter into this Credit Agreement. Each Lender also
represents that it will, independently and without reliance upon the Agent or
NMS 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 analysis,
appraisals and decisions in taking or not taking action under this Credit
Agreement, and to make such investigation as it deems necessary to inform itself
as to the business, assets, operations, property, financial and other
conditions, prospects and creditworthiness of the Credit Parties. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Agent hereunder, the Agent and NMS shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, assets, property, financial or other
conditions, prospects or creditworthiness of the Credit Parties which may come
into the possession of the Agent, NMS or any of their officers, directors,
employees, agents, attorneys-in-fact or affiliates.
10.7 Indemnification.
---------------
The Lenders agree to indemnify the Agent in its capacity as such (to
the extent not reimbursed by the Borrower and without limiting the obligation of
the Borrower to do so), ratably according to their respective Commitments (or if
the Commitments have expired or been terminated, in accordance with the
respective principal amounts of outstanding Loans and Participation Interest of
the Lenders), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including without limitation at
any time following payment in
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full of the Credit Party Obligations) be imposed on, incurred by or asserted
against the Agent in its capacity as such in any way relating to or arising out
of this Credit Agreement or the other Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of the Agent. The
agreements in this Section shall survive the payment of the Credit Party
Obligations and all other amounts payable hereunder and under the other Credit
Documents.
10.8 Agent in its Individual Capacity.
--------------------------------
The Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with a Borrower or any other Credit
Party as though such Agent were not the Agent hereunder. With respect to the
Loans made and Letters of Credit issued and all obligations owing to it, the
Agent shall have the same rights and powers under this Credit Agreement as any
Lender and may exercise the same as though they were not the Agent, and the
terms "Lender" and "Lenders" shall include the Agent in its individual capacity.
10.9 Successor Agent.
---------------
The Agent may, at any time, resign upon 20 days written notice to the
Lenders. Upon any such resignation, the Required Lenders shall have the right to
appoint a successor Agent, provided such successor Agent is a Lender hereunder
or qualifies under clause (b) of the definition of Eligible Assignee. If no
successor Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 60 days after the notice of resignation,
then the retiring Agent shall select a successor Agent, provided such successor
Agent is a Lender hereunder or qualifies under clause (b) of the definition of
Eligible Assignee. Upon the acceptance of any appointment as the Agent hereunder
by a successor, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations as
the Agent, as appropriate, under this Credit Agreement and the other Credit
Documents and the provisions of this Section 10.9 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was the Agent under
this Credit Agreement.
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SECTION 11
MISCELLANEOUS
-------------
11.1 Notices.
-------
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address or telecopy numbers set forth on Schedule
--------
11.1, or at such other address as such party may specify by written notice to
----
the other parties hereto.
11.2 Right of Set-Off.
----------------
In addition to any rights now or hereafter granted under applicable law
or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default and the commencement of remedies described in
Section 9.2, each Lender is authorized at any time and from time to time,
without presentment, demand, protest or other notice of any kind (all of which
rights being hereby expressly waived), to set-off and to appropriate and apply
any and all deposits (general or special) and any other indebtedness at any time
held or owing by such Lender (including, without limitation, branches, agencies
or Affiliates of such Lender wherever located) to or for the credit or the
account of any Credit Party against obligations and liabilities of such Credit
Party to the Lenders hereunder, under the Notes, the other Credit Documents or
otherwise, irrespective of whether the Agent or the Lenders shall have made any
demand hereunder and although such obligations, liabilities or claims, or any of
them, may be contingent or unmatured, and any such set-off shall be deemed to
have been made immediately upon the occurrence of an Event of Default even
though such charge is made or entered on the books of such Lender subsequent
thereto. The Credit Parties hereby agree that any Person purchasing a
participation in the Loans and Commitments hereunder pursuant to Section 11.3(c)
or 3.8 may exercise all rights of set-off with respect to its participation
interest as fully as if such Person were a Lender hereunder.
11.3 Benefit of Agreement.
--------------------
(a) Generally. This Credit Agreement shall be binding upon and
---------
inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; provided that none of the Credit
--------
Parties may assign and transfer any of its interests (except as
permitted by Section 8.4 or 8.5) without the prior written consent of
the Lenders; and provided further that the rights of each Lender to
-------- -------
transfer, assign or grant participations in its rights and/or
obligations hereunder shall be limited as set forth below in this
Section 11.3.
(b) Assignments. Each Lender may assign to one or more
-----------
Eligible Assignees all or a portion of its rights and obligations under
this Credit Agreement (including,
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without limitation, all or a portion of its Loans, its Notes, and its
Commitments); provided, however, that:
-------- -------
(i) each such assignment shall be to an Eligible
Assignee;
(ii) except in the case of an assignment to another
Lender, any such partial assignment shall be in an amount at
least equal to $5,000,000 or an integral multiple of
$1,000,000 in excess thereof (or the remaining amount of the
Commitment being assigned by such Lender);
(iii) each such assignment by a Lender shall be of a
constant, and not varying, percentage of all of its rights and
obligations under this Credit Agreement and the Notes; and
(iv) the parties to such assignment shall execute
and deliver to the Agent for its acceptance an Assignment
Agreement in substantially the form of Exhibit 11.3(b),
---------------
together with a processing fee from the assignor of $3,500.
Upon execution, delivery, and acceptance of such Assignment Agreement,
the assignee thereunder shall be a party hereto and, to the extent of
such assignment, have the obligations, rights, and benefits of a Lender
hereunder and the assigning Lender shall, to the extent of such
assignment, relinquish its rights and be released from its obligations
under this Credit Agreement. Upon the consummation of any assignment
pursuant to this Section 11.3(b), the assignor, the Agent and the
Borrower shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor and the assignee. If the assignee is
not incorporated under the laws of the United States of America or a
state thereof, it shall deliver to the Borrower and the Agent
certification as to exemption from deduction or withholding of taxes in
accordance with Section 3.13.
By executing and delivering an assignment agreement in accordance with
this Section 11.3(b), the assigning Lender thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each other and
the other parties hereto as follows: (A) such assigning Lender warrants
that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim and the assignee
warrants that it is an Eligible Assignee; (B) except as set forth in
clause (A) above, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Credit
Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto, or the execution,
legality, validity, enforceability, genuineness, sufficiency or value
of this Credit Agreement, any of the other Credit Documents or any
other instrument or document furnished pursuant hereto or thereto or
the financial condition of any Credit Party or the performance or
observance by any Credit Party of any of its obligations under this
Credit Agreement, any of the other Credit Documents or any other
instrument or document furnished pursuant hereto or thereto; (C) such
assignee represents and warrants that it is legally authorized to enter
into such assignment agreement; (D) such assignee confirms that it has
received a copy of this Credit Agreement, the other Credit Documents
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and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such
assignment agreement; (E) such assignee will independently and without
reliance upon the Agent, such assigning Lender or any other Lender, and
based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not
taking action under this Credit Agreement and the other Credit
Documents; (F) such assignee appoints and authorizes the Agent to take
such action on its behalf and to exercise such powers under this Credit
Agreement or any other Credit Document as are delegated to the Agent by
the terms hereof or thereof, together with such powers as are
reasonably incidental thereto; and (G) such assignee agrees that it
will perform in accordance with their terms all the obligations which
by the terms of this Credit Agreement and the other Credit Documents
are required to be performed by it as a Lender.
(c) Register. The Agent shall maintain a copy of each
--------
Assignment Agreement delivered to and accepted by it and a register for
the recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Loans owing to, each Lender
from time to time (the "Register"). The entries in the Register shall
--------
be conclusive and binding for all purposes, absent manifest error, and
the Borrower, the Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes
of this Credit Agreement. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(d) Acceptance. Upon its receipt of an Assignment Agreement
----------
executed by the parties thereto, together with any Note subject to such
assignment and payment of the processing fee, the Agent shall, if such
Assignment Agreement has been completed and is in substantially the
form of Exhibit 11.3(b) hereto, (i) accept such Assignment Agreement,
---------------
(ii) record the information contained therein in the Register and (iii)
give prompt notice thereof to the parties thereto.
(e) Participations. Each Lender may sell participations to one
--------------
or more Persons in all or a portion of its rights, obligations or
rights and obligations under this Credit Agreement (including all or a
portion of its Commitments and its Loans); provided, however, that (i)
-------- -------
such Lender's obligations under this Credit Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
participant shall be entitled, to the same extent that such Lender
would be entitled, to the benefit of the yield protection provisions
contained in Sections 3.9 through 3.14, inclusive, and the right of
set-off contained in Section 11.2, provided that the participant
complies with the obligations, if any, imposed on a Lender by such
Sections, (iv) the Borrower shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and
obligations under this Credit Agreement, and such Lender shall retain
the sole right to enforce the obligations of the Borrower relating to
its Loans and its Notes and to approve any amendment, modification, or
waiver of any provision of this Credit Agreement (other than
amendments, modifications, or waivers decreasing the amount of
principal of or the rate at which interest is payable on such Loans or
Notes, extending any scheduled
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principal payment date or date fixed for the payment of interest on
such Loans or Notes, or extending its Commitments) and (v) any such
participation shall be in a minimum aggregate amount of $2,000,000 of
the Commitments and in integral multiples of $1,000,000 in excess
thereof.
(f) Nonrestricted Assignments. Notwithstanding any other
-------------------------
provision set forth in this Credit Agreement, any Lender may at any
time assign and pledge all or any portion of its Loans and its Notes to
any Federal Reserve Bank as collateral security pursuant to Regulation
A and any Operating Circular issued by such Federal Reserve Bank. No
such assignment shall release the assigning Lender from its obligations
hereunder.
(g) Information. Any Lender may furnish any information
-----------
concerning the Borrower or any of its Subsidiaries in the possession of
such Lender from time to time to assignees and participants (including
prospective assignees and participants), subject, however, to the
provisions of Section 11.16 hereof.
11.4 No Waiver; Remedies Cumulative.
------------------------------
No failure or delay on the part of the Agent or any Lender in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower or any Credit Party and
the Agent or any Lender shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder or under any
other Credit Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. The
rights and remedies provided herein are cumulative and not exclusive of any
rights or remedies which the Agent or any Lender would otherwise have. No notice
to or demand on any Credit Party in any case shall entitle any Credit Party to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agent or the Lenders to any other or
further action in any circumstances without notice or demand.
11.5 Payment of Expenses; Indemnification.
------------------------------------
The Credit Parties agree to: (a) pay all reasonable out-of-pocket costs
and expenses of (i) the Agent and NMS in connection with (A) the negotiation,
preparation, execution and delivery and administration of this Credit Agreement
and the other Credit Documents and the documents and instruments referred to
therein (including, without limitation, the reasonable fees and expenses of
Xxxxx & Xxx Xxxxx, PLLC, special counsel to the Agent), and (B) any amendment,
waiver or consent relating hereto and thereto including, but not limited to, any
such amendments, waivers or consents resulting from or related to any work-out,
renegotiation or restructure relating to the performance by the Credit Parties
under this Credit Agreement and (ii) the Agent and each of the Lenders during
the existence of an Event of Default in connection with (A) enforcement of the
Credit Documents and the documents and instruments referred to therein,
including, without limitation, in connection with any such enforcement, the
reasonable fees and disbursements of counsel for the Agent and each of the
Lenders, and (B) any bankruptcy or insolvency proceeding of a Credit Party and
(b) indemnify the Agent, NMS and each Lender, its officers, directors,
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employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses incurred by
any of them as a result of, or arising out of, or in any way related to, or by
reason of, any investigation, litigation or other proceeding (whether or not any
Agent, NMS or Lender is a party thereto) related to (i) the entering into and/or
performance of any Credit Document or the use of proceeds of any Loans
(including other extensions of credit) hereunder or the consummation of any
other transactions contemplated in any Credit Document, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding, (ii) any
Environmental Claim, (iii) any claims for Non-Excluded Taxes payable by the
Borrower pursuant to Section 3.13 (but excluding in the case of (i), (ii) and
(iii) above, any such losses, liabilities, claims, damages or expenses to the
extent incurred by reason of gross negligence or willful misconduct on the part
of the Person to be indemnified).
11.6 Amendments, Waivers and Consents.
--------------------------------
Subject to Section 11.18(b), neither this Credit Agreement nor any
other Credit Document nor any of the terms hereof or thereof may be amended,
changed, waived, discharged or terminated unless such amendment, change, waiver,
discharge or termination is in writing and signed by the Required Lenders and
the then Credit Parties; provided that no such amendment, change, waiver,
--------
discharge or termination shall without the consent of each Lender affected
thereby:
(a) extend the Maturity Date or postpone or extend or waive
any Principal Amortization Payment of any Loan or any portion thereof;
(b) reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any
post-default increase in interest rates) thereon or fees hereunder;
(c) reduce or waive the principal amount of any Loan;
(d) increase or extend any Commitment of a Lender (it being
understood and agreed that a waiver of any Default or Event of Default
or a waiver of any mandatory reduction in the Commitments shall not
constitute a change in the terms of any Commitment of any Lender);
(e) release all or a material portion of the Collateral
securing the Credit Party Obligations hereunder (provided that the
Agent may, without consent from any other Lender, release any
Collateral that is sold or transferred by a Credit Party in conformance
with Section 8.5);
(f) release the Borrower from its obligations or release all
or a material portion of the other Credit Parties from their respective
obligations under the Credit Documents;
(g) amend, modify or waive any provision of this Section or
Section 3.4(a), 3.4(b), 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14,
5.2, 9.1(a), 11.2, 11.3 or 11.5;
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(h) reduce any percentage specified in, or otherwise modify,
the definition of Required Lenders; or
(i) consent to the assignment or transfer by a Borrower of any
of its rights and obligations under (or in respect of) the Credit
Documents.
Not withstanding the above, any amendment to Section 3.3(b) or any of the
defined terms contained in such Section 3.3(b) shall be effective upon the
written consent of the Required Lenders.
Not withstanding the above, no amendment or change that affects the application
of prepayments pursuant to Section 3.3(c) or the allocation of payments between
the Tranche A Term Loans and Tranche B Terms Loans shall be effective unless
Lenders holding in the aggregate more than 50% of the outstanding Tranche A Term
Loans and more than 50% of the Tranche B Term Loans shall consent to such
amendment or change in allocation of payments.
Notwithstanding the above, no provisions of Section 10 may be amended or
modified without the consent of the Agent. No provisions affecting the Issuing
Lender's rights to (a) reimbursement or indemnity under Section 2.2 or (b) any
fees payable pursuant to Section 3.4(c) may be amended without the consent of
the Issuing Lender.
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
such Lender sees fit on any reorganization plan that affects the Loans or the
Letters of Credit, and each Lender acknowledges that the provisions of Section
1126(c) of the Bankruptcy Code supersedes the unanimous consent provisions set
forth herein and (y) the Required Lenders may consent to allow a Credit Party to
use cash collateral in the context of a bankruptcy or insolvency proceeding.
11.7 Counterparts/Telecopy.
---------------------
This Credit Agreement may be executed in any number of counterparts,
each of which where so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. Delivery of executed
counterparts by telecopy shall be as effective as an original and shall
constitute a representation that an original will be delivered.
11.8 Headings.
--------
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 Defaulting Lender.
-----------------
Each Lender understands and agrees that if such Lender is a Defaulting
Lender then notwithstanding the provisions of Section 11.6 it shall not be
entitled to vote on any matter requiring the consent of the Required Lenders or
to object to any matter requiring the consent of all the Lenders; provided,
however, that all other benefits and obligations under the Credit Documents
shall apply to such Defaulting Lender.
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11.10 Survival of Indemnification and Representations and
---------------------------------------------------
Warranties.
----------
All indemnities set forth herein and all representations and warranties
made herein shall survive the execution and delivery of this Credit Agreement,
the making of the Loans, the issuance of the Letters of Credit and the repayment
of the Loans, LOC Obligations and other obligations and the termination of the
Commitments hereunder.
11.11 Governing Law; Jurisdiction.
---------------------------
(a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK (other than the Mortgage Documents which shall
be governed by the laws of the state where the real property is located
that is covered by such Mortgage Document). Any legal action or
proceeding with respect to this Agreement or any other Credit Document
may be brought in the courts of the State of New York or of the United
States for the Southern District of New York, and, by execution and
delivery of this Credit Agreement, each Credit Party hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of such courts. Each Credit Party
further irrevocably consents to the service of process out of any of
the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage
prepaid, to it at the address for notices pursuant to Section 11.1,
such service to become effective 10 days after such mailing. Nothing
herein shall affect the right of a Lender to serve process in any other
manner permitted by law or to commence legal proceedings or to
otherwise proceed against a Credit Party in any other jurisdiction.
Each Credit Party agrees that a final judgment in any action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided
by law; provided that nothing in this Section 11.11(a) is intended to
impair a Credit Party's right under applicable law to appeal or seek a
stay of any judgment.
(b) Each Credit Party hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with
this Agreement or any other Credit Document brought in the courts
referred to in subsection (a) hereof and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought in an
inconvenient forum.
11.12 Waiver of Jury Trial.
--------------------
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
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11.13 Time.
----
All references to time herein shall be references to Eastern Standard
Time or Eastern Daylight time, as the case may be, unless specified otherwise.
11.14 Severability.
------------
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.15 Further Assurances.
------------------
The Credit Parties agree, upon the request of the Agent, to promptly
take such actions, as reasonably requested, as is necessary to carry out the
intent of this Credit Agreement and the other Credit Documents, including, but
not limited to, such actions as are necessary to ensure that the Lenders have a
perfected security interest in the Collateral subject to no Liens other than
Permitted Liens.
11.16 Confidentiality.
---------------
Each Lender agrees that it will use its reasonable best efforts to keep
confidential and to cause any representative designated under Section 7.12 to
keep confidential any non-public information from time to time supplied to it
under any Credit Document; provided, however, that nothing herein shall prevent
-------- -------
the disclosure of any such information to (a) the extent a Lender in good faith
believes such disclosure is required by Requirement of Law, (b) counsel for a
Lender or to its accountants, (c) bank examiners or auditors or comparable
Persons, (d) any affiliate of a Lender, (e) any other Lender, or any assignee,
transferee or participant, or any potential assignee, transferee or participant,
of all or any portion of any Lender's rights under this Agreement who is
notified of the confidential nature of the information or (f) any other Person
in connection with any litigation to which any one or more of the Lenders is a
party; and provided further that no Lender shall have any obligation under this
-------- -------
Section 11.16 to the extent any such information becomes available on a
non-confidential basis from a source other than a Credit Party or that any
information becomes publicly available other than by a breach of this Section
11.16 by any Lender or representative thereof.
11.17 Entirety.
--------
This Credit Agreement together with the other Credit Documents and the
Fee Letter represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Credit
Documents or the transactions contemplated herein and therein.
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11.18 Binding Effect; Continuing Agreement.
------------------------------------
(a) This Credit Agreement shall become effective at such time when
all of the conditions set forth in Section 5.1 have been satisfied or
waived by the Lenders and it shall have been executed by the Borrower, the
Guarantors and the Agent, and the Agent shall have received copies hereof
(telefaxed or otherwise) which, when taken together, bear the signatures of
each Lender, and thereafter this Credit Agreement shall be binding upon and
inure to the benefit of the Borrower, the Guarantors, the Agent and each
Lender and their respective successors and assigns.
(b) This Credit Agreement shall be a continuing agreement and shall
remain in full force and effect until all Loans, LOC Obligations, interest,
fees and other Credit Party Obligations (other than those obligations that
expressly survive the termination of this Credit Agreement) have been paid
in full and all Commitments and Letters of Credit have been terminated.
Upon termination, the Credit Parties shall have no further obligations
(other than those obligations that expressly survive the termination of
this Credit Agreement) under the Credit Documents and the Agent shall, at
the request and expense of the Borrower, deliver all Collateral in its
possession to the Borrower and release all Liens on Collateral; provided
that should any payment, in whole or in part, of the Credit Party
Obligations be rescinded or otherwise required to be restored or returned
by the Agent or any Lender, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise, then the Credit Documents shall
automatically be reinstated and all Liens of the Lenders shall reattach to
the Collateral and all amounts required to be restored or returned and all
costs and expenses incurred by the Agent or Lender in connection therewith
shall be deemed included as part of the Credit Party Obligations.
11.19 Regulation O.
------------
The Credit Parties hereby represent and warrant that no director, executive
officer or principal shareholder of any Credit Party is a director, executive
officer or principal shareholder of any Lender. For the purposes hereof the
terms "director", "executive officer" and "principal shareholder" (when used
with reference to any Lender) have the respective meanings assigned thereto in
Regulation O issued by the Board of Governors of the Federal Reserve System.
Each of the Credit Parties agrees to use its best efforts to insure that no
director, executive officer or principal shareholder of such Credit Party
becomes a director, executive officer or principal shareholder of any Lender.
The Lenders agree that any breach by any Credit Party of the representation,
warranty and covenant contained in this Section 11.19 shall not constitute a
Default or an Event of Default.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Each of the parties hereto has caused a counterpart of this Credit
Agreement to be duly executed and delivered as of the date first above written.
BORROWER: PACKAGING DYNAMICS, L.L.C.
--------
By: /s/ G. Xxxxxxx Xxxxxxxxx
---------------------------------------
Name: G. Xxxxxxx Xxxxxxxxx
-------------------------------------
Title: Vice President
------------------------------------
GUARANTORS: PACKAGING HOLDINGS, L.L.C.
----------
By: /s/ G. Xxxxxxx Xxxxxxxxx
---------------------------------------
Name: G. Xxxxxxx Xxxxxxxxx
-------------------------------------
Title: Vice President
------------------------------------
BAGCRAFT ACQUISITION, L.L.C
By: /s/ G. Xxxxxxx Xxxxxxxxx
---------------------------------------
Name: G. Xxxxxxx Xxxxxxxxx
-------------------------------------
Title: Vice President
------------------------------------
IPMC ACQUISITION, L.L.C
By: /s/ G. Xxxxxxx Xxxxxxxxx
---------------------------------------
Name: G. Xxxxxxx Xxxxxxxxx
-------------------------------------
Title: Vice President
------------------------------------
(Signatures Continued)
LENDERS: NATIONSBANK, N.A.,
-------
in its individual capacity as a Lender and
in its capacity as Agent for the Lenders
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxx
---------------------------------------
Title: Sr. Vice President
--------------------------------------
(Signatures Continued)
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Authorized Signatory
----------------------------------
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------------
Title: Authorized Signatory
----------------------------------
(Signatures Continued)
ABN AMRO Bank N.V.
By: /s/ Xxxxxx X. Xxxx
-----------------------------------------
Name: Xxxxxx X. Xxxx
---------------------------------------
Title: Senior Vice President
--------------------------------------
By: /s/ Xxxx X. Xxxxxxxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxxxxxxx
---------------------------------------
Title: Assistant Vice President
--------------------------------------
(Signatures Continued)
FIRST UNION NATIONAL BANK
By: /s/ Xxxxx Santa Xxxx
--------------------------------------
Name: Xxxxx Santa Xxxx
------------------------------------
Title: Vice President
-----------------------------------
(Signatures Continued)
SOCIETE GENERALE
By: /s/ Xxxxxxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxx
---------------------------------------
Title: Director, Head of SG-Dallas
--------------------------------------
EXHIBIT 1.1A
FORM OF SECURITY AGREEMENT
--------------------------
THIS SECURITY AGREEMENT (this "Security Agreement") is entered into as
------------------
of November __, 1998 among PACKAGING DYNAMICS, L.L.C., a Delaware limited
liability company (the "Borrower"), PACKAGING HOLDINGS, L.L.C., a Delaware
--------
limited liability company (the "Parent"), each of the Subsidiaries of the
------
Borrower from time to time party hereto (the Borrower's Subsidiaries, together
with the Parent, individually a "Guarantor" and collectively the "Guarantors")
--------- ----------
and NATIONSBANK, N.A., in its capacity as agent (in such capacity, the "Agent")
-----
for the lenders from time to time party to the Credit Agreement described below
(the "Lenders").
-------
RECITALS
--------
WHEREAS, the Borrower, the Guarantors, the Lenders and the Agent are
parties to a credit agreement of even date herewith (as the same may be amended,
modified, supplemented or restated from time to time, the "Credit Agreement");
----------------
and
WHEREAS, the Lenders have required that the Borrower and the Guarantors
(the Guarantors, together with the Borrower individually an "Obligor," and
-------
collectively, the "Obligors") secure their respective obligations under the
--------
Credit Agreement and the other Credit Documents in accordance with the terms of
this Security Agreement. The Obligors constitute one integrated financial
enterprise, and the extensions of credit to any Obligor shall benefit directly
and indirectly each Obligor.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
-----------
(a) Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Credit
Agreement. All terms used in this Security Agreement that are defined
in the Uniform Commercial Code in effect in the State of New York (the
"UCC") and which are not otherwise defined herein shall have the
---
meanings set forth therein. For purposes of this Security Agreement,
the term "Lender" shall include any Affiliate of any Lender which has
entered into a Hedging Agreement with the Borrower.
(b) In addition, the following terms shall have the
following meanings:
"Capital Stock": means (i) in the case of a
-------------
corporation, capital stock, (ii) in the case of an association
or business entity, any and all shares, interests,
participations, rights or other equivalents (however
designated) of capital stock, (iii) in the case of a
partnership, partnership interests (whether general or
limited), (iv) in
the case of a limited liability company, membership interests
and (v) any other ownership 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.
"Copyright Licenses": any written agreement, naming
------------------
any Obligor as licensor, granting any right under any
Copyright including, without limitation, any thereof referred
to in Schedule 6.19 to the Credit Agreement.
-------------
"Copyrights": (a) all copyrights in all works subject
----------
to copyright protection pursuant to Title 17 of the United
States Code or applicable copyright legislation in any other
country, now existing or hereafter created or acquired, all
registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Copyright
Office or in any similar office or agency of the United
States, any State thereof or any other country or any
political subdivision thereof, or otherwise, including,
without limitation, any thereof referred to in Schedule 6.19
-------------
to the Credit Agreement, (b) all renewals thereof including,
without limitation, any thereof referred to in Schedule 6.19
-------------
to the Credit Agreement and (c) all actions for infringement
concerning the foregoing.
"Excluded Equipment": all de-inking equipment
------------------
purchased from Milnor Corporation for use at the paper mill
located in Detroit, Michigan owned by IPMC Acquisition, L.L.C.
and which is pledged to the Michigan Department of Natural
Resources.
"Intellectual Property": means all Copyrights,
---------------------
Copyright Licenses, Patents, Patent Licenses, Trademarks and
Trademark Licenses.
"Patent License": all agreements, whether written or
--------------
oral, providing for the grant by or to an Obligor of any right
to manufacture, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in
Schedule 6.19 to the Credit Agreement.
-------------
"Patents": (a) all letters patent of the United
-------
States or any other country, and all reissues and extensions
thereof, including, without limitation, any thereof referred
to in Schedule 6.19 to the Credit Agreement, (b) all
-------------
applications for letters patent of the United States or any
other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation,
any thereof referred to in Schedule 6.19 to the Credit
-------------
Agreement and (c) all actions for infringement concerning the
foregoing, including the right to xxx for and to recover and
retain all damages and profits arising from past
infringements.
"Pledged Interests": means all of the issued and
-----------------
outstanding membership interests in the Borrower, Bagcraft
Acquisition, L.L.C., a Delaware limited liability company, and
IPMC Acquisition, L.L.C., a Delaware limited liability
company.
"Secured Obligations": the collective reference to
-------------------
all of the Credit Party Obligations, now existing or hereafter
arising pursuant to the Credit Documents,
owing from the Borrower or any other Credit Party to any
Lender or the Agent, howsoever evidenced, created, incurred
or acquired, whether primary, secondary, direct, contingent,
or joint and several, including, without limitation, all
liabilities arising under Hedging Agreements with any Lender
and all obligations and liabilities incurred in connection
with collecting and enforcing the foregoing.
"Trademark License": means any agreement, written or
-----------------
oral, providing for the grant by or to an Obligor of any right
to use any Trademark, including, without limitation, any
thereof referred to in Schedule 6.19 to the Credit Agreement.
-------------
"Trademarks": (a) all trademarks, trade names,
----------
corporate names, company names, business names, fictitious
business names, trade styles, service marks, logos and other
source or business identifiers, and the goodwill associated
therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and
Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any
political subdivision thereof, or otherwise, including,
without limitation, any thereof referred to in Schedule 6.19
-------------
to the Credit Agreement, (b) all renewals thereof, including,
without limitation, any thereof referred to in Schedule 6.19
-------------
to the Credit Agreement and (c) all actions for infringement
concerning the foregoing, including the right to xxx for and
to recover and retain all damages and profits arising from
past infringements.
2. Grant of Security Interest in the Collateral. To secure the
--------------------------------------------
prompt payment and performance in full when due, whether by lapse of time,
acceleration or otherwise, of the Secured Obligations, each Obligor hereby
grants to the Agent, for the benefit of the Lenders, a continuing security
interest in, and a right to set off against, any and all right, title and
interest of such Obligor in and to the following, whether now owned or existing
or owned, acquired, or arising hereafter (collectively, the "Collateral"):
----------
(a) All equipment, including, without limitation, all
vehicles, rolling stock, machinery, tools, furniture, furnishings,
office equipment and trade fixtures; provided, however that no security
-------- -------
interest shall exist in the Excluded Equipment until such time as the
Michigan Department of Natural Resources shall have released its
security interest in the same;
(b) All accounts and receivables and all goods represented
by or securing accounts and receivables, including, without limitation,
all rents and tenant payments, if any;
(c) All inventory, including, without limitation, all raw
materials, all work in process and all goods held by an Obligor for
sale or lease;
(d) All contract rights, including, without limitation, all
rights under management agreements, tax sharing agreements and lease
agreements and all rights to payment of money, tax refunds and
insurance proceeds;
(e) All of the Pledged Interests and any dividend,
distribution or return on equity with respect to the Pledged Interests
(other than payments that constitute Restricted Payments);
(f) All of the issued and outstanding shares of Capital
Stock of any Person which hereafter becomes a Subsidiary of any Credit
Party party hereto owned by such Credit Party, including without
limitation, any certificates (or other agreements or instruments), if
any, representing such shares;
(g) All other general intangibles;
(h) All instruments, documents, chattel paper, securities,
investment property, policies and certificates of insurance, deposits,
cash or other goods;
(i) All books, records, ledger cards, files,
correspondence, computer software, tapes, disks and related data
processing software (owned by an Obligor or in which an Obligor has an
interest) that at any time evidence or contain information relating to
any Collateral or are otherwise necessary or helpful in the collection
thereof or realization thereupon;
(j) All Copyrights, Copyright Licenses, Patents, Patent
Licenses, Trademarks and Trademark Licenses;
(k) All other personal property of any kind or type
whatsoever owned by an Obligor;
(l) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(m) All proceeds and products of the foregoing and all
insurance relating to the foregoing collateral and all proceeds thereof
(including, without limitation, insurance proceeds payable on account
of business interruption), whether now existing or hereafter arising.
Notwithstanding anything in this Security Agreement to the contrary,
with respect to each item of Collateral constituting an agreement, license,
permit or other instrument of any Obligor, such item shall be subject to the
security interest created hereby only to the extent that the granting of such
security interest does not, under the terms of such agreement, license, permit
or other instrument, or as provided by law, cause any default under or
termination of such agreement, license, permit or other instrument or the loss
of any material right of such Obligor thereunder; provided, however, that in no
-------- -------
event shall the foregoing be construed to exclude from the security interest
created by this Security Agreement, proceeds or products of any such agreement,
license, permit or other instrument of such Obligor or any accounts receivable
or the right to payments due or become due such Obligor under any such agreement
or other instrument.
Notwithstanding anything in this Security Agreement to the contrary,
the Agent, on behalf of the Lenders, agrees that its Lien on any monies used by
the Obligors to make a Restricted Payment for Taxes permitted by the terms of
the Credit Agreement shall be deemed released upon the payment of such
Restricted Payment for Taxes.
The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest created hereby in the
Collateral (i) constitutes continuing collateral security for all of the Secured
Obligations, whether now existing or hereafter arising and (ii) is not to be
construed as an assignment of any Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trademarks or Trademark Licenses.
3. Provisions Relating to Accounts Receivable.
------------------------------------------
(a) Anything herein to the contrary notwithstanding, each
of the Obligors shall remain liable under each of the accounts
receivable to observe and perform all the conditions and obligations to
be observed and performed by it thereunder, all in accordance with the
terms of any agreement giving rise to each such account receivable.
Neither the Agent nor any Lender shall have any obligation or liability
under any account receivable (or any agreement giving rise thereto) by
reason of or arising out of this Security Agreement or the receipt by
the Agent or any Lender of any payment relating to such account
receivable pursuant hereto, nor shall the Agent or any Lender be
obligated in any manner to perform any of the obligations of an Obligor
under or pursuant to any account receivable (or any agreement giving
rise thereto), to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any account
receivable (or any agreement giving rise thereto), to present or file
any claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times; provided, however, that
-------- -------
the Agent agrees to execute all documents reasonably necessary to
enable the Obligors to collect upon any accounts receivable.
(b) Once during each calendar year or at any time after the
occurrence and during the continuation of an Event of Default, the
Agent shall have the right, but not the obligation, to make test
verifications of the accounts receivable in any manner and through any
medium that it reasonably considers advisable, and the Obligors shall
furnish all such assistance and information as the Agent may require in
connection with such test verifications. At any time and from time to
time, upon the Agent's request, the Obligors shall cause independent
public accountants or others satisfactory to the Agent to furnish (once
each calendar year at the expense of the Obligors and at all other
times at the expense of the Lenders) to the Agent reports showing
reconciliations, aging and test verifications of, and trial balances
for, the accounts receivable. After the occurrence and during the
continuation of an Event of Default, the Agent in its own name or in
the name of others may communicate with account debtors on the accounts
receivable to verify with them to the Agent's satisfaction the
existence, amount and terms of any accounts receivable.
4. Representations and Warranties. Each Obligor hereby represents
------------------------------
and warrants to the Agent, for the benefit of the Lenders:
(a) Chief Executive Office; Books & Records. As of the
---------------------------------------
Closing Date, each Obligor's chief executive office and chief place of
business is (and for the prior four months has been) located at the
locations set forth on Schedule 6.22(c) to the Credit Agreement, and
----------------
each Obligor keeps its books and records at such locations.
(b) Location of Collateral. As of the Closing Date, the
----------------------
location of all tangible property included in the Collateral owned by
each Obligor is as shown on Schedule 6.22(b) to the Credit Agreement.
----------------
(c) Ownership. Each Obligor is the legal and beneficial
---------
owner of its Collateral and has the right to pledge, sell, assign or
transfer the same. There exists no "adverse claim" within the meaning
of Article 8 of the UCC with respect to the Collateral consisting of
"financial assets" (as defined in the UCC) of each Obligor. As of the
Closing Date, each Obligor's legal name is as shown in this Security
Agreement and no Obligor has in the past four months changed its name,
been party to a merger, consolidation or other change in structure or
used any tradename except as set forth in Schedule 4(c) attached
-------------
hereto.
(d) Security Interest/Priority. This Security Agreement
--------------------------
creates a valid security interest in favor of the Agent, for the
benefit of the Lenders, in the Collateral of such Obligor and, when
properly perfected by filing, recordation or registration (or
possession with respect to any shares of Capital Stock that are
certificated and constitute securities for purposes of Article 8 of the
UCC), shall constitute a valid perfected security interest in such
Collateral, to the extent such security can be perfected by filing,
recordation or registration under the UCC or other applicable personal
property security legislation, free and clear of all Liens except for
Permitted Liens.
(e) Contracts; Agreements. As of the Closing Date the
---------------------
Obligors have no material contracts or agreements which are
non-assignable by their terms or which prevent the granting of a
security interest therein such that the unenforceability of such
contracts and agreements in the aggregate would or would reasonably be
expected to have a Material Adverse Effect.
(f) Receivables. Except to the extent the failure of the
-----------
Obligors' receivables to comply with the following terms would not or
would not reasonably be expected to have a Material Adverse Effect, (i)
each receivable of the Obligors and the papers and documents relating
thereto are genuine and in all material respects what they purport to
be, (ii) in the case of each receivable of the Obligors which is an
account receivable, each receivable arises out of (A) a bona fide sale
of goods sold and delivered by such Obligor (or is in the process of
being delivered) or (B) services theretofore actually rendered by such
Obligor to the account debtor named therein, (iii) no receivable
(excluding inter-company receivables) of an Obligor is evidenced by any
instrument or chattel paper valued in excess of $100,000, unless such
instrument or chattel paper has been theretofore endorsed over and
delivered to the Agent except as otherwise provided in Section 5(c)
below and (iv) no surety bond was required or given in connection with
any receivables of an Obligor or the contracts or purchase orders out
of which they arose.
(g) Inventory. As of the Closing Date, no inventory is held
---------
by an Obligor pursuant to consignment, sale or return, sale on approval
or similar arrangement.
(h) Copyrights, Patents and Trademarks.
----------------------------------
(i) Schedule 6.19 to the Credit Agreement includes
-------------
all Intellectual Property which is the subject of a
registration or application and all Trademark Licenses,
Copyright Licenses and Patent Licenses owned by the Obligors
in their own names as of the date hereof.
(ii) Except as set forth in Schedule 6.19 to the
-------------
Credit Agreement, to the best of each Obligor's knowledge,
each Copyright, Copyright License, Patent, Patent License,
Trademark and Trademark License of such Obligor is valid,
subsisting, unexpired, enforceable and has not been abandoned.
(iii) Except as set forth in Schedule 6.19 to the
-------------
Credit Agreement, none of the Copyrights, Patents or
Trademarks is the subject of any licensing or franchise
agreement.
(iv) Except as set forth in Schedule 6.19 to the
-------------
Credit Agreement, no holding, decision or judgment has been
rendered by any Governmental Authority which would limit,
cancel or question the validity of any registered Intellectual
Property.
(v) Except as set forth in Schedule 6.19 to the
-------------
Credit Agreement, to the best of each Obligor's knowledge, no
action or proceeding is pending seeking to limit, cancel or
question the validity of any Intellectual Property.
(vi) All applications pertaining to the Intellectual
Property of each Obligor have been duly and properly filed,
all registrations or letters pertaining to such Intellectual
Property have been duly and properly filed and issued and , to
the best of each Obligor's knowledge, all such Intellectual
Property is valid and enforceable.
(vii) Except as permitted under the Credit Agreement,
no Obligor has made any assignment or agreement in conflict
with the security interest in the Intellectual Property of
each Obligor hereunder.
(i) Authorization of Pledged Interests. The Pledged
----------------------------------
Interests are duly authorized and validly issued and are not subject to
the preemptive rights of any Person. All other equity interests
constituting Pledged Interests will be duly authorized and validly
issued and not subject to the preemptive rights of any Person.
(j) Exercising of Rights. The exercise by the Agent of its
--------------------
rights and remedies hereunder will not violate any law or governmental
regulation or any material contractual restriction in each case,
binding on or affecting an Obligor or any of its property.
(k) Obligor's Authority. No authorization, approval or
-------------------
action by, and no notice or filing with any Governmental Authority
pursuant to any law or governmental authority binding on the Credit
Parties or with any third party (including, without limitation, the
issuer of any Pledged Interests) is required either (i) for the pledge
of Collateral made by each Obligor or for the granting of the security
interest in the Collateral by each Obligor pursuant to this Security
Agreement; or (ii) for the exercise by the Agent or the Lenders of
their rights and remedies hereunder (except as may be required by laws
affecting the offering and sale of securities).
(l) Partnership and Limited Liability Company Interests.
---------------------------------------------------
None of the Pledged Interests (i) is dealt in or traded on a securities
exchange or in a securities market, (ii) by its terms expressly
provides that it is a security governed by Article 8 of the UCC, (iii)
is an investment company security, (iv) is held in a securities account
or (v) constitutes a "security" or a "financial asset" as such terms
are defined in Article 8 of the UCC.
5. Covenants. Each Obligor covenants that, so long as any of the
---------
Secured Obligations remain outstanding (other than any obligations with respect
to the indemnities set forth in any Credit Document which by their terms survive
the termination of such Credit Document) or any Letter of Credit shall remain
outstanding, and until all of the Commitments shall have been terminated, such
Obligor shall:
(a) Other Liens. Defend the Collateral against the claims
-----------
and demands of all other parties claiming an interest therein, keep the
Collateral free from all Liens, except for Permitted Liens, and not
sell, exchange, transfer, assign, lease or otherwise dispose of the
Collateral or any interest therein, except as permitted under the
Credit Agreement.
(b) Preservation of Collateral. Keep the Collateral in good
--------------------------
order, condition and repair in all material respects and not use the
Collateral in violation of the provisions of this Security Agreement or
any other agreement relating to the Collateral or any policy insuring
the Collateral or any applicable statute, law, bylaw, rule, regulation
or ordinance except as permitted under the Credit Agreement.
(c) Instruments/Chattel Paper. Deliver to the Agent each
-------------------------
instrument or chattel paper valued in excess of $100,000 which
represents or relates to the Collateral (other than instruments
evidencing debt obligations from one Credit Party to another Credit
Party), duly endorsed in a manner satisfactory to the Agent, to be held
as Collateral pursuant to this Security Agreement.
(d) Change in Location/Change of Name. Not, without
---------------------------------
providing 30 days prior written notice to the Agent and without filing
such further financing statements or amendments to any previously filed
financing statements as the Agent may require; provided that the Agent
shall promptly provide information to the Obligors regarding financing
statements and amendments to be required after receipt of such notice,
(i) change the location of its chief executive office and chief place
of business (as well as its books and records) from the locations set
forth on Schedule 6.22(c) to the Credit Agreement, (ii) change the
----------------
location of its Collateral from the locations set forth for such
Obligor on Schedule 6.22(b) of the Credit Agreement, or as set forth in
----------------
the Credit
Agreement, or (iii) change its name, be party to a merger,
consolidation or other change in structure or use any tradename other
than as set forth on Schedule 5(d) attached hereto.
-------------
(e) Inspection. Upon reasonable notice, and during
----------
reasonable hours, at all times allow the Agent or its representatives
to visit and inspect the Collateral as set forth in Section 7.12 of the
------------
Credit Agreement.
(f) Contracts; Agreements. Not enter into any material
---------------------
contracts or agreements which are non-assignable to the Agent or the
Lenders by their terms or which prevent the granting of a security
interest to the Agent or the Lenders.
(g) Perfection of Security Interest. Execute and deliver to
-------------------------------
the Agent such agreements, assignments or instruments (including
affidavits, notices, reaffirmations and amendments and restatements of
existing documents, as the Agent may reasonably request) and do all
such other things as the Agent may reasonably deem necessary or
appropriate (i) to assure to the Agent its security interests
hereunder, including, but not limited to, (A) such financing statements
(including renewal statements) or amendments thereof or supplements
thereto or other instruments as the Agent may from time to time
reasonably request in order to perfect and maintain the security
interests granted hereunder in accordance with the UCC, (B) with regard
to Copyrights, a Notice of Grant of Security Interest in such
Copyrights for filing with the United States Copyright Office in the
form of Schedule 5(g)(i) attached hereto, (C) with regard to Patents, a
----------------
Notice of Grant of Security Interest in such Patents for filing with
the United States Patent and Trademark Office in the form of Schedule
--------
5(g)(ii) attached hereto, and (D) with regard to Trademarks, a Notice
--------
of Grant of Security Interest in such Trademarks for filing with the
United States Patent and Trademark Office in the form of Schedule
--------
5(g)(iii) attached hereto, (ii) to consummate the transactions
---------
contemplated hereby and (iii) to otherwise protect and assure the Agent
of its rights and interests hereunder. To that end, each Obligor agrees
that the Agent may file one or more financing statements disclosing the
Agent's security interest in any or all of the Collateral of such
Obligor without, to the extent permitted by law, such Obligor's
signature thereon; provided that the Agent will provide a notice to the
appropriate Obligor of any of the foregoing within 10 days of the
execution, delivery and filing, if any, thereof and will promptly
thereafter provide copies of any of the foregoing executed and
delivered by the Agent, including, if received by the Agent,
acknowledgment copies of any financing statements as filed.
Furthermore, each Obligor hereby irrevocably makes, constitutes and
appoints the Agent, its nominee or any other Person whom the Agent may
designate, as such Obligor's attorney in fact with full power and for
the limited purpose to sign in the name of such Obligor any such
financing statements, or amendments and supplements to financing
statements, renewal financing statements, notices or any similar
documents which in the Agent's reasonable discretion would be necessary
or appropriate in order to perfect and maintain perfection of the
security interests granted hereunder. The power of attorney granted
hereunder is coupled with an interest and is and shall remain
irrevocable so long as the Credit Agreement is in effect (other than
any obligations with respect to the indemnities and the representations
and warranties set forth in any Credit Document which by their terms
survive the termination of such Credit Document) or any amounts payable
thereunder, under any other Credit Document or Hedging Agreement, or
under any Letter of Credit shall remain outstanding, and until all of
the Commitments thereunder shall have terminated. Each
Obligor hereby agrees that a carbon, photographic or other reproduction
of this Security Agreement or any such financing statement is
sufficient for filing as a financing statement by the Agent without
notice thereof to such Obligor wherever the Agent may in its sole
discretion desire to file the same; provided that the Agent will
provide notice to the appropriate Obligor of any of the foregoing
within 10 days of the execution, delivery and filing, if any, thereof
and will promptly thereafter provide copies of any of the foregoing
executed and delivered by the Agent, including, if received by the
Agent, acknowledgment copies of any financing statements as filed. In
the event for any reason the law of any jurisdiction other than New
York becomes or is applicable to the Collateral of any Obligor or any
part thereof, or to any of the Secured Obligations, such Obligor agrees
to execute and deliver all such instruments and to do all such other
things as the Agent in its sole discretion reasonably deems necessary
or appropriate to preserve, protect and enforce the security interests
of the Agent under the law of such other jurisdiction (and, if an
Obligor shall fail to do so promptly upon the request of the Agent,
then the Agent may execute any and all such requested documents on
behalf of such Obligor pursuant to the power of attorney granted
hereinabove). If any Collateral is in the possession or control of an
Obligor's agents and the Agent so requests, such Obligor agrees to
notify such agents in writing of the Agent's security interest therein
and, upon the occurrence and continuance of an Event of Default, upon
the Agent's request, instruct them to hold all such Collateral for the
Lenders' account and subject to the Agent's instructions. Each Obligor
agrees to xxxx its books and records to reflect the security interest
of the Agent in the Collateral The Obligors agree to deliver to the
Agent any certificates representing Capital Stock pledged to the Agent
on behalf of the Lenders pursuant to the terms of this Security
Agreement, together with appropriate transfer powers executed in blank.
(h) Treatment of Receivables. Not grant or extend the time
------------------------
for payment of any receivable, or compromise or settle any receivable
for less than the full amount thereof, or release any person or
property, in whole or in part, from payment thereof, or allow any
credit or discount thereon, other than as normal and customary in the
ordinary course of an Obligor's business.
(i) Covenants Relating to Copyrights.
--------------------------------
(i) Except as otherwise permitted by the Credit
Agreement, employ each Copyright with such notice of copyright
as may be required by law to secure copyright protection.
(ii) Not do any act or knowingly omit to do any act
whereby any Copyright may become invalidated and (A) not do
any act, or knowingly omit to do any act, whereby any
Copyright may become injected into the public domain; (B)
notify the Agent immediately if it knows, or has reason to
know, that any Copyright may become injected into the public
domain or of any adverse determination or development
(including, without limitation, the institution of, or any
such determination or development in, any court or tribunal in
the United States or any other country) regarding an Obligor's
ownership of any such Copyright or its validity; (C) take all
necessary steps as it shall deem appropriate under the
circumstances to maintain and pursue each application (and to
obtain
the relevant registration) and to maintain each registration
of each Copyright owned by an Obligor including, without
limitation, filing of applications for renewal where
necessary; and (D) promptly notify the Agent of any
infringement of any Copyright of an Obligor of which it
becomes aware and take such actions as it shall reasonably
deem appropriate under the circumstances to protect such
Copyright, including, where appropriate, the bringing of suit
for infringement, seeking injunctive relief and seeking to
recover any and all damages for such infringement.
Notwithstanding the foregoing, the Obligors may, in their
reasonable business judgment, fail to maintain, preserve or
protect any Copyrights which are not material to their
businesses.
(iii) Except as otherwise permitted by the Credit
Agreement, not make any assignment or agreement in conflict
with the security interest in the Copyrights of each Obligor
hereunder.
(j) Covenants Relating to Patents and Trademarks.
--------------------------------------------
(i) (A) Continue to use each Trademark in such a
manner as to maintain such Trademark in full force free from
any claim of abandonment for non-use, (B) maintain as in the
past the quality of products and services offered under such
Trademark, (C) employ such Trademark with the appropriate
notice of registration or notice of trademark, as applicable,
sufficient to protect such Trademark, (D) not adopt or use any
xxxx which is confusingly similar or a colorable imitation of
such Trademark unless the Agent, for the ratable benefit of
the Lenders, shall obtain a perfected security interest in
such xxxx pursuant to this Security Agreement, and (E) not
(and not permit any licensee or sublicensee thereof to) do any
act or knowingly omit to do any act whereby any such Trademark
may become invalidated.
(ii) Not do any act, or omit to do any act, whereby
any Patent may become abandoned or dedicated.
(iii) Notify the Agent and the Lenders immediately if
it knows, or has reason to know, that any application or
registration relating to any Patent or Trademark may become
abandoned or dedicated, or of any adverse determination or
development (including, without limitation, the institution
of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office or
any court or tribunal in any country), other than non-final
determinations of any such office or court, regarding an
Obligor's ownership of any Patent or Trademark or its right to
register the same or to keep and maintain the same.
(iv) Take all reasonable and necessary steps,
including, without limitation, in any proceeding before the
United States Patent and Trademark Office, or any similar
office or agency in any other country or any political
subdivision thereof, to maintain and pursue each application
(and obtain the relevant registration) and to maintain each
registration of the Patents and
Trademarks, including, without limitation, filing of
applications for renewal, affidavits of use and affidavits of
incontestability.
(v) Promptly notify the Agent and the Lenders after
it learns that any Patent or Trademark included in the
Collateral is infringed, misappropriated or diluted by a third
party, and take such actions as it shall reasonably deem
appropriate under the circumstances to protect such Patent or
Trademark, including, where appropriate, the bringing of suit
for infringement, misappropriation or dilution, seeking
injunctive relief where appropriate and seeking to recover any
and all damages for such infringement, misappropriation or
dilution.
(vi) Except as otherwise permitted by the Credit
Agreement, not make any assignment or agreement in conflict
with the security interest in the Patents or Trademarks of
each Obligor hereunder.
Notwithstanding the foregoing, the Obligors may, in their
reasonable business judgment, fail to maintain, preserve or protect any
Patent or Trademark which is not material to their businesses.
(k) New Patents, Copyrights and Trademarks. Whenever an
--------------------------------------
Obligor, either by itself or through an agent, employee, licensee or
designee, shall file an application for the registration of any
material Copyright, Patent or Trademark with the United States Patent
and Trademark Office or any similar office or agency in any other
country or any political subdivision thereof, an Obligor shall promptly
report such filing to the Agent and the Lenders. Upon request of the
Agent, an Obligor shall promptly provide the Agent with (i) a listing
of all such applications (together with a listing of the issuance of
registrations or letters on present applications), which new
applications and issued registrations or letters shall be subject to
the terms and conditions hereunder, and (ii) (A) with respect to
Copyrights, a duly executed Notice of Security Interest in such
Copyrights, (B) with respect to Patents, a duly executed Notice of
Security Interest in such Patents, (C) with respect to Trademarks, a
duly executed Notice of Security Interest in such Trademarks or (D)
such other duly executed documents as the Agent may request in a form
acceptable to counsel for the Agent and suitable for recording to
evidence the security interest in the Copyright, Patent or Trademark
which is the subject of such new application or registration.
(l) Insurance. Insure, repair and replace the Collateral of
---------
such Obligor as set forth in the Credit Agreement. All insurance
proceeds received in connection with the Collateral shall be subject to
the security interest of the Agent hereunder.
(m) Issuance or Acquisition of Capital Stock. Issue or
----------------------------------------
acquire, without the prior written consent of the Agent and without
executing and delivering to the Agent such agreements, documents and
instruments as the Agent may require, any Capital Stock consisting of
an interest in a partnership or a limited liability company that (i) is
dealt in or traded on a securities exchange or in a securities market,
(ii) by its terms expressly provides that it is a security governed by
Article 8 of the UCC, (iii) is an investment
company security, (iv) is held in a securities account or (v)
constitutes a "security" or a "financial asset" as such terms are
defined in Article 8 of the UCC.
(n) Excluded Equipment. The aggregate value of obligations
------------------
owed to Michigan Department of Natural Resources which are secured by
the Excluded Equipment will not exceed $2,500,000.
6. Advances by Lenders. On failure of any Obligor to perform any
-------------------
of the covenants and agreements contained herein, the Agent may, at its sole
option and in its sole discretion, perform the same and in so doing may expend
such sums as the Agent may reasonably deem advisable in the performance thereof,
including, without limitation, the payment of any insurance premiums, the
payment of any taxes, a payment to obtain a release of a Lien or potential Lien,
expenditures made in defending against any adverse claim and all other
expenditures which the Agent or the Lenders may make for the protection of the
security hereof or which may be compelled to make by operation of law. All such
sums and amounts so expended shall be repayable by the Obligors on a joint and
several basis promptly upon timely notice thereof and demand therefor, shall
constitute additional Secured Obligations and shall bear interest from the date
said amounts are expended at the default rate provided in Section 3.1(a) of the
--------------
Credit Agreement for Revolving Loans that are Base Rate Loans. No such
performance of any covenant or agreement by the Agent or the Lenders on behalf
of any Obligor, and no such advance or expenditure therefor, shall relieve the
Obligors of any default under the terms of this Security Agreement, the other
Credit Documents or any Hedging Agreement. The Agent and the Lenders may make
any payment hereby authorized in accordance with any xxxx, statement or estimate
procured from the appropriate public office or holder of the claim to be
discharged without inquiry into the accuracy of such xxxx, statement or estimate
or into the validity of any tax assessment, sale, forfeiture, tax lien, title or
claim except to the extent such payment is being contested in good faith by an
Obligor in appropriate proceedings and against which adequate reserves are being
maintained in accordance with GAAP.
7. Events of Default.
-----------------
The occurrence of an event which under the Credit Agreement would
constitute an Event of Default shall be an Event of Default hereunder (an "Event
-----
of Default").
----------
8. Remedies.
--------
(a) General Remedies. Upon the occurrence of an Event of
----------------
Default and during continuation thereof, the Lenders shall have, in
addition to the rights and remedies provided herein, in the Credit
Documents, in the Hedging Agreements with any Lender or by law
(including, but not limited to, the rights and remedies set forth in
the Uniform Commercial Code of the jurisdiction applicable to the
affected Collateral), the rights and remedies of a secured party under
the UCC to the extent permitted by law and further, the Agent may, with
or without judicial process or the aid and assistance of others, (i)
enter on any premises on which any of the Collateral may be located
and, without resistance or interference by the Obligors, take
possession of the Collateral, (ii) dispose of any Collateral on any
such premises, (iii) require the Obligors to assemble and make
available to the Agent at the expense of the Obligors any Collateral at
any place and time designated by the Agent which is reasonably
convenient to both parties, (iv) remove any
Collateral from any such premises for the purpose of effecting sale or
other disposition thereof, and/or (v) without demand and without
advertisement, notice, hearing or process of law, all of which each of
the Obligors hereby waives to the fullest extent permitted by law, at
any place and time or times, sell and deliver any or all Collateral
held by or for it at public or private sale, by one or more contracts,
in one or more parcels, for cash, upon credit or otherwise, at such
prices and upon such terms as the Agent deems advisable, in its sole
discretion (subject to any and all mandatory legal requirements). In
addition to all other sums due the Agent and the Lenders with respect
to the Secured Obligations, the Obligors shall pay the Agent and each
of the Lenders all reasonable documented costs and expenses incurred by
the Agent or any such Lender, including, but not limited to, reasonable
attorneys' fees and court costs, in obtaining or liquidating the
Collateral, in enforcing payment of the Secured Obligations, or in the
prosecution or defense of any action or proceeding by or against the
Agent or the Lenders or the Obligors concerning any matter arising out
of or connected with this Security Agreement, any Collateral or the
Secured Obligations, including, without limitation, any of the
foregoing arising in, arising under or related to a case under the
Bankruptcy Code. To the extent the rights of notice cannot be legally
waived hereunder, each Obligor agrees that any requirement of
reasonable notice shall be met if such notice is personally served on
or mailed, postage prepaid, to the Borrower in accordance with the
notice provisions of Section 11.1 of the Credit Agreement at least 10
------------
days before the time of sale or other event giving rise to the
requirement of such notice. The Agent and the Lenders shall not be
obligated to make any sale or other disposition of the Collateral
regardless of notice having been given. To the extent permitted by law,
any Lender may be a purchaser at any such sale. To the extent permitted
by applicable law, each of the Obligors hereby waives all of its rights
of redemption with respect to any such sale. Subject to the provisions
of applicable law, the Agent and the Lenders may postpone or cause the
postponement of the sale of all or any portion of the Collateral by
announcement at the time and place of such sale, and such sale may,
without further notice, to the extent permitted by law, be made at the
time and place to which the sale was postponed, or the Agent and the
Lenders may further postpone such sale by announcement made at such
time and place.
(b) Remedies Relating to Receivables. Upon the occurrence of
--------------------------------
an Event of Default and during the continuation thereof, whether or not
the Agent has exercised any or all of its rights and remedies
hereunder, each Obligor will promptly, upon written request of the
Agent, instruct all account debtors to remit all payments in respect of
the receivables to a mailing location selected by the Agent. In
addition, upon the occurrence and during the continuance of an Event of
Default, the Agent or its designee may notify any Obligor's customers
and account debtors that the receivables of such Obligor have been
assigned to the Agent or of the Agent's security interest therein, and
may (either in its own name or in the name of an Obligor or both)
demand, collect (including, without limitation, by way of a lockbox
arrangement), receive, take receipt for, sell, xxx for, compound,
settle, compromise and give acquittance for any and all amounts due or
to become due on receivables, and, in the Agent's discretion, file any
claim or take any other action or proceeding to protect and realize
upon the security interest of the Lenders in the receivables. Each
Obligor acknowledges and agrees that the proceeds of its receivables
remitted to or on behalf of the Agent in accordance with the provisions
hereof shall be solely for the Agent's own convenience and that such
Obligor shall not have any right, title or interest in such accounts or
in any such other amounts except as expressly
provided herein. The Agent and the Lenders shall have no liability or
responsibility to any Obligor for acceptance of a check, draft or other
order for payment of money bearing the legend "payment in full" or
words of similar import or any other restrictive legend or endorsement
or be responsible for determining the correctness of any remittance.
Each Obligor hereby agrees to indemnify the Agent and the Lenders from
and against all liabilities, damages, losses, actions, claims,
judgments, costs, expenses, charges and reasonable attorneys' fees
suffered or incurred by the Agent or the Lenders (each, an "Indemnified
-----------
Party") as a result of actions taken by the Agent in accordance with
-----
the foregoing except as relating to or arising out of the gross
negligence or willful misconduct of an Indemnified Party or its
officers, employees or agents. In the case of any investigation,
litigation or other proceeding, the foregoing indemnity shall be
effective whether or not such investigation, litigation or proceeding
is brought by an Obligor, its directors, shareholders or creditors, or
an Indemnified Party or any other Person. The foregoing indemnity shall
survive the repayment of the Secured Obligations and the termination of
the Commitments.
(c) Access. In addition to the rights and remedies hereunder,
------
upon the occurrence of an Event of Default and during the continuance
thereof, the Agent shall have the right to enter and remain upon the
various premises of the Obligors without cost or charge to the Agent,
and use the same, together with materials, supplies, books and records
of the Obligors for the purpose of collecting and liquidating the
Collateral, or for preparing for sale and conducting the sale of the
Collateral, whether by foreclosure, auction or otherwise. In addition,
upon the occurrence of an Event of Default and during the continuance
thereof, the Agent may remove Collateral, or any part thereof, from
such premises and/or any records with respect thereto, in order to
effectively collect or liquidate such Collateral.
(d) Nonexclusive Nature of Remedies. Failure by the Agent or
-------------------------------
the Lenders to exercise any right, remedy or option under this Security
Agreement, any other Credit Document or any Hedging Agreement or as
provided by law, or any delay by the Agent or the Lenders in exercising
the same, shall not operate as a waiver of any such right, remedy or
option. No waiver hereunder shall be effective unless it is in writing
and signed by the party against whom such waiver is sought to be
enforced. Any such waiver shall be effective only to the extent
specifically stated and shall only be granted as provided herein. To
the extent permitted by law, neither the Agent, the Lenders, nor any
party acting as attorney for the Agent or the Lenders, shall be liable
hereunder for any acts or omissions or for any error of judgment or
mistake of fact or law other than their gross negligence or willful
misconduct hereunder. The rights and remedies of the Agent and the
Lenders under this Security Agreement shall be cumulative and not
exclusive of any other right or remedy which the Agent or the Lenders
may have.
(e) Retention of Collateral. The Agent may, after complying
-----------------------
with Section 9-505(2) of the UCC or otherwise complying with the
requirements of applicable law of the relevant jurisdiction, to the
extent the Agent is in possession of any of the Collateral, retain the
Collateral in satisfaction of the Secured Obligations. Unless and until
the Agent shall have provided such notices, however, the Agent shall
not be deemed to have retained any Collateral in satisfaction of any
Secured Obligations for any reason.
(f) Deficiency. In the event that the proceeds of any sale,
----------
collection or realization are insufficient to pay all amounts to which
the Agent or the Lenders are legally entitled, the Obligors shall be
jointly and severally liable for the deficiency, together with interest
thereon at the default rate specified in Section 3.1(a) of the Credit
--------------
Agreement for Revolving Loans that are Base Rate Loans, together with
the costs of collection and the reasonable fees of any attorneys
employed by the Agent to collect such deficiency. Any surplus remaining
after the full payment and satisfaction of the Secured Obligations
shall be returned to the Obligors or to whomsoever a court of competent
jurisdiction shall determine to be entitled thereto.
9. Rights of the Agent.
-------------------
(a) Power of Attorney. In addition to other powers of
-----------------
attorney contained herein, each Obligor hereby designates and appoints
the Agent, on behalf of the Lenders, and each of its designees or
agents, as attorney-in-fact of such Obligor, irrevocably and with power
of substitution, with authority to take any or all of the following
actions upon the occurrence and during the continuance of an Event of
Default:
(i) to demand, collect, settle, compromise, adjust
and give discharges and releases concerning the Collateral,
all as the Agent may reasonably determine;
(ii) to commence and prosecute any actions at any
court for the purposes of collecting any Collateral and
enforcing any other right in respect thereof;
(iii) to defend, settle or compromise any action
brought and, in connection therewith, give such discharge or
release as the Agent may deem reasonably appropriate;
(iv) receive, open and dispose of mail addressed to
an Obligor and endorse checks, notes, drafts, acceptances,
money orders, bills of lading, warehouse receipts or other
instruments or documents evidencing payment, shipment or
storage of the goods giving rise to the Collateral of such
Obligor on behalf of and in the name of such Obligor, or
securing, or relating to such Collateral;
(v) sell, assign, transfer, make any agreement in
respect of, or otherwise deal with or exercise rights in
respect of, any Collateral or the goods or services which have
given rise thereto, as fully and completely as though the
Agent were the absolute owner thereof for all purposes;
(vi) adjust and settle claims under any insurance
policy relating thereto;
(vii) execute and deliver all assignments, conveyances,
statements, financing statements, renewal financing statements,
security agreements, affidavits, notices and other agreements,
instruments and documents that the Agent may determine necessary in
order to perfect and maintain the security
interests and liens granted in this Security Agreement and
in order to fully consummate all of the transactions
contemplated therein;
(viii) institute any foreclosure proceedings that
the Agent may deem appropriate;
(ix) to sign and endorse any drafts, assignments,
proxies, transfer powers relating to any Capital Stock,
verifications, notices and other documents relating to the
Pledged Interests of such Obligor;
(x) to exchange any of the Pledged Interests or
other property upon any merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof
and, in connection therewith, deposit any of the Pledged
Interests of such Obligor with any committee, depository,
transfer agent, registrar or other designated agency upon such
terms as the Agent may determine;
(xi) to vote for a resolution, or to sign an
instrument in writing, sanctioning the transfer of any or all
of the Pledged Interests of such Obligor into the name of the
Agent or one or more of the Lenders or into the name of any
transferee to whom the Pledged Interests of such Obligor or
any part thereof may be sold pursuant to Section 9 hereof; and
(xii) do and perform all such other acts and things
as the Agent may reasonably deem to be necessary, proper or
convenient in connection with the Collateral.
This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Secured Obligations remain
outstanding, or any Credit Document or Hedging Agreement is in effect
or any Letter of Credit shall remain outstanding and (ii) until all of
the Commitments shall have been terminated. The Agent shall be under no
duty to exercise or withhold the exercise of any of the rights, powers,
privileges and options expressly or implicitly granted to the Agent in
this Security Agreement, and shall not be liable for any failure to do
so or any delay in doing so. The Agent shall not be liable for any act
or omission or for any error of judgment or any mistake of fact or law
in its individual capacity or its capacity as attorney-in-fact except
acts or omissions resulting from its gross negligence or willful
misconduct. This power of attorney is conferred on the Agent solely to
protect, preserve and realize upon its security interest in the
Collateral.
(b) Assignment by the Agent. The Agent may in accordance
-----------------------
with the terms of the Credit Agreement be replaced and the successor
Agent shall be entitled to all of the rights and remedies of the Agent
under this Security Agreement in relation thereto.
(c) The Agent's Duty of Care. Other than the exercise of
------------------------
reasonable care to assure the safe custody of the Collateral while
being held by the Agent hereunder, the Agent shall have no duty or
liability to preserve rights pertaining thereto, it being understood
and agreed that the Obligors shall be responsible for preservation of
all rights in the Collateral, and the Agent shall be relieved of all
responsibility for the Collateral
upon surrendering it or tendering the surrender of it to the Obligors.
The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which the
Agent accords its own property, which shall be no less than the
treatment employed by a reasonable and prudent agent in the industry,
it being understood that the Agent shall not have responsibility for
taking any necessary steps to preserve rights against any parties with
respect to any of the Collateral.
(d) Voting Rights in Respect of the Pledged Interests.
-------------------------------------------------
(i) So long as no Event of Default shall have
occurred and be continuing, to the extent permitted by law,
each Obligor may exercise any and all voting and other
consensual rights pertaining to the Pledged Interests of such
Obligor or any part thereof for any purpose not inconsistent
with the terms of this Security Agreement or the Credit
Agreement; and
(ii) Upon the occurrence and during the
continuance of an Event of Default, all rights of a Obligor to
exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to paragraph (i) of
this Section 10(e) shall cease and all such rights shall
thereupon become vested in the Agent which shall thereupon
have the sole right to exercise such voting and other
consensual rights.
(e) Dividend Rights in Respect of the Pledged Interests.
---------------------------------------------------
(i) So long as no Event of Default shall have
occurred and be continuing, each Obligor may receive and
retain any and all dividends (other than Capital Stock
dividends which shall be pledged to the Agent pursuant to the
terms of this Security Agreement and shall be considered
Pledged Interests) or distributions paid in respect of the
Pledged Interests to the extent they are allowed under the
Credit Agreement.
(ii) Upon the occurrence and during the
continuance of an Event of Default:
(A) all rights of an Obligor to receive the
dividends and distributions which it would otherwise
be authorized to receive and retain pursuant to
subsection (i) of this Section 9(e) (other than
rights with respect to cash to be used for Restricted
Payments for Taxes) shall cease and all such rights
shall thereupon be vested in the Agent which shall
thereupon have the sole right to receive and hold as
Pledged Interests such dividends and interest
payments; and
(B) all dividends and distributions which
are received by an Obligor contrary to the provisions
of paragraph (A) of this subsection shall be received
in trust for the benefit of the Agent, shall be
segregated from other property or funds of such
Obligor, and shall be forthwith paid over to the
Agent as Pledged Interests in the exact form
received, to be held by
the Agent as Pledged Interests and as further
collateral security for the Secured Obligations.
10. Application of Proceeds. Upon the occurrence and during the
-----------------------
continuance of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by the Agent or
any of the Lenders in cash or its equivalent, will be applied in reduction of
the Secured Obligations in the order set forth in Section 9.3 of the Credit
Agreement, and each Obligor irrevocably waives the right to direct the
application of such payments and proceeds and acknowledges and agrees that the
Agent shall have the continuing and exclusive right to apply and reapply any and
all such payments and proceeds in the Agent's sole discretion, notwithstanding
any entry to the contrary upon any of its books and records.
11. Costs and Expenses of Agent and Lenders. At all times
---------------------------------------
hereafter, the Obligors agree to promptly pay upon demand any and all reasonable
costs and expenses of the Agent or the Lenders (including, without limitation,
the reasonable costs and expenses of legal counsel), (i) as required under
Section 11.5 of the Credit Agreement and (ii) as necessary to protect the
------------
Collateral, to exercise any rights or remedies under this Security Agreement
with respect to any Collateral. All of the foregoing costs and expenses shall
constitute Secured Obligations hereunder.
12. Continuing Agreement.
--------------------
(a) This Security Agreement shall be a continuing
agreement in every respect and shall remain in full force and effect so
long as the Secured Obligations remain outstanding or any Credit
Document or Hedging Agreement or any Letter of Credit shall remain
outstanding, and until all of the Commitments thereunder shall have
terminated (other than any obligations with respect to the indemnities
set forth in any Credit Document which by their terms survive the
termination of such Credit Document). Upon such payment and
termination, this Security Agreement shall be automatically terminated
and, the Agent and the Lenders shall, upon the request and at the
expense of the Obligors, forthwith release all of its liens and
security interests hereunder and shall execute and deliver all UCC
termination statements and/or other documents reasonably requested by
the Obligors evidencing such termination. Notwithstanding the
foregoing, all releases and indemnities provided hereunder shall
survive termination of this Security Agreement.
(b) This Security Agreement shall continue to be
effective or be automatically reinstated, as the case may be, if at any
time payment, in whole or in part, of any of the Secured Obligations is
rescinded or must otherwise be restored or returned by the Agent or any
Lender as a preference, fraudulent conveyance or otherwise under any
bankruptcy, insolvency or similar law, all as though such payment had
not been made; provided that in the event payment of all or any part of
the Secured Obligations is rescinded or must be restored or returned,
all reasonable costs and expenses (including, without limitation, any
reasonable legal fees and disbursements) incurred by the Agent or any
Lender in defending and enforcing such reinstatement shall be deemed to
be included as a part of the Secured Obligations.
13. Amendments; Waivers; Modifications. This Security Agreement
----------------------------------
and the provisions hereof may not be amended, waived, modified, changed,
discharged or terminated except as set forth in Section 11.6 of the Credit
Agreement.
14. Successors in Interest. This Security Agreement shall create a
----------------------
continuing security interest in the Collateral and shall be binding upon each
Obligor, its successors and assigns and shall inure, together with the rights
and remedies of the Agent and the Lenders hereunder, to the benefit of the Agent
and the Lenders and their successors and assigns; provided, however, that none
-------- -------
of the Obligors may assign its rights or delegate its duties hereunder without
the prior written consent of each Lender or the Required Lenders, as required by
the Credit Agreement. To the fullest extent permitted by law, each Obligor
hereby releases the Agent and each Lender, and its successors and assigns, from
any liability for any act or omission relating to this Security Agreement or the
Collateral, except for any liability arising from the gross negligence or
willful misconduct of the Agent, or such Lender, or its officers, employees or
agents.
15. Notices. All notices required or permitted to be given under
-------
this Security Agreement shall be in conformance with Section 11.1 of the Credit
------------
Agreement.
16. Counterparts. This Security Agreement may be executed in any
------------
number of counterparts, each of which where so executed and delivered shall be
an original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Security Agreement to produce or
account for more than one such counterpart.
17. Headings. The headings of the sections and subsections hereof
--------
are provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Security Agreement.
18. Governing Law; Submission to Jurisdiction; Venue.
------------------------------------------------
(a) THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Any legal action or proceeding with respect to this Security Agreement
may be brought in the courts of the State of North Carolina, or of the
United States for the Western District of North Carolina, and, by
execution and delivery of this Security Agreement, each Obligor hereby
irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of such courts. Each
Obligor further irrevocably consents to the service of process out of
any of the aforementioned courts in any such action or proceeding by
the mailing of copies thereof by registered or certified mail, postage
prepaid, to it at the address for notices pursuant to Section 11.1 of
------------
the Credit Agreement, such service to become effective 30 days after
such mailing. Nothing herein shall affect the right of the Agent to
serve process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against any Obligor in any other
jurisdiction.
(b) Each Obligor hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with
this Security Agreement brought in the courts
referred to in subsection (a) hereof and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought in an
inconvenient forum.
19. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
--------------------
EACH OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
20. Severability. If any provision of this Security Agreement is
------------
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
21. Entirety. This Security Agreement, the other Credit Documents and
--------
the Hedging Agreements with any Lender represent the entire agreement of the
parties hereto and thereto, and supersede all prior agreements and
understandings, oral or written, if any, including any commitment letters or
correspondence relating to the Credit Documents and the Hedging Agreements with
any Lender or the transactions contemplated herein and therein.
22. Survival. All representations and warranties of the Obligors
--------
hereunder shall survive the execution and delivery of this Security Agreement,
the other Credit Documents and the Hedging Agreements with any Lender, the
delivery of the Notes and the making of the Loans and the issuance of the
Letters of Credit under the Credit Agreement.
23. Other Security. To the extent that any of the Secured Obligations
--------------
are now or hereafter secured by property other than the Collateral (including,
without limitation, real property and securities owned by an Obligor), or by a
guarantee, endorsement or property of any other Person, then to the extent the
Agent and the Lenders shall have the right to proceed against such other
property, guarantee or endorsement, upon the occurrence and during the
continuance of any Event of Default, to the extent the applicable security
agreement, guarantee or endorsement or other applicable document so provides,
the Agent and the Lenders have the right, in their sole discretion, to determine
which rights, security, liens, security interests or remedies the Agent and the
Lenders shall at any time pursue, relinquish, subordinate, modify or take with
respect thereto, without in any way modifying or affecting any of them or any of
the Agent's and the Lenders' rights or the Secured Obligations under this
Security Agreement, under any other Credit Document or under any Hedging
Agreement.
24. Joint and Several Obligations of Obligors.
-----------------------------------------
(a) Subject to clause (c), each of the Obligors is accepting
joint and several liability hereunder in consideration of the financial
accommodation to be provided by the Lenders under the Credit Agreement
for the mutual benefit, directly and indirectly, of each of the
Obligors and in consideration of the undertakings of each of the
Obligors to accept joint and several liability for the obligations of
each of them.
(b) Subject to clause (c), each of the Obligors jointly and
severally hereby irrevocably and unconditionally accepts, not merely as
a surety but also as a co-debtor, joint and several liability with the
other Obligors with respect to the payment and performance of all of
the Secured Obligations arising under this Security Agreement, the
other Credit Documents and the Hedging Agreements with any Lender, it
being the intention of the parties hereto that all the Obligations
shall be the joint and several obligations of each of the Obligors
without preferences or distinction among them.
(c) Notwithstanding any provision to the contrary contained
herein or in any other of the Credit Documents, to the extent the
obligations of a Guarantor shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of
any applicable state or federal law relating to fraudulent conveyances
or transfers) then the obligations of each Guarantor hereunder shall be
limited to the maximum amount that is permissible under applicable law
(whether federal or state and including, without limitation, the
Bankruptcy Code).
[remainder of page intentionally left blank]
Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.
BORROWER: PACKAGING DYNAMICS, L.L.C.
--------
a Delaware limited liability company
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
GUARANTORS: PACKAGING HOLDINGS, L.L.C.
----------
a Delaware limited liability company
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
BAGCRAFT ACQUISITION, L.L.C.
a Delaware limited liability company
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
IPMC ACQUISITION, L.L.C.
a Delaware limited liability company
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Accepted and agreed to as of the date first above written.
NATIONSBANK, N.A., as Agent
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
SCHEDULE 4(c)
------------
MERGERS, CONSOLIDATIONS, CHANGE IN STRUCTURE
--------------------------------------------
OR USE OF TRADENAMES
-------------------
SCHEDULE 5(g)(i)
---------------
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
COPYRIGHTS
United States Copyright Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as of
___________, 1998 (as the same may be amended, modified, extended or restated
from time to time, the "Security Agreement") by and among the Obligors party
------------------
thereto (each an "Obligor" and collectively, the "Obligors") and NationsBank,
------- --------
N.A., as Agent (the "Agent") for the lenders referenced therein (the "Lenders"),
----- -------
the undersigned Obligor has granted a continuing security interest in and
continuing lien upon, the copyrights and copyright applications shown below to
the Agent for the ratable benefit of the Lenders:
COPYRIGHTS
----------
Date of
Copyright No. Description of Copyright Copyright
------------ ------------------------ ---------
Copyright Applications
----------------------
Copyright Description of Copyright Date of Copyright
Applications No. Applied For Applications
--------------- ----------- ------------
The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest in the foregoing copyrights and
copyright applications (i) may only be terminated in accordance with the terms
of the Security Agreement and (ii) is not to be construed as an assignment of
any copyright or copyright application.
Very truly yours,
__________________________
[Obligor]
By:_______________________
Name:_____________________
Title:____________________
Acknowledged and Accepted:
NATIONSBANK, N.A., as Agent
By:_____________________
Name:___________________
Title:__________________
SCHEDULE 5(g)(ii)
----------------
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
PATENTS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as of
___________, 1998 (the "Security Agreement") by and among the Obligors party
------------------
thereto (each an "Obligor" and collectively, the "Obligors") and NationsBank,
------- --------
N.A., as Agent (the "Agent") for the lenders referenced therein (the "Lenders"),
----- -------
the undersigned Obligor has granted a continuing security interest in and
continuing lien upon, the patents and patent applications shown below to the
Agent for the ratable benefit of the Lenders:
PATENTS
-------
Description of Patent Date of
Patent No. Item Patent
---------- --------------------- ------
Patent Applications
-------------------
Patent Description of Patent Date of Patent
Applications No. Applied For Applications
---------------- --------------------- --------------
The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest in the foregoing patents and
patent applications (i) may only be terminated in accordance with the terms of
the Security Agreement and (ii) is not to be construed as an assignment of any
patent or patent application.
Very truly yours,
_________________________________
[Obligor]
By:______________________________
Name:____________________________
Title:___________________________
Acknowledged and Accepted:
NATIONSBANK, N.A., as Agent
By:______________________________
Name:____________________________
Title:___________________________
SCHEDULE 5(g)(iii)
-----------------
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
TRADEMARKS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as of
___________, 1998 (the "Security Agreement") by and among the Obligors party
------------------
thereto (each an "Obligor" and collectively, the "Obligors") and NationsBank,
------- --------
N.A., as Agent (the "Agent") for the lenders referenced therein (the "Lenders"),
----- -------
the undersigned Obligor has granted a continuing security interest in and
continuing lien upon, the trademarks and trademark applications shown below to
the Agent for the ratable benefit of the Lenders:
TRADEMARKS
----------
Description of Trademark Date of
Trademark No. Item Trademark
------------ ------------------------ ---------
Trademark Applications
Trademark Description of Trademark Date of Trademark
Applications No. Applied For Applications
--------------- ------------------------ -----------------
The Obligors and the Agent, on behalf of the Lenders, hereby acknowledge and
agree that the security interest in the foregoing trademarks and trademark
applications (i) may only be terminated in accordance with the terms of the
Security Agreement and (ii) is not to be construed as an assignment of any
trademark or trademark application.
Very truly yours,
_________________________________
[Obligor]
By:______________________________
Name:____________________________
Title:___________________________
Acknowledged and Accepted:
NATIONSBANK, N.A., as Agent
By:______________________________
Name:____________________________
Title:___________________________
EXHIBIT 2.1(b)
to
Credit Agreement
FORM OF
NOTICE OF BORROWING
-------------------
TO: NATIONSBANK, N.A., as Agent
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
RE: Credit Agreement dated as of November __, 1998 among Packaging
Dynamics, L.L.C. (the "Borrower"), Packaging Holdings, L.L.C. and each
of the Subsidiaries of the Borrower as Guarantors, NationsBank, N.A.,
as Agent, and the Lenders named therein (as the same may be amended,
modified, extended or restated from time to time, the "Credit
Agreement")
DATE: _____________, ______
1. This Notice of Borrowing is made pursuant to the terms of the Credit
Agreement. All capitalized terms used herein unless otherwise defined
shall have the meanings set forth in the Credit Agreement.
2. Please be advised that the Borrower is requesting Revolving Loans in
the amount of $__________ to be funded on ____________, _____ at the
interest rate option set forth in paragraph 3 below.
Subsequent to the funding of the requested Revolving Loans, the
aggregate amount of Revolving Loans outstanding plus the aggregate
amount of LOC Obligations outstanding will be $________________ which
is less than or equal to the Revolving Committed Amount.
3. The interest rate option applicable to the requested Revolving Loans
shall be:
a. ________ the Adjusted Base Rate
b. ________ the Adjusted Eurodollar Rate for an Interest Period of:
________ one month
________ two months
________ three months
________ six months
4. The representations and warranties made by the Borrower and each other Credit
Party in any Credit Document are true and correct in all material respects at
and as if made on the date of the requested Revolving Loans except to the
extent they expressly relate to an earlier date.
5. No Default or Event of Default exists or shall be continuing either prior to
or after giving effect to the Revolving Loans made pursuant to this Notice of
Borrowing.
6. No Material Adverse Effect has occurred since December 31, 1997.
PACKAGING DYNAMICS, L.L.C.,
a Delaware limited liability company
By:______________________________
Name:____________________________
Title:___________________________
EXHIBIT 2.1(f)
to
Credit Agreement
FORM OF
REVOLVING NOTE
--------------
$______________ _____________, 1998
FOR VALUE RECEIVED, PACKAGING DYNAMICS, L.L.C., a Delaware limited
liability company (the "Borrower"), hereby promises to pay to the order of
--------
____________________ (the "Lender"), at the office of NationsBank, N.A. (the
------
"Agent") (or at such other place or places as the holder of this Revolving Note
-----
may designate), as set forth in that certain Credit Agreement (as it may be
amended, modified, extended or restated from time to time, the "Credit
------
Agreement") dated as of November __, 1998 among the Borrower, Packaging
---------
Holdings, L.L.C. and each of the Subsidiaries of the Borrower as Guarantors, the
Lenders named therein (including the Lender) and the Agent, the principal sum of
___________________________ Dollars ($____________) (or such lesser amount as
shall equal the aggregate unpaid principal amount of the Revolving Loans made by
the Lender to the Borrower under the Credit Agreement), in lawful money of the
United States of America and in immediately available funds, on the dates and in
the principal amounts provided in the Credit Agreement, and to pay interest on
the unpaid principal amount of each such Revolving Loan made by the Lender, at
such office, in like money and funds, for the period commencing on the date of
each such Revolving Loan until each Revolving Loan shall be paid in full, at the
rates per annum and on the dates provided in the Credit Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement and evidences Revolving Loans made by the Lender thereunder.
Capitalized terms used in this Revolving Note and not otherwise defined shall
have the respective meanings assigned to them in the Credit Agreement and the
terms and conditions of the Credit Agreement are expressly incorporated herein
and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of
the Revolving Loans evidenced by this Revolving Note upon the occurrence of
certain events (and for payment of collection costs in connection therewith) and
for prepayments of Revolving Loans upon the terms and conditions specified
therein. In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to principal and
interest, all costs of collection, including reasonable attorney fees.
The date, amount, type, interest rate and duration of Interest Period
(if applicable) of each Revolving Loan made by the Lender to the Borrower, and
each payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder in respect of the
Revolving Loans to be evidenced by this Revolving Note, and each such
recordation or endorsement shall be prima facie evidence of such information,
absent manifest error.
Except as permitted by Section 11.3(b) of the Credit Agreement, this
Revolving Note may not be assigned by the Lender to any other Person.
THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be
executed as of the date first above written.
PACKAGING DYNAMICS, L.L.C.,
a Delaware limited liability company
By:___________________________________
Name:_________________________________
Title:________________________________
Exhibit 2.3(e)
to
Credit Agreement
FORM OF
TRANCHE A TERM NOTE
-------------------
$______________ November __, 1998
FOR VALUE RECEIVED, PACKAGING DYNAMICS, L.L.C., a Delaware limited
liability company (the "Borrower"), hereby promises to pay to the order of
--------
____________________ (the "Lender"), at the office of NationsBank, N.A. (the
------
"Agent") (or at such other place or places as the holder of this Tranche A Term
-----
Note may designate), as set forth in that certain Credit Agreement (as it may be
amended, modified, extended or restated from time to time, the "Credit
------
Agreement") dated as of November __, 1998 among the Borrower, Packaging
---------
Holdings, L.L.C. and each of the Subsidiaries of the Borrower as Guarantors, the
Lenders named therein (including the Lender) and the Agent, the principal sum of
_______________________________ Dollars ($____________) (or such lesser amount
as shall equal the aggregate unpaid principal amount of the Tranche A Term Loan
made by the Lender to the Borrower under the Credit Agreement), in lawful money
of the United States of America and in immediately available funds, on the dates
and in the principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of the Tranche A Term Loan made by the
Lender, at such office, in like money and funds, for the period commencing on
the date of such Tranche A Term Loan until such Tranche A Term Loan shall be
paid in full, at the rates per annum and on the dates provided in the Credit
Agreement.
This Note is one of the Tranche A Term Notes referred to in the Credit
Agreement and evidences the Tranche A Term Loan made by the Lender thereunder.
Capitalized terms used in this Tranche A Term Note and not otherwise defined
shall have the respective meanings assigned to them in the Credit Agreement and
the terms and conditions of the Credit Agreement are expressly incorporated
herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of
the Tranche A Term Loan evidenced by this Tranche A Term Note upon the
occurrence of certain events (and for payment of collection costs in connection
therewith) and for prepayments of such Tranche A Term Loan upon the terms and
conditions specified therein. In the event this Tranche A Term Note is not paid
when due at any stated or accelerated maturity, the Borrower agrees to pay, in
addition to principal and interest, all costs of collection, including
reasonable, documented attorney fees.
The date, amount, type, interest rate and duration of Interest Period
(if applicable) of the Tranche A Term Loan made by the Lender to the Borrower,
and each payment made on account of the principal thereof, shall be recorded by
the Lender on its books; provided that the failure of the Lender to make any
such recordation or endorsement shall not affect the obligations of the Borrower
to make a payment when due of any amount owing hereunder in respect of the
Tranche
A Term Loan to be evidenced by this Tranche A Term Note, and each such
recordation or endorsement shall be prima facie evidence of such information,
absent manifest error.
Except as permitted by Section 11.3(b) of the Credit Agreement, this
Tranche A Term Note may not be assigned by the Lender to any other Person.
THIS TRANCHE A TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Borrower has caused this Tranche A Term Note to
be executed as of the date first above written.
PACKAGING DYNAMICS, L.L.C.,
a Delaware limited liability company
By:___________________________________
Name:_________________________________
Title:________________________________
Exhibit 2.4(e)
to
Credit Agreement
FORM OF
TRANCHE B TERM NOTE
-------------------
$______________ November __, 1998
FOR VALUE RECEIVED, PACKAGING DYNAMICS, L.L.C., a Delaware limited
liability company (the "Borrower"), hereby promises to pay to the order of
--------
____________________ (the "Lender"), at the office of NationsBank, N.A. (the
------
"Agent") (or at such other place or places as the holder of this Tranche B Term
-----
Note may designate), as set forth in that certain Credit Agreement (as it may be
amended, modified, extended or restated from time to time, the "Credit
------
Agreement") dated as of November __, 1998 among the Borrower, Packaging
---------
Holdings, L.L.C. and each of the Subsidiaries of the Borrower as Guarantors, the
Lenders named therein (including the Lender) and the Agent, the principal sum of
_______________________________ Dollars ($____________) (or such lesser amount
as shall equal the aggregate unpaid principal amount of the Tranche B Term Loan
made by the Lender to the Borrower under the Credit Agreement), in lawful money
of the United States of America and in immediately available funds, on the dates
and in the principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of the Tranche B Term Loan made by the
Lender, at such office, in like money and funds, for the period commencing on
the date of such Tranche B Term Loan until such Tranche B Term Loan shall be
paid in full, at the rates per annum and on the dates provided in the Credit
Agreement.
This Note is one of the Tranche B Term Notes referred to in the Credit
Agreement and evidences the Tranche B Term Loan made by the Lender thereunder.
Capitalized terms used in this Tranche B Term Note and not otherwise defined
shall have the respective meanings assigned to them in the Credit Agreement and
the terms and conditions of the Credit Agreement are expressly incorporated
herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of
the Tranche B Term Loan evidenced by this Tranche B Term Note upon the
occurrence of certain events (and for payment of collection costs in connection
therewith) and for prepayments of such Tranche B Term Loan upon the terms and
conditions specified therein. In the event this Tranche B Term Note is not paid
when due at any stated or accelerated maturity, the Borrower agrees to pay, in
addition to principal and interest, all costs of collection, including
reasonable, documented attorney fees.
The date, amount, type, interest rate and duration of Interest Period
(if applicable) of the Tranche B Term Loan made by the Lender to the Borrower,
and each payment made on account of the principal thereof, shall be recorded by
the Lender on its books; provided that the failure of the Lender to make any
such recordation or endorsement shall not affect the obligations of the Borrower
to make a payment when due of any amount owing hereunder in respect of the
Tranche
B Term Loan to be evidenced by this Tranche B Term Note, and each such
recordation or endorsement shall be prima facie evidence of such information,
absent manifest error.
Except as permitted by Section 11.3(b) of the Credit Agreement, this
Tranche B Term Note may not be assigned by the Lender to any other Person.
THIS TRANCHE B TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Borrower has caused this Tranche B Term Note to
be executed as of the date first above written.
PACKAGING DYNAMICS, L.L.C.,
a Delaware limited liability company
By:_____________________________________
Name:___________________________________
Title:__________________________________
Exhibit 2.5
to
Credit Agreement
FORM OF
NOTICE OF CONTINUATION/CONVERSION
---------------------------------
TO: NATIONSBANK, N.A., as Agent
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
RE: Credit Agreement dated as of November __, 1998 among
Packaging Dynamics, L.L.C. (the "Borrower"), Packaging
Holdings L.L.C. and each of the Subsidiaries of the
Borrower as Guarantors, NationsBank, N.A., as Agent,
and the Lenders named therein (as the same may be
amended, modified, extended or restated from time to
time, the "Credit Agreement")
DATE: _____________, 199__
--------------------------------------------------------------------------------
1. This Notice of Continuation/Conversion is made pursuant to the terms of the
Credit Agreement. All capitalized terms used herein unless otherwise
defined shall have the meanings set forth in the Credit Agreement.
2. Please be advised that the Borrower is requesting that a portion of the
current outstanding [Revolving] [Tranche A Term] [Tranche B Term] Loans in
the amount of $__________ currently accruing interest at __________________
be continued or converted as of _____________ at the interest rate option
set forth in paragraph 3 below.
3. The interest rate option applicable to the continuation or conversion of
all or part of the existing [Revolving] [Tranche A Term] [Tranche B Term]
Loans shall be based on:
a. ________ the Adjusted Base Rate
b. ________ the Adjusted Eurodollar Rate for an Interest Period of:
(i) ________ one month
(ii) ________ two months
(iii) ________ three months
(iv) ________ six months
4. [Applicable to continuations of Eurodollar Loans and conversions of Base
Rate Loans into Eurodollar Loans only.] As of the date hereof, no Default
or Event of Default has
occurred and is continuing or would be caused by this Notice of
Continuation/Conversion.
PACKAGING DYNAMICS, L.L.C.,
a Delaware limited liability company
By:__________________________________________
Name:________________________________________
Title:_______________________________________
EXHIBIT 7.1(d)
to
Credit Agreement
FORM OF
OFFICER'S CERTIFICATE
---------------------
TO: NATIONSBANK, N.A., as Agent
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
RE: Credit Agreement dated as of November __, 1998 among
Packaging Dynamics, L.L.C. (the "Borrower"), Packaging
Holdings, L.L.C. and each of the Subsidiaries of the
Borrower as Guarantors, NationsBank, N.A., as Agent,
and the Lenders named therein (as the same may be
amended, modified, extended or restated from time to
time, the "Credit Agreement"; all capitalized terms
used below shall have the meanings set forth in the
Credit Agreement)
DATE: _____________, 199__
-----------------------------------------------------------------------
Pursuant to the terms of the Credit Agreement, I, ______________, [Chief
Financial Officer] [Treasurer] of Packaging Dynamics, L.L.C. hereby certify on
behalf of the Borrower to the best of my knowledge with respect to the Credit
Agreement that:
a. Attached hereto as Schedule 1 are calculations for the quarter
----------
ending ________, 199__, (calculated as of the date of the financial
statements referred to in paragraph c. below) demonstrating compliance by
the Credit Parties with the financial covenants contained in Section 7.2 of
the Credit Agreement.
b. As of the date hereof, no Default or Event of Default exists under
the Credit Agreement, except as indicated on a separate page attached
hereto, together with an explanation of the action taken or proposed to be
taken by the Borrower with respect thereto.
c. The quarterly/annual financial statements for the fiscal
quarter/year ended __________ which accompany this certificate fairly
present in all material respects the consolidated financial condition
of the Borrower and its Subsidiaries as of the end of such fiscal
quarter and have been prepared in accordance with GAAP, subject to
changes resulting from normal year-end audit adjustments.
__________________________________________
_____________, [Chief Financial Officer]
[Treasurer] of Packaging Dynamics, L.L.C.
SCHEDULE 1 TO OFFICER'S CERTIFICATE
-----------------------------------
I. A. Compliance with Section 7.2(a):
Leverage Ratio
--------------
1. Funded Debt $___________
2. EBITDA (see Exhibit A attached hereto) $___________
---------
3. Leverage Ratio (Line 1 / Line 2) :
------------
Maximum Allowed: Line 3 shall be less than or
equal to the applicable ratio set forth in Section 7.2(a)
of the Credit Agreement.
B. Compliance with Section 7.2(b):
Interest Coverage Ratio
-----------------------
1. EBITDA (see Exhibit A attached hereto) $___________
2. Cash Interest Expense $___________
3. Interest Coverage Ratio (Line 1 / Line 2) :
-----------
Minimum Allowed: Line 3 shall be greater than
or equal to the applicable ratio set forth in
Section 7.2(b) of the Credit Agreement.
C. Compliance with Section 7.2(c):
Net Worth
---------
1. Net Income (on a cumulative basis) of the
Borrower and its Subsidiaries (to
the extent positive) as of the end of each
fiscal quarter of the Borrower
commencing with the fiscal quarter ending
December 31, 1998 $___________
2. 50% of Line 1 $___________
3. Net Cash Proceeds from all Equity Issuances $___________
4. 50% of Line 3 $___________
5. $27,5000,000 + Line 2 + Line 4 $__________
6. Net Worth $__________
Required: Line 6 shall be greater than or equal to
Line 5.
D. Compliance with Section 7.2(d):
Fixed Charge Coverage Ratio
---------------------------
1. EBITDA (see Exhibit A attached hereto) $___________
---------
2. Capital Expenditures $___________
3. Restricted Payments for Taxes $___________
4. Cash Tax Payments
5. Cash Interest Expense $___________
6. Scheduled Funded Debt Payments $___________
7. Fixed Charge Coverage Ratio
((Line 1 - Line 2 - Line 3 - 4) / (Line 5 + Line 6) :
------------
Minimum Required: Line 7 shall be greater than
or equal to the applicable ratio set forth in Section 7.2(d)
of the Credit Agreement.
Exhibit A
to Schedule 1
to Exhibit 7.1(d)
Calculation Schedule to Officer's Certificate
As of __________________
Twelve
Months Quarter Quarter Quarter Quarter
Ended Ended Ended Ended Ended
Net Income ________ ________ ________ ________ ________
-/+Extraordinary1 ________ ________ ________ ________ ________
Gains/Losses
+Interest ________ ________ ________ ________ ________
Expense
+Taxes ________ ________ ________ ________ ________
=EBIT ________ ________ ________ ________ ________
+Depreciation ________ ________ ________ ________ ________
+Amortization ________ ________ ________ ________ ________
=EBITDA ________ ________ ________ ________ ________
EXHIBIT 7.13
to
Credit Agreement
FORM OF
JOINDER AGREEMENT
-----------------
THIS JOINDER AGREEMENT (this "Agreement"), dated as of _____________,
199_, is entered into between _____________________, a ___________________ (the
"New Subsidiary") and NATIONSBANK, N.A., in its capacity as Agent (the "Agent")
under that certain Credit Agreement, dated as of November __, 1998 among
Packaging Dynamics, L.L.C. (the "Borrower"), Packaging Holdings, L.L.C. and each
of the Subsidiaries of the Borrower as Guarantors, the Lenders party thereto,
and the Agent (as the same may be amended, modified, extended or restated from
time to time, the "Credit Agreement"). All capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Credit Agreement.
The New Subsidiary and the Agent, for the benefit of the Lenders,
hereby agree as follows:
1. The New Subsidiary hereby acknowledges, agrees and confirms that, by
its execution of this Agreement, the New Subsidiary will be deemed to be a
Credit Party under the Credit Agreement and a "Guarantor" for all purposes of
the Credit Agreement and shall have all of the rights and obligations of a
Guarantor thereunder as if it had executed the Credit Agreement. The New
Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by,
all of the terms, provisions and conditions contained in the Credit Agreement
applicable to the New Subsidiary, including without limitation (a) all of the
representations and warranties of the Credit Parties set forth in Section 6 of
the Credit Agreement, (b) all of the affirmative and negative covenants set
forth in Sections 7 and 8 of the Credit Agreement and (c) all of the guaranty
obligations set forth in Section 4 of the Credit Agreement. Without limiting the
generality of the foregoing terms of this paragraph 1, the New Subsidiary,
subject to the limitations set forth in Section 4.7 of the Credit Agreement,
hereby guarantees, jointly and severally with the other Guarantors, to the Agent
and the Lenders, as provided in Section 4 of the Credit Agreement, the prompt
payment and performance of the Credit Party Obligations in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration or
otherwise) in accordance with the terms thereof and agrees that if any of the
Credit Party Obligations are not paid or performed in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration or otherwise), the
New Subsidiary will, jointly and severally together with the other Guarantors,
promptly pay and perform the same in accordance with the provisions of Section 4
of the Credit Agreement. Without limiting the generality of the foregoing terms
of this paragraph 1, the Subsidiary hereby (a) acknowledges, agrees and confirms
that, by its execution of this Agreement, the Subsidiary will be deemed a party
to the Security Agreement as an "Obligor", (b) acknowledges and agrees that its
obligations under the Credit Agreement are secured in accordance with the terms
of the Security Agreement and the other Collateral Documents and that the
Lenders may exercise their remedies thereunder in accordance with the terms
thereof, (c) grants to the Agent for the benefit of the Lenders, a continuing
security interest
in, and a right to set off against (to the extent permitted by the Credit
Agreement), any and all right, title and interest of the New Subsidiary in and
to the Collateral (as defined in the Security Agreement) and (d) pledges and
grants to the Agent, for the benefit of the Lenders, a security interest in the
Capital Stock (as defined in the Security Agreement) identified on Schedule A
----------
attached hereto. The Subsidiary hereby represents and warrants to the Agent and
the Lenders that (a) set forth on Schedule B attached hereto is (i) a list of
----------
all Real Properties of the New Subsidiary, (ii) all locations where any personal
property of the New Subsidiary is located and (iii) the chief executive office
and principal place of business of the New Subsidiary, (b) set forth on Schedule
--------
C attached hereto is a list of all registrations and applications for material
-
Intellectual Property (as defined in the Security Agreement) owned by the New
Subsidiary and a list of all license agreements to which the New Subsidiary is a
party relating to material Intellectual Property that the New Subsidiary has the
right to use, (c) set forth on Schedule D attached hereto is a complete and
----------
accurate list of all Subsidiaries of the New Subsidiary and (d) set forth on
Schedule E attached hereto are any tradenames of the New Subsidiary. Schedules
----------
6.15, 6.19, 6.22(a), 6.22(b) and 6.22(c) of the Credit Agreement and Schedule
5(c) of the Security Agreement are hereby deemed amended to include the
information on Schedule B through Schedule E attached hereto, as applicable.
2. If required, the New Subsidiary is, simultaneously with the
execution of this Agreement, executing and delivering such Collateral Documents
(and such other documents and instruments) as reasonably requested by the Agent
in accordance with Section 7.13 of the Credit Agreement.
3. The address of the New Subsidiary for purposes of Section 11.1 of
the Credit Agreement is as follows:
______________________________
______________________________
______________________________
______________________________
4. The New Subsidiary hereby waives acceptance by the Agent and the
Lenders of the guaranty by the New Subsidiary under the Credit Agreement upon
the execution of this Agreement by the New Subsidiary.
5. This Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument.
6. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the New Subsidiary has caused this Agreement to be
duly executed by its authorized officer, as of the day and year first above
written.
[NEW SUBSIDIARY]
By:_____________________________
Name:___________________________
Title:__________________________
Acknowledged and Accepted:
NATIONSBANK, N.A., as Agent
By:___________________________
Name:_________________________
Title:________________________
SCHEDULES TO EXHIBIT 7.13
-------------------------
A Capital Stock/Collateral
B Real/Personal Property Locations;
Chief Executive Office
C Intellectual Property
D Subsidiaries
E Tradenames
EXHIBIT 11.3
to
Credit Agreement
FORM OF
ASSIGNMENT AGREEMENT
--------------------
Reference is made to that certain Credit Agreement dated as of November
__, 1998 (as amended, modified, extended or restated from time to time, the
"Credit Agreement") among PACKAGING DYNAMICS, L.L.C. (the "Borrower"), Packaging
---------------- --------
Holdings, L.L.C. and each of the Subsidiaries of the Borrower as Guarantors, the
Lenders party thereto and NationsBank, N.A., as Agent. All capitalized terms
used herein and not otherwise defined shall have the meanings set forth in the
Credit Agreement.
The "Assignor" and the "Assignee" referred to on Schedule 1 attached
hereto agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, without
recourse and without representation or warranty except as expressly set forth
herein, and the Assignee hereby purchases and assumes from the Assignor, the
interests specified on Schedule 1 attached hereto (the "Assigned Interest") in
-----------------
and to the Assignor's rights and obligations under the Credit Agreement and the
other Credit Documents, including, without limitation, (a) the interests of the
Assignor in the Revolving Loan Commitment Percentage, the Tranche A Term Loan
Commitment Percentage and the Tranche B Term Loan Commitment Percentage as of
the Effective Date (as defined below), (b) the Loans owing to the Assignor in
connection with the Assigned Interest which are outstanding on the Effective
Date and (c) the Assignor's participation interests in all Letters of Credit as
of the Effective Date and the rights and obligations appurtenant thereto under
the LOC Documents.
2. The purchase of the Assigned Interest shall be at par (unless
otherwise agreed to by the Assignor or Assignee) and periodic payments made with
respect to the Assigned Interest which (a) accrued prior to the Effective Date
shall be remitted to the Assignor and (b) accrue from and after the Effective
Date shall be remitted to the Assignee.
3. From and after the Effective Date, upon the consent of the Borrower
and the Agent, as applicable, (a) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment, have the rights and
obligations of a Lender thereunder, and (b) the Assignor shall, to the extent
provided in this Assignment, relinquish its rights and be released of its
obligations under the Credit Agreement.
4. The Assignor (a) represents and warrants that it is the legal and
beneficial owner of the Assigned Interest and that the Assigned Interest is free
and clear of any adverse claim and (b) makes no representation or warranty and
assumes no responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Documents or any other
instrument or document furnished pursuant thereto; (ii) the execution, legality,
validity,
enforceability, genuineness, sufficiency or value of the Credit Documents or any
other instrument or document furnished pursuant thereto; or (iii) the financial
condition of any Credit Party or the performance or observance by any Credit
Party of any of its obligations under the Credit Documents or any other
instrument or document furnished pursuant thereto.
5. The Assignee (a) represents and warrants that it is an Eligible
Assignee; (b) represents and warrants that it is legally authorized to enter
into this Assignment Agreement; (c) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 7.1 thereof, the other Credit Documents and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement; (d) agrees that it will,
independently and without reliance upon the Agent, the 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 Credit Documents; (e) appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers and discretion
under the Credit Documents as are delegated to the Agent by the terms thereof,
together with such powers and discretion as are reasonably incidental thereto;
(f) agrees that it will perform in accordance with their terms all of the
obligations that by the terms of the Credit Documents are required to be
performed by it as a Lender; and (f) agrees that it will, on or before the
Effective Date of Assignment, but only if it is not incorporated under the laws
of the United States of America or a state thereof, satisfy those obligations
set forth in Section 3.13(b) of the Credit Agreement.
6. Following the execution of this Assignment Agreement, it will be
delivered to the Agent for acceptance and recording by the Agent, together with
the transfer fees, if applicable, set forth in Section 11.3(b) of the Credit
Agreement. The effective date for this Assignment Agreement (the "Effective
---------
Date") shall be the date of acceptance hereof by the Agent and the Borrower, if
----
applicable, unless otherwise specified on Schedule 1.
7. This Assignment Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
8. This Assignment Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart to this Assignment Agreement by telecopy
shall be effective as an original and shall constitute a representation that an
original shall be delivered.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment Agreement to be executed by their officers thereunto duly authorized
as of the date hereof.
____________________, as Assignor
By:______________________________
Name:____________________________
Title:___________________________
_____________________, as Assignee
By:______________________________
Name:____________________________
Title:___________________________
Notice address of Assignee:
_________________________________
_________________________________
Attn: ___________________________
Telephone: (___) ________
Telecopy: (___) ________
CONSENTED TO:
NATIONSBANK, N.A., as Agent
By:______________________________
Name:____________________________
Title:___________________________
(as applicable)
PACKAGING DYNAMICS, L.L.C., a
Delaware limited liability company
By:______________________________
Name:____________________________
Title:___________________________
SCHEDULE 1
to
ASSIGNMENT AGREEMENT
(a) Date of Assignment: __________________
(b) Legal Name of Assignor: __________________
(c) Legal Name of Assignee: __________________
(d) Effective Date of Assignment: __________________
(e) Revolving Loan Commitment Percentage assigned ________________%
(f) Revolving Loan Commitment Percentage of Assignor
after Assignment ________________%
(g) Total Revolving Loans outstanding as of Effective Date $_________________
(h) Principal Amount of Revolving Loans assigned on
Effective Date (the amount set forth in (g) multiplied by
the percentage set forth in (e)) $_________________
(i) Principal Amount of Revolving Loans of Assignor
after Assignment (the amount set forth in (g) multiplied
by the percentage set forth in (f)) $_________________
(j) Revolving Committed Amount $_________________
(k) Principal Amount of Revolving Committed Amount
assigned on the Effective Date (the amount set forth in
(j) multiplied by the percentage set forth in (e)) $_________________
(l) Principal Amount of Revolving Committed Amount
of Assignor after Assignment (the amount set forth in
(j) multiplied by the percentage set forth in (f)) $_________________
(m) Tranche A Term Loan Commitment Percentage assigned ________________%
(n) Tranche A Term Loan Commitment Percentage of
Assignor after Assignment ________________%
(o) Total Tranche A Term Loans outstanding as of Effective Date $_________________
(p) Principal Amount of Tranche A Term Loans assigned on
Effective Date (the amount set forth in (o) multiplied by
the percentage set forth in (m)) $_________________
(q) Principal Amount of Tranche A Term Loans of Assignor
after Assignment (the amount set forth in (o) multiplied by
the percentage set forth in (n)) $_________________
(r) Total Tranche A Term Loan Committed Amount $_________________
(s) Principal Amount of Tranche A Term Loan Committed
Amount assigned on the Effective Date (the amount set
forth in (r) multiplied by the percentage set forth in (m)) $_________________
(t) Principal Amount of Tranche A Term Loan Committed
Amount of Assignor after Assignment (the amount set
forth in (r) multiplied by the percentage set forth in (n)) $_________________
(u) Tranche B Term Loan Commitment Percentage assigned $_________________
(v) Tranche B Term Loan Commitment Percentage of
Assignor after Assignment $_________________
(w) Total Tranche B Term Loans outstanding as of Effective Date $_________________
(x) Principal Amount of Tranche B Term Loans assigned on
Effective Date (the amount set forth in (w) multiplied by
the percentage set forth in (u)) $_________________
(y) Principal Amount of Tranche B Term Loans of Assignor
after Assignment (the amount set forth in (w) multiplied by
the percentage set forth in (v)) $_________________
(z) Total Tranche B Term Loan Committed Amount $_________________
(aa) Principal Amount of Tranche B Term Loan Committed
Amount assigned on the Effective Date (the amount set
forth in (z) multiplied by the percentage set forth in (u)) $_________________
(bb) Principal Amount of Tranche B Term Loan Committed
Amount of Assignor after Assignment (the amount set
forth in (z) multiplied by the percentage set forth in (v)) $_________________
