Exhibit 4(B)
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CREDIT AGREEMENT
DATED AS OF JUNE 30, 1998
BETWEEN
JPS PACKAGING COMPANY
AND
XXXXXX TRUST AND SAVINGS BANK
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TABLE OF CONTENTS
Section DESCRIPTION Page
SECTION 1. THE CREDITS............................................................. 1
Section 1.1. Revolving Credit.................................................... 1
Section 1.2. Revolving Credit Loans.............................................. 2
Section 1.3. Letters of Credit................................................... 2
Section 1.4. Manner and Disbursement of Loans.................................... 3
SECTION 2. INTEREST, FEES, TERM AND TERMINATION.................................... 3
Section 2.1. Interest Rate Options............................................... 3
Section 2.2. Minimum and Maximum Amounts........................................ 5
Section 2.3. Manner of Rate Selection............................................ 5
Section 2.4. Change of Law....................................................... 5
Section 2.5. Unavailability of Deposits or Inability to Ascertain Adjusted LIBOR 5
Section 2.6. Taxes and Increased Costs........................................... 6
Section 2.7. Funding Indemnity................................................... 7
Section 2.8. Lending Branch...................................................... 7
Section 2.9. Bank's Duty to Mitigate............................................. 7
Section 2.10. Discretion of Bank as to Manner of Funding.......................... 8
SECTION 3. FEES, APPLICATION, PREPAYMENTS, COMPUTATIONS, AND NOTATIONS............. 8
Section 3.1. Facility Fee........................................................ 8
Section 3.2. Unused Line Fee..................................................... 8
Section 3.3. Audit Fees.......................................................... 8
Section 3.4. Letter of Credit Fees............................................... 8
Section 3.5. Computation of Interest and Fees.................................... 8
Section 3.6. Change in Capital Adequacy Requirements............................. 9
Section 3.7. Term and Termination................................................ 9
Section 3.8. Place and Application of Payments and Collections................... 9
Section 3.9. Voluntary Prepayments............................................... 10
Section 3.10. Mandatory Prepayment................................................ 11
Section 3.11. Computation of Obligations Outstanding.............................. 11
Section 3.12. Notations........................................................... 11
SECTION 4. COLLATERAL.............................................................. 12
Section 4.1. Collateral.......................................................... 12
Section 4.2. Collateral Proceeds................................................. 12
Section 4.3. Further Assurances.................................................. 13
Section 4.4. Ohio Title Problem.................................................. 00
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XXXXXXX 0. DEFINITIONS; INTERPRETATION............................................. 13
Section 5.1. Definitions......................................................... 13
Section 5.2. Interpretation...................................................... 23
SECTION 6. REPRESENTATIONS AND WARRANTIES.......................................... 23
Section 6.1. Organization and Qualification...................................... 23
Section 6.2. Subsidiaries........................................................ 23
Section 6.3. Corporate Authority and Validity of Obligations..................... 24
Section 6.4. Use of Proceeds; Margin Stock....................................... 24
Section 6.5. Financial Reports................................................... 24
Section 6.6. No Material Adverse Change.......................................... 25
Section 6.7. Full Disclosure..................................................... 25
Section 6.8. Good Title.......................................................... 25
Section 6.9. Litigation and Other Controversies.................................. 25
Section 6.10. Taxes............................................................... 25
Section 6.11. Approvals........................................................... 25
Section 6.12. Affiliate Transactions.............................................. 25
Section 6.13. Investment Company; Public Utility Holding Company.................. 26
Section 6.14. ERISA............................................................... 26
Section 6.15. Compliance with Laws................................................ 26
Section 6.16. Other Agreements.................................................... 26
Section 6.17. No Default.......................................................... 26
SECTION 7. CONDITIONS PRECEDENT.................................................... 26
Section 7.1. All Advances........................................................ 27
Section 7.2. Initial Advance..................................................... 27
Section 7.3. Surveys............................................................. 29
Section 7.4. Ohio Title.......................................................... 29
SECTION 8. COVENANTS............................................................... 29
Section 8.1. Maintenance of Business............................................. 29
Section 8.2. Maintenance of Properties........................................... 29
Section 8.3. Taxes and Assessments............................................... 30
Section 8.4. Insurance........................................................... 30
Section 8.5. Financial Reports................................................... 30
Section 8.6. Inspection; Appraisals.............................................. 32
Section 8.7. Tangible Net Worth.................................................. 33
Section 8.8. EBITDA.............................................................. 33
Section 8.9. Capital Expenditures................................................ 33
Section 8.10. Indebtedness for Borrowed Money..................................... 34
Section 8.11. Liens............................................................... 34
Section 8.12. Investments, Acquisitions, Loans, Advances and Guaranties........... 35
Section 8.13. Mergers, Consolidations and Sales................................... 36
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Section 8.14. Maintenance of Subsidiaries......................................... 36
Section 8.15. Dividends and Certain Other Restricted Payments..................... 37
Section 8.16. ERISA............................................................... 37
Section 8.17. Compliance with Laws................................................ 37
Section 8.18. Burdensome Contracts With Affiliates................................ 37
Section 8.19. No Changes in Fiscal Year........................................... 37
Section 8.20. Formation of Subsidiaries........................................... 37
Section 8.21. Change in the Nature of Business.................................... 37
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.......................................... 38
Section 9.1. Events of Default................................................... 38
Section 9.2. Non-Bankruptcy Defaults............................................. 40
Section 9.3. Bankruptcy Defaults................................................. 40
Section 9.4. Collateral for Undrawn Letters of Credit............................ 40
SECTION 10. MISCELLANEOUS........................................................... 41
Section 10.1. Non-Business Days................................................... 41
Section 10.2. No Waiver, Cumulative Remedies...................................... 41
Section 10.3. Amendments, Etc..................................................... 41
Section 10.4. Costs and Expenses.................................................. 41
Section 10.5. Documentary Taxes................................................... 42
Section 10.6. Survival of Representations......................................... 42
Section 10.7. Notices............................................................. 43
Section 10.8. Participations...................................................... 43
Section 10.9. Construction........................................................ 43
Section 10.10. Headings............................................................ 44
Section 10.11. Severability of Provisions.......................................... 44
Section 10.12. Counterparts........................................................ 44
Section 10.13. Binding Nature, Governing Law, Etc.................................. 44
Section 10.14. Submission to Jurisdiction; Waiver of Jury Trial................... 44
Signature................................................................................ 45
EXHIBIT A -- REVOLVING CREDIT NOTE
EXHIBIT B -- BORROWING BASE CERTIFICATE
EXHIBIT C -- COMPLIANCE CERTIFICATE
SCHEDULE 6.2 -- SUBSIDIARIES
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Credit Agreement
Xxxxxx Trust and Savings Bank
Chicago, Illinois
Ladies and Gentlemen:
The undersigned, JPS Packaging Company, a Delaware corporation (the
"Company"), applies to you (the "Bank") for your commitment, subject to the
terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, to extend credit to the Company, all as more
fully hereinafter set forth.
Section 1. The Credits.
Section 1.1. Revolving Credit. Subject to the terms and conditions
hereof, the Bank agrees to extend a revolving credit (the "Revolving Credit") to
the Company which may be availed of by the Company from time to time during the
period from and including the date hereof to but not including the Termination
Date, at which time the commitment of the Bank to extend credit under the
Revolving Credit shall expire. The Revolving Credit may be utilized by the
Company in the form of Loans and Letters of Credit, all as more fully
hereinafter set forth, provided that the aggregate principal amount of Loans and
Letters of Credit outstanding at any one time shall not exceed the lesser of (i)
$15,000,000 (such amount as the same may be reduced pursuant hereto being
hereinafter referred to as the "Revolving Credit Commitment") and (ii) the
Available Borrowing Base as then determined and computed. During the period from
and including the date hereof to but not including the Termination Date, the
Company may use the Revolving Credit Commitment by borrowing, repaying and
reborrowing Loans in whole or in part and/or by having the Bank issue Letters of
Credit, having such Letters of Credit expire or otherwise terminate without
having been drawn upon or, if drawn upon, reimbursing the Bank for each such
drawing, and having the Bank issue new Letters of Credit, all in accordance with
the terms and conditions of this Agreement. Notwithstanding any other provision
of this Agreement to the contrary, the Bank shall have the right from time to
time to establish reserves against the amount of Revolving Credit which the
Company may otherwise request hereunder in such amounts and with respect to such
matters as the Bank shall deem necessary or appropriate in its reasonable
judgment. The amount of such reserves shall be subtracted from the Borrowing
Base when calculating the amount of availability under the Revolving Credit
Commitment. Additionally, the Bank may from time to time reduce the percentages
applicable to Eligible Accounts and Eligible Inventory as they relate to the
Borrowing Base if the Bank determines in its reasonable judgment that there has
been a material adverse change in circumstances relating to any or all of such
Collateral from those circumstances in existence on the date of this Agreement
or in the condition (financial or otherwise) of the Company. The Bank agrees to
give the Company five (5) Business Days' prior notice of the establishment of
any such reserve or the reduction of any such percentage.
Section 1.2. Revolving Credit Loans. Subject to the terms and conditions
hereof, the Revolving Credit may be availed of by the Company in the form of
loans (individually a "Loan" and collectively the "Loans"). All Loans shall be
made against and evidenced by a single promissory note of the Company in the
form (with appropriate insertions) attached hereto as Exhibit A (the "Revolving
Credit Note") payable to the order of the Bank in the principal amount of its
Revolving Credit Commitment. The Revolving Credit Note shall be dated the date
of issuance thereof, be expressed to bear interest as set forth in Section 2
hereof, and be expressed to mature on the Termination Date. Without regard to
the principal amount of the Revolving Credit Note stated on its face, the actual
principal amount at any time outstanding and owing by the Company on account of
the Revolving Credit Note shall be the sum of all Loans made hereunder less all
payments of principal actually received by the Bank.
Section 1.3. Letters of Credit. (a) General Terms. Subject to the terms
and conditions hereof, the Revolving Credit may be availed of by the Company in
the form of standby and commercial letters of credit issued by the Bank for the
account of the Company (individually a "Letter of Credit" and collectively the
"Letters of Credit"), provided that the aggregate amount of Letters of Credit
issued and outstanding hereunder shall not at any one time exceed $1,500,000.
For purposes of this Agreement, a Letter of Credit shall be deemed outstanding
as of any time in an amount equal to the maximum amount which could be drawn
thereunder under any circumstances and over any period of time plus any
unreimbursed drawings then outstanding with respect thereto. If and to the
extent any Letter of Credit expires or otherwise terminates without having been
drawn upon, the availability under the Revolving Credit Commitment shall to such
extent be reinstated.
(b) Term. Each Letter of Credit issued hereunder shall expire not later
than the earlier of (i) twelve (12) months from the date of issuance (or be
cancelable not later than twelve (12) months from the date of issuance and each
renewal) or (ii) the Termination Date.
(c) General Characteristics. Each Letter of Credit issued hereunder shall
be payable in U.S. dollars, conform to the general requirements of the Bank for
the issuance of standby or commercial letters of credit, as the case may be, as
to form and substance, and be a letter of credit which the Bank may lawfully
issue.
(d) Applications. At the time the Company requests each Letter of Credit
to be issued (or prior to the first issuance of a Letter of Credit in the case
of a continuing application), the Company shall execute and deliver to the Bank
an application for such Letter of Credit in the form then customarily prescribed
by the Bank (individually an "Application" and collectively the "Applications").
Subject to the other provisions of this subsection, the obligation of the
Company to reimburse the Bank for drawings under a Letter of Credit shall be
governed by the Application for such Letter of Credit. Anything contained in the
Applications to the contrary notwithstanding, (i) in the event the Bank is not
reimbursed by the Company for the amount the Bank pays on any draft drawn under
a Letter of Credit issued hereunder by 11:00 a.m. (Chicago time) on the date
when such drawing is paid, the obligation of the Company to reimburse the Bank
for the amount of
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such draft paid shall bear interest (which the Company hereby promises to pay on
demand) from and after the date the draft is paid until payment in full thereof
at the rate per annum determined by adding 2% to the Domestic Rate as from time
to time in effect, (ii) the Company shall pay fees in connection with each
Letter of Credit as set forth in Section 2 hereof, (iii) except as otherwise
provided in Sections 3 and 4 hereof, prior to the occurrence of a Default or an
Event of Default the Bank will not call for additional collateral security for
the obligations of the Company under the Applications other than the collateral
security contemplated by this Agreement and the Collateral Documents and
collateral security consisting of rights in goods (or documents of title
evidencing the same) financed under such Applications, and (iv) except as
otherwise provided in Sections 3 and 4 hereof, prior to the occurrence of a
Default or an Event of Default the Bank will not call for the funding of a
Letter of Credit by the Company prior to being presented with a draft drawn
thereunder (or, in the event the draft is a time draft, prior to its due date).
Section 1.4. Manner and Disbursement of Loans. (a) The Company shall
give written or telephonic notice to the date Bank (which notice shall be
irrevocable once given) by no later than 1:00 p.m. (Chicago time) on the date
the Company requests the Bank to make a Loan hereunder. Each such notice shall
specify the date of the Loan requested (which must be a Business Day) and the
amount of such Loan. The Company agrees that the Bank may rely upon any written
or telephonic notice given by any person the Bank in good faith believes is an
Authorized Representative without the necessity of independent investigation.
(b) The Company hereby irrevocably authorizes the Bank to make Loans from
time to time hereunder for payment of any Obligation then due and payable
(whether such Obligation is for interest then due on a Loan, reimbursement under
an Application or otherwise), and any such Loan may be made without regard to
the provisions of Section 7 hereof. The Company acknowledges and agrees,
however, that the Bank shall not be under any obligation to make a Loan under
this Section 1.4(b), and the Bank shall incur no liability to the Company or any
other Person for refusing to make a Loan under this Section 1.4(b).
(c) Subject to the provisions of Section 7 hereof, the proceeds of each
Loan made under Section 1.4(a) hereof shall be made available to the Company at
the principal office of the Bank in Chicago, Illinois, in immediately available
funds, in the case of the initial Loan made hereunder, in accordance with the
terms of the written disbursement instructions of the Company, and, in the case
of each subsequent Loan, by deposit to the Company's general account with the
Bank known as Account Number 000-000-0. The proceeds of each Loan made under
Section 1.4(b) hereof shall be disbursed by the Bank by way of direct payment of
the relevant Obligation.
SECTION 2. INTEREST, FEES, TERM AND TERMINATION.
Section 2.1. Interest Rate Options. (a) Generally. Subject to all of the
terms and conditions of this Section 2, portions of the principal indebtedness
evidenced by the Revolving Credit Note (all of the indebtedness evidenced by the
Revolving Credit Note bearing interest at the same rate for the same period of
time being hereinafter referred to as
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a "Portion") may, at the option of the Company, bear interest with reference to
the Domestic Rate (the "Domestic Rate Portion") or with reference to an Adjusted
LIBOR ("LIBOR Portions") and Portions may be converted from time to time from
one basis to the other. All of the indebtedness evidenced by the Revolving
Credit Note which is not part of a LIBOR Portion shall constitute a single
Domestic Rate Portion. All of the indebtedness evidenced by the Revolving Credit
Note which bears interest with reference to a particular Adjusted LIBOR for a
particular Interest Period shall constitute a single LIBOR Portion. There shall
not be more than three (3) LIBOR Portions applicable to the Revolving Credit
Note outstanding at any one time. Anything contained herein to the contrary
notwithstanding, the obligation of the Bank to create, continue or effect by
conversion any LIBOR Portion shall be conditioned upon the fact that at the time
no Default or Event of Default shall have occurred and be continuing. The
Company hereby promises to pay interest on each Portion at the rates and times
specified in this Section 2.
(b) Domestic Rate Portion. The Domestic Rate Portion shall bear interest
at the Domestic Rate as in effect from time to time, provided that if the
Domestic Rate Portion or any part thereof is not paid when due (whether by lapse
of time, acceleration or otherwise) such Portion shall bear interest, whether
before or after judgment, until payment in full thereof at the rate per annum
determined by adding 2% to the interest rate which would otherwise be applicable
thereto from time to time. Interest on the Domestic Rate Portion shall be
payable monthly in arrears on the first Business Day of each month in each year
(commencing August 1, 1998) and at maturity of the Revolving Credit Note and
interest after maturity (whether by lapse of time, acceleration or otherwise)
shall be due and payable upon demand. Any change in the interest rate on the
Domestic Rate Portion resulting from a change in the Domestic Rate shall be
effective on the date of the relevant change in the Domestic Rate.
(c) LIBOR Portions. Each LIBOR Portion shall bear interest for each
Interest Period selected therefor at a rate per annum determined by adding the
Applicable Margin to the Adjusted LIBOR for such Interest Period, provided that
if any LIBOR Portion is not paid when due (whether by lapse of time,
acceleration or otherwise) such Portion shall bear interest, whether before or
after judgment, until payment in full thereof through the end of the Interest
Period then applicable thereto at the rate per annum determined by adding 2% to
the interest rate which would otherwise be applicable thereto (provided that if
any Interest Period is longer than one month, then interest on the LIBOR Portion
having such Interest Period shall be due and payable on the date occurring each
month after the date such Interest Period began and on the last day of such
Interest Period), and effective at the end of such Interest Period such LIBOR
Portion shall automatically be converted into and added to the Domestic Rate
Portion and shall thereafter bear interest at the interest rate applicable to
the Domestic Rate Portion after default. Interest on each LIBOR Portion shall be
due and payable on the last day of each Interest Period applicable thereto and
interest after maturity (whether by lapse of time, acceleration or otherwise)
shall be due and payable upon demand. The Company shall notify the Bank on or
before 11:00 a.m. (Chicago time) on the third Business Day preceding the end of
an Interest Period applicable to a LIBOR Portion whether such LIBOR Portion is
to continue as a LIBOR Portion, in which event the Company shall notify the Bank
of the new Interest Period selected therefor, and in the event the Company
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shall fail to so notify the Bank, such LIBOR Portion shall automatically be
converted into and added to the Domestic Rate Portion as of and on the last day
of such Interest Period.
Section 2.2. Minimum and Maximum Amounts. Each LIBOR Portion shall be in a
minimum amount of $500,000 or such greater amount which is an integral multiple
of $100,000.
Section 2.3. Manner of Rate Selection. The Company shall notify the Bank by
11:00 a.m. (Chicago time) at least three (3) Business Days prior to the date
upon which the Company requests that any LIBOR Portion be created or that any
part of the Domestic Rate Portion be converted into a LIBOR Portion. If any
request is made to convert a LIBOR Portion into another type of Portion
available hereunder, such conversion shall only be made so as to become
effective as of the last day of the Interest Period applicable thereto. All
requests for the creation, continuance and conversion of Portions under this
Agreement shall be irrevocable. Such requests may be written or oral and the
Bank is hereby authorized to honor telephonic requests for creations,
continuances and conversions received by it from any person the Bank reasonably
believes to be an Authorized Representative without the need of independent
investigation, the Company hereby indemnifying the Bank from any liability or
loss ensuing from so acting.
Section 2.4. Change of Law. Notwithstanding any other provisions of this
Agreement or the Revolving Credit Note, if at any time the Bank shall determine
in good faith that any change in applicable laws, treaties or regulations or in
the interpretation thereof makes it unlawful for the Bank to create or continue
to maintain any LIBOR Portion, it shall promptly so notify the Company and the
obligation of the Bank to create, continue or maintain any such LIBOR Portion
under this Agreement shall terminate until it is no longer unlawful for the Bank
to create, continue or maintain such LIBOR Portion. The Company, on demand,
shall, if the continued maintenance of any such LIBOR Portion is unlawful,
thereupon prepay the outstanding principal amount of the affected LIBOR Portion,
together with all interest accrued thereon and all other amounts payable to the
Bank with respect thereto under this Agreement; provided, however, that the
Company may elect to convert the principal amount of the affected Portion into
another type of Portion available hereunder, subject to the terms and conditions
of this Agreement.
Section 2.5. Unavailability of Deposits or Inability to Ascertain Adjusted
LIBOR. Notwithstanding any other provision of this Agreement or the Revolving
Credit Note, if prior to the commencement of any Interest Period, the Bank shall
determine in good faith that deposits in the amount of any LIBOR Portion
scheduled to be outstanding during such Interest Period are not readily
available to the Bank in the relevant market or, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining Adjusted LIBOR, then the Bank shall promptly give notice thereof to
the Company and the obligations of the Bank to create such new LIBOR Portion,
continue such existing LIBOR Portion for a new Interest Period or effect such
new LIBOR Portion by conversion of the Domestic Rate Portion, as the case may
be, in such amount and for such Interest Period shall terminate until deposits
in such amount and for the Interest Period
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selected by the Company shall again be readily available in the relevant market
and adequate and reasonable means exist for ascertaining Adjusted LIBOR.
Section 2.6. Taxes and Increased Costs. With respect to any LIBOR Portion,
if the Bank shall determine in good faith that any change in any applicable law,
treaty, regulation or guideline (including, without limitation, Regulation D of
the Board of Governors of the Federal Reserve System) or any new law, treaty,
regulation or guideline, or any interpretation of any of the foregoing by any
governmental authority charged with the administration thereof or any central
bank or other fiscal, monetary or other authority having jurisdiction over the
Bank or its lending branch or the LIBOR Portions contemplated by this Agreement
(whether or not having the force of law), shall:
(i) impose, increase, or deem applicable any reserve, special
deposit or similar requirement against assets held by, or deposits in or
for the account of, or loans by, or any other acquisition of funds or
disbursements by, the Bank which is not in any instance already accounted
for in computing the interest rate applicable to such LIBOR Portion;
(ii) subject the Bank, any LIBOR Portion or the Revolving Credit Note
to the extent it evidences such a Portion to any tax (including, without
limitation, any United States interest equalization tax or similar tax
however named applicable to the acquisition or holding of debt obligations
and any interest or penalties with respect thereto), duty, charge, stamp
tax, fee, deduction or withholding in respect of this Agreement, any LIBOR
Portion or the Revolving Credit Note to the extent it evidences such a
Portion, except such taxes as may be measured by the overall net income or
gross receipts of the Bank or its lending branches and imposed by the
jurisdiction, or any political subdivision or taxing authority thereof, in
which the Bank's principal executive office or its lending branch is
located;
(iii) change the basis of taxation of payments of principal and
interest due from the Company to the Bank hereunder or under the Revolving
Credit Note to the extent it evidences any LIBOR Portion (other than by a
change in taxation of the overall net income or gross receipts of the
Bank); or
(iv) impose on the Bank any penalty with respect to the foregoing or
any other condition regarding this Agreement, its disbursement, any LIBOR
Portion or the Revolving Credit Note to the extent it evidences any LIBOR
Portion;
and the Bank shall determine in good faith that the result of any of the
foregoing is to increase the cost (whether by incurring a cost or adding to a
cost) to the Bank of creating or maintaining any LIBOR Portion hereunder or to
reduce the amount of principal or interest received or receivable by the Bank,
then the Company shall pay on demand to the Bank from time to time as specified
by the Bank such additional amounts as the Bank shall reasonably determine are
sufficient to compensate and indemnify it for such increased cost or reduced
amount. If the Bank makes such a claim for compensation, it shall provide to the
Company a certificate setting forth the computation of the increased cost or
reduced amount as a result
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of any event mentioned herein in reasonable detail and such certificate shall be
conclusive if reasonably determined.
Section 2.7. Funding Indemnity. In the event the Bank shall incur any
loss, cost or expense (including, without limitation, any loss (including loss
of profit), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired or contracted to be acquired by
the Bank to fund or maintain any LIBOR Portion or the relending or reinvesting
of such deposits or other funds or amounts paid or prepaid to the Bank) as a
result of:
(i) any payment of a LIBOR Portion on a date other than the last day
of the then applicable Interest Period for any reason, whether before or
after default, and whether or not such payment is required by any
provisions of this Agreement; or
(ii) any failure by the Company to create, borrow, continue or effect
by conversion a LIBOR Portion on the date specified in a notice given
pursuant to this Agreement;
then upon the demand of the Bank, the Company shall pay to the Bank such amount
as will reimburse the Bank for such loss, cost or expense. If the Bank requests
such a reimbursement, it shall provide to the Company a certificate setting
forth the computation of the loss, cost or expense giving rise to the request
for reimbursement in reasonable detail and such certificate shall be conclusive
if reasonably determined.
Section 2.8. Lending Branch. The Bank may, at its option (subject only to
Section 2.9 hereof), elect to make, fund or maintain Portions of the Loans
hereunder at such of its branches or offices as the Bank may from time to time
elect.
Section 2.9. Bank's Duty to Mitigate. The Bank agrees that, as promptly as
practicable after it becomes aware of the occurrence of an event or the
existence of a condition that would cause it to be affected under Section 2.4,
2.5 or 2.6 hereof, the Bank will, to the extent not inconsistent with the Bank's
internal policies and customary business practices, use reasonable efforts to
make, fund or maintain the LIBOR Portions through another lending branch or
office of the Bank if as a result thereof the unlawfulness which would otherwise
require payment of such Loans pursuant to Section 2.4 hereof would cease to
exist or the circumstances which under Section 2.5 hereof would otherwise
terminate such Bank's obligation to make LIBOR Portions would cease to exist or
the increased costs or other compensation which would otherwise be required to
be paid in respect of LIBOR Portions pursuant to Sections 2.6 hereof would be
materially reduced, and if, as determined by the Bank, in its sole discretion,
the making, funding or maintaining of such Portions through such other lending
branch or office would not otherwise adversely affect such Portions or the Bank.
The Company hereby agrees to pay all reasonable expenses incurred by the Bank in
utilizing another lending branch or office of the Bank pursuant to this Section
2.9.
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Section 2.10. Discretion of Bank as to Manner of Funding. Subject to
Section 2.9 hereof, but notwithstanding any other provision of this Agreement to
the contrary, the Bank shall be entitled to fund and maintain its funding of all
or any part of the Revolving Credit Note in any manner it sees fit, it being
understood, however, that for the purposes of this Agreement all determinations
hereunder (including, without limitation, determinations under Sections 2.5, 2.6
and 2.7 hereof) shall be made as if the Bank had actually funded and maintained
each LIBOR Portion during each Interest Period applicable thereto through the
purchase of deposits in the relevant market in the amount of such LIBOR Portion,
having a maturity corresponding to such Interest Period, and bearing an interest
rate equal to the LIBOR for such Interest Period
SECTION 3. FEES, APPLICATION, PREPAYMENTS, COMPUTATIONS, AND NOTATIONS.
Section 3.1. Facility Fee. The Company has paid to the Bank prior to the
date hereof a non-refundable facility fee in the amount of $75,000.
Section 3.2. Unused Line Fee. For the period from and including the date
hereof to but not including the Termination Date, the Company shall pay to the
Bank a fee at the rate of 1/4 of 1% per annum on the average daily unused
portion of the Revolving Credit Commitment. Such fee shall be payable quarter-
annually in arrears on the first day of each calendar quarter in each year
(commencing October 1, 1998) and on the Termination Date.
Section 3.3. Audit Fees. The Company shall pay to the Bank charges for
audits of the Collateral performed by the Bank or its agents or representatives
in such amounts as the Bank may from time to time request (the Bank
acknowledging and agreeing that such charges shall be computed in the same
manner as it at the time customarily uses for the assessment of charges for
similar collateral audits); provided, however, that in the absence of any
Default or Event of Default, the Company shall not be required to pay the Bank
for more than four (4) such audits per calendar year and shall not be required
to pay more than $500 per day per person conducting the audit, plus the Bank's
out-of-pocket costs and expenses.
Section 3.4. Letter of Credit Fees. On the date of issuance of each Letter
of Credit, and as a condition thereto, and annually thereafter, the Company
shall pay to the Bank a letter of credit fee computed at the rate of 1/4 of 1%
per annum on the maximum amount of the related Letter of Credit which is
scheduled to be outstanding during the immediately succeeding twelve (12)
months. In addition to the letter of credit fee called for above, the Company
further agrees to pay to the Bank such processing and transaction fees and
charges as the Bank from time to time customarily imposes in connection with any
amendment, cancellation, negotiation and/or payment of letters of credit and
drafts drawn thereunder.
Section 3.5. Computation of Interest and Fees. All interest on the Loans
and on the reimbursement obligations with respect to all Applications and all
fees due hereunder shall be calculated on the basis of a year of 360 days for
the actual number of days elapsed. Any change in the interest rate applicable to
the Obligations resulting from a change in the Domestic Rate shall be effective
on the date of the relevant change in the Domestic Rate.
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Section 3.6. Change in Capital Adequacy Requirements. If the Bank shall
determine that the adoption after the date hereof of any applicable law, rule or
regulation regarding capital adequacy, or any change in any existing law, rule
or regulation, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank (or any of
its branches) 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 the Bank's capital as a consequence of its obligations hereunder to extend
credit constituting a LIBOR Portion to a level below that which the Bank could
have achieved but for such adoption, change or compliance (taking into
consideration the Bank's policies with respect to liquidity and capital
adequacy) by an amount deemed by the Bank to be material, then from time to
time, within fifteen (15) days after demand by the Bank, the Company shall pay
to the Bank such additional amount or amounts reasonably determined by the Bank
as will compensate the Bank for such reduction.
Section 3.7. Term and Termination. (a) Term. The term of the Revolving
Credit Commitment shall be approximately three years from the date hereof
through and including June 30, 2001, and the Revolving Credit Commitment shall
terminate on such date unless sooner terminated pursuant to this Section or as
otherwise provided in this Agreement. The Company may terminate the Revolving
Credit Commitment in whole (but not in part) at any time upon at least sixty
(60) days prior written notice to the Bank and upon (i) the payment in full of
all outstanding Obligations (including, without limitation, the outstanding
principal balance of the Revolving Credit Note), together with all accrued and
unpaid interest thereon, (ii) the payment of any accrued and unpaid unused line
fees to the date of termination and (iii) the payment of any prepayment premium
required pursuant to the terms of this Section, and (iv) the expiration or
termination of all Letters of Credit and, to the extent any such Letter of
Credit has not expired in accordance with its terms or otherwise been terminated
to the satisfaction of the Bank, accompanied by collateral security in form and
in such amounts as shall be satisfactory to the Bank. At the effective date of
any such termination of the Revolving Credit Commitment by the Company, the
Company shall pay a prepayment premium to the Bank, as liquidated damages for
the loss of bargain and not as a penalty, in an amount equal to $150,000 during
the initial term if termination occurs during the first 12-month period of the
initial term (the date hereof through and including June 30, 1999), and $75,000
at any time thereafter.
Section 3.8. Place and Application of Payments and Collections. (a) All
payments of principal, interest, fees and all other Obligations payable
hereunder and under the other Loan Documents shall be made to the Bank at its
office at 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx (or at such other place as
the Bank may specify). All such payments shall be made in lawful money of the
United States of America, in immediately available funds at the place of
payment, without set-off or counterclaim and without reduction for, and free
from, any and all present or future taxes, levies, imposts, duties, fees,
charges, deductions, withholdings, restrictions or conditions of any nature
imposed by any government or any political subdivision or taxing authority
thereof (but excluding any taxes imposed on or measured by the net income or
gross receipts of the Bank). Payments received by the Bank after 1:30
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p.m. (Chicago time) shall be deemed received as of the opening of business on
the next Business Day. Unless the Company otherwise directs, principal payments
on the Revolving Credit Note shall be applied first to the Domestic Rate Portion
of the Revolving Credit Note until payment in full thereof, with any balance
applied to the LIBOR Portions of the Revolving Credit Note in the order in which
their Interest Periods expire.
(b) All payments made by the Company and all proceeds of Collateral shall,
upon receipt by the Bank, be applied by the Bank to the Obligations then due and
payable, with any balance of such proceeds not applied to the Obligations to be
held by the Bank as collateral security for the Obligations. Prior to the
occurrence of a Default or Event of Default, except as otherwise specifically
provided for herein, all payments made by the Company and all proceeds of
Collateral shall be applied by the Bank against the outstanding Obligations as
follows:
(i) first, to any outstanding fees, charges and expenses then due
the Bank;
(ii) second, to outstanding interest charges then due in respect of
the Obligations;
(iii) third, to the outstanding principal balance of the Loans and
reimbursement obligations in respect of drafts drawn under Letters of
Credit; and
(iv) finally, to be applied to, or held as collateral security for,
any remaining unpaid or unsatisfied Obligations.
Except as otherwise specifically provided for herein, the Company hereby
irrevocably waives the right to direct the application of payments and
collections at any time received by the Bank from or on behalf of the Company,
and the Company hereby irrevocably agrees that the Bank shall have the
continuing exclusive right to apply and reapply any and all such payments and
collections received at any time by the Bank against the Obligations in such
manner as the Bank may deem advisable.
(c) The Company hereby irrevocably authorizes the Bank to charge any of
the Company's deposit accounts maintained with the Bank for the amounts from
time to time necessary to pay any then due Obligations; provided that the
Company acknowledges and agrees that the Bank shall be under no obligation to do
so and the Bank shall incur no liability to the Company or any other Person for
the Bank's failure to do so.
Section 3.9. Voluntary Prepayments.
(a) Domestic Rate Portion. The Company shall have the privilege of
voluntarily prepaying without premium or penalty and in whole or in part (but if
in part, then in an amount not less than $10,000) the Domestic Rate Portion of
the Revolving Credit Note at any time upon notice to the Bank prior to 11:00
a.m. (Chicago time) on the date fixed for prepayment.
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(b) LIBOR Portions. The Company may voluntarily prepay any LIBOR Portion
of the Revolving Credit Note only on the last date of the then applicable
Interest Period, in whole or in part (but if in part, then in an amount not less
than $500,000 or such greater amount which is an integral multiple of $100,000),
upon 3 Business Days' prior notice to the Bank (which notice shall be
irrevocable once given, must be received by the Bank no later than 11:00 a.m.
(Chicago time) on the third Business Day preceding the date of such prepayment,
and shall specify the principal amount to be repaid); provided, however, that
the outstanding principal amount of any LIBOR Portion of the Revolving Credit
Note prepaid in part shall not be less than $500,000 or such greater amount
which is an integral multiple of $100,000 after giving effect to such
prepayment. Any such prepayment shall be effected by payment of the principal
amount to be prepaid and accrued interest thereon to the end of the applicable
Interest Period.
Section 3.10. Mandatory Prepayment. The Company covenants and agrees that
if at any time the sum of the then unpaid principal balance of the Loans plus
the then outstanding amount of Letters of Credit shall be in excess of the
Available Borrowing Base as then determined and computed, the Company shall
immediately and without notice or demand pay over the amount of the excess to
the Bank as and for a mandatory prepayment on such Obligations, with each such
prepayment first to be applied to the Loans until payment in full thereof with
any remaining balance to be held by the Bank as collateral security for the
Obligations owing under the Applications.
Section 3.11. Computation of Obligations Outstanding. For the purpose of
calculating the aggregate principal balance of Obligations outstanding
hereunder, Obligations shall be deemed to be paid on the date payments or
collections, as the case may be, are applied by the Bank to such Obligations;
provided, however, for purposes of calculating interest payable by the Company
on the Loans and on any other interest-bearing Obligations under this Agreement,
any payment or collection, as the case may be, shall be deemed to be applied to
the Loans or other interest-bearing Obligations one (1) Business Day after
receipt of such payment or collection by the Bank. Notwithstanding the
foregoing, if any item presented for collection by the Bank is not honored, the
Bank may reverse any provisional credit which has been given for the item and
make appropriate adjustments to the amount of interest and principal otherwise
due hereunder.
Section 3.12. Notations. Each Loan made against the Revolving Credit Note,
the status of all amounts evidenced by the Revolving Credit Note as constituting
part of the Domestic Rate Portion or a LIBOR Portion, and, in the case of any
LIBOR Portion, the rates of interest and Interest Periods applicable to such
Portion shall be recorded by the Bank on its books and records or, at its
option, recorded on a schedule to the Revolving Credit Note and the unpaid
principal balance and status, rates and Interest Periods so recorded or endorsed
by the Bank shall be prima facie evidence in any court or other proceeding
brought to enforce the Revolving Credit Note of the principal amount remaining
unpaid thereon, the status of the Loan or Loans evidenced thereby and the
interest rates and Interest Periods applicable thereto; provided that the
failure of the Bank to record any of the foregoing shall not limit or otherwise
affect the obligation of the Company to repay the principal amount of the
Revolving Credit Note together with accrued interest thereon. Prior
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to any negotiation of the Revolving Credit Note, the Bank shall record on a
schedule thereto the status of all amounts evidenced thereby as constituting
part of the Domestic Rate Portion or a LIBOR Portion and, in the case of any
LIBOR Portion, the rates of interest and the Interest Periods applicable
thereto.
Section 4. Collateral.
Section 4.1. Collateral. The payment and performance of the Obligations
shall at all times be secured by, among other things, (a) all of the Company's
accounts, chattel paper, documents, instruments, general intangibles, inventory,
equipment, fixtures, investment property and certain other assets and property
of the Company, in each case whether now owned or held or hereafter acquired or
arising, in each case as described in and pursuant to that certain Security
Agreement dated of even date herewith, as the same may be amended, modified or
supplemented from time to time (the "Security Agreement"), (b) all of the
Company's real property and all improvements thereon and certain other related
assets and property located at Akron, Ohio pursuant to that certain Mortgage and
Security Agreement with Assignment of Rents dated of even date herewith, as the
same may be amended, modified or supplemented from time to time (the "Ohio
Mortgage"), (c) all of the Company's real property and all improvements thereon
and certain other related assets and property located at San Leandro, California
pursuant to that certain Deed of Trust and Security Agreement with Assignment of
Rents dated of even date herewith, as the same may be amended, modified or
supplemented from time to time (the "California Trust Deed") (the Ohio Mortgage
and the California Trust Deed being hereinafter referred to collectively as the
"Mortgages"), (d) all of the Company's trademarks, trademark licenses and
certain other related assets and property of the Company, in each case whether
now owned or held or hereafter acquired or arising, pursuant to that certain
Trademark Collateral Agreement dated of even date herewith, as the same may be
amended, modified or supplemented from time to time (the "Trademark Agreement"),
and (e) all of the Company's patents, patent applications and certain other
related assets and property of the Company, in each case whether now owned or
held or hereafter acquired or arising, pursuant to that certain Patent
Collateral Agreement dated of even date herewith, as the same may be amended,
modified or supplemented from time to time (the "Patent Agreement").
Section 4.2. Collateral Proceeds. The Company agrees to make such
arrangements as shall be necessary or appropriate to assure (through the use of
a lockbox under the sole control of the Bank) that all proceeds of the
Collateral are deposited (in the same form as received) in a remittance account
maintained with and under the control of the Bank, such account to constitute a
special restricted account. Any proceeds of Collateral received by the Company
shall be held by the Company in trust for the Bank in the same form in which
received, shall not be commingled with any assets of the Company, and shall be
delivered immediately to the Bank (together with any necessary endorsements
thereto) for deposit into such account. The Company acknowledges that the Bank
has (and is hereby granted to the extent it does not already have) a Lien on
such account and all funds contained therein to secure the Obligations. No
amounts deposited in such account shall be released to the Company, but shall
instead be applied to, or otherwise held as collateral security for, the
outstanding Obligations as set forth in Section 3 hereof, it being understood
and agreed that
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the Company notwithstanding such application shall have the right to obtain
additional Revolving Credit under this Agreement subject to the terms and
conditions hereof.
Section 4.3. Further Assurances. The Company covenants and agrees that it
shall comply with all terms and conditions of each of the Collateral Documents
and that it shall, at any time and from time to time as requested by the Bank,
execute and deliver such further instruments and do such other acts as the Bank
may deem necessary or desirable to provide for or protect or perfect the Lien of
the Bank in the Collateral.
Section 4.4. Ohio Title Problem. Prior to (but not after) September 30,
1998, notwithstanding anything in any Loan Document to the contrary, the Company
shall not be deemed in default of the Ohio Mortgage if (a) the Company does not
own fee simple title to each parcel of real property subject to the Lien of the
Ohio Mortgage by virtue of the failure of the County of Summit, Ohio to transfer
to the Company the County's interest in such real property and (b) the County
has not disputed its obligation to make such transfer.
Section 5. Definitions; Interpretation.
Section 5.1. Definitions. The following terms when used herein shall have
the following meanings:
"Adjusted LIBOR" means a rate per annum determined by the Bank in
accordance with the following formula:
Adjusted LIBOR = LIBOR
---------------------------
100%-Reserve Percentage
"Reserve Percentage" means, for the purpose of computing Adjusted LIBOR, the
maximum rate of all reserve requirements (including, without limitation, any
marginal, emergency, supplemental or other special reserves) imposed by the
Board of Governors of the Federal Reserve System (or any successor) under
Regulation D on Eurocurrency liabilities (as such term is defined in Regulation
D) for the applicable Interest Period as of the first day of such Interest
Period, but subject to any amendments to such reserve requirement by such Board
or its successor, and taking into account any transitional adjustments thereto
becoming effective during such Interest Period. For purposes of this definition,
LIBOR Portions shall be deemed to be Eurocurrency liabilities as defined in
Regulation D without benefit of or credit for prorations, exemptions or offsets
under Regulation D. "LIBOR" means, for each Interest Period, (a) the LIBOR Index
Rate for such Interest Period, if such rate is available, and (b) if the LIBOR
Index Rate cannot be determined, the arithmetic average of the rates of interest
per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) at which
deposits in U.S. Dollars in immediately available funds are offered to the Bank
at 11:00 a.m. (London, England time) two (2) Business Days before the beginning
of such Interest Period by three (3) or more major banks in the interbank
eurodollar market selected by the Bank for a period equal to such Interest
Period and in an amount equal or comparable to the applicable LIBOR Portion
scheduled to be outstanding from the Bank during such Interest Period. "LIBOR
Index Rate" means, for any Interest Period, the rate per annum
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(rounded upwards, if necessary, to the next higher one hundred-thousandth of a
percentage point) for deposits in U.S. Dollars for a period equal to such
Interest Period, which appears on the Telerate Page 3750 as of 11:00 a.m.
(London, England time) on the day two (2) Business Days before the commencement
of such Interest Period. "Telerate Page 3750" means the display designated as
"Page 3750" on the Telerate Service (or such other page as may replace Page 3750
on that service or such other service as may be nominated by the British
Bankers' Association as the information vendor for the purpose of displaying
British Bankers' Association Interest Settlement Rates for U.S. Dollar
deposits). Each determination of LIBOR made by the Bank shall be conclusive and
binding absent manifest error.
"Affiliate" means any Person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to control another Person for purposes of this
definition if such Person possesses, directly or indirectly, the power to
direct, or cause the direction of, the management and policies of the other
Person, whether through the ownership of voting securities, common directors,
trustees or officers, by contract or otherwise; provided, however, that, in any
event for purposes of this definition, any Person that owns, directly or
indirectly, 5% or more of the securities having the ordinary voting power for
the election of directors or governing body of a corporation or 5% or more of
the partnership or other ownership interests of any other Person (other than as
a limited partner of such other Person) will be deemed to control such
corporation or other Person.
"Agreement" means this Credit Agreement, as the same may be amended,
modified or restated from time to time in accordance with the terms hereof.
"Applicable Margin" means 2.75%; provided, however, that such amount shall
be equal to 2.50% effective as of the first day of the calendar month following
submission to the Bank of the annual audit report of the Company required by
Section 8.5(d) hereof for its fiscal year ending on or about December 31, 1998
if and only if (i) the Company's EBITDA for both of two consecutive fiscal
quarters of the Company (the second of such quarters to end no earlier than
December 31, 1998) is greater than or equal to $1,000,000 for each such quarter
and (ii) the relevant financial statements required by Section 8.5 for such
quarters reflect an EBITDA of the requisite amount for each such quarter.
"Application" is defined in Section 1.3 hereof.
"Authorized Representative" means those persons shown on the list of
officers provided by the Company pursuant to Section 7.2(a) hereof, or on any
update of any such list provided by the Company to the Bank, or any further or
different officer of the Company so named by any Authorized Representative of
the Company in a written notice to the Bank.
"Available Borrowing Base" means, as of any time it is to be determined,
the amount (if any) by which (x) the Borrowing Base as then determined and
computed exceeds (y) $500,000.
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"Availability" means, as of any time it is to be determined, the amount (if
any) by which (x) the Available Borrowing Base as then determined and computed
exceeds (y) the aggregate principal amount of all Loans and Letters of Credit
outstanding under this Agreement.
"Bank" is defined in the introductory paragraph hereof.
"Borrowing Base" means, as of any time it is to be determined, the sum of:
(a) 85% (or such lesser percentage as the Bank may determine from
time to time pursuant to Section 1.1 hereof) of the remainder of the then
outstanding unpaid amount of Eligible Accounts less any and all returns,
rebates, discounts (which may, at the Bank's option, be calculated on the
shortest terms), credits, allowances, finance charges and/or taxes of any
nature at any time issued, owing, available to or claimed by account
debtors, granted, outstanding or payable in connection with such Eligible
Accounts at such time; plus
(b) the lesser of (i) $5,000,000 and (ii) the sum of (x) 60% (or such
lesser percentage as the Bank may determine from time to time pursuant to
Section 1.1 hereof) of the value (computed at the lower of market or cost
using the first-in/first-out method of inventory valuation applied by the
Company in accordance with GAAP) of Eligible Inventory consisting of raw
materials plus (y) 50% (or such lesser percentage as the Bank may determine
from time to time pursuant to Section 1.1 hereof) of the value (computed at
the lower of market or cost using the first-in/first-out method of
inventory valuation applied by the Company in accordance with GAAP) of
Eligible Inventory consisting of finished goods;
provided that the Borrowing Base shall be computed only as against and on so
much of such Collateral as is included on the certificates to be furnished from
time to time by the Company pursuant to this Agreement and, if required by the
Bank pursuant to any of the terms hereof or any Collateral Document, as verified
by such other evidence required to be furnished to the Bank pursuant hereto or
pursuant to any such Collateral Document.
"Business Day" means any day other than a Saturday or Sunday on which the
Bank is not authorized or required to close in Chicago, Illinois.
"Capital Lease" means any lease of Property which in accordance with GAAP
is required to be capitalized on the balance sheet of the lessee.
"Capitalized Lease Obligation" means the amount of the liability shown on
the balance sheet of any Person in respect of a Capital Lease as determined in
accordance with GAAP.
"Change of Control Event" means the occurrence of any of the following
circumstances:
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(a) G. Xxxxxxx Xxxx, Xxxxxxx X. Xxxxxx, Xxxxxx X. Xxxx Group, Inc., a
Delaware corporation, and the Affiliates of such corporation, taken
together (collectively, the "Xxxx Group"), shall cease at any time and for
any reason to own, both legally and beneficially, 30% or more of the
combined voting power of all securities of the Company entitled to vote in
the election of directors; or
(b) any Person or two or more Persons (other than the Xxxx Group)
acting in concert acquire beneficial ownership (within the meaning of Rule
13d-3 of the SEC under the Securities Exchange Act of 1934), directly or
indirectly, of common stock of the Company (or other securities convertible
into such common stock) representing a percentage greater than what the
Xxxx Group owns (both legally and beneficially) of the combined voting
power of all securities of the Company entitled to vote in the election of
directors; or
(c) during any period of up to 12 consecutive months, whether
commencing before or after the date hereof, the membership of the Board of
Directors of the Company changes for any reason (other than by reason of
death, disability, or scheduled retirement) so that the majority of the
Board of Directors is made up of Persons who were not directors at the
beginning of such 12 month period.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto.
"Collateral" means all properties, rights, interests and privileges from
time to time subject to the Liens granted to the Bank by the Collateral
Documents.
"Collateral Documents" means the Security Agreement, Mortgages, Patent
Agreement, Trademark Agreement and all other mortgages, deeds of trust, security
agreements, assignments, financing statements and other documents as shall from
time to time secure the Obligations.
"Company" is defined in the introductory paragraph hereof.
"Controlled Group" means all members of a controlled group of corporations
and all trades and businesses (whether or not incorporated) under common control
which, together with the Company or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.
"Current Account" means an account receivable with terms requiring payment
within sixty (60) days of the original invoice date (which shall not be more
than five (5) days subsequent to the shipment date).
"Dated Jel-Sert Account" means an account receivable owing from Jel-Sert
with terms requiring payment in more than sixty (60), but not more than one
hundred twenty (120), days from the original invoice date (which shall not be
more than five (5) days subsequent to the shipment date).
-16-
"Default" means any event or condition the occurrence of which would, with
the passage of time or the giving of notice, or both, constitute an Event of
Default.
"Domestic Rate" means, for any day, the greater of (i) the rate of interest
announced by the Bank from time to time as its prime commercial rate, as in
effect on such day; and (ii) the sum of (x) the rate determined by the Bank to
be the average (rounded upwards, if necessary, to the next higher 1/100 of 1%)
of the rates per annum quoted to the Bank at approximately 10:00 a.m. (Chicago
time) (or as soon thereafter as is practicable) on such day (or, if such day is
not a Business Day, on the immediately preceding Business Day) by two or more
Federal funds brokers selected by the Bank for the sale to the Bank at face
value of Federal funds in an amount equal or comparable to the principal amount
owed to the Bank for which such rate is being determined, plus (y) 1/2 of 1%
(0.5%).
"EBITDA" means, with reference to any period, Net Income for such period
plus all amounts deducted in arriving at such Net Income amount in respect of
(i) Interest Expense for such period, plus (ii) federal, state and local income
taxes for such period, plus (iii) all amounts properly charged for depreciation
of fixed assets and amortization of intangible assets during such period on the
books of the Company and its Subsidiaries.
"Eligible Accounts" means all accounts receivable of the Company which the
Bank, in its reasonable judgment, deems to be Eligible Accounts; provided that
in no event shall an account receivable be deemed an Eligible Account unless all
representations and warranties set forth in the Collateral Documents with
respect to such account receivable are true and correct and such account
receivable:
(a) arises out of the sale by the Company of finished goods inventory
delivered to and accepted by, or out of the rendition by the Company of
services fully performed by the Company and accepted by, the account debtor
on such account receivable and such account receivable otherwise represents
a final sale;
(b) the account debtor on such account receivable is located within
the United States of America;
(c) is the valid, binding and legally enforceable obligation of the
account debtor obligated thereon and such account debtor is not (i) a
Subsidiary or an Affiliate of the Company, (ii) a shareholder, director,
officer or employee of the Company or any Subsidiary, (iii) the United
States of America, or any state or political subdivision thereof, or any
department, agency or instrumentality of any of the foregoing, unless the
Company has complied with the Assignment of Claims Act or any similar state
or local statute, as the case may be, to the satisfaction of the Bank, (iv)
a debtor under any proceeding under the United States Bankruptcy Code, as
amended, or any other comparable bankruptcy or insolvency law, or (v) an
assignor for the benefit of creditors;
(d) is not evidenced by an instrument or chattel paper unless the
same has been endorsed and delivered to the Bank;
-17-
(e) is an asset of the Company to which it has good and marketable
title, is freely assignable, and is subject to a perfected, first priority
Lien in favor of the Bank free and clear of any other Liens;
(f) is not owing from an account debtor who is also a creditor or
supplier of the Company (provided that if any such account debtor is also a
creditor or supplier of the company, the portion of such accounts
receivable of such account debtor in excess of the aggregate amount
outstanding on the obligations of the Company and its subsidiaries to such
account debtor and its affiliates shall not be deemed ineligible by reason
of the foregoing provisions of this clause (f)), is not subject to any
offset, counterclaim or other defense with respect thereto and, with
respect to said account receivable or the contract or purchase order out of
which the same arose, no surety bond was required or given in connection
therewith;
(g) is either a Current Account or a Dated Jel-Sert Account;
(h) if a Current Account, such account receivable is not unpaid more
than ninety (90) days after the date of the applicable original invoice and
is not more than sixty (60) days past due from the original due date of the
applicable original invoice; or, if a Dated Jel-Sert Account, such account
receivable is not more than thirty (30) days past due from the original due
date of the applicable original invoice and unpaid more than one hundred
fifty (150) days after the date of the applicable original invoice;
(i) is not owed by an account debtor who is obligated on accounts
receivable owed to the Company more than 25% of the aggregate unpaid
balance of which have been past due for longer than the relevant periods
specified in subsection (h) above unless the Bank has approved the
continued eligibility thereof;
(j) would not cause the total accounts receivable owing from any one
account debtor (other than the Major Customers) and its Affiliates to
exceed 10% of all Eligible Accounts;
(k) would not cause the total accounts receivable owing from any
Major Customer and its Affiliates to exceed 25% of all Eligible Accounts;
(l) would not cause the total accounts receivable owing from any one
account debtor and its Affiliates to exceed any credit limit established
for purposes of determining eligibility hereunder by the Bank in its
reasonable judgment for such account debtor and for which the Bank has
given the Company at least five (5) Business Day's prior notice of the
establishment of any such credit limit; and
(m) does not arise from a sale to an account debtor on a xxxx-and-
hold, guaranteed sale, sale-or-return, sale-on-approval, consignment or any
other repurchase or return basis.
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"Eligible Inventory" means all raw materials and finished goods inventory
of the Company (other than spare parts, subassemblies, adhesives, inks or
packaging, crating and supplies inventory) which the Bank, in its reasonable
judgment, deems to be Eligible Inventory; provided that in no event shall
inventory be deemed Eligible Inventory unless all representations and warranties
set forth in the Collateral Documents with respect to such inventory are true
and correct and such inventory:
(a) is an asset of the Company to which it has good and marketable
title, is freely assignable, and is subject to a perfected, first priority
Lien in favor of the Bank free and clear of any other Liens;
(b) is located at the Company's facilities in San Leandro, California
or Akron, Ohio or DeSoto, Kansas or Raleigh, North Carolina or such other
locations as are approved in writing by the Bank and, in the case of
facilities owned by the Company subject to a mortgage or deed of trust or
facilities not owned by the Company, which are at times subject to mortgage
and/or landlord waiver agreements in form and substance satisfactory to the
Bank;
(c) is not so identified to a contract to sell that it constitutes an
account;
(d) is not obsolete or slow moving, and is of good and merchantable
quality free from any defects which might adversely affect the market value
thereof; and
(e) in the case of finished goods inventory, was produced pursuant to
binding and existing purchase orders therefor to which the Company has
title (provided that finished goods inventory consisting of flexible
packaging shall not be deemed ineligible by virtue of this clause (e) to
the extent the same constitutes a customary production overrun not more
than 10% in excess of the amount of such goods produced pursuant to
purchase orders as aforesaid).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute thereto.
"Event of Default" means any event or condition identified as such in
Section 9.1 hereof.
"GAAP" means generally accepted accounting principles as in effect from
time to time, applied by the Company and its Subsidiaries on a basis consistent
with the preparation of the Company's most recent financial statements furnished
to the Bank pursuant to Section 6.5 hereof.
"Indebtedness for Borrowed Money" means for any Person (without
duplication) (i) all indebtedness created, assumed or incurred in any manner by
such Person representing money borrowed (including by the issuance of debt
securities), (ii) all indebtedness for the deferred purchase price of property
or services (other than trade accounts payable arising in the ordinary course of
business which are not more than forty-five (45) days past due),
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(iii) all indebtedness secured by any Lien upon Property of such Person,
whether or not such Person has assumed or become liable for the payment of such
indebtedness, (iv) all Capitalized Lease Obligations of such Person, and (v) all
obligations of such Person on or with respect to letters of credit, bankers'
acceptances and other extensions of credit whether or not representing
obligations for borrowed money.
"Interest Expense" means, with reference to any period, the sum of all
interest charges (including imputed interest charges with respect to Capitalized
Lease Obligations and all amortization of debt discount and expense) of the
Company and its Subsidiaries for such period determined in accordance with GAAP.
"Interest Period" means, with respect to (a) any LIBOR Portion, the period
commencing on, as the case may be, the creation, continuation or conversion date
with respect to such LIBOR Portion and ending one (1), two (2) or three (3)
months thereafter as selected by the Company in its notice as provided herein;
provided that all of the foregoing provisions relating to Interest Periods are
subject to the following:
(i) if any Interest Period would otherwise end on a day which is not
a Business Day, that Interest Period shall be extended to the next
succeeding Business Day, unless in the case of an Interest Period for a
LIBOR Portion the result of such extension would be to carry such Interest
Period into another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(ii) no Interest Period may extend beyond the Termination Date;
(iii) the interest rate to be applicable to each Portion for each
Interest Period shall apply from and including the first day of such
Interest Period to but excluding the last day thereof; and
(iv) no Interest Period may be selected if after giving effect
thereto the Company will be unable to make a principal payment scheduled to
be made during such Interest Period without paying part of a LIBOR Portion
on a date other than the last day of the Interest Period applicable
thereto.
For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month and ending on a numerically corresponding day in
the next calendar month, provided, however, if an Interest Period begins on the
last day of a month or if there is no numerically corresponding day in the month
in which an Interest Period is to end, then such Interest Period shall end on
the last Business Day of such month.
"Letter of Credit" is defined in Section 1.3 hereof.
"LIBOR Portions" is defined in Section 2.1(a).
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"Lien" means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of any Property, including the interests of a
vendor or lessor under any conditional sale, Capital Lease or other title
retention arrangement.
"Loans" is defined in Section 1.2 hereof.
"Loan Documents" means this Agreement, the Revolving Credit Note, the
Applications, and the Collateral Documents.
"Major Customers" means such account debtors of the Company as the Bank
shall so designate from time to time in writing to and accepted by the Company.
"Merger" means the merger of Seal Acquisition Corporation, a Delaware
corporation, with and into Sealright Co., Inc., a Delaware corporation
("Sealright"), if such merger occurs as described in Sealright's June 9, 1998
Proxy Statement/Prospectus for such transaction.
"Mortgages" is defined in Section 4.1 hereof.
"Net Income" means, with reference to any period, the net income (or net
loss) of the Company and its Subsidiaries for such period as computed on a
consolidated basis in accordance with GAAP; provided, however, that there shall
be excluded from any determination of Net Income, all extraordinary gain or
extraordinary loss in each case attributable to the sale of discontinued
operations not relating to the Company's flexible packaging business.
"Obligations" means all obligations of the Company to pay principal and
interest on the Loans, all reimbursement obligations owing under the
Applications, all fees and charges payable hereunder, and all other payment
obligations of the Company arising under or in relation to any Loan Document, in
each case whether now existing or hereafter arising, due or to become due,
direct or indirect, absolute or contingent, and howsoever evidenced, held or
acquired.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.
"Patent Agreement" is defined in Section 4.1 hereof.
"Person" means an individual, partnership, corporation, association, trust,
unincorporated organization or any other entity or organization, including a
government or agency or political subdivision thereof.
"Plan" means any employee pension benefit plan covered by Title IV of ERISA
or subject to the minimum funding standards under Section 412 of the Code that
either (i) is maintained by a member of the Controlled Group for employees of a
member of the Controlled Group or (ii) is maintained pursuant to a collective
bargaining agreement or any
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other arrangement under which more than one employer makes contributions and to
which a member of the Controlled Group is then making or accruing an obligation
to make contributions or has within the preceding five plan years made
contributions.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Revolving Credit" is defined in Section 1.1 hereof.
"Revolving Credit Commitment" is defined in Section 1.1 hereof.
"Revolving Credit Note" is defined in Section 1.2 hereof.
"SEC" means the federal Securities and Exchange Commission, and any
successor thereto.
"Security Agreement" is defined in Section 4.1 hereof.
"Subsidiary" means any corporation or other Person more than 50% of the
outstanding ordinary voting shares or other equity interests of which is at the
time directly or indirectly owned by the Company, by one or more of its
Subsidiaries, or by the Company and one or more of its Subsidiaries.
"Tangible Net Worth" means, as of any time the same is to be determined,
the total shareholders' equity (including capital stock, additional paid-in-
capital and retained earnings after deducting treasury stock, but excluding
minority interests in Subsidiaries) which would appear on the balance sheet of
the Company and its Subsidiaries determined on a consolidated basis in
accordance with GAAP minus the sum of (i) all assets which would be classified
as intangible assets under GAAP, including, without limitation, goodwill,
patents, trademarks, trade names, copyrights, franchises and deferred charges
(including, without limitation, unamortized debt discount and expense,
organization costs and deferred research and development expense) and similar
assets and (ii) the write-up of assets above cost.
"Termination Date" means June 30, 2001, or such earlier date on which the
Revolving Credit Commitment is terminated in whole pursuant to Section 3.7, 9.2
or 9.3 hereof.
"Trademark Agreement" is defined in Section 4.1 hereof.
"Unfunded Vested Liabilities" means, for any Plan at any time, the amount
(if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent valuation
date for such Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA.
"Welfare Plan" means a "welfare plan" as defined in Section 3(1) of ERISA.
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"Wholly-Owned Subsidiary" means a Subsidiary of which all of the issued and
outstanding shares of capital stock (other than directors' qualifying shares as
required by law) or other equity interests are owned by the Company and/or one
or more Wholly-Owned Subsidiaries within the meaning of this definition.
Section 5.2. Interpretation. The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. The words
"hereof", "herein", and "hereunder" and words of like import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. All references to time of day herein are references
to Chicago, Illinois time unless otherwise specifically provided. Where the
character or amount of any asset or liability or item of income or expense is
required to be determined or any consolidation or other accounting computation
is required to be made for the purposes of this Agreement, it shall be done in
accordance with GAAP except where such principles are inconsistent with the
specific provisions of this Agreement.
Section 6. Representations and Warranties.
The Company represents and warrants to the Bank as follows:
Section 6.1. Organization and Qualification. The Company is duly
organized, validly existing and in good standing as a corporation under the laws
of the State of Delaware, has full and adequate corporate power to own its
Property and conduct its business as now conducted, and is duly licensed or
qualified and in good standing in each jurisdiction in which the failure to be
so licensed or qualified could have a material adverse effect on the financial
condition, Properties, business or operation of the Company or any Subsidiary.
Section 6.2. Subsidiaries. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated or organized, as the case may be, has full and adequate power to
own its Property and conduct its business as now conducted, and is duly licensed
or qualified and in good standing in each jurisdiction in which the failure to
be so licensed or qualified could have a material adverse effect on the
financial condition, Properties, business or operation of the Company or any
Subsidiary. Schedule 6.2 hereto identifies each Subsidiary, the jurisdiction of
its incorporation or organization, as the case may be, the percentage of issued
and outstanding shares of each class of its capital stock or other equity
interests owned by the Company and the Subsidiaries and, if such percentage is
not 100% (excluding directors' qualifying shares as required by law), a
description of each class of its authorized capital stock and other equity
interests and the number of shares of each class issued and outstanding. All of
the outstanding shares of capital stock and other equity interests of each
Subsidiary are validly issued and outstanding and fully paid and nonassessable
and all such shares and other equity interests indicated on Schedule 6.2 as
owned by the Company or a Subsidiary are owned, beneficially and of record, by
the Company or such Subsidiary free and clear of all Liens. There are no
outstanding commitments or other obligations of any Subsidiary to issue, and no
options,
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warrants or other rights of any Person to acquire, any shares of any class of
capital stock or other equity interests of any Subsidiary.
Section 6.3. Corporate Authority and Validity of Obligations. The Company
has full right and authority to enter into this Agreement and the other Loan
Documents, to make the borrowings herein provided for, to issue its Revolving
Credit Note in evidence thereof, to grant to the Bank the Liens described in the
Collateral Documents, and to perform all of its obligations hereunder and under
the other Loan Documents. The Loan Documents delivered by the Company have been
duly authorized, executed and delivered by the Company and constitute valid and
binding obligations of the Company enforceable in accordance with their terms
except as enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting creditors' rights generally and general
principles of equity (regardless of whether the application of such principles
is considered in a proceeding in equity or at law); and this Agreement and the
other Loan Documents do not, nor does the performance or observance by the
Company of any of the matters and things herein or therein provided for,
contravene or constitute a default under any provision of law or any judgment,
injunction, order or decree binding upon the Company or any provision of the
charter, articles of incorporation or by-laws of the Company or any covenant,
indenture or agreement of or affecting the Company or any of its Properties, or
result in the creation or imposition of any Lien on any Property of the Company.
Section 6.4. Use of Proceeds; Margin Stock. The Company shall use the
proceeds of the Loans and other extensions of credit made available hereunder
solely for its general working capital purposes and for such other legal and
proper purposes as are consistent with all applicable laws and the terms of this
Agreement. Neither the Company nor any Subsidiary is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any Loan or any other extension of
credit made hereunder will be used to purchase or carry any such margin stock or
to extend credit to others for the purpose of purchasing or carrying any such
margin stock.
Section 6.5. Financial Reports. The consolidated balance sheet of the
Company and its Subsidiaries as at December 31, 1997, and the related
consolidated statements of income retained earnings and cash flows of the
Company and its Subsidiaries for the fiscal year then ended, and accompanying
notes thereto, which financial statements are accompanied by the audit report of
KPMG Peat Marwick, independent public accountants, and the unaudited interim
consolidated balance sheet of the Company and its Subsidiaries as at March 31,
1998, and the related consolidated statements of income and cash flows of the
Company and its Subsidiaries for the three (3) months then ended, heretofore
furnished to the Lenders, fairly present the consolidated financial condition of
the Company and its Subsidiaries as at said dates and the consolidated results
of their operations and cash flows for the periods then ended in conformity with
generally accepted accounting principles applied on a consistent basis. Neither
the Company nor any Subsidiary has contingent liabilities which are material to
it other than as indicated on such financial statements or, with respect to
future periods, on the financial statements furnished pursuant to Section 8.5
hereof.
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Section 6.6. No Material Adverse Change. Since December 31, 1997, there has
been no change in the condition (financial or otherwise) or business prospects
of the Company or any Subsidiary except those occurring in the ordinary course
of business, none of which individually or in the aggregate have been materially
adverse.
Section 6.7. Full Disclosure. The statements and information furnished to
the Bank in connection with the negotiation of this Agreement and the other Loan
Documents and the commitment by the Bank to provide all or part of the financing
contemplated hereby do not contain any untrue statements of a material fact or
omit a material fact necessary to make the material statements contained herein
or therein not misleading, the Bank acknowledging that as to any projections
furnished to the Bank, the Company only represents that the same were prepared
on the basis of information and estimates the Company believed to be reasonable.
Section 6.8. Good Title. The Company and its Subsidiaries each have good
and defensible title to their assets as reflected on the most recent
consolidated balance sheet of the Company and its Subsidiaries furnished to the
Bank (except for sales of assets by the Company and its Subsidiaries in the
ordinary course of business), subject to no Liens other than such thereof as are
permitted by Section 8.11 hereof.
Section 6.9. Litigation and Other Controversies. There is no litigation or
governmental proceeding or labor controversy pending, nor to the knowledge of
the Company threatened, against the Company or any Subsidiary which if adversely
determined would (a) impair the validity or enforceability of, or impair the
ability of the Company to perform its obligations under, this Agreement or any
of the other Loan Documents or (b) result in any material adverse change in the
financial condition, Properties, business or operations of the Company or any
Subsidiary.
Section 6.10. Taxes. All tax returns required to be filed by the Company or
any Subsidiary in any jurisdiction have, in fact, been filed, and all taxes,
assessments, fees and other governmental charges upon the Company or any
Subsidiary or upon any of their respective Properties, income or franchises,
which are shown to be due and payable in such returns, have been paid. The
Company does not know of any proposed additional tax assessment against it or
its Subsidiaries for which adequate provision in accordance with GAAP has not
been made on its accounts. Adequate provisions in accordance with GAAP for taxes
on the books of the Company and each Subsidiary have been made for all open
years, and for its current fiscal period.
Section 6.11. Approvals. No authorization, consent, license, or exemption
from, or filing or registration with, any court or governmental department,
agency or instrumentality, nor any approval or consent of the stockholders of
the Company or any other Person, is or will be necessary to the valid execution,
delivery or performance by the Company of this Agreement or any other Loan
Document.
Section 6.12. Affiliate Transactions. Neither the Company nor any
Subsidiary is a party to any contracts or agreements with any of its Affiliates
(other than with Wholly-Owned Subsidiaries) on terms and conditions which are
less favorable to the Company or
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such Subsidiary than would be usual and customary in similar contracts or
agreements between Persons not affiliated with each other.
Section 6.13. Investment Company; Public Utility Holding Company. Neither
the Company nor any Subsidiary is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "public utility holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 6.14. ERISA. The Company and each other member of its Controlled
Group has fulfilled its obligations under the minimum funding standards of and
is in compliance in all material respects with ERISA and the Code to the extent
applicable to it and has not incurred any liability to the PBGC other than a
liability to the PBGC for premiums under Section 4007 of ERISA. Neither the
Company nor any Subsidiary has any contingent liabilities with respect to any
post-retirement benefits under a Welfare Plan, other than liability for
continuation coverage described in article 6 of Title I of ERISA.
Section 6.15. Compliance with Laws. The Company and its Subsidiaries each
are in compliance with the requirements of all federal, state and local laws,
rules and regulations applicable to or pertaining to their Properties or
business operations (including, without limitation, the Occupational Safety and
Health Act of 1970, the Americans with Disabilities Act of 1990, and laws and
regulations establishing quality criteria and standards for air, water, land and
toxic or hazardous wastes and substances), non-compliance with which could have
a material adverse effect on the financial condition, Properties, business or
operations of the Company or any Subsidiary. Neither the Company nor any
Subsidiary has received notice to the effect that its operations are not in
compliance with any of the requirements of applicable federal, state or local
environmental, health and safety statutes and regulations or are the subject of
any governmental investigation evaluating whether any remedial action is needed
to respond to a release of any toxic or hazardous waste or substance into the
environment, which non-compliance or remedial action could have a material
adverse effect on the financial condition, Properties, business or operations of
the Company or any Subsidiary.
Section 6.16. Other Agreements. Neither the Company nor any Subsidiary is
in default under the terms of any covenant, indenture or agreement of or
affecting the Company, any Subsidiary or any of their Properties, which default,
if uncured, would have a material adverse effect on the financial condition,
Properties, business or operations of the Company or any Subsidiary.
Section 6.17. No Default. No Default or Event of Default has occurred and
is continuing.
Section 7. Conditions Precedent.
The obligation of the Bank to make any Loan or to issue any Letter of
Credit under this Agreement is subject to the following conditions precedent:
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Section 7.1. All Advances. As of the time of the making of each extension
of credit (including the initial extension of credit) hereunder:
(a) each of the representations and warranties set forth in Section
6 hereof and in the other Loan Documents shall be true and correct as of
such time, except to the extent the same expressly relate to an earlier
date;
(b) the Company shall be in full compliance with all of the terms
and conditions of this Agreement and of the other Loan Documents, and no
Default or Event of Default shall have occurred and be continuing or would
occur as a result of making any such extension of credit;
(c) in the case of any request for an extension of credit under the
Revolving Credit, after giving effect to such extension of credit the
aggregate principal amount of all Loans and Letters of Credit outstanding
under this Agreement shall not exceed the lesser of (i) the Revolving
Credit Commitment and (ii) the Available Borrowing Base;
(d) in the case of the issuance of any Letter of Credit, the Bank
shall have received a properly completed Application therefor together with
the fees called for hereby; and
(e) such extension of credit shall not violate any order, judgment
or decree of any court or other authority or any provision of law or
regulation applicable to the Bank (including, without limitation,
Regulation U of the Board of Governors of the Federal Reserve System) as
then in effect.
The Company's request for any Loan or Letter of Credit shall constitute its
warranty as to the facts set forth in subsections (a) through (e), both
inclusive, above.
Section 7.2. Initial Advance. At or prior to the making of the
initial extension of credit hereunder, the following conditions precedent shall
also have been satisfied:
(a) the Bank shall have received the following (each to be properly
executed and completed) and the same shall have been approved as to form
and substance by the Bank:
(i) the Revolving Credit Note;
(ii) the Collateral Documents, including the lockbox agreement
required pursuant to Section 4.2 hereof together with any financing
statements requested by the Bank in connection with the Collateral
Documents;
(iii) copies (executed or certified, as may be appropriate)
of all legal documents or proceedings taken in connection with the
execution and delivery
-27-
of this Agreement and the other Loan Documents to the extent the Bank or
its counsel may reasonably request;
(iv) an incumbency certificate containing the name, title and
genuine signatures of each of the Company's Authorized Representatives;
(v) evidence of insurance required by Section 8.4 hereof; and
(vi) except to the extent waived in writing by the Bank, landlords'
lien waivers in connection with the Property of the Company located in
leased premises;
(b) the Bank shall have received the initial fees called for hereby;
(c) the Bank shall have received such valuations and certifications as it
may require in order to satisfy itself as to the value of the Collateral, the
financial condition of the Company and its Subsidiaries, and the lack of
material contingent liabilities of the Company and its Subsidiaries;
(d) legal matters incident to the execution and delivery of this Agreement
and the other Loan Documents and to the transactions contemplated hereby and
thereby shall be satisfactory to the Bank and its counsel; and the Bank shall
have received the favorable written opinion of counsel for the Company in form
and substance satisfactory to the Bank and its counsel;
(e) the Bank shall have received a Borrowing Base certificate in the form
attached hereto as Exhibit C showing the computation of the Borrowing Base in
reasonable detail as of the close of business not earlier than the close of the
most recently completed calendar week prior to the making of the initial
extension of credit hereunder; and showing, among other things, Availability of
at least $4,500,000;
(f) the Merger shall have occurred and the Bank shall have received
assurances satisfactory to it of the foregoing;
(g) the Bank shall have received a good standing certificate for the
Company (dated as of the date no earlier than thirty (30) days prior to the date
hereof) from the office of the secretary of state of the state of its
incorporation and each state in which it is qualified to do business as a
foreign corporation;
(h) the Liens granted to the Bank under the Collateral Documents shall
have been perfected in a manner satisfactory to the Bank and its counsel;
(i) the Bank shall have received a title insurance policy in the amount of
$2,950,000 and issued by Xxxxxxx Title Insurance Company or another title
company to be approved by the Bank (or a binding commitment therefor) on each
parcel of real
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property subject to the Lien of the California Trust Deed together with
such endorsements thereto as the Bank requests;
(j) the Bank shall have received fixed-asset appraisals on the
equipment of the Company performed by valuation consultants acceptable to
the Bank;
(k) the Bank shall have reasonably satisfied itself concerning the
environmental hazards and matters with respect to each parcel of real
property;
(l) the Bank shall have received such other agreements, instruments,
documents, certificates and opinions as the Bank may reasonably request.
Section 7.3. Surveys. No later than August 31, 1998, the Company shall
have furnished the Bank an ALTA survey prepared by a licensed surveyor on each
parcel of real property subject to the Liens of the Mortgages (which surveys
shall also state whether or not any portion of the real property is in a
federally designated flood hazard area). The Company's failure to furnish the
Bank any such survey by such deadline shall constitute an Event of Default
hereunder.
Section 7.4. Ohio Title. No later than September 30, 1998, (i) the Bank
shall have received a title insurance policy in the amount of $2,000,000 and
issued by Xxxxxxx Title Insurance Company or another title company to be
approved by the Bank (or a binding commitment therefor) on each parcel of real
property purported to be subject to the Lien of the Ohio Mortgage together with
such endorsements thereto as the Bank requests, which policy shows the Company
owns fee simple title to each parcel of such real property subject to no
exceptions to or defects in title other than those which are reasonably
acceptable to the Bank and which insures the validity and priority of the Ohio
Mortgage as a first Lien against such property with an effective date no earlier
than the date of the transfer to the Company from the County of Summit, Ohio
contemplated by Section 4.4 hereof and (ii) the Company shall take such action
and execute such instruments and documents as the Bank shall reasonably require
to confirm and assure that the Lien of the Ohio Mortgage encumbers fee simple
title to each parcel of the real property purported to be subject to the Lien
thereof.
Section 8. Covenants.
The Company agrees that, so long as any credit is available to or in use by
the Company hereunder, except to the extent compliance in any case or cases is
waived in writing by the Bank:
Section 8.1. Maintenance of Business. The Company shall, and shall cause
each Subsidiary to, preserve and maintain its existence. The Company shall, and
shall cause each Subsidiary to, preserve and keep in force and effect all
licenses, permits and franchises necessary to the proper conduct of its
business.
Section 8.2. Maintenance of Properties. The Company shall maintain,
preserve and keep its property, plant and equipment in good repair, working
order and condition
-29-
(ordinary wear and tear excepted) and shall from time to time make all needful
and proper repairs, renewals, replacements, additions and betterments thereto so
that at all times the efficiency thereof shall be fully preserved and
maintained, and shall cause each Subsidiary to do so in respect of property,
plant and equipment owned or used by it.
Section 8.3. Taxes and Assessments. The Company shall duly pay and
discharge, and shall cause each Subsidiary to duly pay and discharge, all taxes,
rates, assessments, fees and governmental charges upon or against it or its
Properties, in each case before the same become delinquent and before penalties
accrue thereon, unless and to the extent that the same are being contested in
good faith and by appropriate proceedings which prevent enforcement of the
matter under contest and adequate reserves are provided therefor.
Section 8.4. Insurance. The Company shall insure and keep insured, and
shall cause each Subsidiary to insure and keep insured, with good and
responsible insurance companies, all insurable Property owned by it which is of
a character usually insured by Persons similarly situated and operating like
Properties against loss or damage from such hazards and risks, and in such
amounts, as are insured by Persons similarly situated and operating like
Properties; and the Company shall insure, and shall cause each Subsidiary to
insure, such other hazards and risks (including employers' and public liability
risks) with good and responsible insurance companies as and to the extent
usually insured by Persons similarly situated and conducting similar businesses.
The Company shall in any event maintain insurance on the Collateral to the
extent required by the Collateral Documents. The Company shall upon request
furnish to the Bank a certificate setting forth in summary form the nature and
extent of the insurance maintained pursuant to this Section.
Section 8.5. Financial Reports. The Company shall, and shall cause each
Subsidiary to, maintain a standard system of accounting in accordance with GAAP
and shall furnish to the Bank and its duly authorized representatives such
information respecting the business and financial condition of the Company and
its Subsidiaries as the Bank may reasonably request; and without any request,
shall furnish to the Bank:
(a) as soon as available, and in any event no later than the last
Business Day of each calendar week, a Borrowing Base certificate in the
form attached hereto as Exhibit B showing the computation of the Borrowing
Base in reasonable detail as of the close of business on the last day of
the immediately preceding week, together with such other information as is
therein required, prepared by the Company and certified to by the President
or chief financial officer of the Company (provided, however, if and so
long as Availability has been $2,500,000 or greater at all times since the
beginning of the then most recently completed calendar week, then the
Company need not furnish the Bank a Borrowing Base certificate for such
week's close, but shall instead furnish the Bank as soon as available, and
in any event no later than five (5) days after the last day of the month in
which such week was completed, a Borrowing Base certificate showing the
computation of the Borrowing Base as of the close of business on the last
day of such month);
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(b) as soon as available, and in any event within thirty (30) days
after the close of each monthly accounting period of the Company, a copy of
the consolidated and consolidating balance sheet of the Company and its
Subsidiaries as of the last day of such monthly accounting period and the
consolidated and the consolidating statements of income, retained earnings
and cash flows of the Company and its Subsidiaries for the month and for
the fiscal year-to-date period then ended, each in reasonable detail
showing in comparative form the figures for the corresponding date and
period in the previous fiscal year as well as showing in comparative form
the year-to-date comparisons to the Company's current business plan,
prepared by the Company in accordance with GAAP (but without requisite
notes commonly associated with year-end financial statements) and certified
to by the President or chief financial officer of the Company;
(c) within the period provided in subsection (b) above, an accounts
receivable aging and accounts payable listing together with an inventory
report, each in reasonable detail prepared by the Company and certified to
by the President or chief financial officer of the Company;
(d) as soon as available, and in any event within one hundred twenty
(120) days after the last day of each annual accounting period of the
Company, a copy of the consolidated and consolidating balance sheet of the
Company and its Subsidiaries as of the close of such period and the
consolidated and consolidating statements of income, retained earnings and
cash flows of the Company and its Subsidiaries for the period then ended,
and accompanying notes thereto, each in reasonable detail showing in
comparative form the figures for the previous fiscal year, accompanied by
an unqualified opinion thereon of KPMG Peat Marwick or another firm of
independent public accountants of recognized national standing, selected by
the Company and satisfactory to the Bank, to the effect that the financial
statements have been prepared in accordance with GAAP and present fairly in
accordance with GAAP the consolidated financial condition of the Company
and its Subsidiaries as of the close of such fiscal year and the results of
their operations and cash flows for the fiscal year then ended and that an
examination of such accounts in connection with such financial statements
has been made in accordance with generally accepted auditing standards and,
accordingly, such examination included such tests of the accounting records
and such other auditing procedures as were considered necessary in the
circumstances;
(e) within the period provided in subsection (d) above, the written
statement of the accountants who certified the audit report thereby
required that in the course of their audit they have obtained no knowledge
of any Default or Event of Default, or, if such accountants have obtained
knowledge of any such Default or Event of Default, they shall disclose in
such statement the nature and period of the existence thereof;
(f) promptly after receipt thereof, any additional written reports,
management letters or other detailed information contained in writing
concerning significant aspects of the Company's or any Subsidiary's
operations and financial affairs given to it by its independent public
accountants;
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(g) promptly after the sending or filing thereof, copies of all proxy
statements, financial statements and reports the Company sends generally to
its shareholders, and copies of all other regular, periodic and special
reports and all registration statements the Company files with the SEC or
any successor thereto (including without limitation Forms 10-Q and 10-K),
or with any national securities exchanges;
(h) as soon as available, and in any event within thirty (30) days
prior to the end of each fiscal year of the Company, a copy of the
Company's consolidated and consolidating business plan for the following
fiscal year, such business plan to show the Company's projected
consolidated and consolidating revenues, expenses, and balance sheet on
month-by-month basis in reasonable detail, prepared by the Company and in
form reasonably satisfactory to the Bank; and
(i) promptly after knowledge thereof shall have come to the attention
of any responsible officer of the Company, written notice of any threatened
or pending litigation or governmental proceeding or labor controversy
against the Company or any Subsidiary which, if adversely determined, would
materially and adversely affect the financial condition, Properties,
business or operations of the Company or any Subsidiary or of the
occurrence of any Default or Event of Default hereunder.
Each of the financial statements furnished to the Bank pursuant to subsections
(b) and (d) of this Section 8.5 shall be accompanied by a written certificate in
the form attached hereto as Exhibit C signed by the President or chief financial
officer of the Company to the effect that to the best of such officer's
knowledge and belief no Default or Event of Default has occurred during the
period covered by such statements or, if any such Default or Event of Default
has occurred during such period, setting forth a description of such Default or
Event of Default and specifying the action, if any, taken by the Company to
remedy the same. Such certificate shall also set forth the calculations
supporting such statements in respect of Sections 8.7, 8.8 and 8.9 of this
Agreement.
Section 8.6. Inspection; Appraisals. The Company shall, and shall cause
each Subsidiary to, permit the Bank and its duly authorized representatives and
agents to visit and inspect any of the Properties, corporate books and financial
records of the Company and each Subsidiary, to examine and make copies of the
books of accounts and other financial records of the Company and each
Subsidiary, and to discuss the affairs, finances and accounts of the Company and
each Subsidiary with, and to be advised as to the same by, its officers,
employees and independent public accountants (and by this provision the Company
authorizes such accountants to discuss with the Bank the finances and affairs of
the Company and of each Subsidiary) at such reasonable times and reasonable
intervals as the Bank may designate. The Bank may obtain (or direct the Company
to obtain and provide to the Bank) updated appraisals on the Company's fixed
assets (including its equipment and/or real property), or portion thereof, from
time to time as the Bank may designate, which appraisal reports shall in each
case be prepared by an appraiser acceptable to the Bank and be in such format
and contain such detail as the Bank may reasonably request. The costs and
expenses incurred in obtaining any such appraisal shall in each case be borne by
the Company
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(whether obtained by the Bank or by the Company), provided that prior to the
occurrence of a Default or Event of Default, the Company shall not be required
to pay for more than one appraisal of the Company's equipment per calendar year
and one appraisal of the Company's real property per calendar year. The Company
shall, at the Bank's request, provide, at the Company's expense, updated
environmental questionnaires concerning activities and conditions affecting the
real property owned, leased or operated by the Company or any of its
Subsidiaries and/or environmental reports prepared for the Bank by an
environmental consultant or an environmental engineering firm acceptable to the
Bank concerning any real property owned, leased or operated by the Company or
any of its Subsidiaries.
Section 8.7. Tangible Net Worth. The Company shall, at all times
during each of the periods specified below, maintain Tangible Net Worth at not
less than:
Tangible Net Worth
From and To and shall not be
including including less than:
The date hereof December 31, 1999 $38,000,000
January 1, 2000 At all times thereafter $40,000,000
Section 8.8. EBITDA. (a) Quarterly Test. The Company shall, as of the
last day of each calendar month ending during any one of the periods specified
below (commencing September 30, 1998), maintain EBITDA for the three calendar
months then ended of not less than:
From and To and EBITDA shall not be
including including less than:
9/30/98 12/15/98 $ 0
12/16/98 3/15/99 $ 500,000
3/16/99 6/15/99 $ 600,000
6/16/99 9/15/99 $ 700,000
9/16/99 12/15/99 $ 850,000
12/16/99 At all times thereafter $1,000,000
(b) Annual Test. The Company shall, as of December 31, 1999 and December
31, 2000, maintain EBITDA for the fiscal year of the Company ended on or about
such date of not less than $3,500,000 and $4,000,000, respectively.
Section 8.9. Capital Expenditures. The Company shall not, nor shall it
permit any Subsidiary to, expend or become obligated for capital expenditures
(as determined in accordance with GAAP) in an aggregate amount during any fiscal
year of the Company in excess of the amount set forth for such year below:
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FOR THE YEAR ENDING ON: CAPITAL EXPENDITURES
SHALL NOT BE MORE THAN:
12/31/98 $3,000,000
12/31/99 $3,500,000
12/31/00 $5,500,000
Section 8.10. Indebtedness for Borrowed Money. The Company shall not, nor
shall it permit any Subsidiary to, issue, incur, assume, create or have
outstanding any Indebtedness for Borrowed Money; provided, however, that the
foregoing shall not restrict nor operate to prevent:
(a) the Obligations of the Company owing to the Bank and other
indebtedness and obligations of the Company or any Subsidiary from time to
time owing to the Bank;
(b) purchase money indebtedness and Capitalized Lease Obligations
secured by Liens permitted by Section 8.11(e) hereof in an aggregate amount
not to exceed $500,000 at any one time outstanding; and
(c) unsecured indebtedness not otherwise permitted by this Section
aggregating not more than $50,000 at any one time outstanding.
Section 8.11. Liens. The Company shall not, nor shall it permit any
Subsidiary to, create, incur or permit to exist any Lien of any kind on any
Property owned by the Company or any Subsidiary; provided, however, that the
foregoing shall not apply to nor operate to prevent:
(a) Liens arising by statute in connection with worker's
compensation, unemployment insurance, old age benefits, social security
obligations, taxes, assessments, statutory obligations or other similar
charges, good faith cash deposits in connection with tenders, contracts or
leases to which the Company or any Subsidiary is a party or other cash
deposits required to be made in the ordinary course of business, provided
in each case that the obligation is not for borrowed money and that the
obligation secured is not overdue or, if overdue, is being contested in
good faith by appropriate proceedings which prevent enforcement of the
matter under contest and adequate reserves have been established therefor;
(b) mechanics', workmen's, materialmen's, landlords', carriers', or
other similar Liens arising in the ordinary course of business with respect
to obligations which are not due or which are being contested in good faith
by appropriate proceedings which prevent enforcement of the matter under
contest;
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(c) the pledge of assets for the purpose of securing an appeal, stay
or discharge in the course of any legal proceeding, provided that the
aggregate amount of liabilities of the Company and its Subsidiaries secured
by a pledge of assets permitted under this subsection, including interest
and penalties thereon, if any, shall not be in excess of $100,000 at any
one time outstanding;
(d) the Liens granted in favor of the Bank by the Collateral
Documents;
(e) Liens on property of the Company or any of its Subsidiaries
created solely for the purpose of securing indebtedness permitted by
Section 8.10(b) hereof, representing or incurred to finance, refinance or
refund the purchase price of Property, provided that no such Lien shall
extend to or cover other Property of the Company or such Subsidiary other
than the respective Property so acquired, and the principal amount of
indebtedness secured by any such Lien shall at no time exceed the original
purchase price of such Property;
(f) Liens created by judgments which do not constitute an event of
default under Section 9.1(h) hereof;
(g) survey exceptions or encumbrances, easements or reservations, or
rights of others for rights-of-way, utilities and other similar purposes,
or rights of lessors or sublessors of real property leased by the Company
or any Subsidiary, or zoning or other restrictions as to the use of real
properties which are necessary for the conduct of the activities of the
Company and any Subsidiary of the Company or which customarily exist on
properties of corporations engaged in similar activities and similarly
situated and which do not in any event materially impair their use in the
operation of the business of the Company or any Subsidiary of the Company;
and
(h) any Lien existing on any Property (other than receivables and
inventory) prior to the acquisition thereof by the Company or any
Subsidiary, provided that such Lien is not created in contemplation of or
in connection with such acquisition and the aggregate principal amount of
Indebtedness at any time outstanding, secured by such Liens, shall not
exceed $50,000.
Section 8.12. Investments, Acquisitions, Loans, Advances and Guaranties.
The Company shall not, nor shall it permit any Subsidiary to, directly or
indirectly, make, retain or have outstanding any investments (whether through
purchase of stock or obligations or otherwise) in, or loans or advances (other
than for travel advances and other similar cash advances made to employees in
the ordinary course of business) to, any other Person, or acquire all or any
substantial part of the assets or business of any other Person or division
thereof, or be or become liable as endorser, guarantor, surety or otherwise for
any debt, obligation or undertaking of any other Person, or otherwise agree to
provide funds for payment of the obligations of another, or supply funds thereto
or invest therein or otherwise assure a creditor of another against loss, or
apply for or become liable to the issuer of a letter of credit which supports an
obligation of another, or subordinate any claim or demand
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it may have to the claim or demand of any other Person; provided, however, that
the foregoing shall not apply to nor operate to prevent:
(a) investments in direct obligations of the United States of America
or of any agency or instrumentality thereof whose obligations constitute
full faith and credit obligations of the United States of America, provided
that any such obligations shall mature within one year of the date of
issuance thereof;
(b) investments in commercial paper rated at least P-1 by Xxxxx'x
Investors Services, Inc. and at least A-1 by Standard & Poor's Corporation
maturing within 270 days of the date of issuance thereof;
(c) investments in certificates of deposit issued by any United
States commercial bank having capital and surplus of not less than
$100,000,000 which have a maturity of one year or less;
(d) endorsement of items for deposit or collection of commercial
paper received in the ordinary course of business; and
(e) investments, loans, advances and guaranties not otherwise
permitted by this Section aggregating not more than $50,000 at any one time
outstanding.
In determining the amount of investments, acquisitions, loans, advances and
guarantees permitted under this Section 8.12, investments and acquisitions shall
always be taken at the original cost thereof (regardless of any subsequent
appreciation or depreciation therein), loans and advances shall be taken at the
principal amount thereof then remaining unpaid, and guarantees shall be taken at
the amount of obligations guaranteed thereby.
Section 8.13. Mergers, Consolidations and Sales. The Company shall not,
nor shall it permit any Subsidiary to, be a party to any merger or
consolidation, or sell, transfer, lease or otherwise dispose of all or any
substantial part of its Property, including any disposition of Property as part
of a sale and leaseback transaction, or in any event sell or discount (with or
without recourse) any of its notes or accounts receivable; provided, however,
that this Section shall not apply to nor operate to prevent the Company or any
Subsidiary from selling its inventory in the ordinary course of its business.
Any sale, transfer, lease or other disposition of more than five percent (5%) of
the Company's total assets shall be deemed "substantial" for purposes of this
Section.
Section 8.14. Maintenance of Subsidiaries. The Company shall not assign,
sell or transfer, or permit any Subsidiary to issue, assign, sell or transfer,
any shares of capital stock of a Subsidiary; provided that the foregoing shall
not operate to prevent the issuance, sale and transfer to any person of any
shares of capital stock of a Subsidiary solely for the purpose of qualifying,
and to the extent legally necessary to qualify, such person as a director of
such Subsidiary.
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Section 8.15. Dividends and Certain Other Restricted Payments. The
Company shall not during any fiscal year (a) declare or pay any dividends on or
make any other distributions in respect of any class or series of its capital
stock (other than dividends payable solely in its capital stock) or (b) directly
or indirectly purchase, redeem or otherwise acquire or retire any of its capital
stock; provided, however, that the Company may expend up to $200,000 to redeem
fractional shares resulting from the exchange of stock occurring pursuant to an
Agreement and Plan of Merger dated as of March 2, 1998, which provides for,
among other things, the partial redemption of common stock of Sealright Co.,
Inc. ("Sealright") which will be converted into the right of the shareholders of
Sealright to receive a certain amount of cash and one-half share of common stock
of the Company.
Section 8.16. ERISA. The Company shall, and shall cause each Subsidiary
to, promptly pay and discharge all obligations and liabilities arising under
ERISA of a character which if unpaid or unperformed might result in the
imposition of a Lien against any of its Properties. The Company shall, and shall
cause each Subsidiary to, promptly notify the Bank of (i) the occurrence of any
reportable event (as defined in ERISA) with respect to a Plan, (ii) receipt of
any notice from the PBGC of its intention to seek termination of any Plan or
appointment of a trustee therefor, (iii) its intention to terminate or withdraw
from any Plan, and (iv) the occurrence of any event with respect to any Plan
which would result in the incurrence by the Company or any Subsidiary of any
material liability, fine or penalty, or any material increase in the contingent
liability of the Company or any Subsidiary with respect to any post-retirement
Welfare Plan benefit.
Section 8.17. Compliance with Laws. The Company shall, and shall cause
each Subsidiary to, comply in all respects with the requirements of all federal,
state and local laws, rules, regulations, ordinances and orders applicable to or
pertaining to their Properties or business operations, non-compliance with which
could have a material adverse effect on the financial condition, Properties,
business or operations of the Company or any Subsidiary or could result in a
Lien upon any of their Property.
Section 8.18. Burdensome Contracts With Affiliates. The Company shall
not, nor shall it permit any Subsidiary to, enter into any contract, agreement
or business arrangement with any of its Affiliates on terms and conditions which
are less favorable to the Company or such Subsidiary than would be usual and
customary in similar contracts, agreements or business arrangements between
Persons not affiliated with each other.
Section 8.19. No Changes in Fiscal Year. Neither the Company nor any
Subsidiary shall change its fiscal year from its present basis without the prior
written consent of the Bank.
Section 8.20. Formation of Subsidiaries. Except for existing Subsidiaries
designated on Schedule 6.2 hereto, the Company shall not, nor shall it permit
any Subsidiary to, form or acquire any Subsidiary without the prior written
consent of the Bank.
Section 8.21. Change in the Nature of Business. The Company shall not,
and shall not permit any Subsidiary to, engage in any business or activity if as
a result the general nature
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of the business of the Company or any Subsidiary would be changed in any
material respect from the general nature of the business engaged in by the
Company or such Subsidiary on the date of this Agreement. Without limiting the
generality of the foregoing, the Company shall cause Venture Packaging, Inc. to
remain inactive until such Subsidiary is dissolved.
Section 9. Events of Default and Remedies.
Section 9.1. Events of Default. Any one or more of the following shall
constitute an "Event of Default" hereunder:
(a) default in the payment when due of all or any part of any
Obligation payable by the Company hereunder or under any other Loan
Document (whether at the stated maturity thereof or at any other time
provided for in this Agreement), or default shall occur in the payment when
due of any other indebtedness or obligation (whether direct, contingent or
otherwise) of the Company owing to the Bank; or
(b) default in the observance or performance of any covenant set
forth in Sections 8.5 or 8.7 hereof which is not remedied within ten (10)
days after the earlier of (i) the date on which such failure shall first
become known to any officer of the Company or (ii) written notice thereof
is given to the Company by the Bank; or
(c) default in the observance or performance of any covenant set
forth in Sections 8.7, 8.8, 8.9, 8.10, 8.11, 8.12, 8.13, 8.14 or 8.15
hereof or of any provision of any Loan Document requiring the maintenance
of insurance on the Collateral subject thereto or dealing with the use or
remittance of proceeds of Collateral; or
(d) default in the observance or performance of any other provision
hereof or of any other Loan Document which is not remedied within thirty
(30) days after the earlier of (i) the date on which such failure shall
first become known to any officer of the Company or (ii) written notice
thereof is given to the Company by the Bank; or
(e) any representation or warranty made by the Company herein or in
any other Loan Document, or in any statement or certificate furnished by it
pursuant hereto or thereto, or in connection with any extension of credit
made hereunder, proves untrue in any material respect as of the date of the
issuance or making thereof; or
(f) any event occurs or condition exists (other than those described
in subsections (a) through (e) above) which is specified as an event of
default under any of the other Loan Documents, or any of the Loan Documents
shall for any reason not be or shall cease to be in full force and effect,
or any of the Loan Documents is declared to be null and void, or any of the
Collateral Documents shall for any reason fail to create a valid and
perfected first priority Lien in favor of the Bank in any Collateral
purported to be covered thereby except as expressly permitted by the terms
thereof; or
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(g) default shall occur under any Indebtedness for Borrowed Money
issued, assumed or guaranteed by the Company or any Subsidiary, or under
any indenture, agreement or other instrument under which the same may be
issued, and such default shall continue for a period of time sufficient to
permit the acceleration of the maturity of any such Indebtedness for
Borrowed Money (whether or not such maturity is in fact accelerated), or
any such Indebtedness for Borrowed Money shall not be paid when due
(whether by lapse of time, acceleration or otherwise); or
(h) any judgment or judgments, writ or writs, or warrant or warrants
of attachment, or any similar process or processes in an aggregate amount
in excess of $250,000 shall be entered or filed against the Company or any
Subsidiary or against any of their Property and which remains unvacated,
unbonded, unstayed or unsatisfied for a period of thirty (30) days; or
(i) the Company or any member of its Controlled Group shall fail to
pay when due an amount or amounts aggregating in excess $100,000 which it
shall have become liable to pay to the PBGC or to a Plan under Title IV of
ERISA; or notice of intent to terminate a Plan or Plans having aggregate
Unfunded Vested Liabilities in excess of $100,000 (collectively, a
"Material Plan") shall be filed under Title IV of ERISA by the Company or
any other member of its Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any Material Plan or a proceeding shall be instituted by a
fiduciary of any Material Plan against the Company or any member of its
Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within thirty (30) days
thereafter; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Material Plan must be
terminated; or
(j) dissolution or termination of existence of the Company or any
Subsidiary; or
(k) there shall occur any material adverse change in the condition
(financial or otherwise) of the Company or any Subsidiary; or
(l) a Change of Control Event shall occur; or
(m) the Company or any Subsidiary shall (i) have entered
involuntarily against it an order for relief under the United States
Bankruptcy Code, as amended, (ii) not pay, or admit in writing its
inability to pay, its debts generally as they become due, (iii) make an
assignment for the benefit of creditors, (iv) apply for, seek, consent to,
or acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any substantial part of
its Property, (v) institute any proceeding seeking to have entered against
it an order for relief under the United States Bankruptcy Code, as amended,
to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it
or its debts under any law relating to bankruptcy, insolvency or
-39-
reorganization or relief of debtors or fail to file an answer or other
pleading denying the material allegations of any such proceeding filed
against it, (vi) take any corporate action in furtherance of any matter
described in parts (i) through (v) above, or (vii) fail to contest in good
faith any appointment or proceeding described in Section 9.1(n) hereof;
(n) a custodian, receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Company or any Subsidiary or any
substantial part of any of their Property, or a proceeding described in
Section 9.1(m)(v) shall be instituted against the Company or any
Subsidiary, and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 60 days.
Section 9.2. Non-Bankruptcy Defaults. When any Event of Default described
in subsection (a) through (l), both inclusive, of Section 9.1 has occurred and
is continuing, the Bank may, by notice to the Company, take one or more of the
following actions:
(a) terminate the obligation of the Bank to extend any further credit
hereunder on the date (which may be the date thereof) stated in such
notice;
(b) declare the principal of and the accrued interest on the
Revolving Credit Note to be forthwith due and payable and thereupon the
Revolving Credit Note, including both principal and interest and all fees,
charges and other Obligations payable hereunder and under the other Loan
Documents, shall be and become immediately due and payable without further
demand, presentment, protest or notice of any kind; and
(c) enforce any and all rights and remedies available to it under the
Loan Documents or applicable law.
Section 9.3. Bankruptcy Defaults. When any Event of Default described in
subsection (m) or (n) of Section 9.1 has occurred and is continuing, then the
Revolving Credit Note, including both principal and interest, and all fees,
charges and other Obligations payable hereunder and under the other Loan
Documents, shall immediately become due and payable without presentment, demand,
protest or notice of any kind, and the obligation of the Bank to extend further
credit pursuant to any of the terms hereof shall immediately terminate. In
addition, the Bank may exercise any and all remedies available to it under the
Loan Documents or applicable law.
Section 9.4. Collateral for Undrawn Letters of Credit. When any Event of
Default, other than an Event of Default described in subsections (m) or (n) of
Section 9.1, has occurred and is continuing, the Company shall, upon demand of
the Bank, and when any Event of Default described in subsections (m) or (n) of
Section 9.1 has occurred the Company shall, without notice or demand from the
Bank, immediately pay to the Bank the full amount of each Letter of Credit then
outstanding, the Company agreeing to immediately make such payment and
acknowledging and agreeing that the Bank would not have an adequate remedy at
law for failure of the Company to honor any such demand and that the
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Bank shall have the right to require the Company to specifically perform such
undertaking whether or not any draws have been made under any such Letters of
Credit.
Section 10. Miscellaneous.
Section 10.1. Non-Business Days. If any payment hereunder becomes due and
payable on a day which is not a Business Day, the due date of such payment shall
be extended to the next succeeding Business Day on which date such payment shall
be due and payable. In the case of any payment of principal falling due on a day
which is not a Business Day, interest on such principal amount shall continue to
accrue during such extension at the rate per annum then in effect, which accrued
amount shall be due and payable on the next scheduled date for the payment of
interest.
Section 10.2. No Waiver, Cumulative Remedies. No delay or failure on the
part of the Bank in the exercise of any power or right shall operate as a waiver
thereof or as an acquiescence in any default, nor shall any single or partial
exercise of any power or right preclude any other or further exercise thereof or
the exercise of any other power or right. The rights and remedies hereunder of
the Bank are cumulative to, and not exclusive of, any rights or remedies which
it would otherwise have.
Section 10.3. Amendments, Etc. No amendment, modification, termination or
waiver of any provision of this Agreement or of any other Loan Document, nor
consent to any departure by the Company therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Bank. No notice
to or demand on the Company in any case shall entitle the Company to any other
or further notice or demand in similar or other circumstances.
Section 10.4. Costs and Expenses; Environmental Indemnity. (a) The Company
agrees to pay on demand the costs and expenses of the Bank in connection with
the negotiation, preparation, execution and delivery of this Agreement and the
other Loan Documents and the other instruments and documents to be delivered
thereunder, and in connection with the recording and filing of any of the
foregoing as well as in connection with lien searches from time to time obtained
by the Bank in its administration of the credit facilities provided for herein,
and in connection with the transactions contemplated hereby or thereby, and in
connection with any consents hereunder and any waivers or amendments hereto or
thereto, including the fees and expenses of Messrs. Xxxxxxx and Xxxxxx, counsel
for the Bank, with respect to all of the foregoing (whether or not the
transactions contemplated hereby are consummated). The Company further agrees to
pay to the Bank or any other holder of the Obligations all costs and expenses
(including court costs and attorneys' fees), if any, incurred or paid by the
Bank or any other holder of the Obligations in connection with any Default or
Event of Default or in connection with the enforcement of this Agreement or any
other Loan Document or any other instrument or document delivered thereunder.
The Company further agrees to indemnify the Bank, and any security trustee, and
their respective directors, officers and employees, against all losses, claims,
damages, penalties, judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor, whether or not
the indemnified person is a party thereto)
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which any of them may pay or incur arising out of or relating to any Loan
Document or any of the transactions contemplated thereby or the direct or
indirect application or proposed application of the proceeds of any extension of
credit made available hereunder, other than those which arise from the gross
negligence or willful misconduct of the party claiming indemnification. The
Company, upon demand by the Bank at any time, shall reimburse the Bank for any
legal or other expenses incurred in connection with investigating or defending
against any of the foregoing except if the same is directly due to the gross
negligence or willful misconduct of the party to be indemnified. The obligations
of the Company under this Section 10.4 shall survive the termination of this
Agreement.
(b) The Company unconditionally agrees to forever indemnify, defend and
hold harmless, and covenants not to xxx for any claim for contribution against,
the Bank for any damages, costs, loss or expense, including without limitation,
response, remedial or removal costs, arising out of any of the following: (i)
any presence, release, threatened release or disposal of any hazardous or toxic
substance or petroleum by the Company or any Subsidiary or otherwise occurring
on or with respect to its property, (ii) the operation or violation of any
environmental law, whether federal, state, or local, and any regulations
promulgated thereunder, by the Company or any Subsidiary or otherwise occurring
on or with respect to its property, (iii) any claim for personal injury or
property damage in connection with the Company or any Subsidiary or otherwise
occurring on or with respect to its property, and (iv) the inaccuracy or breach
of any environmental representation, warranty or covenant by the Company or any
Subsidiary made herein or in any loan agreement, promissory note, mortgage, deed
of trust, security agreement or any other instrument or document evidencing or
securing any indebtedness, obligations or liabilities of the Company owing to
the Bank or setting forth terms and conditions applicable thereto or otherwise
relating thereto, except for damages arising from the Bank's willful misconduct
or gross negligence. This indemnification shall survive the payment and
satisfaction of all indebtedness, obligations and liabilities of the Company
owing to the Bank and the termination of this agreement, and shall remain in
force beyond the expiration of any applicable statute of limitations and payment
or satisfaction in full of any single claim under this indemnification. This
indemnification shall be binding upon the successors and assigns of the Company
and shall inure to the benefit of the Bank and its directors, officers,
employees, agents, and collateral trustees, and their successors and assigns.
Section 10.5. Documentary Taxes. The Company agrees to pay on demand any
documentary, stamp or similar taxes payable in respect of this Agreement or any
other Loan Document, including interest and penalties, in the event any such
taxes are assessed, irrespective of when such assessment is made and whether or
not any credit is then in use or available hereunder.
Section 10.6. Survival of Representations. All representations and
warranties made herein or in any of the other Loan Documents or in certificates
given pursuant hereto or thereto shall survive the execution and delivery of
this Agreement and the other Loan Documents, and shall continue in full force
and effect with respect to the date as of which they were made as long as any
credit is in use or available hereunder.
-42-
Section 10.7. Notices. Except as otherwise specified herein, all notices
hereunder shall be in writing (including cable, telecopy or telex) and shall be
given to the relevant party at its address, telecopier number or telex number
set forth below, or such other address, telecopier number or telex number as
such party may hereafter specify by notice to the other given by United States
certified or registered mail, by telecopy or by other telecommunication device
capable of creating a written record of such notice and its receipt. Notices
hereunder shall be addressed:
to the Company at:
JPS Packaging Company
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxx 00000
Attention: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
to the Bank at:
Xxxxxx Trust and Savings Bank
X.X. Xxx 000
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Commercial Finance Group
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Telex: 254157
Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section 10.7 and a confirmation of such telecopy has been
received by the sender, (ii) if given by telex, when such telex is transmitted
to the telex number specified in this Section 10.7 and the answerback is
received by sender, (iii) if given by mail, five (5) days after such
communication is deposited in the mail, certified or registered with return
receipt requested, addressed as aforesaid, or (iv) if given by any other means,
when delivered at the addresses specified in this Section 10.7; provided that
any notice given pursuant to Section 1 hereof shall be effective only upon
receipt.
Section 10.8. Participations. The Bank may grant participations in its
extensions of credit hereunder to any other bank or other lending institution (a
"Participant"), provided that (i) no Participant shall thereby acquire any
direct rights under this Agreement or the other Loan Documents and (ii) no sale
of such a participation in extensions of credit hereunder shall in any manner
relieve the Bank of its obligations hereunder.
Section 10.9. Construction. The provisions of this Agreement relating to
Subsidiaries shall only apply during such times as the Company has one or more
Subsidiaries. Nothing
-43-
contained herein shall be deemed or construed to permit any act or omission
which is prohibited by the terms of any of the other Loan Documents, the
covenants and agreements contained herein being in addition to and not in
substitution for the covenants and agreements contained in the other Loan
Documents.
Section 10.10. Headings. Section headings used in this Agreement are for
convenience of reference only and are not a part of this Agreement for any other
purpose.
Section 10.11. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 10.12. Counterparts. This Agreement may be executed in any number
of counterparts, and by different parties hereto on separate counterpart
signature pages, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.
Section 10.13. Binding Nature, Governing Law, Etc. This Agreement shall be
binding upon the Company and its successors and assigns, and shall inure to the
benefit of the Bank and the benefit of its successors and assigns, including any
subsequent holder of the Obligations. The Company may not assign its rights
hereunder without the written consent of the Bank. This Agreement constitutes
the entire understanding of the parties with respect to the subject matter
hereof and any prior agreements, whether written or oral, with respect thereto
are superseded hereby. This Agreement and the rights and duties of the parties
hereto shall be governed by, and construed in accordance with, the internal laws
of the State of Illinois without regard to principles of conflicts of laws.
Section 10.14. Submission to Jurisdiction; Waiver of Jury Trial. The
Company hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Northern District of Illinois and of any Illinois State
court sitting in the City of Chicago for purposes of all legal proceedings
arising out of or relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or thereby. The Company irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum. The Company and the Bank each hereby irrevocably waive
any and all right to trial by jury in any legal proceeding arising out of or
relating to any Loan Document or the transactions contemplated thereby.
-44-
Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall constitute a contract between us for the uses and purposes
hereinabove set forth.
Dated as of this 30th day of June, 1998.
JPS PACKAGING COMPANY
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
Accepted and agreed to in Chicago, Illinois as of the day and year last
above written.
XXXXXX TRUST AND SAVINGS BANK
By: /s/ Xxxxxxx X. Xxxx
----------------------------------
Name: Xxxxxxx X. Xxxx
-----------------------------
Title: Vice President
----------------------------
-45-
Exhibit A
JPS Packaging Company
Revolving Credit Note
Chicago, Illinois
$15,000,000 June 30, 1998
On the Termination Date, for value received, the undersigned, JPS Packaging
Company, a Delaware corporation (the "Company"), hereby promises to pay to the
order of Xxxxxx Trust And Savings Bank (the "Bank") at its office at 000 Xxxx
Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, the principal sum of (i) Fifteen Million and
no/100 Dollars ($15,000,000), or (ii) such lesser amount as may at the time of
the maturity hereof, whether by acceleration or otherwise, be the aggregate
unpaid principal amount of all Loans owing from the Company to the Bank under
the Revolving Credit provided for in the Credit Agreement hereinafter mentioned.
This Note evidences Loans made and to be made to the Company by the Bank
under the Revolving Credit provided for under that certain Credit Agreement
dated as of June 30, 1998 between the Company and the Bank (said Credit
Agreement, as the same may be amended, modified or restated from time to time,
being referred to herein as the "Credit Agreement"), and the Company hereby
promises to pay interest at the office specified above on each Loan evidenced
hereby at the rates and at the times and in the manner specified therefor in the
Credit Agreement.
Each Loan made against this Note and any repayment of principal hereon
shall be endorsed by the holder hereof on a schedule to this Note or recorded on
the books and records of the holder hereof (provided that such entries shall be
endorsed on a schedule to this Note prior to any negotiation hereof), and the
Company agrees that in any action or proceeding instituted to collect or enforce
collection of this Note, the entries endorsed on a schedule to this Note or
recorded on the books and records of the holder hereof shall be prima facie
evidence of the unpaid principal balance of this Note.
This Note is issued by the Company under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary prepayments
may be made hereon, and certain prepayments are required to be made hereon, all
in the events, on the terms and with the effects provided in the Credit
Agreement. All capitalized terms used herein without definition shall have the
same meanings herein as such terms are defined in the Credit Agreement.
-46-
The Company hereby promises to pay all costs and expenses (including
attorneys' fees) suffered or incurred by the holder hereof in collecting this
Note or enforcing any rights in any collateral therefor. The Company hereby
waives presentment for payment and demand. This Note shall be construed in
accordance with, and governed by, the internal laws of the State of Illinois
without regard to principles of conflicts of laws.
JPS PACKAGING COMPANY
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
-2-
Xxxxxx Bank
Exhibit B
Borrowing Base Certificate
Report Number Date
------------ -----------------
Total Approved Revolving Line $ Maximum Inventory Loan $
--------- ---------
======================================================================
Accounts Receivable Update
----------------------------------------------------------------------
Additions:
(A) New Sales (See Attached)
----------
(B) Miscellaneous (+)
----------
Total Gross Additions (2)
----------
Deductions:
(A) Collections (See Attached)
----------
(B) Discounts Allowed
----------
(C) Credit Memos
----------
(D) Miscellaneous (-)
----------
Total Gross Deductions (3)
----------
======================================================================
======================================================================
Loan Balance Update
----------------------------------------------------------------------
Loan Outstanding as of
-------
From Previous Report #
----------
Less Collections
----------
Additional Advance Requested
----------
New Loan Balance This Report
----------
Plus L/C or Other Reserves
----------
Total Loans and Other Liabilities
Carry to Line 12 ----------
======================================================================
=======================================================================================
COLLATERAL STATUS
---------------------------------------------------------------------------------------
Accounts Raw Matrl. Finished GDS.
Receivbl. Inventory Inventory
---------------------------------------------------------------------------------------
As of Date MM/DD/YY MM/DD/YY MM/DD/YY
-------- -------- --------
---------------------------------------------------------------------------------------
(1) Previous Collaterial
Balance
---------------------------------------------------------------------------------------
(2) + Additions
---------------------------------------------------------------------------------------
(3) - Collections/Deductions
---------------------------------------------------------------------------------------
(4) = New Collateral Balance
---------------------------------------------------------------------------------------
(5) Less Total Ineligibles
as of _______
---------------------------------------------------------------------------------------
(6) = Eligible Collateral
---------------------------------------------------------------------------------------
(7) x Rate of Advance 85% 60%* 50%*
---------------------------------------------------------------------------------------
(8) = Loan Value (A) (B) (C)
---------------------------------------------------------------------------------------
(9) Less $500,000 (D) ($500,000)
---------------------------------------------------------------------------------------
(10) Total Loan Value =
A/R + Inv - $500,000;
A + B + C - $500,000
---------------------------------------------------------------------------------------
(11) Maximum Borrowing Limit =
Less of Total Loan Value
OR Total Approved Revolving Line
---------------------------------------------------------------------------------------
(12) Less Total Loans and Other Liabilities
---------------------------------------------------------------------------------------
(13) NEW AVAILABILITY
(Line 11 minus 12)
=======================================================================================
Pursuant to the terms of the Credit Agreement dated as of June 30, 1998 between
us (the "Credit Agreement"), we submit this Borrowing Base Certificate to you
and certify that the information set forth above and on any attachments to this
Certificate is true, correct and complete as of the date of this Certificate.
Borrower: JPS Packaging Company
Authorized Signer:
---------------------------------
* An overall inventory cap on raw material and finished goods inventory of
$5,000,000.
EXHIBIT C
COMPLIANCE CERTIFICATE
This Compliance Certificate is furnished to Xxxxxx Trust and Savings Bank
(the "Bank") pursuant to that certain Credit Agreement dated as of June 30,
1998, by and between JPS Packaging Company (the "Company") and the Bank (the
"Credit Agreement"). Unless otherwise defined herein, the terms used in this
Compliance Certificate have the meanings ascribed thereto in the Credit
Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected ___________________ of the Company;
2. I have reviewed the terms of the Credit Agreement and I have made,
or have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Company and its Subsidiaries during the
accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or the occurrence of any
event which constitutes a Default or Event of Default during or at the end of
the accounting period covered by the attached financial statements or as of the
date of this Certificate, except as set forth below;
4. The financial statements required by Section 8.5 of the Credit
Agreement and being furnished to you concurrently with this certificate are, to
the best of my knowledge, true, correct and complete as of the dates and for the
periods covered thereby; and
5. The Attachment hereto sets forth financial data and computations
evidencing the Company's compliance with certain covenants of the Credit
Agreement, all of which data and computations, to the best of my knowledge,
fairly present the consolidated financial condition of the Company and its
Subsidiaries as at said dates and the consolidated results of their operations
and cash flows for the periods then ended in conformity with generally accepted
accounting principles applied on a consistent basis.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Company has taken, is taking, or proposes to
take with respect to each such condition or event:
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
The foregoing certifications, together with the computations set forth in
the Attachment hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this _________ day of
____________, 1998.
JPS PACKAGING COMPANY
By________________________________
Name:___________________________
Title:__________________________
-2-
ATTACHMENT TO COMPLIANCE CERTIFICATE
JPS PACKAGING COMPANY
Compliance Calculations for Credit Agreement
Dated as of June 30, 1998
Calculations as of _______________, 19__
--------------------------------------------------------------------------------
A. Tangible Net Worth (Section 8.7)
1. Total shareholder's equity $__________
A1
2. Sum of:
(i) intangibles $___________
(ii) write-up of assets $___________ $__________
A2
3. Line A1 minus Line A2 $
==========
(Tangible Net Worth) A3
4. Line A3 must be greater than or equal to $__________
B. EBITDA (Section 8.8)*
1. Net Income for past 3 months $__________
B1
2. Interest Expense for past 3 months $__________
B2
3. Federal, state and local income $__________
taxes for past 3 months B3
4. Depreciation and Amortization for past 3 months $__________
B4
----------------------
*EBITDA is also tested at 12/31/99 and 12/31/00 using the prior 12 month
periods.
5. Add Lines B1, B2, B3 and B4 $
(EBITDA) =========
B5
6. Line B5 must not be less than $
=========
C. Capital Expenditures (Section 8.9)
----------------------------------
1. Capital Expenditures for month $
---------
C1
2. Capital Expenditures fiscal year to date $
---------
C2
3. Line C2 must be less than or equal to $
---------
D. Indebtedness for Borrowed Money (Section 8.10)
----------------------------------------------
1. Purchase Money Indebtedness $
---------
D1
2. Capitalized Lease Obligations $
---------
D2
3. Add Lines D1 and D2 $
=========
D3
4. Line D3 must be less than or equal to $
---------
E. Operating Leases (Section 8.14)
-------------------------------
1. Operating Leases for month $
---------
E1
2. Operating Leases fiscal year to date $
---------
E2
3. Line E2 must be less than or equal to $
---------
-2-
SCHEDULE 6.2
SUBSIDIARIES
JURISDICTION OF PERCENTAGE
NAME INCORPORATION OWNERSHIP
Venture Packaging, Inc. North Carolina 100%
