CREDIT AGREEMENT
by and among
FIRST UNION NATIONAL BANK,
as Agent and Lender,
FLEET NATIONAL BANK,
as Lender,
and any additional Lenders from time to time party hereto,
and
XXXX CORPORATION,
as Borrower
December 21, 2001
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS........................................................1
1.1. Definitions.........................................................1
1.2. Rules of Construction..............................................12
ARTICLE 2 REVOLVING CREDIT FACILITY.........................................13
2.1. The Revolving Credit Facility...................................13
2.2. Promissory Notes................................................13
2.3. Lenders' Participation..........................................13
2.4. Use of Proceeds.................................................13
2.5. Repayment.......................................................14
2.6. Interest........................................................14
2.7. Advances........................................................16
2.8. Reduction and Termination of Commitment.........................17
2.9. Prepayment; Repayment...........................................18
2.10. Funding Costs; Loss of Earnings.................................18
2.11. Payments........................................................18
2.12. Commitment Fee..................................................18
2.13. Arrangement Fee.................................................18
2.14. Agent Fee.......................................................18
2.15. Regulatory Changes in Capital Requirements......................19
2.16. Withholding Taxes...............................................19
ARTICLE 3 LETTERS OF CREDIT.................................................19
3.1. Availability of Credits.........................................19
3.2. Commitment Availability.........................................20
3.3. Approval and Issuance...........................................20
3.4. Obligations of Borrower.........................................21
3.5. Payment by First Union on Letters of Credit.....................21
3.6. Collateral Security.............................................22
3.7. General Terms of Credits........................................22
ARTICLE 4 REPRESENTATIONS AND WARRANTIES....................................23
4.1. Organization and Good Standing..................................24
4.2. Power and Authority; Validity of Agreement......................24
4.3. No Violation of Laws or Agreements..............................24
4.4. Material Contracts..............................................24
4.5. Compliance......................................................24
4.6. Litigation......................................................24
4.7. Title to Assets.................................................24
4.8. Accuracy of Information; Full Disclosure........................25
4.9. Taxes and Assessments...........................................25
4.10. Indebtedness....................................................25
4.11. Investments; Subsidiaries.......................................25
4.12. ERISA...........................................................25
4.13. Fees and Commissions............................................26
4.14. No Extension of Credit for Securities...........................26
4.15. Hazardous Wastes, Substances and Petroleum Products.............26
4.16. Solvency........................................................26
4.17. Foreign Assets Control Regulations..............................27
4.18. Investment Company Act..........................................27
4.19. Public Utility Holding Company Act..............................27
ARTICLE 5 CONDITIONS........................................................27
5.1. First Advance...................................................27
5.2. Subsequent Advances and Issuances of Letters of Credit..........28
5.3. Additional Condition to Lenders' Obligations....................28
5.4. Additional Condition Relating to Permitted Acquisitions.........28
ARTICLE 6 AFFIRMATIVE COVENANTS.............................................29
6.1. Existence and Good Standing.....................................29
6.2. Financial Statements and Public Information.....................29
6.3. Compliance Certificate..........................................30
6.4. Books and Records...............................................30
6.5. Insurance.......................................................30
6.6. Compliance with Laws............................................30
6.7. Taxes...........................................................30
6.8. Costs and Expenses..............................................31
6.9. Notice of Certain Events........................................31
6.10. ERISA...........................................................31
6.11. Deposit Accounts................................................32
6.12. Minimum Net Worth...............................................32
6.13. Consolidated Capitalization Ratio...............................32
6.14. Funded Debt to EBITDA Ratio.....................................32
6.15. Fixed Charge Coverage Ratio.....................................32
6.16. Funded Debt to Borrowing Base Ratio.............................32
6.17. Subsequent Credit Terms.........................................32
6.18. Successor Agent.................................................33
6.19. Transactions Among Affiliates...................................33
6.20. Purchase Documents..............................................33
6.21. Performance of Obligations......................................33
6.22. Audits/Inspections..............................................33
6.23. Ownership of Subsidiaries.......................................33
6.24. Other Information...............................................33
ARTICLE 7 NEGATIVE COVENANTS................................................33
7.1. Indebtedness....................................................33
7.2. Guaranties......................................................34
7.3. Loans...........................................................34
7.4. Liens and Encumbrances..........................................34
7.5. Additional Negative Pledge......................................35
7.6. Restricted Payments.............................................35
7.7. Transfer of Assets; Liquidation.................................35
7.8. Acquisitions and Investments....................................36
7.9. Payments to Affiliates..........................................36
7.10. Use of Proceeds.................................................36
7.11. Governing Documents.............................................36
7.12. Change in Control...............................................36
7.13. Nature of Business..............................................36
7.14. Prepayment of Indebtedness......................................36
7.15. Fiscal Year.....................................................36
7.16. Issuance and Sale of Stock......................................37
7.17. Sale Leasebacks.................................................37
7.18. Operating Lease Obligations.....................................37
ARTICLE 8 DEFAULT...........................................................37
8.1. Events of Default...............................................37
8.2. Remedies........................................................38
8.3. Right of Setoff.................................................38
8.4. Remedies Cumulative; No Waiver..................................39
ARTICLE 9 LENDERS...........................................................39
9.1. Application of Payments.........................................39
9.2. Setoff..........................................................39
9.3. Modifications and Waivers.......................................39
9.4. Obligations Several.............................................40
9.5. Lenders' Representations........................................40
9.6. Investigation...................................................40
9.7. Powers of Agent.................................................40
9.8. General Duties of Agent, Immunity and Indemnity.................40
9.9. No Responsibility for Representations or Validity, etc..........40
9.10. Action on Instruction of Lenders; Right to Indemnity............40
9.11. Employment of Agents............................................41
9.12. Reliance on Documents...........................................41
9.13. Agent's Rights as a Lender......................................41
9.14. Expenses........................................................41
9.15. Resignation of Agent............................................41
9.16. Successor Agent.................................................41
9.17. Enforcement by Agent............................................41
ARTICLE 10 MISCELLANEOUS....................................................41
10.1. Indemnification and Release Provisions..........................41
10.2. Binding and Governing Law.......................................42
10.3. Survival........................................................42
10.4. No Waiver; Delay................................................42
10.5. Modification; Waiver; Assignment................................42
10.6. Headings........................................................42
10.7. Notices.........................................................42
10.8. Payment on Non-Business Days....................................43
10.9. Time of Day.....................................................43
10.10. Severability....................................................43
10.11. Counterparts....................................................44
10.12. Consent to Jurisdiction and Service of Process..................44
10.13. Arbitration.....................................................44
10.14. Preservation and Limitation of Remedies.........................44
10.15. Waiver of Jury Trial............................................45
10.16. Acknowledgements................................................45
LIST OF EXHIBITS
Exhibits
--------
Exhibit A: Form of Borrowing Base Certificate
Exhibit B: Form of Borrowing Notice
Exhibit C: Form of Revolving Credit Note
Exhibit D: Form of Compliance Certificate
Exhibit E: Form of LC Application
Exhibit F: Form of Guaranty Agreement
Schedules
---------
Schedule 4.11 Subsidiaries
Schedule 4.15 Environmental Disclosures
Schedule 7.2 Xxxx Corporation Guarantees
Schedule 7.4 Existing Liens
CREDIT AGREEMENT
This CREDIT AGREEMENT is made as of December 21, 2001, by and
among XXXX CORPORATION, a Pennsylvania corporation with offices at One Commerce
Square, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000 ("Borrower"), FIRST UNION
NATIONAL BANK, a national banking association with offices at 000 Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 ("First Union", and in its capacity as
agent hereunder, "Agent"), and FLEET NATIONAL BANK, a national banking
association, with offices at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx
00000 ("Fleet", and together with First Union each individually a "Lender" and
collectively the "Lenders", together with any additional Lenders from time to
time party hereto).
BACKGROUND
A. Borrower desires to obtain a revolving credit
facility in the maximum aggregate principal amount of $25,000,000 for the
purpose of providing for (a) general corporate purposes, working capital and to
support the issuance of documentary and standby letters of credit and (b)
acquisitions in the second and third years of the Revolving Credit Facility; and
B. The Lenders are willing to lend up to $25,000,000 to
Borrower, subject to the terms and conditions hereof;
In consideration of the foregoing background and the promises
and the agreements hereinafter set forth, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1. Definitions. When used in this Agreement, the following terms
shall have the respective meanings set forth below.
"Adjusted LMI" has the meaning set forth in Section
2.6(a)(i)(A) hereof.
"Adjusted Net Income" means, for any period, (a) Net Income
for such period plus (b) all expenses of Cost Base Reduction Activities deducted
in the determination of such Net Income, provided that the aggregate amount of
such expenses of Cost Base Reduction Activities counted in determining Adjusted
Net Income for all periods subsequent to the Graphics Sale Transaction shall be
limited to $3,000,000 for the Fiscal Year 2001 through Fiscal Year 2003.
"Advance" means a borrowing under the Commitment pursuant to
Section 2.7 hereof.
"Affiliate" means: (i) any Person who or entity which directly
or indirectly owns, controls or holds ten percent (10%) or more of the
outstanding beneficial interest in Borrower; (ii) any entity of which ten
percent (10%) or more of the outstanding beneficial interest is directly or
indirectly owned, controlled, or held by Borrower; (iii) any entity which
directly or indirectly is under common control with Borrower; (iv) any officer,
director or partner of Borrower or any Affiliate; or (v) any immediate family
member of any person who is an Affiliate. For purposes of this definition,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of an entity, whether
through the ownership of voting securities, by contract, or otherwise.
"Agent" means First Union National Bank, a national banking
association, in its capacity as agent for the Lenders hereunder, and its
successors and assigns in such capacity.
-2-
"Agreement" means this Credit Agreement and all exhibits and
schedules hereto, as each may be amended from time to time.
"Applicable Margin" means the amount set forth in the right
column, based on the ratio of Funded Debt to EBITDA set forth in the left
column:
Funded Debt to EBITDA Applicable Margin
--------------------- -----------------
Level 1 Less than 1.00x 1.75%
Level 2 1.00x to less than 1.75x 2.00%
Xxxxx 0 1.75x or above 2.25%
Changes in the Applicable Margin shall be based upon the Compliance Certificate
most recently delivered to the Agent pursuant to Section 6.2 hereof and shall
become effective on (a) as to any Compliance Certificate relating to one of the
first three fiscal quarters of the Borrower's fiscal year, the forty-fifth
(45th) day following the end of such fiscal quarter, and (b) as to any
Compliance Certificate delivered following the end of a fiscal year, the
ninetieth (90th) day following the end of such fiscal year; provided, however,
that (i) following the occurrence and during the continuance of any Event of
Default, the Applicable Margin shall be 2.25%, and (ii) the initial Applicable
Margin shall be 2.00%.
"Appraisals" means the appraisal dated November 5, 2001
prepared by Xxxxxxxx & Xxxxxxx, setting forth the aggregate value of the Fixed
Assets of Borrower, using an orderly liquidation value for machinery and
equipment and the appraisal dated October 30, 2001 prepared by Xxxxxxxxxxx,
Xxxxxxx Inc., setting forth the fair market value for the Borrower's real
property, each in form and substance satisfactory to the Lenders.
"Xxxxxx Family" means the wife, children and descendants of
such children of the late Xxxxxx X. Xxxxxx III, their respective spouses and
estates, any trusts primarily for the benefit of any of the foregoing and the
administrators, executors and trustees of any such estates or trusts.
"Borrower" means Xxxx Corporation, a Pennsylvania corporation,
and any successors or permitted assigns.
"Borrowing Base" means, as of the date of determination, the
sum of: (a) seventy percent (70%) of Eligible Accounts Receivable; (b) ninety
percent (90%) of CSVLI; (c) the lesser of (i) forty percent (40%) of Eligible
Inventory and (ii) $5,000,000; (d) seventy percent (70%) of the aggregate value
of Fixed Assets set forth in the Appraisals, such value being reduced by the
value (as set forth in the Appraisals) of any such Fixed Asset which was or
becomes, after the date hereof, sold, transferred, destroyed or obsolete or
otherwise ceases to maintain its functional use to the Borrower; and (e) eighty
percent (80%) of Unfinanced Capital Expenditures, such expenditures being
reduced by the amount of any such Unfinanced Capital Expenditure for which the
related Fixed Asset was or has become, sold, transferred, destroyed or obsolete
or otherwise ceases to maintain its functional use to the Borrower.
"Borrowing Base Certificate" means the certificate in the form
attached hereto as Exhibit A, to be delivered by Borrower to the Lenders
pursuant to Section 6.2(c) hereof.
"Borrowing Notice" means the certificate in the form attached
hereto as Exhibit B to be delivered by Borrower to Agent as a condition of each
Advance.
2
"Business Day" means (i) for most purposes, any day not a
Saturday, Sunday or day on which commercial banks in Philadelphia, Pennsylvania
or Charlotte, North Carolina are required or permitted to be closed, and (ii) in
addition, with respect to matters in connection with LIBOR, any such day on
which commercial banks in London, England also are not required or permitted to
be closed.
"Calculation Date" means the last day of each fiscal quarter
of Borrower.
"Capital Expenditures" means the expenditures of Borrower and
their Consolidated Subsidiaries for any Fixed Asset having a useful life of more
than one (1) year, or any improvements or additions thereto, including direct or
indirect acquisition of such assets, and including any obligations to pay rent
or other amounts under a Capital Lease.
"Capital Leases" means any lease with respect to which the
obligation for rental payments is required to be capitalized on a balance sheet
of the Borrower or any Consolidated Subsidiary in accordance with GAAP.
"Capital Lease Obligations" means all obligations of Borrower
and its Consolidated Subsidiaries to pay rent or other amounts under Capital
Leases.
"Change in Control" means any of the following events or
circumstances:
(i) individuals who, at the beginning of any period of
twenty-four (24) consecutive months, constitute Borrower's board of directors
(together with any new director whose election by Borrower's board of directors
or whose nomination for election by Borrower's stockholders was approved by a
vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason (other than death
or disability) to constitute a majority of the Borrower's board of directors
then in office; or
(ii) any Person or Persons acting as a group (as such term is
used in Rule 13d-5 under the Exchange Act as in effect on the date hereof) shall
in the aggregate, directly or indirectly, control or own (beneficially or
otherwise) more than fifty percent (50%) (by number of shares) of the issued and
outstanding voting stock of Borrower; provided, however, that a "Change in
Control" shall not occur if (A) such group includes (x) members of the Xxxxxx
Family, (y) directors and officers of Borrower and its Affiliates as of November
1, 2001 and (z) other directors and officers of Borrower or any Affiliates of
Borrower as of November 1, 2001whose election is approved by a vote of at least
two-thirds of the directors of the relevant entity then in office who were
either themselves in office on November 1, 2001 or subsequently approved as
provided in this clause (z), (B) the Persons described in the preceding clause
(A) together own at least 20% (by number of shares) of the issued and
outstanding voting stock of Borrower and (C) no member of the Xxxxxx family has
entered into an agreement with any Person not a member of the Xxxxxx Family that
restricts in any manner how such member of the Xxxxxx Family may vote his shares
of stock in Borrower.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and all rules and regulations with respect thereto in effect
from time to time.
"Commitment" means the obligation of the Lenders to make
Advances and issue Letters of Credit hereunder, in the maximum aggregate
principal or stated amount, as applicable, including, without limitation,
amounts advanced under the Revolving Credit Facility and the face amount of all
Letters of Credit and the amount of Reimbursement Obligations outstanding under
the Letter of Credit Sublimit, not to exceed Twenty Five Million Dollars
($25,000,000), as such amount may be reduced from time to time pursuant to
Section 2.8 or Section 8.2 hereof.
3
"Consolidated Tangible Net Worth" means, as of the date of
determination, Net Worth minus the value of the Intangible Assets of the
Borrower and its Consolidated Subsidiaries.
"Control Event" means:
(i) the execution by Borrower or any of its Affiliates of any
agreement or letter of intent with respect to any proposed transaction or event
or series of transactions or events which, if consummated, individually or in
the aggregate, may reasonably be executed to result in a Change in Control; or
(ii) the making of any written offer by any person (as such
term is used in Section 13(d) and Section 14(d)(2) of the Exchange Act as in
effect on the date hereof or related persons constituting a group (as such term
is used in Rule 13d-5 under the Exchange Act as in effect on the date hereof) to
the holders of the common stock of Borrower which offer, if accepted by the
requisite number of holders, would result in a Change in Control.
"Cost Base Reduction Activities" means those activities the
Borrower will embark upon subsequent to the Graphics Sale Transaction to reduce
various ongoing expenses to align the Borrower's cost structure to its remaining
businesses.
"Credit Documents" means this Agreement, the Notes and any
other agreements, documents, instruments and writings now or hereafter existing,
creating, evidencing, guarantying, security or relating to any of the
liabilities of Borrower hereunder or in connection herewith, together with all
amendments, modifications, renewals or extensions thereof.
"CSVLI" means the aggregate cash surrender value of any life
insurance policy for which of Borrower or Consolidated Subsidiary is listed as
the sole beneficiary.
"Debt Service" means, for any period, all payments of
principal, Interest Expense and fees made or required to be made on account of
Funded Debt.
"Default" means an event, condition or circumstance the
occurrence of which would, with the giving of notice or the passage of time or
both, constitute an Event of Default.
"Dollar Equivalent" means, on any date of determination, the
amount, as determined by the Agent, of Dollars which could be purchased with the
amount of Canadian Dollars involved in such computation at the spot rate at
which Dollars may be exchanged into Canadian Dollars as set forth on such date
on the applicable Dow Xxxxx Telerate (or any successor pages) or, if such rate
does not appear on such pages, at the at the rate of exchange quoted by the
Agent in Philadelphia, Pennsylvania at 11:00 a.m. on the date of determination,
to prime banks in New York City for the spot purchase in the New York foreign
exchange market of such amount of Dollars with Canadian Dollars, as the case may
be.
"EBITDA" means, for any period, the sum, for any Person and
its Consolidated Subsidiaries, of (i) Net Income for such period but excluding
(A) non-cash charges associated with exercise of stock options, (B) unusual
items, including but not limited to refinancing, restructuring or reorganization
charges, (C) effects of changes in accounting principles and (D) extraordinary
items, (ii) an amount which, in the determination of Net Income for such period,
has been deducted for (A) Interest Expense for such period and (B) total
federal, state and local income taxes for such period, and (iii) an amount
which, in the determination of Net Income for such period, has been deducted for
depreciation and amortization expense for such period, each determined in
accordance with GAAP.
4
"Eligible Accounts Receivable" means, as of any date of
determination thereof, the aggregate of all trade account receivables of
Borrower and its Consolidated Subsidiaries, without duplication, at book value
net of reserves and contractual allowances (including provisions for returns)
determined in accordance with GAAP, excluding, without duplication:
(a) any receivable not payable in United States Dollars or
Canadian Dollars (provided, that the value of any receivable payable in Canadian
Dollars shall, for the purposes of any calculations, be valued at the Dollar
Equivalent as of the date of such calculation);
(b) any receivable for which an original invoice is not issued
within thirty (30) days after the applicable sale of goods;
(c) any receivable due from Borrower or any Subsidiary or
Affiliate of Borrower;
(d) any receivable with respect to all or part of which a
check, promissory note, draft, trade acceptance or other instrument for the
payment of money has been presented for payment and returned uncollected for any
reason;
(e) any receivable as to which the applicable owner knows that
any one or more of the following events has occurred with respect to the account
debtor: death or judicial declaration of incompetency; the filing by or against
such account debtor of a request or petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as a bankrupt, or other relief
under the bankruptcy, insolvency, or similar laws of the United States, any
state or territory thereof, or any foreign jurisdiction, now or hereafter in
effect; the making of any general assignment by such account debtor for the
benefit of creditors; the appointment of a receiver or trustee for such account
debtor or for any of the assets of such account debtor, including, without
limitation, the appointment of or taking possession by a "custodian," as defined
in the U.S. Bankruptcy Code; the institution by or against such account debtor
of any other type of insolvency proceeding (under the bankruptcy laws of the
United States or elsewhere) or of any formal or informal proceeding for the
dissolution or liquidation of, settlement of claims against, or winding up of
affairs of, such account debtor; the sale, assignment, or transfer of all or
substantially all of the assets of such account debtor; the inability to pay or
the nonpayment by such account debtor of its debts generally as they become due;
the cessation of the business of such account debtor as a going concern; or, in
Agent's sole reasonable judgment, unsatisfactory general financial performance
or credit standing or likelihood of unsatisfactory general financial performance
or credit standing in the near future;
(f) any receivable which is outstanding more than ninety (90)
days past the original date such installment is due;
(g) the aggregate amount of all receivables owed by an account
debtor fifty percent (50%) or more of which are outstanding in excess of the
period set forth in clause (f) above;
(h) any receivable as to which there is any unresolved
dispute, defense, offset or counterclaim with or by the account debtor;
(i) any receivable that has not been created in the ordinary
course of business; and
(j) any receivable representing an obligation for goods placed
on consignment and not yet sold by the consignee, or for goods on approval.
5
"Eligible Inventory" means all finished goods inventory of
Borrower and its Consolidated Subsidiaries, at the lesser of book value
determined in accordance with GAAP, and market value, excluding, without
duplication:
(a) any inventory located outside of the United States or
Canada, or in the possession of a contract manufacturer;
(b) any inventory in the possession of a third party on
consignment or pursuant to a sale on approval or sale or return, or otherwise
located at the place of business of a third party at which such party deals in
goods of that kind; and
(c) any inventory represented by warehouse receipts or other
documents of title.
"Environmental Control Statutes" means any federal, state,
county, regional or local laws governing the control, storage, removal, spill,
release or discharge of Hazardous Substances, including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986
("CERCLA"), the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984, the Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1976, the Hazardous Materials Transportation Act, the
Emergency Planning and Community Right to Know Act of 1986, the National
Environmental Policy Act of 1975, the Oil Pollution Act of 1990, the Clean Air
Act, the Toxic Substances Control Act, the Safe Drinking Water Act, the
Emergency Planning and Community Right-to-Know Act, the Atomic Energy Act and
any so-called "Super Fund" or "Super Lien" law or environmental laws
administered by the Environmental Protection Agency, any similar or implementing
state law, and in each case, as amended from time to time, and all rules and
regulations with respect thereto in effect from time to time.
"EPA" means the United States Environmental Protection Agency,
or any successor thereto.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, any successor statute of similar import, and
all rules and regulations with respect thereto in effect from time to time.
"ERISA Affiliate" means, any person that is a member of any
group or organization within the meaning of Code Sections 414(b), (c), (m) or
(o) of which Borrower or any Subsidiary is a member.
"Event of Default" means an event described in Section 8.1
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any rule or regulations in effect from time to
time under such act.
"Existing Letters of Credit" means the letter of credit in the
amount of $800,000 to secure workers' compensation obligations of the Borrower
and the letter of credit in the amount of $125,000 to secure product liability
insurance, issued by Xxxxx Brothers at the request of the Borrower.
"Existing Capital Lease Obligations" means all Capital Lease
Obligations in existence on the date of this Agreement.
6
"Fixed Assets" means, as of the date of determination, all of
Borrower's and its Consolidated Subsidiaries' machinery, equipment, real
property and other fixed assets, initially as set forth in the Appraisals and as
the same exists from time to time.
"Fixed Charge Coverage Ratio" means, as of any Calculation
Date, beginning with December 2, 2001, the ratio of (a) EBITDA less (i) Capital
Expenditures and (ii) Restricted Payments, all for the related Rolling Period to
(b) the sum of (i) Interest Expense and (ii) Scheduled Funded Debt Payments,
during such Rolling Period. For the purposes of calculating this ratio prior to
Xxxxx 0, 0000, XXXXXX will be calculated to include the applicable Consolidated
quarterly Proforma EBITDA calculations previously provided to the Agent for the
fiscal quarters ending March 4, 2001, June 3, 2001 and September 2, 2001 and a
calculation for the fiscal quarter ending December 2, 2001, which the Borrower
will submit to the Agent no later than February 28, 2002.
"Funded Debt" means, as of the date of determination, the
aggregate principal amount of all Indebtedness of Borrower and its Consolidated
Subsidiaries for:
(i) borrowed money other than trade indebtedness incurred in
the normal and ordinary course of business for value received;
(ii) "synthetic" leases or other similar lease arrangements;
(iii) installment purchases of real or personal property;
(iv) Capital Lease Obligations; and
(v) guaranties of Funded Debt of others, without duplication.
"GAAP" means generally accepted accounting principles set
forth in the Opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants and in statements of the Financial
Accounting Standards Board and in such other statements by such other entity as
Agent may reasonably approve, which are applicable in the circumstances as of
the date in question; and such principles observed in a current period shall be
comparable in all material respects to those applied in a preceding period.
"Governmental Authorities" means individually and collectively
the federal, state and local governmental authorities and administrative
agencies which govern the business or industrial facilities owned or operated by
Borrower.
"Graphics Sale Transaction" means the sale by the Borrower as
of October 9, 2001 in a single transaction of the Borrower's graphics products
business and related assets.
"Guarantor" means individually, and "Guarantors" means
collectively, jointly and severally, Xxxx Holdings, Inc., a Delaware
corporation, and Xxxx X-ACTO, Inc., a Pennsylvania corporation, and each entity
that becomes a Guarantor under the Guaranty Agreement after the date hereof.
"Guaranty Agreement" means the Guaranty Agreement in the form
of Exhibit F attached hereto which the Guarantors are required to deliver to the
Agent pursuant to Section 5.1(b) of this Agreement, as the same may be amended,
modified or restated from time to time.
"Hazardous Substance" means petroleum products and items
defined in the Environmental Control Statutes as "hazardous substances",
"hazardous wastes", "pollutants" or "contaminants" and any other toxic,
reactive, corrosive, carcinogenic, flammable or hazardous substance or other
pollutant.
7
"Indebtedness" of any person means and includes all
obligations of such person which, in accordance with GAAP, shall be classified
on a balance sheet of such person as liabilities of such person and in any event
shall include all (i) obligations of such person for borrowed money or which
have been incurred in connection with acquisition of property or assets, (ii)
obligations secured by any lien upon property or assets owned by such person,
notwithstanding that such person has not assumed or become liable for the
payment of such obligations, (iii) obligations created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such person, notwithstanding the fact that the rights and remedies
of the seller, lender or lessor under such agreement in the event of default are
limited to repossession or sale of property, (iv) Capital Leases, (v) guarantees
and (vi) letters of credit and letter of credit reimbursement obligations.
"Intangible Assets" means for the applicable entity, all
assets of such entity which would be classified in accordance with GAAP as
intangible assets, including without limitation, all franchises, licenses,
permits, patents, patent applications, copyrights, trademarks, trade-names,
goodwill, experimental or organization expenses and other like intangibles and
unamortized debt discount.
"Internal Loan" means, any loan made from any Subsidiary to
the Borrower or either Guarantor or from the Borrower to either Guarantor;
provided that, the Borrower or Guarantor, as applicable, shall not make any
payment as to any such loan following the occurrence and during the continuance
of any Default or Event of Default.
"Interest Expense" means, for any period, all interest expense
of the Borrower and its Consolidated Subsidiaries for such period, as determined
in accordance with GAAP.
"Interest Period" means, with respect to each Portion bearing
interest at a LIBOR-Based Rate, a period of one (l), two (2) or three (3)
months' duration, as Borrower may elect, during which a specific LIBOR-Based
Rate is applicable; provided, however, that (i) interest on each such Portion
shall accrue from and including the first day of the applicable Interest Period
to, but excluding, the day on which such Interest Period expires; (ii) if any
Interest Period would otherwise end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such Business Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Business Day, as applicable, subject to
clause (iii) below; and (iii) any Interest Period which begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month.
"IRB Bonds" means the Industrial Revenue Refunding Bonds.
(Xxxx Manufacturing Co. Project), Series 1994, issued by Iredell County
Industrial Facilities and Pollution Control Financing Authority.
"Lender" means individually and "Lenders" means collectively,
First Union and Fleet, their respective successors and assigns.
"LC Application" means the Letter of Credit Application in the
form of Exhibit E attached hereto to be delivered by the Borrower to First Union
pursuant to Section 3.3 hereof, as same may be amended or modified or extended
or restated from time to time.
8
"Letter of Credit" means individually, and "Letters of Credit"
means collectively, the letter(s) of credit in the form agreed upon by the
Borrower and First Union at the time of issuance of the applicable Letter of
Credit pursuant to the terms and conditions of Article 3 hereof.
"Letter of Credit Sublimit" means that portion of the
Commitment which First Union has agreed to make available under Article 3 hereof
(including the aggregate amount of all Reimbursement Obligations), being on the
date hereof, Five Million Dollars ($5,000,000), as such amount may be reduced
from time to time pursuant to Section 2.8 hereof.
"LIBOR" means a rate of interest per annum (rounded to the
next higher 1/100 of 1%) for United States Dollar deposits in the London
Interbank Market, as reported on Telerate page 3750 as of 11:00 a.m. London
time, on the second Business Day prior to the commencement of the relevant
Interest Period in amounts substantially equal to the Portion as to which
Borrower may elect the LIBOR-Based Rate to be applicable and with a maturity of
comparable duration to the Interest Period selected by Borrower for such
Portion, as may be adjusted for reserves by dividing that rate by the result of
1.00 minus the LIBOR Reserve.
"LIBOR-Based Rate" has the meaning set forth in Section
2.6(a)(i)(B) hereof.
"LIBOR Market Index Rate" means, for any day, the rate for one
(1) month United States Dollar deposits as reported on Telerate page 3750 as of
11:00 a.m., London time, on such day, or if such day is not a Business Day, then
the immediately preceding Business Day (or if not so reported, then as
determined by the Agent from another recognized source or interbank quotation).
"LIBOR Reserve" means, for a Lender, on any day, that
percentage (expressed as a decimal) which is in effect (whether or not actually
incurred) with respect to a Lender on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor or any other banking
authority to which a Lender is subject including any board or governmental or
administrative agency of the United States or any other jurisdiction to which a
Lender is subject), for determining the maximum reserve requirement (including
without limitation any basic, supplemental, marginal or emergency reserves) for
Eurocurrency liabilities as defined in Regulation D or deposits in any
non-United States or an international office of such Lender in an amount and
with maturities of comparable duration to the Interest Period elected by
Borrower. Notwithstanding the foregoing, if the undersigned has hedged the
LIBOR-Based Rate by entering into an interest rate swap agreement, LIBOR shall
be rounded five decimal places in accordance with the 1991 ISDA Definitions
published by the International Swaps and Derivatives Association, Inc.
"Loan" means the sum of (a) all outstanding principal balance
of Indebtedness advanced under the Revolving Credit Facility, (b) the aggregate
amount available to be drawn under all Letters of Credit issued hereunder, and
(c) the aggregate amount of Reimbursement Obligations, in each case, together
with interest accrued thereon and fees and expenses incurred in connection
therewith.
"Material Adverse Effect" means either singly or in the
aggregate, a material adverse effect on the business, financial condition or
prospects of Borrower and its Consolidated Subsidiaries taken as a whole as a
result of any condition, circumstance or contingency arising after the date
hereof.
"Maximum Principal Amount" means, as to any Lender, the
maximum principal amount of the Commitment which such Lender has agreed to lend
as set forth in Section 2.3 hereof.
"Net Funded Debt" means as at any time Funded Debt less the
amount at which cash would be shown on a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries at such time in accordance with GAAP.
9
"Net Income" means, for any period, net income after taxes for
such period for Borrower and its Consolidated Subsidiaries, as determined in
accordance with GAAP.
"Net Worth" means, as of any date, total shareholders' equity
of the Borrower and its Consolidated Subsidiaries as of such date, as determined
in accordance with GAAP.
"Note Purchase Agreement" means the Note Purchase Agreement
dated as of August 1, 1996 among Xxxx, Massachusetts Mutual Life Insurance
Company, Allstate Life Insurance Company, Allstate Insurance Company, Provident
Mutual Life Insurance Company - Covenant, Provident Mutual Life Insurance
Company, Mennonite Mutual Aid Association and Mennonite Retirement Trust, as
amended by a Consent and Amendment to Note Agreement dated November 14, 2001,
and as amended from time to time, to the extent permitted hereby.
"Notes" means collectively the Revolving Credit Notes in the
form of Exhibit C attached hereto to be delivered by Borrower to each Lender
pursuant to Section 5.1(a) hereof, as same may be amended or modified or
extended or restated from time to time.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) which is not a
Capital Lease other than any such lease in which that Person is the lessor.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Permitted Acquisitions" means any acquisition by the Borrower
of any other Person or a substantial portion of the Assets of any other Person,
the form and substance of which has, prior to such acquisition, been consented
to in writing by the Lenders.
"Permitted Investments" means: (i) investments in commercial
paper or variable rate or fixed rate notes maturing in 180 days or less from the
date of issuance which is rated A1 or better by Standard & Poor's Corporation or
P1 or better by Xxxxx'x Investors Services, Inc.; (ii) investments in direct
obligations of the United States of America or obligations of any agency thereof
which are guaranteed by the United States of America, provided that such
obligations mature within twelve (12) months of the date of acquisition thereof;
(iii) investments in time deposits, repurchase agreements and certificates of
deposit maturing within one (1) year from the date of acquisition thereof issued
by a bank or trust company organized under the laws of the United States or any
state thereof, having capital, surplus and undivided profits aggregating at
least $500,000,000 and the long-term deposits of which are rated A1 or better by
Xxxxx'x Investors Services, Inc. or equivalent by Standard & Poor's Corporation;
(iv) investments, classified in accordance with GAAP as current assets, in money
market investment programs registered under the Investment Company Act of 1940,
as amended; (v) investments consisting of stock, obligations, securities or
other property received by the Borrower in settlement of accounts receivable
(created in the ordinary course of business) from bankrupt obligors; (vi) loans
permitted by Section 7.3 hereof; (vii) investments in joint ventures and
partnerships, provided that the aggregate outstanding principal amount of all
such investments does not, at any time, exceed ten percent (10%) of Consolidated
Tangible Net Worth; (viii) investments made pursuant to and in accordance with
the Borrower's Corporation Supplemental Executive Benefits Plan, as in effect on
the date hereof; (ix) investments in Subsidiaries existing as of the date
hereof, which have been disclosed on Schedule 4.11 hereto; and (x) other
investments of types not otherwise described above, provided that the aggregate
outstanding principal amount of all such investments does not, at any time,
exceed One Million Dollars ($1,000,000).
10
"Person" means any individual, sole proprietorship,
partnership, corporation, business trust, joint stock company, trust,
unincorporated organization, association, limited liability company,
institution, public benefit corporation, joint venture, entity or government
(whether Federal, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof).
"Plan" means any pension benefit or welfare benefit plan as
defined in Sections 3(1), (2) or (3) of ERISA maintained or sponsored by,
contributed to, or covering employees of, Borrower or any ERISA Affiliate.
"Portion" means a portion of an Advance as to which Borrower
has elected a specific interest rate and, except with respect to a Portion
bearing interest at the Adjusted LMI, an Interest Period.
"Prime Rate" means the rate of interest announced by Agent
from time to time as its prime rate and is one of several interest rate bases
used by Agent. Agent lends at rates both above and below its Prime Rate and
Borrower acknowledges that the Prime Rate is not represented or intended to be
the lowest or most favorable rate of interest offered by Agent.
"Pro Rata Share" means as to any Lender the ratio which the
outstanding principal balance of its portion of the Indebtedness advanced under
the Revolving Credit Facility hereunder bears to the aggregate outstanding
principal balance of the Indebtedness advanced under the Revolving Credit
Facility at any time; or if no indebtedness is outstanding hereunder, its
percentage share of the Commitment.
"Purchase Documents" means documents and agreements entered
into from time to time in connection with Permitted Acquisitions, each in form
and substance reasonably satisfactory to the Lenders.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System, comprising Part 204 of Title 12, Code of Federal
Regulations, as amended from time to time, and any successor thereto.
"Reimbursement Obligations" means Borrower's obligations with
respect to drafts paid under Letters of Credit, as further defined in Section
3.4(b) hereof.
"Release" means any spill, leak, emission, discharge or the
pumping, pouring, emptying, disposing, injecting, escaping, leaching or dumping
of a Hazardous Substance.
"Required Lenders" means, (i) if less than three Lenders are
party to this Agreement, all Lenders, and (ii) if three or more Lenders are
party to this Agreement, those Lenders (which may include Agent) holding
fifty-one percent (51%) or more of the amount of the Commitment or, if
Indebtedness is outstanding hereunder, fifty-one percent (51%) or more of such
outstanding Indebtedness.
"Restricted Payments" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of the Borrower or any of its Subsidiaries, at any time outstanding, (ii) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of stock
of the Borrower or any of its Subsidiaries, at any time outstanding and (iii)
any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of stock of the
Borrower or any of its Subsidiaries, at any time outstanding (excluding, for
purposes of clauses (i), (ii) or (iii) above, any payment made to Borrower or
any of its Subsidiaries).
"Revolving Credit Facility" has the meaning ascribed to such
term in Section 2.1 hereof.
11
"Rolling Period" means, as of any date, the most recent four
(4) consecutive fiscal quarters of Borrower completed on or before such date.
"Scheduled Funded Debt Payments" means, as of any Calculation
Date, the scheduled payments of principal on Funded Debt.
"Shares" of any corporation means any and all shares of
capital stock of such corporation of any class or other shares, interests,
participation or other equivalents (however designated) in the capital of such
corporation.
"Subsidiary" with respect to any person means any corporation
of which such person and/or one or more other Subsidiaries of such person shall
at the time own Shares (however designated) having ordinary voting power for the
election of at least a majority of the board of directors (or other governing
body) of such corporation, other than Shares having such power only by reason of
the happening of a contingency. Unless otherwise specified, the term
"Subsidiary" shall mean a Subsidiary of Borrower.
"Termination Date" means the earlier of (i) December 21, 2004
or (ii) the date on which the Commitment is terminated pursuant to Section 2.8
hereof.
"Unfinanced Capital Expenditures" means Capital Expenditures
made after the date of this Agreement which are purchased with cash or the
proceeds of any Advance hereunder and are, following such purchase, unencumbered
by any lien or security interest of any other Person.
"Unused Commitment Fee Rate" means the amount set forth in the
right column, based on the ratio of Funded Debt to EBITDA set forth in the left
column:
Unused Commitment
Funded Debt to EBITDA Fee Rate
--------------------- --------
Level 1 Less than 1.00x 0.30%
Xxxxx 0 1.00x to less than1.75x 0.40%
Xxxxx 0 1.75x and above 0.50%
Changes in the Unused Commitment Fee Rate shall be based upon the Compliance
Certificate most recently delivered to the Agent pursuant to Section 6.2 hereof
and shall become effective on (a) as to any Compliance Certificate relating to
one of the first three fiscal quarters of the Borrower's fiscal year, the
forty-fifth (45th) day following the end of such fiscal quarter, and (b) as to
any Compliance Certificate delivered following the end of a fiscal year, the
ninetieth (90th) day following the end of such fiscal year; provided, however,
that (i) following the occurrence and during the continuance of any Event of
Default, the Unused Commitment Fee Rate shall be 0.50%, and (ii) the initial
Unused Commitment Fee Rate shall be 0.40%.
1.2. Rules of Construction.
(a) GAAP. Except as otherwise provided herein, financial and accounting
terms used in the foregoing definitions or elsewhere in this Agreement, shall be
defined in accordance with GAAP.
(b) Use of Term "Consolidated." Any term defined in Section 1.1 hereof,
when modified by the word "Consolidated," shall have the meaning given to such
term herein as to Borrower and all entities whose accounts, financial results or
position, for either federal income tax or financial accounting purposes, are
consolidated with those of Borrower in accordance with GAAP, and any financial
terms used herein shall be presumed to be calculated on a Consolidated basis
unless otherwise stated.
12
ARTICLE 2
REVOLVING CREDIT FACILITY
2.1. The Revolving Credit Facility. From time to time prior to the
Termination Date, subject to the provisions below, each Lender shall make
Advances to Borrower, which Borrower may repay and reborrow, up to an aggregate
outstanding principal amount not to exceed at any time the Commitment as from
time to time in effect (the "Revolving Credit Facility"). Notwithstanding the
foregoing, the Borrower shall not be entitled to any Advance if, after giving
effect to such Advance, the aggregate unpaid amount of the outstanding Advances
under the Revolving Credit Facility, when added to (a) the aggregate face amount
of all Letters of Credit then outstanding and (b) the aggregate amount of all
Reimbursement Obligations then outstanding, would exceed the lesser of: (i) the
Borrowing Base or (ii) the amount of the Commitment.
2.2. Promissory Notes. The indebtedness of Borrower to each Lender
under the Loan will be evidenced by a Note executed by Borrower in favor of such
Lender in the form of Exhibit C hereto. The original principal amount of each
Lender's Note will be the amount identified in Section 2.3 hereof as its
respective Maximum Principal Amount; provided, however, that notwithstanding the
face amount of each such Note, Borrower's liability under each such Note shall
be limited at all times to its actual indebtedness, principal, interest and
fees, then outstanding hereunder.
2.3. Lenders' Participation. Lenders shall participate in the Loan up
to the respective Maximum Principal Amounts and in the respective percentages
set forth in the schedule below.
Pro Rata Share
Maximum (as percentage
Lender Principal Amount of Commitment)
------ ---------------- --------------
First Union $15,000,000 60%
Fleet $10,000,000 40%
----------- ---
TOTAL: $25,000,000 100%
2.4. Use of Proceeds. Funds advanced under the Loan shall be used (a)
to fund general corporate purposes and working capital of Borrower and to
support the issuance of Letters of Credit and (b) to fund Permitted Acquisitions
consummated at any time after the first anniversary of the date hereof and prior
to the Termination Date; provided, that no proceeds of the Loan will be loaned,
contributed or otherwise used to fund any Subsidiary of the Borrower.
13
2.5. Repayment. The aggregate outstanding principal balance under the
Loan shall be due and payable on the Termination Date.
2.6. Interest. Portions shall bear interest on the outstanding
principal amount thereof in accordance with the following provisions:
(a) Available Interest Rates.
(i) In the absence of an Event of Default hereunder, and prior
to maturity, any Portion shall bear interest at any one of the following rates:
(A) Adjusted LMI. The LIBOR Market Index Rate plus the Applicable
Margin.
(B) LIBOR-Based Rate. LIBOR plus the Applicable Margin.
(ii) Notwithstanding the foregoing, upon the occurrence and
during the continuance of an Event of Default or Default hereunder, including
after maturity and before and after judgment, Borrower hereby agree to pay to
Lenders interest on the outstanding principal balance of the Loan and, to the
extent permitted by law, overdue interest with respect thereto, at the rate of
three percent (3%) per annum in excess of the rates then available to and
elected by Borrower for each Portion then outstanding through the end of the
applicable Interest Periods and, thereafter, at the rate of three percent (3%)
per annum in excess of Adjusted LMI.
(b) Procedure for Determining Interest Periods and Rates of Interest.
(i) If Borrower elects Adjusted LMI to be applicable to a
Portion, Borrower must notify Agent of such election prior to ten o'clock
(10:00) a.m. Philadelphia time on the day the proposed application of such rate.
If Borrower elects the LIBOR-Based Rate to be applicable to a Portion, Borrower
must notify Agent of (i) such election and (ii) the Interest Period selected
prior to ten o'clock (10:00) a.m. Philadelphia time at least three (3) Business
Days prior to such Advance or the commencement of the proposed Interest Period.
If Borrower does not provide the applicable notice for the LIBOR-Based Rate,
then Borrower shall be deemed to have requested that Adjusted LMI shall apply to
any Portion as to which the Interest Period is expiring and to any new Advance
until Borrower shall have given proper notice of a change in or determination of
the rate of interest in accordance with this Section 2.6(b).
(ii) Borrower shall not elect more than five (5) different
Portions (other than Portions bearing interest at Adjusted LMI) to be applicable
to Advances at any one time.
(c) Payment and Calculation of Interest. Interest shall be calculated
in accordance with the election made pursuant to Section 2.6(b) hereof and as
set forth below.
(i) With respect to Portions which bear interest at the
LIBOR-Based Rate, interest shall be due and payable in arrears on the last day
of each Interest Period for each Portion; provided, however, that with respect
to Portions having an Interest Period in excess of three (3) months, Borrower
shall pay interest quarterly in arrears commencing on the first Business Day of
the calendar quarter next succeeding the date on which such Interest Period
commences and continuing on the first Business Day of each January, April, July
and October thereafter and on the expiration of the Interest Period. Interest
based on the LIBOR-Based Rate shall be calculated on the basis of the actual
number of days elapsed over a year of three hundred sixty (360) days.
14
(ii) With respect to Portions which bear interest at Adjusted
LMI, Borrower shall pay interest on the first Business Day of the month
commencing on the first such date after the first Advance which bears interest
at Adjusted LMI. Interest based on the LIBOR Market Interest Rate shall be
calculated on the basis of the actual number of days elapsed over a year of
three hundred sixty-five (365) or three hundred sixty-six (366) days, as the
case may be.
(d) Reserves. If at any time when a Portion is subject to the
LIBOR-Based Rate (or any other match-funded rate), and a Lender is subject to
and incurs a LIBOR Reserve, Borrower hereby agrees to pay within five (5)
Business Days of demand thereof from time to time, as billed by Agent on behalf
of itself or a Lender, such additional amount as is necessary to reimburse such
Lender for its costs in maintaining such LIBOR Reserve.
Such amount shall be computed by taking into account the cost
incurred by such Lender in maintaining such LIBOR Reserve in an amount equal to
such Lender's ratable share of the Portion on which such LIBOR Reserve is
incurred. The determination by the Lender of such costs incurred and the
allocation, if any, of such costs among Borrower and other customers which have
similar arrangements with such Lender shall be prima facie evidence of the
correctness of the fact and the amount of such additional costs. Such Lender
will notify Borrower of any event occurring after the date of this Agreement
that will entitle the Lender to compensation pursuant to this Section 2.6(d) as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation.
A certificate of such Lender setting forth such amount or
amounts as shall be necessary to compensate such Lender or its holding company
as specified above shall be delivered to Borrower and shall be conclusive absent
manifest error. Borrower shall pay such Lender the amount shown as due on any
such certificate delivered by such Lender within three (3) Business Days after
its receipt of the same.
Failure on the part of any Lender to demand compensation for
increased costs or reduction in amounts received or receivable or reductions in
return on capital with respect to any period shall not constitute a waiver of
such Lender's right to demand compensation with respect to such period or any
other period; provided, that in no event shall such Lender request compensation
for periods in excess of six (6) months retroactively from the date of any
demand.
(e) Special Provisions Applicable to LIBOR-Based Rate. The following
special provisions shall apply to the LIBOR-Based Rate:
(i) Change of LIBOR-Based Rate. The LIBOR-Based Rate may be
automatically adjusted by Agent on a prospective basis to take into account
additional or increased costs due to changes in applicable law or regulation or
the interpretation thereof occurring subsequent to the commencement of the then
applicable Interest Period, including but not limited to changes in tax laws
(except changes of general applicability in corporate income tax laws) and
changes in the reserve requirements imposed by the Board of Governors of the
Federal Reserve System (or any successor), that increase the cost to Lenders of
funding the Loan or any Portion thereof bearing interest at the LIBOR-Based
Rate. Agent shall give Borrower notice of such a determination and adjustment,
which determination shall be prima facie evidence of the correctness of the fact
and the amount of such adjustment. Borrower may, by notice to Agent, (A) request
Agent to furnish to Borrower a statement setting forth the basis for adjusting
such LIBOR-Based Rate and the method for determining the amount of such
adjustment; and/or (B) repay the Portion with respect to which such adjustment
is made in accordance with Section 2.9 hereof.
(ii) Unavailability of Eurodollar Funds. In the event that
Borrower shall have requested the LIBOR-Based Rate in accordance with Section
2.6(b) hereof and any Lender shall have reasonably determined that Eurodollar
deposits equal to the principal amount of such Lender's share of the Portion and
for the Interest Period specified are unavailable, or that the LIBOR-Based Rate
will not adequately and fairly reflect the cost of making or maintaining such
Lender's share of the principal amount of the Portion specified by Borrower
during the Interest Period specified or that by reason of circumstances
affecting Eurodollar markets, adequate and reasonable means do not exist for
ascertaining the LIBOR-Based Rate applicable to the specified Interest Period,
Agent shall promptly give notice of such determination to Borrower that the
LIBOR-Based Rate is not available. A determination by such Lender hereunder
shall be prima facie evidence of the correctness of the fact and amount of such
additional costs. Upon such a determination, (i) the Lenders' obligation to
advance or maintain Portions at the LIBOR-Based Rate shall be suspended until
Agent shall have notified Borrower and Lenders that such conditions shall have
ceased to exist, and (ii) Borrower shall elect Adjusted LMI to be applicable to
Portions.
15
(iii) Illegality. In the event that it becomes unlawful for a
Lender to maintain Eurodollar liabilities sufficient to fund such Lender's share
of any Portion subject to the LIBOR-Based Rate, then such Lender shall
immediately notify Borrower thereof (with a copy to Agent) and such Lender's
obligations hereunder to make or maintain Advances at the LIBOR-Based Rate shall
be suspended until such time as such Lender may again cause the LIBOR-Based Rate
to be applicable to its share of any Portion and until such time, such Lender's
share of any Portion shall then be subject to either Adjusted LMI (plus the then
Applicable Margin) or the Prime Rate, as Borrower may elect in accordance with
the provisions of this Section 2.6.
2.7. Advances.
(a) In addition to providing the requisite notices set forth in Section
3.1 hereof (relating to submission of applications for Letters of Credit) and at
the times set forth in Section 2.6(b) hereof (relating to the election of
interest rates), Borrower shall give the Agent at least three (3) Business Days'
prior written notice not later than eleven o'clock (11:00) a.m. on the date of
each requested Advance under the Commitment, specifying the date, amount and
purpose thereof. Such notice shall be in the form of the Borrowing Notice
attached hereto as Exhibit B, shall be certified by the treasurer, assistant
treasurer or chief financial officer of Borrower and shall contain the following
information and representations, which shall be deemed affirmed and true and
correct as of the date of the requested Advance:
(i) the aggregate amount of the requested Advance, which shall
be in multiples of $100,000 but not less than the lesser of $500,000 or the
unborrowed balance of the Commitment;
(ii) confirmation of the interest rate(s) Borrower has elected
to apply to the above Advance and, if more than one interest rate has been
elected, the amount of the Portion as to which each interest rate shall apply;
(iii) with respect to any Portion bearing interest at the
LIBOR-Based Rate, the Interest Period selected;
(iv) confirmation of Borrower's compliance with Sections 6.12
through 6.16 and 7.1 through 7.18 following such Advance; and
(v) statements that: the representations and warranties set
forth in Article 4 hereof are true and correct as of the date thereof, except
with regard to facts and circumstances occurring after the date hereof without
any breach of covenant by Borrower and of which the Agent has been provided
notice; no Default or Event of Default hereunder has occurred and is then
continuing or would result from such Advance; and, there has been no material
adverse change in Borrower's financial condition, operations or business since
the date of this Agreement.
16
(b) (i) Upon receiving a request for an Advance in accordance with
subsection (a) above, Agent shall request by two (2) Business Days' notice to
Lenders that each Lender advance funds to Agent so that each Lender participates
in the requested Advance in the same percentage as it participates in the
Commitment. Each Lender shall advance its applicable percentage of the requested
Advance to Agent by delivering federal immediately available funds at Agent's
offices prior to twelve o'clock (12:00) noon on the date of the Advance. Subject
to the satisfaction of the terms and conditions hereof, Agent shall promptly
make the requested Advance available to Borrower by crediting such amount to the
designated deposit account with Agent on the day of the requested Advance;
provided, however, that in the event Agent does not receive a Lender's share of
the requested Advance by such time as provided above, Agent shall not be
obligated to Advance such Lender's share.
(ii) Unless Agent shall have been notified by a Lender prior to the
date such Lender's share of any such Advance is to be made by such Lender that
such Lender does not intend to make its share of such requested Advance
available to Agent, Agent may assume that such Lender has made or will make such
proceeds available to Agent on such date, and Agent may, in reliance upon such
assumption (but shall not be obligated to), make available to Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to Agent by such Lender on the date the Advance is made, Agent shall be entitled
to recover such amount, on demand from such Lender, together with interest
thereon in respect of each day during the period commencing on the date such
amount was made available to Borrower and ending on (but excluding) the date
Agent recovers such amount, from such Lender, at a rate per annum, equal to the
overnight "Federal Funds Rate" in New York as reported in publication H.15 by
the Federal Reserve Bank of New York for such day (or, if such day is not a
Business Day, for the next preceding Business Day) for three (3) days and,
thereafter, at Adjusted LMI.
(iii) Each Lender shall receive interest on its share of any Advance
from the date on which the amount of its share of such Advance is received by
Agent and not from the date on which Agent makes such Advance (if it elects to
do so as permitted in clause (ii) of subsection 2.7(b)) unless such dates are
the same.
(c) Each request for an Advance pursuant to this Section 2.7 shall be
irrevocable and binding on Borrower. In the case of any Advance which is to be
based upon the LIBOR-Based Rate, Borrower shall indemnify each Lender against
any loss, cost or expense incurred by such Lender as a result of any failure to
fulfill on or before the date specified in such request for an Advance the
applicable conditions set forth in Article 5, including, without limitation, any
loss (including loss of margin and anticipated profits), cost or expense
incurred by reason of the liquidation or redeployment of deposits or other funds
acquired by such Lender to fund the Advance to be made by such Lender when such
Advance, as a result of such failure, is not made on such date, as calculated by
Agent in accordance with Section 2.10 hereof.
2.8. Reduction and Termination of Commitment.
(a) Borrower. Borrower shall have the right at any time and from time
to time, upon thirty (30) Business Days' prior written notice to Agent, to
reduce the Commitment in whole or in part pro rata among the Lenders in a
minimum amount of $500,000 and increments of $100,000 in excess thereof without
penalty or premium, provided that on the effective date of such reduction
Borrower shall (i) make a prepayment of the Loan in an amount, if any, by which
the aggregate outstanding principal balance of the Loan exceeds the amount of
the Commitment as then so reduced, together with accrued interest on the amount
so prepaid, and (ii) if a Portion is paid prior to the last day of an Interest
Period, pay on such effective date any funding costs and loss of earnings and
anticipated profits which may arise in connection with such prepayment or
repayment, as calculated by Agent in accordance with Section 2.10 hereof.
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(b) Lenders. Pursuant to Section 8.2 hereof, Required Lenders shall
have the right to terminate the Commitment at any time, in their discretion,
following the occurrence of any Event of Default hereunder. Any payment
following the occurrence of an Event of Default, acceleration and demand for
payment shall include the payment of any amounts due pursuant to Section 2.10
hereof.
(c) Restoration Only With Consent. Any termination or reduction of the
Commitment pursuant to subsections 2.8(a) and (b) shall be permanent, and the
Commitment cannot thereafter be restored or increased without the written
consent of all Lenders.
2.9. Prepayment; Repayment. Upon one (1) Business Day's prior written
notice by Borrower to Agent, Borrower may prepay the outstanding principal
balance under the Loan at any time without premium or penalty, provided that (i)
prepayments prior to the Termination Date shall not reduce the Commitment and
may be reborrowed; (ii) partial prepayments will be applied first to accrued
interest and fees and then to outstanding Advances; (iii) prepayments shall be
in amounts of $500,000 and increments of $100,000 in excess thereof; and (iv)
such prepayment shall be accompanied by any amounts which may be due pursuant to
Section 2.10 hereof.
2.10. Funding Costs; Loss of Earnings. In connection with any
prepayment or repayment of a Portion bearing interest at a LIBOR-Based Rate,
made on other than the last day of the applicable Interest Period, whether such
prepayment or repayment is voluntary, mandatory, by demand, acceleration or
otherwise, Borrower shall pay to Lenders any loss (including loss of margin and
anticipated profits), costs or expense incurred by Lenders or any of them, which
may arise in connection with such prepayment or repayment, as calculated by
Agent.
2.11. Payments. All payments of principal, interest, fees and other
amounts due hereunder, including any prepayments thereof, shall be made by
Borrower to Agent in immediately available funds before twelve o'clock (12:00)
noon on any Business Day at the principal office of Agent set forth at the
beginning of this Agreement. Borrower hereby authorizes (a) Agent and First
Union to charge any account of Borrower with Agent and (b) Fleet to charge any
account of Borrower with Fleet or any successor or replacement account, for all
payments of principal, interest and fees when due hereunder.
2.12. Commitment Fee. Borrower shall pay to Agent (for the benefit of
Lenders) a non-refundable commitment fee at the Unused Commitment Fee Rate on
the unborrowed portion of the Commitment from the date hereof through the
Termination Date, which fee shall be payable at the offices of Agent, quarterly
in arrears on the first day of each January, April, July and October, commencing
April 1, 2002, as billed by Agent. Lenders shall share in such commitment fee in
the same proportion as they participate in the Commitment. The commitment fee
shall be calculated on the basis of the actual number of days elapsed over a
year of three hundred sixty (360) days.
2.13. Arrangement Fee. On the date of execution of this Agreement,
Borrower shall pay to Agent (for the benefit of Lenders) at the offices of Agent
an arrangement fee equal to one quarter of one percent (0.25%) of the
Commitment, in which Lenders shall share in the same proportion as they
participate in the Commitment.
2.14. Agent Fee. Borrower agrees to pay Agent an agent fee on the first
day of each fiscal quarter of the Borrower, so long as any amount is available
or outstanding under the Commitment or the Loan.
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2.15. Regulatory Changes in Capital Requirements. If any Lender shall
have determined that the adoption or the effectiveness after the date hereof of
any law, rule, regulation or guideline regarding capital adequacy, or any change
in any of the foregoing or in the interpretation or administration of any of the
foregoing by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by such
Lender (or any lending office of such Lender) or such Lender's holding company
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on such Lender's capital
or on the capital of such Lender's holding company, if any, as a consequence of
this Agreement, the Commitment, Advances or the Loan made by such Lender
pursuant hereto to a level below that which such Lender or its holding company
could have achieved but for such adoption, change or compliance (taking into
consideration such Lender's policies and the policies of such Lender's holding
company with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or its holding
company for any such reduction suffered from the effective date of any such
event, together with interest on each such amount from the date demanded until
payment in full thereof at the rate provided in Section 2.6(a)(ii) hereof with
respect to amounts not paid when due. Such Lender will notify Borrower of any
event occurring after the date of this Agreement that will entitle the Lender to
compensation pursuant to this Section 2.15 as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation.
A certificate of such Lender setting forth such amount or
amounts as shall be necessary to compensate such Lender or its holding company
as specified above shall be delivered to Borrower and shall be conclusive absent
manifest error. Borrower shall pay such Lender the amount shown as due on any
such certificate delivered by such Lender within three (3) Business Days after
its receipt of the same.
Failure on the part of any Lender to demand compensation for
increased costs or reduction in amounts received or receivable or reductions in
return on capital with respect to any period shall not constitute a waiver of
such Lender's right to demand compensation with respect to such period or any
other period; provided, that in no event shall such Lender request compensation
for periods in excess of six (6) months retroactively from the date of any
demand.
2.16. Withholding Taxes. All amounts payable under this Agreement,
whether principal, interest or otherwise, shall be paid in full, free and clear
of any present or future taxes, (other than taxes measured by the income of
Agent or any Lender), levies, imposts, duties, charges, fees or withholdings and
without setoff or counterclaim or any restriction or condition or deduction
whatsoever. If Borrower is compelled by law to make any deduction or
withholding, it will ensure that the same does not exceed the minimum liability
therefor and will promptly pay Agent (for the benefit of Lenders) such
additional amount as will result in the net amount received by Lenders being
equal to the full amount which would have been receivable had there been no
deduction or withholding.
ARTICLE 3
LETTERS OF CREDIT
3.1. Availability of Credits. Subject to the terms and conditions set
forth herein, the Agent shall from time to time prior to the Termination Date
issue Letters of Credit for the account of Borrower on the following terms and
conditions:
(i) at the time of issuance of any Letter of Credit, the
unused portion of the Letter of Credit Sublimit shall equal or exceed the face
amount of such Letter of Credit;
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(ii) at the time of issuance of any Letter of Credit, the face
amount of such Letter of Credit aggregated with (A) the face amount of all other
Letters of Credit then outstanding hereunder, (B) all amounts outstanding under
the Revolving Credit Facility, and (C) all Reimbursement Obligations, shall not
exceed in the aggregate the lesser of (x) the Commitment or (y) the Borrowing
Base then in effect;
(iii) the final expiry date of each Letter of Credit shall be
the earlier of (a) 365 days after the date of issuance of such Letter of Credit
or (b) the Termination Date;
(iv) there shall not exist at the time of issuance of the
Letter of Credit, and as a result thereof, any Event of Default or Default;
(v) Borrower shall have completed and delivered to the Agent
(A) the Borrowing Notice form and (B) an LC Application as provided in Section
3.2 hereof;
(vi) each Letter of Credit issued under this Article 3 shall
be required by Borrower in its ordinary course of business; and
(vii) Borrower shall have paid any and all LC Fees (as defined
in Section 3.4(a) hereof) then outstanding or due in connection with such
issuance.
(b) Extension of Letters of Credit. Notwithstanding the provisions of
this Section 3.1 requiring that the final expiry of each Letter of Credit be on
or before the Termination Date, Lenders hereby agree that the Agent may issue,
upon Borrower's request if required by a proposed beneficiary, a Letter of
Credit which by its terms may be extended beyond the Termination Date. With
respect to any such Letter of Credit issued hereunder, Borrower hereby agrees it
will deliver to Agent on or before the Termination Date cash collateral as
required by Section 3.6 hereof.
3.2. Commitment Availability. The Commitment as from time to time in
effect shall be reduced by the face amount of any outstanding Letters of Credit.
Such Commitment amount shall be restored but simultaneously reduced by the
amount of any Advances under Section 2.7 which are made to Borrower to reimburse
Agent for draws under the Letters of Credit as required pursuant to Section 3.4
hereof.
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3.3. Approval and Issuance.
(a) Borrower shall provide Agent not less than three (3) Business Days'
prior written notice of each request for the issuance of a Letter of Credit by
delivery of an Borrowing Notice form and the Agent's LC Application in the form
attached hereto as Exhibit E. Each Borrowing Notice form submitted by Borrower
to Agent requesting the issuance of a Letter of Credit shall (a) be certified by
the treasurer, assistant treasurer or chief financial officer of Borrower, (b)
list all Letters of Credit outstanding to the Borrower as of such date and, for
each Letter of Credit so listed, its face amount, outstanding undrawn balance
and expiration date, and (c) represent as to the matters set forth in Section
2.7(a) hereof.
(b) Agent will promptly provide to Lenders written or telephonic
notification of Agent's receipt of the Borrowing Notice form and the LC
Application which shall state (i) the amount of the Letter of Credit requested
and (ii) the expiration date of the Letter of Credit.
3.4. Obligations of Borrower.
(a) Borrower agrees to pay to Agent in connection with each Letter of
Credit issued hereunder: (i) immediately upon the demand of Agent, the amount
paid by the Agent with respect to such Letter of Credit; (ii) immediately upon
demand of Agent, the amount of any draft presented purporting to be drawn under
such Letter of Credit provided that the draft and accompanying documents conform
to the terms of the Letter of Credit but subject to the terms of Section 3.7
hereof (whether or not the Agent has at such time honored such draft) and any
other amounts paid thereunder (it being understood that Agent is not required to
make demand upon or proceed against the Agent or other party or to resort to any
collateral before obtaining payment from Borrower); (iii) (A) with respect to
standby Letters of Credit annually in advance, a fee for the benefit of the
Agent of one-half of one percent (1/2%) per annum on the outstanding face amount
of such Letter of Credit and (B) with respect to documentary Letters of Credit,
the standard rates and fees charged by the Agent, including without limitation,
such issuance negotiations, review and other fees as the Agent from time to time
shall notify Borrower (in either case the "LC Fee"); provided, however, that if
any Letter of Credit is canceled and surrendered to Agent, the Agent agrees to
promptly pay to Agent for rebate to Borrower the LC Fee multiplied by the actual
number of days remaining in the applicable period for which such LC Fee was paid
divided by 360; and (iv) interest on any Indebtedness outstanding with respect
to such Letter of Credit, whether for funds paid on drafts on such Letter of
Credit, or otherwise (but such Indebtedness shall not include undrawn balances
of such Letter of Credit issued hereunder) calculated at the rate and paid at
the times and in the manner set forth for the calculation of interest and
payment thereof on Advances in Section 2.6 hereof. Interest under clause (iv)
above shall accrue on amounts paid on a Letter of Credit (if not reimbursed by
Borrower on the same day) from the date of payment by Agent, whether or not
demand is made, until such amounts are reimbursed by Borrower whether before, at
or after demand.
(b) In the absence of an Event of Default or Default hereunder, and
subject to the provisions of this Agreement including Sections 2.4, 2.7, 5.2 and
5.3 hereof, Lenders hereby agree to advance funds to Borrower under the
Revolving Credit Facility to make the payments required under Sections 3.4(a)(i)
and (ii) hereof with respect to amounts paid or payable on account of a draft
drawn under a Letter of Credit. Borrower's obligation to reimburse the Agent for
such advances shall be deemed "Advances" under Article 2 hereof; and such
Advances shall bear interest, be repayable, prepayable and otherwise subject to
all the terms and conditions hereof as if advanced by Lenders pursuant to
Section 2.7 hereof. If any payment by the Agent of a draft drawn under a Letter
of Credit is for any reason (including without limitation the occurrence or
continuation of a Default or an Event of Default hereunder) not advanced
pursuant to this Article or otherwise is not reimbursed prior to or on the date
of such payment, the amount of such payment shall thereupon be deemed for
purposes hereof a "Reimbursement Obligation" hereunder. Such Reimbursement
Obligation shall bear interest at the default rate set forth in Section 2.6(c)
hereof with respect to amounts outstanding under the Revolving Credit Facility,
shall be repayable upon demand, and shall reduce Borrower's availability under
the Revolving Credit Commitment by the amount of such Reimbursement Obligation.
Notwithstanding the foregoing, the creation of such Reimbursement Obligation
shall not in any way limit the Agent's or any Lender's ability to treat as an
Event of Default hereunder Borrower's failure to make such reimbursement.
3.5. Payment by First Union on Letters of Credit.
(a) With respect to each Letter of Credit issued hereunder, First Union
agrees that it is irrevocably obligated to pay to Agent for each such Letter of
Credit each and every payment made or to be made by Agent under such Letter of
Credit (each such payment to be made, a "LC Contribution"). First Union's LC
Contribution shall be due immediately upon, and in any event no later than the
same day as, receipt of written notice (which may be sent by telex) from Agent
that (i) it has made a payment or (ii) a draft has been presented purporting to
be drawn on a Letter of Credit issued hereunder. Such payment shall be made at
Agent's offices in immediately available federal funds.
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(b) The obligation of First Union to make its LC Contribution hereunder
is absolute, continuing and unconditional, and Agent shall not be required first
to make demand upon or proceed against Borrower or any other guarantor or
surety, or any others liable with respect to the applicable Letter of Credit and
shall not be required first to resort to any collateral. LC Contributions shall
be made without regard to termination of this Agreement or the Commitment, the
existence of an Event of Default or event which, with the passage of time or the
giving of notice or both would constitute an Event of Default hereunder, the
acceleration of indebtedness hereunder or any other event or circumstance.
3.6. Collateral Security. Immediately upon the termination of the
Commitment (including voluntary termination of the Commitment by Borrower) or
the occurrence of an Event of Default, and within five (5) Business Days prior
to the Termination Date, First Union may require (and in the case of an Event of
Default occurring under Section 8.1(h) it shall be required automatically) that
Borrower deliver to Agent, cash or U.S. Treasury Bills with maturities of not
more than ninety (90) days from the date of delivery (discounted in accordance
with customary banking practice to present value to determine amount) in an
amount equal at all times to one hundred ten percent (110%) of the outstanding
undrawn amount of all Letters of Credit, such cash or U.S. Treasury Bills and
all interest earned thereon to constitute cash collateral for all such Letters
of Credit. At such time as such cash collateral or U.S. Treasury Bills is
required to be and has not been deposited, Agent on behalf of First Union shall
be entitled to liquidate such of the other collateral as is necessary or
appropriate in its sole judgment so as to create such cash collateral. Any cash
collateral so deposited and all interest earned thereon, shall be held by Agent
and invested and reinvested at the expense and the written direction of
Borrower, in U.S. Treasury Bills with maturities of no more than thirty (30)
days from the date of investment. To the extent of any draws reducing the
outstanding amount of any Letter of Credit for which the Borrower has provided
the reserve required above, the Borrower may instruct the Agent to draw from
such reserve an amount sufficient to pay the related Reimbursement Obligations
to First Union and may thereafter maintain the reserve at such reduced amount
and, upon (a) expiration of such Letter of Credit and (b) repayment of all
related Reimbursement Obligations, any amounts remaining in such reserve shall
be promptly returned to the Borrower.
3.7. General Terms of Credits. The following terms and conditions apply
with respect to each Letter of Credit (a "Credit") notwithstanding anything to
the contrary contained herein:
(a) Borrower assumes all risks of the acts or omissions of the
beneficiary of each Credit with respect to the use of the Credit or with respect
to the beneficiary's obligations to Borrower. None of First Union nor any of its
officers or directors shall be liable or responsible for (and First Union hereby
agrees to indemnify and hold the Agent and any issuer of a Credit harmless with
respect to): (i) the use which may be made of the Credit or for any acts or
omissions of the beneficiary in connection therewith; (ii) the accuracy, truth,
validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should in fact prove to be in any or all
respects false, misleading, inaccurate, invalid, insufficient, fraudulent or
forged; (iii) the payment by Agent against presentation of facially conforming
documents; (iv) any other circumstances whatsoever in making or failing to make
payment under a Credit unless paid despite non-conforming documents or not paid
despite conforming documents; or (v) any inaccuracy, interruption, error or
delay in transmission or delivery of correspondence or documents by post,
telegraph or otherwise. In furtherance and not in limitation of the foregoing,
Agent may accept facially conforming documents without responsibility for
further investigation, regardless of any notice or information to the contrary.
(b) To the extent any failure to comply with the provisions of this
Section 3.7(b) could, either individually or in the aggregate, result in a
Material Adverse Effect, Borrower agrees to procure or to cause the
beneficiaries of each Credit to procure promptly any necessary import and export
or other licenses for the import or export or shipping of any goods referred to
in or pursuant to a Credit and to comply and to cause the beneficiaries to
comply with all foreign and domestic governmental regulations with respect to
the shipment and warehousing of such goods or otherwise relating to or affecting
such Credit, including governmental regulations pertaining to transactions
involving designated foreign countries or their nationals, and to furnish such
certificates in that respect as Agent may at any time reasonably require, and to
keep such goods adequately covered by insurance in amounts, with carriers and
for such risks as shall be customary in the industry and to cause First Union's
interest to be endorsed on such insurance and to furnish Agent at its request
with reasonable evidence thereof. Should such insurance (or lack thereof) upon
said goods for any reason not be reasonably satisfactory to Agent, Agent may
(but is not obligated to) obtain, at Borrower's expense, insurance satisfactory
to Agent.
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(c) In connection with each Credit, neither First Union nor any
correspondent shall be responsible for: (i) the existence, character, quality,
quantity, condition, packing, value or delivery of the property purporting to be
represented by documents; (ii) any difference in character, quality, quantity,
condition or value of the property from that expressed in documents; (iii) the
time, place, manner or order in which shipment of the property is made; (iv)
partial or incomplete shipment referred to in such credit; (v) the character,
adequacy or responsibility of any insurer, or any other risk connected with
insurance; (vi) any deviation from instructions, delay, default or fraud by the
beneficiary or any one else in connection with the property or the shipping
thereof; (vii) the solvency, responsibility or relationship to the property of
any party issuing any documents in connection with the property; (viii) delay in
arrival or failure to arrive of either the property or any of the documents
relating thereto; (ix) delay in giving or failure to give notice of arrival or
any other notice; (x) any breach of contract between the Letter of Credit
beneficiaries and Borrower; (xi) any laws, customs, and regulations which may be
effective in any jurisdiction where any negotiation and/or payment of such
Credit occurs; (xii) failure of documents (other than documents required by the
terms of the Credit) to accompany any draft at negotiation; or (xiii) failure of
any entity to note the amount of any document or draft on the reverse of such
Credit or to surrender or to take up such Credit or to forward documents other
than documents required by the terms of the Credit. In connection with each
Credit, First Union shall not be responsible for any error, neglect or default
of any of their correspondents. None of the above shall affect, impair or
prevent the vesting of any of First Union's rights or powers hereunder. If a
Credit provides that payment is to be made by the issuing First Union's
correspondent, neither First Union nor such correspondent shall be responsible
for the failure of any of the documents specified in such Credit to come into
the Agent's hands, or for any delay in connection therewith, and Borrower's
obligation to make reimbursements shall not be affected by such failure or delay
in the receipt of any such documents.
(d) Notwithstanding but without limiting any of the foregoing, with
respect to any Credit, Borrower shall have a claim against Agent, and Agent
shall be liable to Borrower, to the extent, but only to the extent, of any
direct, as opposed to indirect or consequential, damages suffered by Borrower
caused by the Agent's willful misconduct or gross negligence.
(e) To the extent not inconsistent with this Agreement, (i) the Uniform
Customs and Practices for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500, and (ii) the International Standby
Practices 1998, International Chamber of Commerce Publication No. 590, is hereby
made a part of this Agreement with respect to obligations in connection with
each Credit, to the extent applicable.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants, as to itself and its
Subsidiaries, as applicable, as follows:
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4.1. Organization and Good Standing. Borrower and each Subsidiary is
duly organized and existing and in good standing, under the laws of the state of
its incorporation, has the power and authority to carry on its business as now
conducted, and is qualified to do business in all other states in which the
nature of its business or the ownership of its properties requires such
qualification and in which failure to so qualify is reasonably likely to have a
Material Adverse Effect.
4.2. Power and Authority; Validity of Agreement. Borrower has the power
and authority under Pennsylvania law and under its articles of incorporation and
by-laws to enter into and perform this Agreement, the Notes and all other
agreements, documents and actions required hereunder; and all actions (corporate
or otherwise) necessary or appropriate for Borrower's execution and performance
of this Agreement, the Notes and the other Credit Documents and actions required
hereunder have been taken, and, upon their execution, the same will constitute
the valid and binding obligations of Borrower, to the extent it is a party
thereto, enforceable in accordance with their terms.
4.3. No Violation of Laws or Agreements. The making and performance of
this Agreement, the Notes and the other Credit Documents and actions required of
Borrower hereunder will not violate any provisions of any law or regulation,
federal, state or local, or the respective articles of incorporation and by-laws
of Borrower or any Subsidiary or result in any breach or violation of, or
constitute a default under, any agreement or instruments by which Borrower or
any Subsidiary or its respective property may be bound.
4.4. Material Contracts. No Borrower nor any Subsidiary is a party to
or in any manner obligated under any contracts material to its business
including, without limitation, the Note Purchase Agreement, the IRB Bonds and
the Existing Letters of Credit, except contracts under which there exists no
material default of Borrower or such Subsidiary.
4.5. Compliance. Borrower and each Subsidiary is in compliance in all
material respects with all applicable laws and regulations, federal, state and
local (including without limitation those administered by the Governmental
Authorities, applicable to the conduct of its business and operations; Borrower
and each Subsidiary possesses all the franchises, permits, licenses,
certificates of compliance and approval and grants of authority necessary or
required in the conduct of its respective business(es), and the same are valid,
binding, enforceable and subsisting without any defaults thereunder or
enforceable adverse limitations thereon and are not subject to any proceedings
or claims opposing the issuance, development or use thereof or contesting the
validity thereof; and no authorization, consent, approval, waiver, license or
formal exemptions from, nor any filing, declaration or registration with, any
court or consents, governmental agency or regulatory authority (federal, state
or local) or non-governmental entity, under the terms of contracts or otherwise,
is required by reason of or in connection with Borrower's or any Subsidiary's
execution and performance of this Agreement, the Notes and other Credit
Documents and actions required hereunder.
4.6. Litigation. There are no actions, suits, proceedings or claims
which are pending or, to the best of Borrower's knowledge or information,
threatened against Borrower or any Subsidiary which, if adversely resolved,
would have a Material Adverse Effect.
4.7. Title to Assets. Borrower and each Subsidiary has good and
marketable title to all of its properties and assets free and clear of any liens
and encumbrances (other than liens and encumbrances permitted under Section 7.4
hereof), and all such assets are in good order and repair and fully covered
(except for deductibles in customary and reasonable amounts) by the insurance
required under Section 6.5 hereof.
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4.8. Accuracy of Information; Full Disclosure.
(a) All information furnished to Lenders concerning the financial
condition of Borrower and the Subsidiaries, including Borrower's annual
financial statement for the period ending December 3, 2000, and the interim
financial statements dated September 2, 2001, copies of which have been
furnished to Lenders, has been prepared in accordance with GAAP and fairly
presents the financial condition of Borrower and its Subsidiaries as of the
dates and for the periods covered and discloses all liabilities of Borrower and
its Subsidiaries and there has been no material adverse change in the financial
condition or business of Borrower or its Subsidiaries from the date of such
statements to the date hereof; and
(b) All financial statements and other documents furnished by Borrower
to the Lenders in connection with this Agreement and the Notes do not and will
not contain any untrue statement of material fact or omit to state a material
fact necessary in order to make the statements contained therein not misleading.
Borrower has disclosed to the Lenders in writing any and all facts which
materially and adversely affect the business, properties, operations or
condition, financial or otherwise, of Borrower or of Borrower and its
Subsidiaries, considered as a whole, or Borrower's ability to perform its
obligations under this Agreement and the Notes.
4.9. Taxes and Assessments.
(a) Borrower and each Subsidiary has filed all required tax returns or
has filed for extensions of time for the filing thereof, and has paid all
applicable federal, state and local taxes, other than taxes not yet due or which
may be paid hereafter without penalty; provided that no such taxes shall be
required to be paid if they are being contested in good faith by appropriate
proceedings and are covered by appropriate reserves maintained in cash or cash
equivalents and in accordance with GAAP; and
(b) Borrower has no knowledge of any deficiency or additional
assessment in connection therewith not provided for in the financial statements
required hereunder.
4.10. Indebtedness. Borrower has no presently outstanding Indebtedness
or obligations, including contingent obligations and obligations under leases of
property from others, except the Indebtedness and obligations: (a) reflected in
Borrower's financial statements which have been furnished to Lenders pursuant to
Section 4.8 hereof; (b) as permitted pursuant to Section 7.1 hereof; and (c)
contracts in the ordinary course of business.
4.11. Investments; Subsidiaries. Borrower has (a) no investments in or
loans to any other individuals or business entities, other than Permitted
Investments, and (b) no Subsidiaries other than those reflected on Schedule
4.11.
4.12. ERISA. Borrower and each Subsidiary and ERISA Affiliate is in
compliance in all material respects with all applicable provisions of ERISA and
the regulations promulgated thereunder, and:
(a) none of Borrower, any Subsidiary, nor any ERISA Affiliate maintains
or contributes to or has maintained or contributed to any multiemployer plan (as
defined in section 4001 of ERISA) under which Borrower, any Subsidiary or any
ERISA Affiliate could have any withdrawal liability;
25
(b) none of Borrower, any Subsidiary, nor any ERISA Affiliate, sponsors
or maintains any Plan under which there is an accumulated funding deficiency
within the meaning of ss.412 of the Code, whether or not waived;
(c) the aggregate liability for accrued benefits and other ancillary
benefits under each Plan subject to Title IV of ERISA that is sponsored or
maintained by Borrower, any Subsidiary or any ERISA Affiliate (determined on the
basis of the actuarial assumptions prescribed for valuing benefits under
terminating single-employer defined benefit plans under Title IV of ERISA) does
not exceed the aggregate fair market value of the assets under each such Plan;
(d) the aggregate liability of Borrower and each Subsidiary and each
ERISA Affiliate arising out of or relating to a failure of any Plan to comply
with the provisions of ERISA or the Code, will not have a Material Adverse
Effect on Borrower or any Subsidiary; and
(e) there does not exist any unfunded liability (determined on the
basis of actuarial assumptions utilized by the actuary for the plan in preparing
the most recent Annual Report) of Borrower, any Subsidiary or ERISA Affiliate
under any plan, program or arrangement providing post-retirement life or health
benefits.
4.13. Fees and Commissions. Borrower owes no fees or commissions of any
kind, and knows of no claim for any fees or commissions, in connection with
Borrower's obtaining the Commitment or the Loan from Lenders, except those
provided herein.
4.14. No Extension of Credit for Securities. Borrower is not now, nor
at any time has it been engaged principally, or as one of its important
activities, in the business of extending or arranging for the extension of
credit, for the purpose of purchasing or carrying any margin stock or margin
securities; nor will the proceeds of the Loan be used by Borrower directly or
indirectly, for such purposes.
4.15. Hazardous Wastes, Substances and Petroleum Products. Except as
disclosed in Schedule 4.15 hereto:
(a) Borrower and each Subsidiary: (i) has received all permits and
filed all notifications necessary to carry on their respective business(es); and
(ii) is in compliance in all respects with all Environmental Control Statutes.
(b) None of Borrower nor any Subsidiary has given any written or oral
notice, nor has it failed to give required notice, to the Environmental
Protection Agency ("EPA") or any state or local agency with regard to any actual
or imminently threatened Release of Hazardous Substances on properties owned,
leased or operated by Borrower or any Subsidiary or used in connection with the
conduct of its business and operations.
(c) None of Borrower nor any Subsidiary has received notice that it is
potentially responsible for costs of clean-up or remediation of any actual or
imminently threatened Release of Hazardous Substances pursuant to any
Environmental Control Statute.
4.16. Solvency. Borrower is, and after receipt and application of the
first Advance will be, solvent such that (i) the fair value of its assets
(including without limitation the fair salable value of the goodwill and other
intangible property of Borrower) is greater than the total amount of its
liabilities, including without limitation, contingent liabilities, (ii) the
present fair salable value of its assets (including without limitation the fair
salable value of the goodwill and other intangible property of Borrower) is not
less than the amount that will be required to pay the probable liability on its
debts as they become absolute and matured, and (iii) it is able to realize upon
its assets and pay its debts and other liabilities, contingent obligations and
other commitments as they mature in the normal course of business. Borrower (i)
does not intend to, and does not believe that it will, incur debts or
liabilities beyond its ability to pay as such debts and liabilities mature, and
(ii) is not engaged in a business or transaction, or about to engage in a
business or transaction, for which its property would constitute unreasonably
small capital after giving due consideration to the prevailing practice and
industry in which it is engaged. For purposes of this Section 4.16, in computing
the amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that reasonably can
be expected to become an actual matured liability of Borrower.
26
4.17. Foreign Assets Control Regulations. Neither the borrowing by
Borrower nor its use of the proceeds thereof will violate the Foreign Assets
Control Regulations, the Foreign Funds Control Regulations, the Transactions
Control Regulations, the Cuban Assets Control Regulations, the Iranian Assets
Control Regulation, the Libyan Sanctions Regulations, the Nicaraguan Trade
Control Regulations or the South African Transactions Regulations of the United
States Treasury Department (31 C.F.R. Subtitle B, Chapter V, as amended).
4.18. Investment Company Act. Borrower is not directly or indirectly
controlled by or acting on behalf of any person which is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
4.19. Public Utility Holding Company Act. Borrower is not a "public
utility holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended (the "1935 Act"), nor does the execution,
delivery and performance of this Agreement and the Notes require any filing,
authorization or consent under the 1935 Act.
ARTICLE 5
CONDITIONS
5.1. First Advance. The obligation of Lenders to make the first Advance
or issue the first Letter of Credit shall be subject to Lenders' receipt of the
following documents, each in form and substance satisfactory to Lenders:
(a) Revolving Credit Notes. The Notes duly executed by Borrower.
(b) Guaranty Agreement. The Guaranty Agreement duly executed by the
Guarantors.
(c) Authorization Documents. A certified copy of the articles of
incorporation, bylaws and resolutions of the Board of Directors of Borrower
authorizing Borrower's execution and full performance of this Agreement, the
Notes and all other documents and actions required hereunder, and an incumbency
certificate setting forth the officers of Borrower and those persons authorized
to execute this Agreement and the other Credit Documents.
(d) Certificates of Good Standing. A certificate of good standing or
subsistence, as applicable issued by the Secretary of State of the state of
organization of Borrower and of each jurisdiction in which Borrower is
authorized to operate or do business.
(e) Opinion of Counsel. An opinion letter from counsel for Borrower
covering with such exceptions and qualifications as may be satisfactory to
Lenders, certain representations and warranties set forth in Article 4 hereof
and such other items as are required by the Lenders.
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(f) Borrowing Notice. A completed Borrowing Notice required under
Section 2.7(a), hereof, and any other documents or information reasonably
required by Lenders in connection therewith, including, with respect to any
Letter of Credit, the LC Application.
(g) Borrowing Base Certificate. A completed Borrowing Base Certificate
prepared as of December 2, 2001.
(h) Fees. Payment of the arrangement fee required by Section 2.13
hereof.
(i) Searches. Uniform Commercial Code, tax, judgment, PBGC and EPA lien
searches against Borrower in those offices and jurisdictions as the Lenders
shall reasonably request.
(j) Appraisals. The Appraisals, in form and substance satisfactory to
the Lenders.
(k) Financial Statements. Consolidated Financial Statements of the
Borrower for the period ending September 2, 2001.
(l) Other Documents. Such additional documents as Lenders reasonably
may request.
5.2. Subsequent Advances and Issuances of Letters of Credit. The
obligation of Lenders to make additional Advances under the Commitment and to
issue Letters of Credit shall be subject to Agent's receipt of: (a) a completed
Borrowing Notice, including, with respect to any Letter of Credit, the LC
Application; (b) a completed Borrowing Base Certificate dated as of the last day
of the fiscal month immediately preceding the date of the requested Advance or
issuance of Letter of Credit; and (c) as to any Advance or issuance of Letter of
Credit requested to fund a Permitted Acquisition, the delivery to all Lenders of
the documents set forth in Section 5.4 hereof, each in form and substance
satisfactory to Required Lenders, and the fulfillment of the other conditions
set forth therein.
5.3. Additional Condition to Lenders' Obligations. It shall be a
condition to Lenders' obligation hereunder to make any Advance or issue any
Letter of Credit that the statements made in related Borrowing Notice shall be
true and correct as if made on the date of such Advance or issuance of such
Letter of Credit, that no Default or Event of Default shall have occurred and be
continuing on the date of such Advance or issuance of such Letter of Credit or
be caused by such Advance or issuance of such Letter of Credit, that all fees
required pursuant to Sections 2.12, 2.13 and 2.14 hereof have been paid as and
when due, and there shall have been no material adverse change in Borrower's
financial condition or business since the date hereof.
5.4. Additional Condition Relating to Permitted Acquisitions. In
addition to the delivery of a Borrowing Notice required by Section 5.2, in
connection with the funding of any Advance to provide funds for any Permitted
Acquisition, Borrower represents and warrants as follows, as applicable:
(a) Validity. Borrower has the power and authority under the laws of
Borrower's state of incorporation and under its articles of incorporation and
by-laws to enter into and perform the related Purchase Documents and all other
agreements, documents and actions required thereunder; and all actions
(corporate or otherwise) necessary or appropriate for Borrower's execution and
performance of such Purchase Documents and all other documents, agreements and
actions required thereunder have been taken, and, upon their execution, such
Purchase Documents will constitute the valid and binding obligation of Borrower,
enforceable in accordance with its terms.
28
(b) No Violations. The making and performance of the Purchase
Documents, and all other agreements, documents and actions required thereunder,
will not violate any provision of any law or regulation, federal, state or
local, including without limitation all state corporate laws and judicial
precedents of Borrower's state of incorporation and will not violate any
provisions of the articles of incorporation and by-laws of Borrower, or
constitute a default under any agreement by which Borrower or its property may
be bound.
(c) Purchase Documents. As to any Permitted Acquisition, final drafts
of all Purchase Documents in connection with the Permitted Acquisition have been
delivered to each Lender.
ARTICLE 6
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as the Commitment,
any Letter of Credit or any Indebtedness of Borrower to Lenders is outstanding,
Borrower will and will cause each of its Subsidiaries (and with respect to
Section 6.10, will cause each ERISA Affiliate) to:
6.1. Existence and Good Standing. Preserve and maintain its existence
as a corporation, and its good standing in all states in which it conducts
business and the validity of all its franchises, licenses, permits, certificates
of compliance or grants of authority required in the conduct of its business,
except as permitted under Sections 7.7 and 7.8.
6.2. Financial Statements and Public Information. Furnish to the Agent
the following financial and public information:
(a) not later than ninety (90) days after the end of each fiscal year,
audited consolidated year-end financial statements for Borrower and its
Subsidiaries, including, but not limited to, statements of financial condition,
income and cash flows, a reconciliation of net worth, notes to financial
statements and any other information which may assist the Lenders in assessing
Borrower's financial condition (all of the above prepared in accordance with
GAAP, consistently applied, and accompanied by an opinion, satisfactory in form
and substance to the Agent, by an independent Certified Public Accountant
("CPA") acceptable to the Agent, and certified as true, correct and complete by
Borrower's assistant treasurer, treasurer or chief financial officer;
(b) not later than forty-five (45) days after the end of each fiscal
quarter: (i) consolidated financial statements for Borrower and its Subsidiaries
including, but not limited to, statements of financial condition, income and
cash flows, and a reconciliation of net worth (certified as true, correct and
complete by Borrower's assistant treasurer, treasurer or chief financial
officer); and (ii) a Borrowing Base Certificate dated as of the last day of such
quarter and certified as true, correct and complete by Borrower's assistant
treasurer, treasurer or chief financial officer;
(c) prior to December 1, 2002, so long as any amount of the Loan
(including any Letter of Credit) is outstanding, not later than fifteen (15)
calendar days after the end of each applicable month, a Borrowing Base
Certificate dated as of the last day of such month and certified as true,
correct and complete by Borrower's assistant treasurer, treasurer or chief
financial officer;
(d) not later than ninety (90) days after the end of each fiscal year
of the Borrower, an annual business plan and budget containing, among other
things, projected financial statements for the next fiscal year.
29
(e) not later than five (5) calendar days after receipt thereof by
Borrower or any of its Subsidiaries a copy of any management letter or report
for Borrower or such Subsidiary prepared by a CPA;
(f) promptly upon transmission thereof, copies of all such financial
statements, proxy statements, notices and reports as it shall send to its
stockholders, copies of all registration statements (without exhibits), and all
annual, quarterly or other reports which Borrower files with the Securities and
Exchange Commission (or any governmental body or agency succeeding to the
functions of the Securities and Exchange Commission) including without
limitation, Forms 10Q and Forms 10K; and
(g) such other information respecting the operations, financial or
otherwise, of Borrower or any of its Subsidiaries, as the Lenders or any of them
may from time to time reasonably request.
6.3. Compliance Certificate. Furnish to the Agent, together with each
set of financial statements described in Sections 6.2(a) and (b) above, a
Compliance Certificate in the form of Exhibit D hereto, showing the calculation
of the covenants set forth in Sections 6.12 through 6.16 hereof and signed by
Borrower's assistant treasurer, treasurer or chief financial officer, certifying
that (i) all representations and warranties set forth in this Agreement and in
any other Credit Document remain true and correct; (ii) none of the covenants in
this Agreement or in any other Credit Document has been breached; and (iii) no
Default or Event of Default under this Agreement or under the other Credit
Documents has occurred and is continuing.
6.4. Books and Records. Keep and maintain satisfactory and adequate
books and records of account in accordance with GAAP and make or cause the same
to be made available to Lenders or their agents or nominees at any reasonable
time upon reasonable notice for inspection and to make extracts thereof and
permit Agent or any Lender to discuss contents of same with senior officers of
Borrower and each Subsidiary and also with outside auditors and accountants of
Borrower.
6.5. Insurance. Keep and maintain all of its property and assets in
good working order and repair and fully covered by insurance (subject to
deductibles in customary and reasonable amounts) with reputable and financially
sound insurance companies against such hazards and in such amounts as are
customary in the industry, and to furnish or cause to be furnished to Agent
certificates evidencing such insurance upon request.
6.6. Compliance with Laws. Comply in all material respects with all
local, state and federal laws and regulations applicable to its business,
including without limitation the Environmental Control Statutes, and the
Securities Act and all laws and regulations of the SEC and other Governmental
Authorities, and the provisions and requirements of all franchises, permits,
certificates of compliance and approval issued by regulatory authorities and
other like grants of authority held by Borrower or any Subsidiary, except where
failure to maintain any such franchise, permit, certificate of compliance or
approval issued by any regulatory authority or other like grant of authority is,
individually or in the aggregate, not reasonably likely to have a Material
Adverse Effect.
6.7. Taxes. Pay and discharge all taxes, assessments or other
governmental charges or levies imposed on it or any of its property or assets
prior to the date on which any penalty for non-payment or late payment is
incurred, unless the same are (a) currently being contested in good faith by
appropriate proceedings, diligently prosecuted and (b) are covered by
appropriate reserves maintained in cash or cash equivalents in accordance with
GAAP.
30
6.8. Costs and Expenses. Pay or reimburse Agent and each Lender for all
out-of-pocket costs and expenses (including but not limited to reasonable
attorneys' fees and disbursements) Agent or any Lender may pay or incur in
connection with the preparation and review of this Agreement and all waivers,
consents and amendments in connection therewith and all other documentation
related thereto, the making of the Loan hereunder, and the collection,
administration or enforcement of the same, including without limitation any fees
and disbursements incurred in defense of or to retain any amounts of principal,
interest or fees paid. All obligations provided for in this Section 6.8 shall
survive any termination of this Agreement or the Commitment and the repayment of
the Loan.
6.9. Notice of Certain Events. Notify Agent in writing promptly:
(a) of the institution of any litigation, the commencement of any
administrative proceedings, the happening of any event or the assertion or
threat of any claim which is reasonably likely to have a Material Adverse Effect
or the occurrence of any Default or Event of Default hereunder;
(b) of any material default under the Note Purchase Agreement, the IRB
Bonds, either Existing Letter of Credit or any other material contract;
(c) in detail of any actual or alleged failure to comply with or
perform, breach, violation or default under any applicable local, state and
federal laws or regulations or under the terms of any of such franchises or
licenses, grants of authority, or of the occurrence or existence of any facts or
circumstances which with the passage of time, the giving of notice or otherwise
could create such a breach, violation or default or could occasion the
termination of any of such franchises or grants of authority; if any of the
foregoing is reasonably likely to have a Material Adverse Effect;
(d) with respect to the Environmental Control Statutes, in connection
with the conduct of Borrower's or any Subsidiary's business(es) or operations,
any person (including, without limitation, EPA or any state or local agency)
provides oral or written notification to Borrower or any Subsidiary, or Borrower
or any Subsidiary otherwise becomes aware of a condition with regard to an
actual or imminently threatened Release of Hazardous Substances; and notify
Agent in detail immediately upon the receipt by Borrower or any Subsidiary of an
assertion of liability under the Environmental Control Statutes, of any actual
or alleged failure to comply with or perform, breach, violation or default under
any such statutes or regulations or of the occurrence or existence of any facts,
events or circumstances which with the passage of time, the giving of notice, or
both, could create such a breach, violation or default; if any of the foregoing
is reasonably likely to have a Material Adverse Effect; and
(e) upon the occurrence of any Change in Control or Control Event, of
such Change in Control or Control Event unless notice in respect of such Change
in Control (or Change in Control contemplated by such Control Event) shall have
been given pursuant to Section 7.12.
6.10. ERISA. (a) Comply in all material respects with the provisions of
ERISA to the extent applicable to any Plan maintained for the employees of
Borrower, any Subsidiary or any ERISA Affiliate; (b) do or cause to be done all
such acts and things that are required to maintain the qualified status of each
Plan which is intended to be qualified under Section 4.01(a) of the Code and the
tax-exempt status of each trust forming part of such Plan; (c) not incur any
material accumulated funding deficiency (within the meaning of ERISA and the
regulations promulgated thereunder), or any material liability to the PBGC (as
established by ERISA); (d) permit any event to occur (i) which would permit the
PBGC to terminate a Plan under Section 4042 of ERISA or (ii) which may result in
the imposition of a lien on its properties or assets; and (e) notify Agent in
writing promptly after it has come to the attention of senior management of
Borrower of the occurrence of any "reportable event" under Section 4043 of ERISA
(other than an event for which notice is waived), or other event which would
permit the PBGC to terminate a Plan under Section 4042 of ERISA (relating to the
soundness of a Plan) or the PBGC's ability to assert a material liability
against it or impose a lien on Borrower's, any Subsidiary's, or any ERISA
Affiliate's properties or assets; and (f) refrain from engaging in any
non-exempt prohibited transactions or actions causing liability under Section
502 of ERISA.
31
6.11. Deposit Accounts. Maintain all of its primary operating accounts
with the Agent.
6.12. Minimum Net Worth. Maintain at all times, to be tested as of each
Calculation Date, Net Worth of not less than the greater of (a) 85% of Net Worth
calculated as of December 2, 2001 or (b) $30,000,000 provided, that in
performing such calculation, an amount not to exceed Three Million Dollars
($3,000,000) deducted from Net Worth in connection with Cost Base Reduction
Activities will be added back to Net Worth; and increasing each fiscal quarter
thereafter, on a cumulative basis over such amount, by an amount equal to (i)
fifty percent (50%) of Adjusted Net Income for such fiscal quarter, so long as
Net Worth is less than $60,000,000 and (ii) thirty percent (30%) of Adjusted Net
Income for such fiscal quarter, if Net Worth is at least $60,000,000, such
adjustment to be made in either case without allowance for any losses.
6.13. Consolidated Capitalization Ratio. Maintain at all times, to be
tested as of each Calculation Date, a percentage ratio of (a) Net Funded Debt to
(b) the sum of (i) Net Funded Debt and (ii) Net Worth, not to exceed fifty
percent (50%); provided, that in performing such calculation, an amount not to
exceed Three Million Dollars ($3,000,000) deducted from Net Worth in connection
with Cost Base Reduction Activities will be added back to Net Worth.
6.14. Funded Debt to EBITDA Ratio. Maintain at all times, to be tested
as of each Calculation Date, a ratio of Funded Debt to EBITDA, of not more than
2.5 to 1.0. For the purposes of calculating this ratio prior to Xxxxx 0, 0000,
XXXXXX will be calculated to include the applicable Consolidated quarterly
Proforma EBITDA calculations previously provided to the Lenders for the fiscal
quarters ending March 4, 2001, June 3, 2001 and September 2, 2001 and a
calculation for the fiscal quarter ending December 2, 2001, which the Borrower
will submit to the Lenders no later than February 28, 2002.
6.15. Fixed Charge Coverage Ratio. Maintain at all times, to be tested
as of each Calculation Date, a Fixed Charge Coverage Ratio not less than 1.3 to
1.0 for each Calculation Date; provided, that for the Calculation Date September
1, 2002 such ratio shall be not less than 1.2 to 1.0.
6.16. Funded Debt to Borrowing Base Ratio. Maintain at all times, to be
tested as of the last day of each fiscal quarter, a ratio of Funded Debt to the
Borrowing Base, of not more than 1.0 to 1.0.
6.17. Subsequent Credit Terms.
(a) Notify Agent in writing not less than five (5) Business Days prior
to its entering into any amendment, modification of any existing credit
arrangement, including, without limitation, the Note Purchase Agreement and the
IRB Bonds, pursuant to which Borrower or any of them shall agree to financial
covenants which are more restrictive to Borrower or its Consolidated
Subsidiaries than those contained in Articles 6 and 7 hereof. Upon Borrower's
entry into any such amendment or modification or agreement with respect to same,
the corresponding covenants, terms and conditions of this Agreement shall be and
shall be deemed to be automatically and immediately amended to conform with and
to include the applicable covenants, terms and/or conditions of such other
agreement; provided, however, that the foregoing shall not be applicable to or
be deemed to affect any provision of this Agreement if any amendment or
modification is less restrictive to Borrower and its Consolidated Subsidiaries.
32
(b) In the event any property of Borrower or any Subsidiary is subject
to a lien, security interest or other encumbrance in violation of Section 7.4
hereof, Borrower or such Subsidiary shall make, or cause to be made, provisions
whereby the Notes shall be secured equally and ratable with all other
obligations secured thereby, and in any case the Notes shall have the benefit,
to the full extent that, and with such priority as the holders may be entitled
thereto under applicable law, of any equitable lien on such property securing
the Notes. Such violation of Section 7.4 hereof shall constitute an Event of
Default hereunder, whether or not the Notes are secured pursuant to this Section
6.17(b); and.
(c) Borrower hereby agrees promptly to execute and deliver any and all
such documents and instruments and to take all such further actions as Lender
may, in its sole discretion, deem necessary or appropriate to effectuate the
provisions of this Section 6.17.
6.18. Successor Agent. In the event of the appointment of any successor
Agent pursuant to Section 9.15 hereof, execute and deliver any documents
reasonably requested by Lenders to effectuate and confirm the transfer to such
successor Agent of all rights, powers, duties, obligations and property vested
in its predecessor Agent hereunder.
6.19. Transactions Among Affiliates. Cause all transactions between and
among Affiliates to be on an arms-length basis and on such terms and conditions
as are customary in the applicable industry between and among unrelated
entities.
6.20. Purchase Documents. Provide Agent with copies of all Purchase
Documents promptly upon execution thereof.
6.21. Performance of Obligations. Perform in all material respects all
of its obligations under the terms of all material agreements, indentures,
mortgages, security agreements or other debt instruments to which it is a party
or by which it is bound.
6.22. Audits/Inspections. Upon reasonable notice and during normal
business hours, permit representatives appointed by the Agent, including,
without limitation, independent accountants, agents, attorneys and appraisers to
visit and inspect its property, including its books and records, its accounts
receivable and inventory, its facilities and its other business assets, and to
make photocopies or photographs thereof and to write down and record any
information such representative obtains and shall permit the Agent or its
representatives to investigate and verify the accuracy of information provided
to the Agent and to discuss all such matters with the officers, employees and
representative of such Person.
6.23. Ownership of Subsidiaries. Borrower shall directly or indirectly
own at all times 100% of the Shares of each of its Subsidiaries.
6.24. Other Information. Provide Lenders with any other documents and
information, financial or otherwise, reasonably requested by Lenders from time
to time.
ARTICLE 7
NEGATIVE COVENANTS
So long as the Commitment, any Letter of Credit or any
Indebtedness of Borrower to Lenders remains outstanding hereunder, Borrower
covenants and agrees that without Required Lenders' prior written consent, it
will not and it will not permit any Subsidiary to:
33
7.1. Indebtedness. Borrow any monies or create any Indebtedness except:
(a) borrowings from the Lenders hereunder; (b) under the Note Purchase
Agreement, the IRB Bonds and the Existing Letters of Credit; (c) trade
Indebtedness and other obligations and liabilities which appear on the balance
sheet of the Borrower, each to the extent incurred in the normal and ordinary
course of business for value received; (d) Existing Capital Lease Obligations;
(e) guaranties permitted under Section 7.2; and (f) Internal Loans; provided,
however, that the Borrower may incur up to an aggregate of $2,000,000 principal
amount of Indebtedness in any fiscal year, in addition to the Indebtedness
permitted above, so long as immediately prior to and following any such
incurrence of additional Indebtedness no Default or Event of Default exists or
would exist hereunder.
7.2. Guaranties. Guarantee or assume or agree to become liable in any
way, either directly or indirectly, for any additional indebtedness or liability
of others except (a) to endorse checks or drafts in the ordinary course of
business, (b) in the normal and ordinary course of business not to exceed in the
aggregate $1,000,000 at any time, and (c) the guarantees described on Schedule
7.2 hereof, provided that the Borrower's guarantee to ING Bank in the
Netherlands described on Schedule 7.2 will be terminated no later than February
1, 2002.
7.3. Loans. Make any loans or advances to any Person, other than (a)
loans to directors, officers, employees, agents customers and suppliers that do
not exceed in the aggregate, the principal amount of Five Hundred Thousand
Dollars ($500,000) at any one time outstanding; and (b) the Internal Loans.
7.4. Liens and Encumbrances. Create, permit or suffer the creation of
any liens, security interests, or any other encumbrances on any of its property,
real or personal, except:
(a) in favor of Lenders, as security for the Loan;
(b) liens arising in favor of sellers or lessors for Indebtedness and
obligations incurred to purchase or lease fixed or capital assets permitted
under Section 7.1 hereof, provided, however, that such liens secure only the
indebtedness and obligations created thereunder and are limited to the assets
purchased or leased pursuant thereto;
(c) liens for taxes, assessments or other governmental charges,
federal, state or local, which are then being currently contested in good faith
by appropriate proceedings and are covered by appropriate reserves maintained in
cash or cash equivalents and in accordance with GAAP;
(d) pledges or deposits to secure obligations under workmen's
compensation, unemployment insurance or social security laws or similar
legislation;
(e) deposits to secure performance or payment bonds, bids, tenders,
contracts, leases, franchises or public and statutory obligations required in
the ordinary course of business;
(f) deposits to secure surety, appeal or custom bonds required in the
ordinary course of business;
(g) existing liens on the real property and related assets located in
Statesville, North Carolina in favor of the holders of the IRB Bonds;
(h) statutory liens of landlords and liens of carriers, warehousemen,
mechanics, materialmen and suppliers and other liens imposed by law or pursuant
to customary reservations or retentions of title arising in the ordinary course
of business; provided, that such liens secure only amounts not yet due and
payable or, if due and payable, are being contested in good faith by appropriate
proceedings for which adequate reserves determined in accordance with GAAP have
been established (and as to which the property subject to any such lien is not
yet subject to foreclosure, sale or loss on account thereof);
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(i) liens in connection with any judgment, writ, warrant or attachment
or execution or similar process (including judgment or appeal bonds), which
would not, either singularly or in the aggregate result in or constitute an
Event of Default pursuant to Section 8.1(j) hereof;
(j) easements, right-of-way, restrictions (including zoning
restrictions, minor defects or irregularities in title and other similar charges
or encumbrances not, in any material respect, impairing the use of the
encumbered Property for its intended purposes;
(k) leases or subleases granted to others not interfering in any
material respect with the business of Borrower or any Subsidiary;
(l) any interest of title of a lessor under, and liens arising from UCC
financing statements (or equivalent filings, registrations or agreements in
foreign jurisdictions) relating to, leases permitted by this Agreement;
(m) normal and customary rights of setoff with respect to deposits of
cash in favor of banks or other depository institutions; and
(n) Liens existing on the date hereof and set forth on Schedule 7.4;
provided, that (i) no such lien shall at any time be extended to or cover any
property of the Borrower or any Subsidiary other than the property subject
thereto on the date hereof and (ii) the principal amount of the Indebtedness
secured by such liens shall not be increased.
7.5. Additional Negative Pledge. Enter into, assume, or be or become
subject to any agreement, covenant, or promise with any person or entity (other
than (a) hereunder and (b) as exists on the date hereof in the Note Purchase
Agreement and the Existing Letter of Credit) restricting in any manner its
ability to pledge its assets or properties or otherwise grant any liens,
security interests or encumbrances on its property.
7.6. Restricted Payments. Make any Restricted Payment if, immediately
prior to or following any such payment, a Default or Event of Default exists or
would exist hereunder.
7.7. Transfer of Assets; Liquidation.
(a) Sell, lease, transfer or otherwise dispose of all or any portion of
its assets, real or personal, other than such transactions in the normal and
ordinary course of business for value received; provided, however, that the
Borrower and any Subsidiary may sell, lease, transfer and otherwise dispose of
assets outside the ordinary course of its business so long as (i) no Default or
Event of Default exists immediately prior to or following any such action and
(ii) the aggregate fair market value of such assets sold, leased, transferred or
otherwise disposed of does not exceed in the aggregate $12,000,000; or
(b) discontinue, liquidate, or change in any material respect any
substantial part of its operations or business(es); provided, however, that the
Borrower and Subsidiaries may take such actions so long as (A) no Default or
Event of Default exists immediately prior to or following any such action and
(B) each such action is in respect of an operation or business producing annual
sales (in the fiscal year most recently preceding such action) in an amount
which when aggregated with all other actions under this subsection (b) does not
exceed $8,500,000.
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7.8. Acquisitions and Investments.
(a) Purchase or otherwise acquire (including without limitation by way
of share exchange) any part or amount of the capital stock or assets of, or make
any investments; provided that, Borrower may (i) make Permitted Acquisitions,
(ii) purchase goods and services in the ordinary course of the Borrower's
business and (iii) make Permitted Investments, subject to the conditions and
limitations set forth in the definition thereof, in, any other firm or
corporation;
(b) enter into any new business activities or ventures not directly
related to its present business;
(c) merge or consolidate with or into any other firm or corporation,
except for mergers that result in the Borrower being the surviving entity to the
extent no Default or Event of Default exists immediately prior to or following
any such action; provided, that the consent of the Lenders to any such action
solely among Subsidiaries shall not be unreasonably withheld; or
(d) create any subsidiary corporations, unless such subsidiary becomes
a Guarantor hereunder on terms acceptable to the Required Lenders, provided
that, no Default or Event of Default exists immediately prior to or following
any such action.
7.9. Payments to Affiliates. Pay any salaries or other compensation,
fees (including but not limited to management and consulting fees) or other
payments to any Affiliate of Borrower other than at market rates and in the
ordinary course of business.
7.10. Use of Proceeds. Use any of the proceeds of the Loan, directly or
indirectly, to (i) purchase or carry margin securities within the meaning of
Regulation U of the Board of Governors of the Federal Reserve Systems; (ii)
engage as its principal business in the extension of credit for purchasing or
carrying such securities, or (iii) to fund, by loan, contribution or otherwise,
any Subsidiary of the Borrower.
7.11. Governing Documents. Either (i) amend or permit any amendments to
Borrower's articles of incorporation or by-laws or the Note Purchase Agreement,
the IRB Bonds or the reimbursement obligations in connection with either
Existing Letter of Credit, or (ii) make any amendment to any other material
contract, which amendment under (i) or (ii) is adverse to the Lenders.
7.12. Change in Control. The Borrower will not take any action that
consummates or finalizes a Change in Control unless (i) at least thirty (30)
days prior to such action it shall have given to each Lender written notice and
(ii) the Required Lenders shall have provided written consent to such Change in
Control.
7.13. Nature of Business. Substantially alter the character or conduct
of the business conducted by the Borrower or any Subsidiary as of the date
hereof.
7.14. Prepayment of Indebtedness. If any Default or Event of Default
has occurred and is continuing or would be directly or indirectly caused as a
result thereof, make (or give any notice with respect thereto) any voluntary or
optional payment or prepayment or redemption or acquisition for value
(including, without limitation, by way of depositing money or securities with
the trustee with respect thereto before due for the purpose of paying when due),
refund, refinancing or exchange of any other Indebtedness.
7.15. Fiscal Year. Without the prior written approval of the Agent,
change its fiscal year.
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7.16. Issuance and Sale of Stock. Except (a) to qualify directors where
required by applicable law and (b) to the extent permitted pursuant to Sections
7.7 and 7.8 hereof, sell, transfer or otherwise dispose of, any shares of
capital stock of Borrower or any Subsidiary or permit any of its Subsidiaries to
issue, sell or otherwise dispose of, any shares of capital stock of any
Subsidiary.
7.17. Sale Leasebacks. Except as permitted pursuant to Section 7.1,
directly or indirectly, become or remain liable as lessee or as guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any Property (whether real or personal or mixed), whether now owned or
acquired after the Closing Date, (i) which such Person has sold or transferred
or is to sell or transfer to any other Person other than Borrower or (ii) which
such Person intends to use for substantially the same purpose as any other
Property which has been sold or is to be sold or transferred by such Person to
any other Person in connection with such lease.
7.18. Operating Lease Obligations. Borrower will not, nor will it
permit any of its Subsidiaries to, enter into, assume or permit to exist any
obligations for the payment of rental under Operating Leases which in the
aggregate for all such Persons would exceed $6,000,000 in any fiscal year.
ARTICLE 8
DEFAULT
8.1. Events of Default. Each of the following events shall be an Event
of Default hereunder:
(a) if Borrower shall fail to pay as and when due any installment of
principal, interest, fees, costs, expenses or any other sum payable to Lenders
hereunder or otherwise;
(b) if any representation or warranty made herein or in connection
herewith or in any statement, certificate or other document furnished hereunder
is false or misleading in any material respect when made;
(c) if Borrower or any Subsidiary shall default in any payment or
performance of any other obligation(s) or Indebtedness (other than the
obligations and Indebtedness hereunder) owing to either Lender or to any other
Person (i) under or in connection with the Note Purchase Agreement, the IRB
Bonds or, unless cured within thirty (30) days, reimbursement obligations
arising in connection with either Existing Letter of Credit or (ii) otherwise,
if the outstanding amount (including outstanding principal and any accrued and
unpaid interest and fees due thereunder) of which, either singly or in the
aggregate, is in excess of $3,500,000, whether such obligation(s) or
Indebtedness are now or hereafter incurred;
(d) if Borrower shall default in or fail to observe at any test date
the covenants set forth in Sections 6.12 through 6.16 hereof or 7.1 through 7.18
hereof;
(e) if Borrower or any Subsidiary shall default in the performance of
any other agreement or covenant contained herein (other than as provided in
subsections (a), (b), (c) or (d) above) or in any document executed or delivered
in connection herewith, and such default shall continue uncured for thirty (30)
days after Borrower had or should have had knowledge of such breach;
(f) if any Change of Control occurs;
(g) if custody or control of any substantial part of the property of
Borrower or any Subsidiary shall be assumed by any governmental agency or any
court of competent jurisdiction at the instance of any governmental agency; if
any material license or franchise shall be suspended, revoked or otherwise
terminated, or if any governmental regulatory authority or judicial body shall
make any other final non-appealable determination the effect of which would be
to affect materially and adversely affect the operations of Borrower and its
Subsidiaries taken as a whole as now conducted;
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(h) if: Borrower or any Guarantor becomes insolvent, bankrupt or
generally fails to pay its debts as such debts become due, is adjudicated
insolvent or bankrupt, admits in writing its inability to pay its debts, suffers
a custodian, receiver or trustee for it or substantially all of its property to
be appointed, makes an assignment for the benefit of creditors, or suffers
proceedings under any law related to bankruptcy, insolvency, liquidation or the
reorganization, readjustment or the release of debtors to be instituted against
it; proceedings under any law related to bankruptcy, insolvency, liquidation, or
the reorganization, readjustment or the release of debtors is instituted or
commenced by Borrower or any Guarantor; any order for relief is entered relating
to any of the foregoing proceedings; Borrower or any Guarantor shall call a
meeting of its creditors with a view to arranging a composition or adjustment of
its debts; or Borrower or any Guarantor shall by any act or failure to act
indicate its consent to, approval of or acquiescence in any of the foregoing;
(i) any event or condition shall occur or exist with respect to any
activity or substance regulated under the Environmental Control Statutes and as
a result of such event or condition, Borrower or any Subsidiaries have incurred
or in the opinion of the Lenders are reasonably likely to incur a liability in
excess of $1,000,000 during any consecutive twelve (12) month period; or
(j) if any judgment, writ, warrant or attachment or execution or
similar process which calls for payment or presents liability either singly or
in the aggregate in excess of $1,000,000 shall be rendered, issued or levied
against Borrower or any Subsidiary or its respective property and such process
shall not be paid, waived, stayed, vacated, discharged, settled, satisfied or
fully bonded within sixty (60) days after its issuance or levy.
8.2. Remedies. Upon the occurrence of any Event of Default and at any
time thereafter, at the election of Required Lenders, and by notice by Agent to
Borrower (except if an Event of Default described in Section 7.1(h) shall occur
in which case acceleration shall occur automatically without notice), Required
Lenders may declare the entire unpaid balance, principal, interest and fees, of
all Indebtedness of Borrower to Lenders, hereunder or otherwise, to be
immediately due and payable. Upon such declaration, the Commitment shall
immediately and automatically terminate and Lenders shall have no further
obligation to make any Advances and the immediate right to enforce or realize on
any collateral security granted therefor in any manner or order it deems
expedient without regard to any equitable principles of marshalling or
otherwise. In addition to any rights granted hereunder or in any documents
delivered in connection herewith, Lenders shall have all the rights and remedies
granted by any applicable law, all of which shall be cumulative in nature.
8.3. Right of Setoff. If any of the Liabilities shall be due and
payable or any one or more Events of Default shall have occurred, whether or not
the Agent shall have made demand under any Credit Document and regardless of the
adequacy of any collateral for the Liabilities or other means of obtaining
repayment of the Liabilities, each Lender shall have the right, without notice
to Borrower and is specifically authorized hereby to set-off against and apply
to the then unpaid balance of the Liabilities any items or funds of Borrower
held by each Lender or any affiliate of such Lender, any and all deposits
(whether general or special, time or demand, matured or unmatured) or any other
property of Borrower including, without limitation, securities and/or
certificates of deposit, now or hereafter maintained by Borrower for its own
account with any Lender or any affiliate of such Lender, and any other
indebtedness at any time held or owing by any Lender or any affiliate of such
Lender, to or for the credit or the account of Borrower, even if effecting such
setoff results in a loss or reduction of interest or the imposition of a penalty
applicable to the early withdrawal of time deposits. For such purpose, the
Lenders shall have, and Borrower hereby grants to each Lender, a first lien on
and security interest in such deposits, property, funds and accounts and the
proceeds thereof.
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8.4. Remedies Cumulative; No Waiver. The rights, powers and remedies of
the Lenders provided in this Agreement and any in the other Credit Documents are
cumulative and not exclusive of any right, power or remedy provided by law or
equity. No failure or delay on the part of the Agent or any Lender in the
exercise of any right, power or remedy shall operate as a waiver thereof, nor
shall any single or partial exercise preclude any other or further exercise
thereof, or the exercise of any other right, power or remedy.
ARTICLE 9
LENDERS
This Article sets forth the relative rights and duties of
Agent and Lenders respecting the Loan and does not confer any enforceable rights
on Borrower against Lenders or create on the part of Lenders any duties or
obligations to Borrower.
9.1. Application of Payments. Agent shall apply all payments of
principal, interest, commitment fee or other amounts hereunder made to Agent by
or on behalf of Borrower, to Lenders on the basis of their Pro Rata Shares of
the outstanding principal balance of indebtedness hereunder, except (i) the fees
payable under Sections 2.12 and 2.13 hereof which shall be distributed to each
Lender in the respective percentage in which such Lender participates in the
Commitment and (ii) the fees payable under Section 2.14 hereof, which shall be
paid solely to Agent. Such distribution of payments shall be made promptly in
federal funds immediately available at the office of each Lender set forth
above.
9.2. Setoff. In the event a Lender, by exercise of its right of setoff,
otherwise, reduces indebtedness owing to it hereunder by an amount greater than
its Pro Rata Share of such amount based upon the Lenders' respective shares of
principal indebtedness outstanding immediately before such setoff, such Lender
shall purchase a portion of the indebtedness hereunder owing to each other
Lender so that after such purchase each Lender shall hold its Pro Rata Share of
all the indebtedness then outstanding hereunder, provided that if all or any
portion of such excess payment is thereafter recovered from such Lender, such
purchase shall be rescinded and the purchase price restored to the extent of any
such recovery, but without interest.
9.3. Modifications and Waivers. No modification or amendment hereof,
consent hereunder or waiver of Event of Default shall be effective except by
written consent of the Required Lenders; provided, however, that (a) the written
consent of all Lenders shall be required to: (i) decrease the rate(s) of
interest applicable to any Advance; (ii) increase the amount of the Commitment,
and the Lenders' respective shares thereof, (iii) modify the Commitment Fee, or
(iv) modify, amend, waive, discharge, terminate or suspend compliance with (A)
the dates of payment hereunder, or (B) the provisions of this Section 9.3; and
(b) in the absence of the existence of an Event of Default or a Default
hereunder, Borrower may propose the replacement of, and with the written consent
of the Agent may replace, any Lender. The Lenders hereby agree to execute such
further documents including without limitation amendments to this Agreement, and
the Note(s), and certificates and deliver such opinions as the Agent and its
counsel shall so request to implement any termination or replacement
contemplated hereby. Any amendment or waiver made pursuant to this Section 9.3
shall apply to and bind all of the Lenders and any future holder of any Notes.
No modification or waiver of any provision of this Agreement or any Note, nor
any consent to any departure by Borrower herefrom or therefrom, shall in any
case be effective unless the same be in writing, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No notice to or demand on Borrower in any case shall entitle
Borrower to any other or further notice or demand in any similar or other
circumstances.
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9.4. Obligations Several. The obligations of the Lenders hereunder are
several, and each Lender hereunder shall not be responsible for the obligations
of the other Lenders hereunder, nor, will the failure of one Lender to perform
any of its obligations hereunder relieve the other Lenders from the performance
of their respective obligations hereunder.
9.5. Lenders' Representations. Each Lender represents and warrants to
the other Lenders that (i) it has been furnished all information it has
requested for the purpose of evaluating its proposed participation under this
Agreement; (ii) it has decided to enter into this Agreement on the basis of its
independent review and credit analysis of Borrower, this Agreement and the
documentation in connection therewith and has not relied for such analysis on
any information or analysis provided by any other Lender; (iii) it is
participating herein for its own account as a commercial transaction and not
with a view to the distribution, disposition or participation of its interest
herein, and it has no present intention of making any such distribution,
disposition or participation.
9.6. Investigation. No Lender shall have any obligation to the others
to investigate the condition of Borrower or any other matter concerning the
Loan.
9.7. Powers of Agent. Agent shall have and may exercise those powers
specifically delegated to Agent herein, together with such powers as are
reasonably incidental thereto.
9.8. General Duties of Agent, Immunity and Indemnity. In performing its
duties as Agent hereunder, Agent will take the same care as it takes in
connection with loans in which it alone is interested, subject to the
limitations on liabilities contained herein; provided that Agent shall not be
obligated to ascertain or inquire as to the performance of any of the terms,
covenants or conditions hereof by Borrower. Neither Agent nor any of its
directors, officers, agents or employees shall be liable for any action or
omission by any of them hereunder or in connection herewith except for gross
negligence or willful misconduct. Subject to such exception, each of the Lenders
hereby indemnifies Agent on the basis of such Lender's Pro Rata Share, against
any such liability, claim, loss or expense; provided, however, that if one or
more of the Lenders shall make any payments to Agent for any such liability,
claim, loss or expense for which Borrower subsequently reimburses Agent, Agent
shall promptly remit to each such Lender the respective amount received from
such Lender on account thereof or, if less than full payment is received from by
Borrower, the proportionate amount thereof paid by each such Lender.
9.9. No Responsibility for Representations or Validity, etc. Each
Lender agrees that Agent shall not be responsible to any Lender for any
representations, statements, or warranties of Borrower herein. Neither Agent nor
any of its directors, officers, employees or agents shall be responsible for the
validity, effectiveness, sufficiency, perfection or enforceability of this
Agreement and any collateral security therefor, or any documents relating
thereto or for the priority of any of Lenders' security interests in any such
collateral security.
9.10. Action on Instruction of Lenders; Right to Indemnity. Agent shall
in all cases be fully protected in acting or refraining from acting hereunder in
accordance with written instructions to it signed by Required Lenders unless the
consent of all the Lenders is expressly required hereunder in which case Agent
shall be so protected when acting in accordance with such instructions from all
the Lenders. Such instructions and any action taken or failure to act pursuant
thereto shall be binding on all the Lenders, provided that except as otherwise
provided herein, Agent may act hereunder in its own discretion without
requesting such instructions. Agent shall be fully justified in failing or
refusing to take any action hereunder unless it shall first be specifically
indemnified to its satisfaction by the other Lenders on the basis of their
respective Pro Rata Shares, against any and all liability and expense which it
may incur by reason of taking or continuing to take any such action.
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9.11. Employment of Agents. In connection with its activities
hereunder, Agent may employ agents and attorneys-in-fact and shall not be
answerable, except as to money or securities received by it or its authorized
agents, for the default or misconduct of agents or attorneys-in-fact selected
with reasonable care.
9.12. Reliance on Documents. Agent shall be entitled to rely upon (a)
any paper or document believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons and (b) upon the opinion of its
counsel with respect to legal matters.
9.13. Agent's Rights as a Lender. With respect to its share of the
indebtedness hereunder, Agent shall have the same rights and powers hereunder as
any other Lender and may exercise the same as though it were not Agent. Each of
the Lenders may accept deposits from, lend money to, and generally engage in any
kind of banking or trust business with Borrower as if it were not Agent or a
Lender hereunder.
9.14. Expenses. Each of the Lenders shall reimburse Agent, from time to
time at the request of Agent, for its Pro Rata Share of any expenses incurred by
Agent in connection with the performance of its functions hereunder, provided
however that in the event Lenders shall reimburse Agent for expenses for which
Borrower subsequently reimburses Agent, Agent shall remit to each Lender the
respective amount received from such Lender against such expenses.
9.15. Resignation of Agent. Agent may at any time resign its position
as Agent, without affecting its position as a Lender, by giving written notice
to Lenders and Borrower. Such resignation shall take effect upon the appointment
of a successor agent in accordance with this Section. In the event Agent shall
resign, Lenders shall appoint a Lender as successor agent. If within thirty (30)
days of the Agent's notice of resignation no successor agent shall have been
appointed by Lenders and accepted such appointment, then Agent, in its
discretion may appoint any other Lender as a successor agent.
9.16. Successor Agent. The successor Agent appointed pursuant to
Section 9.15 shall execute and deliver to its predecessor and Lenders an
instrument in writing accepting such appointment, and thereupon such successor,
without any further act, deed or conveyance, shall become fully vested with all
the properties, rights, duties and obligations of its predecessor Agent. The
predecessor Agent shall deliver to its successor Agent forthwith all collateral
security, documents and moneys held by it as Agent, if any, whereupon such
predecessor Agent shall be discharged from its duties and obligations as Agent
under this Agreement.
9.17. Enforcement by Agent. All rights of action under this Agreement
and under the Notes and all rights to the collateral security, if any, hereunder
may be enforced by Agent and any suit or proceeding instituted by Agent in
furtherance of such enforcement shall be brought in its name as Agent without
the necessity of joining as plaintiffs or defendants any other Lenders, and the
recovery of any judgment shall be for the benefit of Lenders subject to the
expenses of Agent.
ARTICLE 10
MISCELLANEOUS
10.1. Indemnification and Release Provisions. Borrower hereby
indemnifies and agrees to protect, defend and hold harmless Agent and each
Lender and its directors, officers, officials, agents, employees and counsel and
their respective heirs, administrators, executors, successors and assigns, from
and against, any and all losses, liabilities (including without limitation
settlement costs and amounts, transfer taxes, documentary taxes, or assessments
or charges made by any governmental authority), claims, damages, interest,
judgments, costs, or expenses, including without limitation fees and
disbursements of counsel, incurred by any of them arising out of or in
connection with or by reason of this Agreement, the Commitment, the issuance of
any Letter of Credit, the making of the Loan or any other Credit Document,
including without limitation, any and all losses, liabilities, claims, damages,
interests, judgments, costs or expenses relating to or arising under any
Environmental Control Statute or the application of any such Statute to any of
Borrower's or a Subsidiary's properties or assets. Borrower hereby releases
Agent and each Lender and its respective directors, officers, agents, employees
and counsel from any and all claims for loss, damages, costs or expenses caused
or alleged to be caused by any act or omission on the part of any of them except
to the extent relating to such party's gross negligence or willful misconduct.
All obligations provided for in this Section10.1 shall survive any termination
of this Agreement or the Commitment and the repayment of the Loan.
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10.2. Binding and Governing Law. This Agreement and all documents
executed hereunder shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns and shall be governed
as to their validity, interpretation and effect by the laws of the Commonwealth
of Pennsylvania.
10.3. Survival. All agreements, representations, warranties and
covenants of Borrower contained herein or in any documentation required
hereunder shall survive the execution of this Agreement and the making of the
Loan hereunder and except for Sections 6.8 and 10.1 which provide otherwise,
will continue in full force and effect as long as any indebtedness or other
obligation of Borrower to any Lender remains outstanding.
10.4. No Waiver; Delay. If Lenders or any of them shall waive any
power, right or remedy arising hereunder or under any applicable law, such
waiver shall not be deemed to be a waiver upon any other Lender or the later
occurrence or recurrence of any of said events with respect to any Lender. No
delay by Lenders in the exercise of any power, right or remedy shall, under any
circumstances, constitute or be deemed to be a waiver, express or implied, of
the same and no course of dealing between the parties hereto shall constitute a
waiver of Lenders' powers, rights or remedies. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
10.5. Modification; Waiver; Assignment. Except as otherwise provided in
this Agreement, no modification or amendment hereof, waiver or consent
hereunder, or assignment hereof or participation herein, shall be effective
unless made in a writing signed by appropriate officers of the parties hereto;
provided that any Lender may, at any time, pledge or assign its interest in the
Loan or its Note, including any collateral therefor, to any Federal Reserve Bank
in accordance with applicable law.
10.6. Headings. The various headings in this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
10.7. Notices. Any notice, request or consent required hereunder or in
connection herewith shall be deemed satisfactorily given if in writing
(including facsimile transmissions) and delivered by hand or mailed (registered
or certified mail) to the parties at their respective addresses or telecopier
number set forth below or such other addresses or telecopier numbers as may be
given by any party to the others in writing:
if to Borrower:
Xxxx Corporation
One Commerce Square
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Telecopier: (000) 000-0000
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with a copy to:
Xxxxxx Xxxxx, Esq.
Drinker, Xxxxxx & Xxxxx
One Xxxxx Square
00xx & Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
if to Agent or First Union:
First Union National Bank
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxx, Esquire
Xxxxxx Xxxxxxxx LLP
3000 Two Xxxxx Square
00xx xxx Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Telecopier: (000) 000-0000
if to Fleet:
Fleet National Bank
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Telecopier: (000) 000-0000
10.8. Payment on Non-Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day other than a Business Day, such
payment may be made on the next succeeding Business Day, provided however that
such extension of time shall be included in the computation of interest due in
conjunction with such payment or other fees due hereunder, as the case may be.
10.9. Time of Day. All time of day restrictions imposed herein shall be
calculated using Agent's local time.
10.10. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
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10.11. Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all the signatures on such counterparts
appeared on one document, and each such counterpart shall be deemed to be an
original.
10.12. Consent to Jurisdiction and Service of Process. Borrower
irrevocably appoints each and every officer of Borrower as its attorney upon
whom may be served any notice, process or pleading in any action or proceeding
against it arising out of or in connection with any of the Credit Documents; and
Borrower hereby consents that any action or proceeding against it be commenced
and maintained in any court within the Commonwealth of Pennsylvania or in the
United States District Court for the Eastern District of Pennsylvania by service
of process on any such officer; and Borrower agrees that the courts of the
Commonwealth of Pennsylvania and the United States District Court for the
Eastern District of Pennsylvania shall have jurisdiction with respect to the
subject matter hereof and the person of Borrower. Notwithstanding the foregoing,
the Lender, in its absolute discretion may also initiate proceedings in the
courts of any other jurisdiction in which Borrower may be found or in which any
of its properties may be located.
10.13. Arbitration. Upon demand of any party hereto, whether made
before or after institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to this Agreement and
other Credit Documents ("Disputes") between or among parties to this Agreement
shall be resolved by binding arbitration as provided herein. Institution of a
judicial proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions, claims arising from Credit Documents executed in the
future, or claims arising out of or connected with the transaction reflected by
this Agreement.
Arbitration shall be conducted under and governed by the
Commercial Financial Disputes Arbitration Rules (the "Arbitration Rules") of the
American Arbitration Association (the "AAA") and Title 9 of the U.S. Code. All
arbitration hearings shall be conducted in the city in which the office of
Lender first stated above is located. The expedited procedures set forth in Rule
53 et seq. of the Arbitration Rules shall be applicable to claims of less than
$1,000,000. All applicable statutes of limitation shall apply to any Dispute. A
judgment upon the award may be entered in any court having jurisdiction. The
panel from which all arbitrators are selected shall be comprised of licensed
attorneys. The single arbitrator selected for expedited procedure shall be a
retired judge from the highest court of general jurisdiction, state or federal,
of the state where the hearing will be conducted or if such person is not
available to serve, the single arbitrator may be a licensed attorney.
Notwithstanding the foregoing, this arbitration provision does not apply to
disputes under or related to swap agreements.
10.14. Preservation and Limitation of Remedies. Notwithstanding the
preceding binding arbitration provisions, Lenders and Borrower agree to
preserve, without diminution, certain remedies that any party hereto may employ
or exercise freely, independently or in connection with an arbitration
proceeding or after an arbitration action is brought. Lenders and Borrower shall
have the right to proceed in any court of proper jurisdiction or by self-help to
exercise or prosecute the following remedies, as applicable: (i) all rights to
foreclose against any real or personal property or other security by exercising
a power of sale granted under the Credit Documents or under applicable law or by
judicial foreclosure and sale, including a proceeding to confirm the sale; (ii)
all rights of self-help including peaceful occupation of real property and
collection of rents, setoff, and peaceful possession of personal property; (iii)
obtaining provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and filing an
involuntary bankruptcy proceeding; and (iv) when applicable, a judgment by
confession of judgment. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in a
Dispute.
44
Borrower and Lenders agree that they shall not have a remedy
of punitive or exemplary damages against the other in any Dispute and hereby
waive any right or claim to punitive or exemplary damages they have now or which
may arise in the future in connection with any Dispute whether the Dispute is
resolved by arbitration or judicially.
10.15. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE NOTE OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY LENDER
OR AGENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH LENDER'S ENTERING
INTO THIS AGREEMENT.
10.16. ACKNOWLEDGEMENTS. BORROWER ACKNOWLEDGES THAT IT HAS HAD THE
ASSISTANCE OF COUNSEL IN THE REVIEW AND EXECUTION OF THIS AGREEMENT AND,
SPECIFICALLY, SECTIONS 10.16 HEREOF, AND FURTHER ACKNOWLEDGES THAT THE MEANING
AND EFFECT OF THE FOREGOING WAIVER OF JURY TRIAL HAS BEEN FULLY EXPLAINED TO
BORROWER BY SUCH COUNSEL.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
45
IN WITNESS WHEREOF, the undersigned, by their duly authorized
officers, have executed this Credit Agreement the day and year first above
written.
ATTEST: XXXX CORPORATION
By: By:
------------------------------ -----------------------------------
Name: Xxxx Pave Name: Xxxxxx Xxxxxxx
Title: Assistant Treasurer Title: Treasurer
[CORPORATE SEAL]
FIRST UNION NATIONAL BANK,
individually and in its
capacity as Agent hereunder
By:
-----------------------------------
Name: Xxxxxx X. Xxxx
Title: Senior Vice President
FLEET NATIONAL BANK
By:
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
46
EXHIBIT A
EXHIBIT B
EXHIBIT C
EXHIBIT D
EXHIBIT E
EXHIBIT F
SCHEDULE 4.11
SCHEDULE 4.15
Schedule 7.2
Guaranties
Xxxx Corporation has issued Corporate Guaranties on two UK facilities (leased by
Xxxx Graphics Europe Ltd.), the assets of which were sold as part of the
Graphics business. Xxxx Graphics has sublease arrangements on those two
facilities. The obligations of these leases are outlined below. Additionally a
Corporate Guarantee to ING Bank in the Netherlands for overdrafts and a line of
credit of 2.5 million guilders or $1.0 million is currently in the process of
being terminated as bank accounts are being transferred to the new owners of the
Graphics business. There are no overdrafts or borrowings under this account.
Facility Annual Rent Lease Term Sublease Rent Sublease Term
-------- ----------- ---------- ------------- -------------
Unit # 6 (pound)161,000 1991-2016 (pound)161,000 2000-2010*
Scimitar Park *Subtenant may break lease in
Courtaulds Road, Burnt Xxxxx 2005 with no penalty.
Basildon, Essex XX00 0XX
Xxxxxxx
Unit #1 (pound)297,000 1997-2022* (pound)315,000 2001-2011*
1 Xxxxxxx Close *May break lease * Subtenant may break lease Burnt
Xxxxx Industrial Estate in 2012 with no in 2003 with options to break
Xxxxxxxx, Xxxxx XX00 0XX penalty. lease annually thereafter.
England
Schedule 7.4
Existing Liens
-------------------- --------------------------------- ------------------------------ ----------------------------------
Debtor Name Jurisdiction of related Filing Secured Party Status and Collateral
-------------------- --------------------------------- ------------------------------ ----------------------------------
Xxxx Corporation PA Department of State-UCC Toyota Motor Credit File Date: 9-13-01
Section Corporation File # : 34350987
Collateral: Equipment (See
attached schedule to related
financing statement)
-------------------- --------------------------------- ------------------------------ ----------------------------------
Xxxx Corporation PA Department of State-UCC Toyota Motor Credit File Date: 9-26-01
Section Corporation File # : 34391325
Collateral: Equipment (See
attached schedule to related
financing statement)
-------------------- --------------------------------- ------------------------------ ----------------------------------
