-------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED REVOLVING CREDIT
AND
SECURITY AGREEMENT
-------------------------------------------------------------------------------
IBJ XXXXXXXX BANK & TRUST COMPANY
(AS LENDER AND AS AGENT)
-------------------------------------------------------------------------------
WITH
-------------------------------------------------------------------------------
THE XXXXX GROUP, INC.
(BORROWER)
-------------------------------------------------------------------------------
February __, 1997
-------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED REVOLVING CREDIT
AND
SECURITY AGREEMENT
------------------------------
Second Amended and Restated Revolving Credit and Security Agreement
dated as of February __, 1997 among THE XXXXX GROUP, INC., a corporation
organized under the laws of the State of Delaware ("Borrower"), the undersigned
financial institutions (collectively, the "Lenders" and individually a
"Lender") and IBJ XXXXXXXX BANK & TRUST COMPANY ("IBJS"), a New York banking
corporation, as agent for Lenders (IBJS, in such capacity, the "Agent").
BACKGROUND
----------
Borrower is a party with Lenders and Agent to an Amended and Restated
Revolving Credit, Term Loan and Security Agreement dated May 8, 1996 as the
same has been amended by Waiver and Amendment No. 1 to Amended and Restated
Revolving Credit, Term Loan and Security Agreement dated as of July 31, 1996,
as further amended, restated, supplemented or restated from time to time, the
"Existing Agreement") pursuant to which Agent and Lenders provide Borrower with
certain financial accommodations.
Borrower has informed Lenders that Borrower is prepaying in full Term
Loan A and Term Loan B (as such terms are defined in the Existing Agreement)
and Borrower has requested that Agent and Lenders (i) consent to the issuance
by Borrower of $120,000,000 of 9 1/2% Senior Subordinated Notes due February
__, 2007 (the "Senior Subordinated Notes"), (ii) consent to the release of
Agent's security interest in, among other things, the Equipment and the
discharge of the Mortgages (as such term is defined in the Existing Agreement),
(iii) consent to the prepayment of the Additional Mezzanine Debt, the Mezzanine
Debt and the Xxxxx River Subordinated Note, (iv) consent to the purchase of
substantially all of the assets constituting the paper and plastic table top
disposable products business of Printed Products Division, a division of Astro
Valcour, Inc, (v) consent to a loan by Borrower to CEG in an amount not to
exceed $2,600,000 and (vi) consent to a tender offer of 74,000 shares of common
stock of Borrower in an amount not to exceed $10,000,000, and Agent and Lenders
are willing to do so on the terms and conditions set forth herein.
By execution of this Agreement, Borrower, Lenders and Agent intend to
amend and restate the Existing Agreement in its entirety and as so amended and
restated the Existing Agreement shall read in full as set forth herein on the
Effective Date.
IN CONSIDERATION of the mutual covenants and undertakings herein
contained, Borrower, and Lenders Agent hereby agree as follows:
AMENDMENT AND RESTATEMENT
-------------------------
As of the date of this Agreement, the terms, conditions, covenants,
agreements, representations and warranties contained in the Existing Agreement
shall be deemed amended and restated in their entirety as follows; provided,
however, that nothing contained in this Agreement shall impair, limit or affect
the Liens heretofore granted, pledged and/or assigned to Agent for the ratable
benefit of Lenders with respect to Collateral as security for the Obligations
to Agent and Lenders under the Existing Agreement.
I. DEFINITIONS.
1.1. Accounting Terms. As used in this Agreement, the Notes, or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; provided,
however, whenever such accounting terms are used for the purposes of
determining compliance with financial covenants in this Agreement, such
accounting terms shall be defined in accordance with GAAP applied in
preparation of the audited financial statements of Borrower for the fiscal year
ended July 31, 1996.
1.2. General Terms. For purposes of this Agreement the following terms
shall have the following meanings:
"Acquired Debt" shall mean, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or becomes a Restricted Subsidiary of such specified
Person, including, without limitation, Indebtedness incurred in connection
with, or in contemplation of, such other Person merging with or into or
becoming a Subsidiary of such specified Person, and (ii) Indebtedness secured
by a Lien encumbering any asset acquired by such specified Person.
"Acquisition" shall mean The Xxxxx Acquisition Group, Inc., a
Delaware Corporation.
"Acquisition Agreement" shall mean the Asset Purchase Agreement
including all exhibits and schedules thereto dated as of December 14, 1994
among Xxxxx Paper Company, a Pennsylvania corporation as seller, Acquisition as
buyer and Borrower as Parent (and, ultimately, the buyer pursuant to an
assignment of rights by Acquisition) as amended by an Amendment dated as of
March 31, 1995.
"Additional Mezzanine Documentation" shall mean, collectively,
the Antidilution Protection Agreement, the Mezzanine Shares, the Additional
Mezzanine Note and the Securities Purchase Agreement dated as of the December
29, 1995 Effective Date between Borrower and Mezzanine Lender.
- 2 -
"Additional Mezzanine Note" shall mean the 14% senior
subordinated notes due 2002 dated as of December 29, 1995 in the principal
amount of $6,000,000 executed by Borrower in favor of Mezzanine Lender.
"Affiliate" of any specified Person shall mean any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided, that, beneficial ownership of 10% or more of the voting securities of
a Person shall be deemed to be control.
"Affiliate Transaction" shall have the meaning set forth in
Section 7.10 hereof.
"Alternate Base Rate" shall mean, for any day, a rate per annum
equal to the higher of (i) the Base Rate in effect on such day and (ii) the
Federal Funds Rate in effect on such day plus 1/2 of 1%.
"Antidilution Protection Agreement" shall mean the Antidilution
Protection Agreement dated as of December 29, 1995 by and between Mezzanine
Lender and Borrower.
"Appleton Property" shall mean the premises located at 0000 Xxxxx
Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxx.
"Asset Sale" shall mean (i) the sale, lease, conveyance or other
disposition of any assets (including, without limitation, by way of a sale and
leaseback), other than sales of Inventory in the ordinary course of business
consistent with past practices and (ii) the issue or sale by Borrower or any of
its Restricted Subsidiaries of Equity Interests of any of Borrower's Restricted
Subsidiaries, whether in a single transaction or a series of related
transactions (a) that have a fair market value in excess of $1.0 million or (b)
for net proceeds in excess of $1.0 million. Notwithstanding the foregoing: (i)
a transfer of assets by Borrower to a Wholly Owned Restricted Subsidiary or by
a Wholly Owned Restricted Subsidiary to Borrower or to another Wholly Owned
Restricted Subsidiary and (ii) a Restricted Payment that is permitted by
Section 7.7 will not be deemed to be Asset Sales.
"Authority" shall have the meaning set forth in Section 4.19(d).
"Base Rate" shall mean the base commercial lending rate of IBJS
as publicly announced to be in effect from time to time, such rate to be
adjusted automatically, without notice, on the effective date of any change in
such rate. This rate of interest is determined from time to time by IBJS as a
means of
- 3 -
pricing some loans to its customers and is neither tied to any external rate of
interest or index nor does it necessarily reflect the lowest rate of interest
actually charged by IBJS to any particular class or category of customers of
IBJS.
"Xxxxxx" shall mean Xxxxxx Xxxxxx & Co., Inc., a New York
corporation.
"Xxxxxx Acquisition" shall mean the acquisition by Borrower of
certain of the assets and business of Xxxxxx for an aggregate amount not to
exceed $10,000,000 pursuant to the Xxxxxx Purchase Agreement.
"Xxxxxx Purchase Agreement" shall mean that certain Agreement
dated October 12, 1995 between Xxxxxx and Borrower.
"Blocked Accounts" shall have the meaning set forth in Section
4.15(h).
"Borrower" shall mean The Xxxxx Group, Inc., a Delaware
corporation, and all permitted successors and assigns.
"Borrower's Account" shall have the meaning set forth in Section
2.8.
"Business Day" shall mean with respect to Eurodollar Rate Loans,
any day on which commercial banks are open for domestic and international
business, including dealings in Dollar deposits in London, England and New
York, New York and with respect to all other loans, any day other than a day on
which commercial banks in New York are authorized or required by law to close.
"Capital Lease Obligations" shall mean, at the time any
determination thereof is to be made, the amount of the liability in respect of
a capital lease that would at such time be required to be capitalized on a
balance sheet in accordance with GAAP.
"Capital Stock" shall mean (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Cash Equivalents" shall mean (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentally thereof having maturities of
not more than six months from the date of acquisition, (iii) certificates of
deposit and Eurodollar time deposits with maturities of six months or less from
the date of acquisition, bankers' acceptances with maturities not exceeding six
months and overnight bank deposits, in each case
- 4 -
with any domestic commercial bank having capital and surplus in excess of $500
million and a Xxxxx Bank Watch Rating of "B" or better, (iv) repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clauses (ii) and (iii) above entered into with any
financial institution meeting qualifications specified in clause (iii) above
and (v) commercial paper having the highest rating obtainable from Xxxxx'x
Investors Service, Inc. or Standard & Poor's Corporation and in each case
maturing within one year after the date of acquisition.
"CEG" shall mean Creative Expressions Group, Inc., a Delaware
corporation.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss.ss.9601 et
seq.
"Change of Control" shall mean the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of Borrower and its
Restricted Subsidiaries taken as a whole, to any "person" or "group" (as such
terms are used in Section 13(d)(3) and Section 14(d)(2) of the Exchange Act)
other than the Principals, (ii) the adoption of a plan relating to the
liquidation or dissolution of Borrower, (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any person or group (as defined above), other than the
Principals, becomes the "beneficial owner" (as defined in Rule 13d-3 and Rule
13d-5 under the Exchange Act), directly or indirectly, of more of the voting
power of the voting stock of Borrower than at that time is beneficially owned
by the Principals; or (iv) the first day on which more than a majority of the
members of the Board of Directors of Borrower are not Continuing Directors. For
purposes of this definition, any transfer of an equity interest of an entity
that was formed for the purpose of acquiring voting stock of Borrower will be
deemed to be a transfer of such portion of such voting stock as corresponds to
the portion of the equity of such entity that has been so transferred.
"Charges" shall mean all taxes, charges, fees, imposts, levies or
other assessments, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, value added, transfer, franchise,
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation and
property taxes, custom duties, fees, assessments, liens, claims and charges of
any kind whatsoever, together with any interest and any penalties, additions to
tax or additional amounts, imposed by any taxing or other authority, domestic
or foreign (including, without limitation, the Pension Benefit Guaranty
Corporation or any environmental agency or superfund), upon the Collateral,
Borrower or any of its Affiliates.
- 5 -
"Chesapeake" shall mean Chesapeake Consumer Products Company, a
Virginia corporation.
"Chesapeake Acquisition" shall mean the acquisition by Borrower
of all of the stock of Chesapeake pursuant to the Chesapeake Purchase
Agreement.
"Chesapeake Purchase Agreement" shall mean that certain Stock
Purchase Agreement dated October 13, 1995 between Chesapeake Corporation and
Borrower.
"Closing Date" shall mean March 31, 1995 or such other date as
may be agreed to by the parties hereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time and the regulations promulgated thereunder.
"Collateral" shall mean and include:
(a) all Receivables;
(b) Intellectual Property;
(c) all Inventory;
(d) all of Borrower's right, title and interest in and to
(i) all merchandise returned or rejected by Customers, relating to or securing
any of the Receivables; (ii) all of Borrower's rights as a consignor, a
consignee, an unpaid vendor, mechanic, artisan, or other lienor, including
stoppage in transit, setoff, detinue, replevin, reclamation and repurchase;
(iii) all additional amounts due to Borrower from any Customer relating to the
Receivables; (iv) other property, including warranty claims, relating to any
goods securing this Agreement; (v) all of Borrower's contract rights, rights of
payment which have been earned under a contract right, instruments, documents,
chattel paper, warehouse receipts, deposit accounts, money and securities; (vi)
if and when obtained by Borrower, all real and personal property of third
parties in which Borrower has been granted a lien or security interest as
security for the payment or enforcement of Receivables; and (vii) any other
goods, personal property or real property now owned or hereafter acquired in
which Borrower has expressly granted a security interest or may in the future
grant a security interest to Agent hereunder, or in any amendment or supplement
hereto, or under any other agreement between Lenders and Borrower;
(e) all of Borrower's ledger sheets, ledger cards, files,
correspondence, records, books of account, business papers, computers, computer
software (owned by Borrower or in which it has an interest), computer programs,
tapes, disks and documents relating to (a), (b), (c) or (d) of this Paragraph;
and
(f) all proceeds and products of (a), (c), (d) and (e) in
whatever form, including, but not limited to: cash,
- 6 -
deposit accounts (whether or not comprised solely of proceeds), certificates of
deposit, insurance proceeds (including hazard, flood and credit insurance),
negotiable instruments and other instruments for the payment of money, chattel
paper, security agreements, documents, eminent domain proceeds, condemnation
proceeds and tort claim proceeds.
"Commission" shall mean the Securities Exchange Commission.
"Commitment Percentage" of any Lender shall mean the percentage
set forth below such Lender's name on the signature page hereof as same may be
adjusted upon any assignment by a Lender pursuant to Section 15.3(b) hereof.
"Commitment Transfer Supplement" shall mean a document in the
form of Exhibit 15.3 hereto, properly completed and otherwise in form and
substance satisfactory to Agent by which the Purchasing Lender purchases and
assumes a portion of the obligation of Lenders to make Revolving Advances under
this Agreement.
"Consents" shall mean all filings and all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and other third parties, domestic or foreign, necessary to carry on
Borrower's business, including, without limitation, any Consents required under
all applicable federal, state or other applicable law.
"Consolidated Cash Flow" shall mean, with respect to any Person
for any period, the Consolidated Net Income of such Person and its Restricted
Subsidiaries for such period plus, without duplication, to the extent deducted
in computing Consolidated Net Income, (i) an amount equal to any extraordinary
loss plus any net loss realized in connection with an Asset Sale, (ii)
provision for taxes based on income or profits of such Person an its Restricted
Subsidiaries for such period, (iii) consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
and whether or not capitalized (including, without limitation, amortization of
original issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions, discounts and other
fees and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations) and (iv)
depreciation and amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) of such Person and its Restricted Subsidiaries for such
period, in each case, on a consolidated basis and determined in accordance with
GAAP. Notwithstanding the foregoing, the provision for taxes on the income or
profits of, and the depreciation and amortization of, a Subsidiary of the
reference Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent (and in same proportion) that the Net
Income of such Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a
- 7 -
corresponding amount would be permitted at the date of determination to be
dividended, directly or indirectly, to Borrower by such Subsidiary without
prior governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" shall mean, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided, that, (i) the Net Income (but not loss) of any
Person that is not a Subsidiary or that is accounted for by the equity method
of accounting shall be included only to the extent of the amount of dividends
or distributions paid in cash to the referent Person or a Wholly Owned
Restricted Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary
shall be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of such Net Income is not
at the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in
a pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded (iv) the cumulative effect of a change in
accounting principles shall be excluded and (v) the Net Income of any
Unrestricted Subsidiary shall be excluded, whether or not distributed to
Borrower or one of its Restricted Subsidiaries.
"Consolidated Net Worth" shall mean, with respect to any Person
as of any date, the sum of (i) the consolidated equity of the common equity
holders of such Person and its Restricted Subsidiaries as of such date plus
(ii) the respective amounts reported on such Person's balance sheet as of such
date with respect to any series of preferred stock (other than Disqualified
Stock) that by its terms is not entitled to the payment of dividends unless
such dividends may be declared and paid only out of net earnings in respect of
the year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (a) all
write-ups (other than write-ups resulting from foreign currency translations
and write-ups of tangible assets of a going concern business made within 12
months after the acquisition of such business) subsequent to the date of the
Indenture in the book value of any asset owned by such Person or a consolidated
Subsidiary of such Person, (b) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except,
in each case, Permitted Investments), and (c) all unamortized debt discount and
expense and unamortized deferred charges as of such date, all of the foregoing
determined in accordance with GAAP.
- 8 -
"Continuing Directors" shall mean, as of any date of
determination, any member of the Board of Directors of Borrower who (i) was a
member of the Board of Directors on the date of this Agreement or (ii) was
nominated for election to the Board of Directors with the approval of at least
a majority of the Continuing Directors who were members of the Board of
Directors at the time of such nomination or election.
"Controlled Group" shall mean all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with Borrower, are treated as a single
employer under Section 414 of the Code.
"Customer" shall mean and include the account debtor with respect
to any Receivable and/or the prospective purchaser of goods, services or both
with respect to any contract or contract right, and/or any party who enters
into or proposes to enter into any contract or other arrangement with Borrower,
pursuant to which Borrower is to deliver any Inventory or perform any services.
"Default" shall mean an event which, with the giving of notice or
passage of time or both, would constitute an Event of Default.
"Default Rate" shall have the meaning set forth in Section 3.1
hereof.
"Depository Accounts" shall have the meaning set forth in Section
4.15(h) hereof.
"Disqualified Stock" shall mean any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or
prior to the date that is 91 days after the date on which the Senior
Subordinated Notes mature.
"Documents" shall have the meaning set forth in Section 8.3(c)
hereof.
"Dollar" and the sign "$" shall mean lawful money of the United
States of America.
"Domestic Rate Loan" shall mean any Revolving Advance that bears
interest based upon the Alternate Base Rate.
"Earnings Before Interest and Taxes" shall mean for any period
the sum of (i) Borrower's Net Income for such period, (ii) all interest expense
of Borrower for such period and (iii) all charges against Borrower's income for
such period for federal, state and local taxes.
- 9 -
"EBITDA" shall mean for any period the sum of (i) Earnings Before
Interest and Taxes, (ii) depreciation expenses for such period and (iii)
amortization expenses for such period.
"Effective Date" shall mean date on which all the conditions
precedent in Section 8.3 have been satisfied.
"Eligible Inventory" shall mean and include Inventory (excluding
work in process), valued at the lower of cost or market value, determined on a
first-in-first-out basis, which is not, in Agent's opinion, obsolete, slow
moving or unmerchantable and which Agent, in its sole discretion, shall not
deem ineligible Inventory, based on such considerations as Agent may from time
to time deem appropriate including, without limitation, whether the Inventory
is subject to a perfected, first priority security interest in favor of Agent
and whether the Inventory conforms to all standards imposed by any governmental
agency, division or department thereof which has regulatory authority over such
goods or the use or sale thereof.
"Eligible Receivables" shall mean each Receivable arising in the
ordinary course of Borrower's business and which Agent, in its sole credit
judgment, shall deem to be an Eligible Receivable, based on such considerations
as Agent may from time to time deem appropriate. A Receivable shall not be
deemed eligible unless such Receivable is subject to Agent's perfected security
interest and no other Lien, and is evidenced by an invoice or other documentary
evidence satisfactory to Lenders. In addition, no Receivable shall be an
Eligible Receivable if:
(a) it arises out of a sale made by Borrower to an Affiliate of
Borrower or to a Person controlled by an Affiliate of Borrower;
(b) it is due or unpaid more than ninety (90) days after the
original invoice date;
(c) fifty percent (50%) or more of the Receivables from such
Customer are not deemed Eligible Receivables hereunder. Such percentage may, in
Agent's sole discretion, be increased or decreased from time to time;
(d) any covenant, representation or warranty contained in this
Agreement with respect to such Receivable has been breached;
(e) the Customer shall (i) apply for, suffer, or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property or call
a meeting of its creditors, (ii) admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of
its present business, (iii) make a general assignment for the benefit of
creditors, (iv) commence a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or
insolvent, (vi) file a petition
- 10 -
seeking to take advantage of any other law providing for the relief of debtors,
(vii) acquiesce to, or fail to have dismissed, any petition which is filed
against it in any involuntary case under such bankruptcy laws, or (viii) take
any action for the purpose of effecting any of the foregoing;
(f) the sale is to a Customer outside the continental United
States of America, unless the sale is on letter of credit, guaranty or
acceptance terms, in each case acceptable to Agent in its sole discretion;
(g) the sale to the Customer is on a xxxx-and-hold, guaranteed
sale, sale-and-return, sale on approval, consignment or any other repurchase or
return basis or is evidenced by chattel paper; provided, however, Receivables
arising out of xxxx-and-hold sales in an aggregate amount not to exceed
$300,000 and which otherwise meet the eligibility criteria for Eligible
Receivables shall be deemed to constitute Eligible Receivables;
(h) Agent believes, in its sole judgment, that collection of such
Receivable is insecure or that such Receivable may not be paid by reason of the
Customer's financial inability to pay;
(i) the Customer is the United States of America, any state or
any department, agency or instrumentality of any of them, unless Borrower
assigns its right to payment of such Receivable to Agent pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et
seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other
applicable statutes or ordinances;
(j) the goods giving rise to such Receivable have not been
shipped and delivered to and accepted by the Customer or the services giving
rise to such Receivable have not been performed by Borrower and accepted by the
Customer or the Receivable otherwise does not represent a final sale;
(k) the Receivables of the Customer exceed a credit limit
determined by Agent, in its sole discretion, to the extent such Receivable
exceeds such limit;
(l) the Receivable is subject to any offset or deduction, to the
extent of such offset or deduction, or defense, dispute, or counterclaim, the
Customer is also a creditor or supplier or the Receivable is contingent in any
respect or for any reason;
(m) Borrower has made any agreement with any Customer for any
deduction therefrom, to the extent of such deduction, except for discounts or
allowances made in the ordinary course of business for prompt payment, all of
which discounts or allowances are reflected in the calculation of the face
value of each respective invoice related thereto;
- 11 -
(n) shipment of the merchandise or the rendition of services has
not been completed;
(o) any return, rejection or repossession of the merchandise has
occurred;
(p) such Receivable is not payable to Borrower; or
(q) such Receivable is not otherwise satisfactory to Agent as
determined in good faith by Agent in the exercise of its discretion in a
reasonable manner.
"Environmental Complaint" shall have the meaning set forth in
Section 4.19(d) hereof.
"Environmental Laws" shall mean all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.
"Equipment" shall mean and include all of Borrower's goods
(excluding Inventory) whether now owned or hereafter acquired and wherever
located including, without limitation, all equipment, machinery, apparatus,
motor vehicles, fittings, furniture, furnishings, fixtures, parts, accessories
and all replacements and substitutions therefor or accessions thereto.
"Equity Interests" shall mean Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time and the rules and regulations promulgated
thereunder.
"Eurodollar Rate" shall mean for any Eurodollar Rate Loan for the
then current Interest Period relating thereto the rate per annum (such
Eurodollar Rate to be adjusted to the next higher 1/100 of one (1%) percent)
equal to the quotient of (a) LIBOR, divided by (b) a number equal to 1.00 minus
the aggregate of the rates (expressed as a decimal) of reserve requirements
current on the day that is two Business Days prior to the beginning of the
Interest Period (including without limitation basic, supplemental, marginal and
emergency reserves) under any regulation promulgated by the Board of Governors
of the Federal Reserve System (or any other governmental authority having
jurisdiction over IBJS) as in effect from time to time, dealing with reserve
requirements prescribed for Eurocurrency funding including any reserve
requirements with respect to "Eurocurrency liabilities" under
- 12 -
Regulation D of the Board of Governors of the Federal Reserve System.
"Eurodollar Rate Loan" shall mean a Revolving Advance at any time
that bears interest based on the Eurodollar Rate.
"Event of Default" shall mean any of the events set forth in
Article X hereof.
"Existing Indebtedness" shall mean Indebtedness of Borrower and
its Subsidiaries in existence on the date of this Agreement, until such amounts
are repaid.
"Federal Funds Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers, as published for
such day (or if such day is not a Business Day, for the next preceding Business
Day) by the Federal Reserve Bank of New York, or if such rate is not so
published for any day which is a Business Day, the average of quotations for
such day on such transactions received by IBJS from three Federal funds brokers
of recognized standing selected by IBJS.
"Fee Letter" shall mean that certain fee letter dated as of the
Effective Date from Borrower to Agent setting forth fees to be paid by Borrower
to Agent.
"Fixed Assets" shall mean, collectively, Equipment and Real
Property including any products and proceeds thereof in whatever form.
"Fixed Charge Coverage Ratio" shall mean with respect to any
Person for any period, the ratio of the Consolidated Cash Flow of such Person
for such period to the Fixed Charges of such Person for such period. In the
event that Borrower or any of its Restricted Subsidiaries incurs, assumes,
Guarantees or redeems any Indebtedness (other than revolving credit borrowings)
or issues preferred stock subsequent to the commencement of the period for
which the Fixed Charge Coverage Ratio is being calculated but prior to the date
on which the event for which the calculation of the Fixed Charge Coverage Ratio
is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period. In addition, for purposes of making the computation referred
to above, (i) acquisitions that have been made by Borrower or any of its
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the
Calculation Date shall be deemed to have occurred on the first day of the
four-quarter reference period and Consolidated Cash Flow for such reference
period shall be calculated without giving effect to clause (iii) of
- 13 -
the proviso set forth in the definition of Consolidated Net Income, and (ii)
the Consolidated Cash Flow attributable to discontinued operations (as
determined in accordance with GAAP) and operations or businesses disposed of
prior to the Calculation Date shall be excluded, and (iii) the Fixed Charges
attributable to discontinued operations (as determined in accordance with GAAP)
and operations or businesses disposed of prior to the Calculation Date shall be
excluded, but only to the extent that the obligations giving rise to such Fixed
Charges will not be obligations of the referent Person or any of its Restricted
Subsidiaries following the Calculation Date.
"Fixed Charges" shall mean, with respect to any Person for any
period, the sum, without duplication, of (i) the consolidated interest expense
of such Person and its Restricted Subsidiaries for such period, whether paid or
accrued (including, without limitation, amortization of original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptances financings, and
net payments (if any) pursuant to Hedging Obligations) and (ii) the
consolidated interest expense of such Person and its Restricted Subsidiaries
that was capitalized during such period and (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries (whether or not such Guarantee or Lien is called
upon) and (iv) the product of (a) all dividend payments on any series of
preferred stock of such Person, other than dividend payments on preferred stock
of Borrower paid solely in additional shares of such preferred stock times (b)
a fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP.
"Formula Amount" shall have the meaning set forth in Section
2.1(a).
"Four M" shall mean Four M Corporation, a Maryland corporation.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"General Intangibles" shall mean and include all of Borrower's
general intangibles, whether now owned or hereafter acquired including, without
limitation, all choses in action, causes of action, corporate or other business
records, inventions, designs, patents, patent applications, equipment
formulations, manufacturing procedures, quality control procedures, trademarks,
trade secrets, goodwill, copyrights, registrations, licenses, franchises,
customer lists, tax refunds, tax refund claims, computer programs, all claims
under guaranties, security interests
- 14 -
or other security held by or granted to Borrower to secure payment of any of
the Receivables by a Customer all rights of indemnification and all other
intangible property of every kind and nature (other than Receivables).
"Governmental Body" shall mean any nation or government, any
state or other political subdivision thereof or any entity exercising the
legislative, judicial, regulatory or administrative functions of or pertaining
to a government.
"Guarantee" shall mean a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Hazardous Discharge" shall have the meaning set forth in Section
4.19(d) hereof.
"Hazardous Substance" shall mean, without limitation, any
flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde
foam insulation, polychlorinated byphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or toxic substances
or related materials as defined in CERCLA, the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA,
Articles 15 and 27 of the New York State Environmental Conservation Law or any
other applicable Environmental Law and in the regulations adopted pursuant
thereto.
"Hazardous Wastes" shall mean all waste materials subject to
regulation under CERCLA, RCRA or applicable state law, and any other applicable
Federal and state laws now in force or hereafter enacted relating to hazardous
waste disposal.
"Hedging Obligations" shall mean, with respect to any Person, the
obligations of such Person under (i) interest and currency rate swap
agreements, interest rate cap agreements and interest rate collar agreements
and (ii) other agreements or arrangements designed to protect such Person
against fluctuations in interest or currency exchange rates.
"IBJS" shall have the meaning given to such term in the
introductory paragraph of this Agreement.
"Indebtedness" shall mean with respect to any Person, (i) any
indebtedness of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof) or bankers'
acceptances or representing Capital Lease Obligations or the balance deferred
and unpaid of the purchase price of any property or representing any Hedging
Obligations, except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing indebtedness (other
than letters of credit and Hedging
- 15 -
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, (ii) all indebtedness of others secured by a
Lien on any asset of such Person (whether or not such indebtedness is assumed
by such Person) in which case the amount of such Indebtedness shall be deemed
to be the lesser of (a) the amount of such Indebtedness and (b) the fair market
value of the asset that secures such Indebtedness, (iii) Disqualified Stock of
such Person, (iv) preferred stock of any Restricted Subsidiary of such Person
(other than preferred stock held by such Person or any of its Wholly Owned
Restricted Subsidiaries) and (v) to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person.
"Indenture" shall mean that certain Indenture dated as of the
Effective Date between the Trustee and Borrower.
"Intellectual Property" shall mean and include all of Borrower's
inventions, designs, patents, patent applications, equipment formulations,
manufacturing procedures, quality control procedures, trademarks, trade
secrets, goodwill, copyrights, registrations, licenses, whether now owned or
hereafter acquired.
"Interest Coverage Ratio" shall mean, for any period, without
duplication, the ratio of (x) EBITDA to (y) (i) interest expense for such
period plus (ii) permitted dividends to the extent paid in cash.
"Interest Period" shall mean the period provided for any
Eurodollar Rate Loan pursuant to Section 2.2(b).
"Inventory" shall mean all of Borrower's now owned or hereafter
acquired goods, merchandise and other personal property, wherever located, to
be furnished under any contract of service or held for sale or lease, all raw
materials, work in process, finished goods and materials and supplies of any
kind, nature or description which are or might be used or consumed in
Borrower's business or used in selling or furnishing such goods, merchandise
and other personal property, and all documents of title or other documents
representing them.
"Inventory Advance Rate" shall have the meaning set forth in
Section 2.1(a)(ii) hereof.
"Investments" shall mean, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of direct or indirect loans (including guarantees of Indebtedness or other
obligations), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP; provided, that, an acquisition of assets, Equity Interests or other
securities by Borrower or any of its Restricted Subsidiaries for consideration
- 16 -
consisting of common equity securities of Borrower or such Restricted
Subsidiary shall not be deemed to be an Investment.
"Xxxxx River" shall mean Xxxxx River Paper Company, Inc., a
Virginia corporation.
"Xxxxx River Acquisition" shall mean the acquisition by Borrower
of the stock of Xxxxx River-Long Beach, Inc., a Virginia corporation and the
assets of the Natural Dam division of Xxxxx River pursuant to the Xxxxx River
Purchase Agreement.
"Xxxxx River Purchase Agreement" shall mean that certain Asset
Purchase Agreement dated as of March 22, 1996 between Xxxxx River and Borrower.
"Xxxxx River Subordinated Note" shall mean the $7,000,000
Subordinated Note dated as of May 8, 1996 made by Borrower to Xxxxx River in
connection with the Xxxxx River Purchase Agreement.
"Lender" and "Lenders" shall have the meaning ascribed to such
term in the Preamble and shall include each person which is a Purchasing
Lender.
"LIBOR" shall mean for any Eurodollar Rate Loan for the then
current Interest Period relating thereto, the rate per annum quoted by Agent to
Borrower two (2) Business Days prior to the first day of such Interest Period
as the rate available to Agent in the interbank market for offshore Dollar
deposits in immediately available funds for a period equal to such Interest
Period and in an amount equal to the amount of such Eurodollar Rate Loan.
"Lien" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Long Beach Property" shall mean the premises located at 00000
Xxxxxxx Xxxx, Xxxxxx Xxxxxxxxx, Xxxxxxxxxx 00000.
"Make-Whole Premium" with respect to a Senior Subordinated Note
means an amount equal to the greater of (i) 104.75% of the outstanding
principal amount of such Senior Subordinated Note and (ii) the excess of (a)
the present value of the remaining interest, premium and principal payments due
on such Senior Subordinated Note as if such Senior Subordinated Note were
redeemed on March 1, 2002, computed using a discount rate equal to the Treasury
Rate plus 50 basis points, over (b) the outstanding principal amount of such
Senior Subordinated Note.
- 17 -
"Material Adverse Effect" shall mean a material adverse effect on
(i) the business, assets, operations, prospects or financial condition of
Borrower, (ii) Borrower's ability to pay the Obligations in accordance with the
terms thereof, (iii) the Collateral or Agent's Liens on the Collateral or the
priority of any such Lien, or (iv) Agent's and Lenders' rights and remedies
under this Agreement and the Other Documents.
"Maximum Revolving Advance Amount" shall mean $50,000,000 as
reduced in accordance with Section 2.12 hereof.
"Maximum Revolving Loan Commitment" of any Lender shall mean the
amount set forth below such Lender's name on the signature page hereof which
amount equals the maximum amount of Revolving Advances such Lender is committed
to make hereunder as same may be adjusted upon any assignment by a Lender
pursuant to Section 15.3(b) hereof.
"Mezzanine Debt" shall mean all obligations owed by Borrower to
Mezzanine Lender pursuant to the Mezzanine Documentation and Additional
Mezzanine Documentation.
"Mezzanine Documentation" shall mean, collectively, the Mezzanine
Warrant, the Mezzanine Note and the Securities Purchase Agreement dated as of
May 24, 1995, as amended, between Borrower and Mezzanine Lender.
"Mezzanine Lender" shall mean The Equitable Life Assurance
Society of the United States.
"Mezzanine Note" shall mean the 14% senior subordinated notes due
2002 dated May 24, 1995 in the principal amount of $10,000,000 executed by
Borrower in favor of Mezzanine Lender.
"Mezzanine Shares" shall mean the 3,665.98 shares of Borrower's
Class B Common Stock issued by Borrower to Mezzanine Lender on December 29,
1995.
"Mezzanine Warrant" shall mean the Warrant dated May 24, 1995
issued by Borrower to Mezzanine Lender.
"Monthly Advances" shall have the meaning set forth in Section
3.1 hereof.
"Natural Dam Property" shall mean, collectively, the premises
located at (i) Natural Dam Facility, 0000 Xxxxx Xxxxxxx 00, Xxxxxxxxxx, Xxx
Xxxx 00000, (ii) 00 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000 and (iii)
Company Houses (4), 4874, 4875, 4886, 0000 Xxxxx Xxxxxxx 00, Xxxxxxxxxx, Xxx
Xxxx 00000.
"Net Income" shall mean, with respect to any Person for any
period, the net income (loss) of such Person for such period, determined in
accordance with GAAP and before any reduction in respect of preferred stock
dividends, excluding, however, (i) any gain (but not loss), together with any
related provision for
- 18 -
taxes on such gain (but not loss), realized in connection with (a) any Asset
Sale (including, without limitation, dispositions pursuant to sale and
leaseback transactions) or (b) the disposition of any securities by such Person
or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness
of such Person or any of its Restricted Subsidiaries and (ii) any extraordinary
or nonrecurring gain (but not loss), together with any related provision for
taxes on such extraordinary or nonrecurring gain (but not loss).
"Net Proceeds" shall mean the aggregate cash proceeds received by
Borrower or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions), any
relocation expenses incurred as a result thereof, any taxes paid or payable by
Borrower or any of its Restricted Subsidiaries as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that were the subject of such Asset
Sale and any reserve for adjustment in respect of the sale price of such asset
or assets established in accordance with GAAP.
"Non-Recourse Debt" shall mean Indebtedness (i) as to which
neither Borrower nor any of its Restricted Subsidiaries (a) provides credit
support of any kind (including any undertaking, agreement or instrument that
would constitute Indebtedness), (b) is directly or indirectly liable (as a
guarantor or otherwise), or (c) constitutes the lender, (ii) no default with
respect to which (including any rights that the holders thereof may have to
take enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Senior Subordinated Notes) of Borrower or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity and
(iii) as to which the Lenders have been notified in writing that they will not
have any recourse to the stock or assets of Borrower or any of its Restricted
Subsidiaries.
"Note" or "Notes" shall mean the Revolving Credit Notes.
"Obligations" shall mean and include any and all of Borrower's
Indebtedness and/or liabilities to Agent or Lenders or any corporation that
directly or indirectly controls or is controlled by or is under common control
with any Lender of every kind, nature and description, direct or indirect,
secured or unsecured, joint, several, joint and several, absolute or
contingent, due or to become due, now existing or hereafter arising,
contractual or tortious, liquidated or unliquidated, arising under this
Agreement or under any other related agreement between Agent
- 19 -
or Lenders and Borrower and all obligations of Borrower to Agent or Lenders to
perform acts or refrain from taking any action.
"Offering Memorandum" shall mean the offering memorandum of
Borrower dated February 24, 1997 with respect to the 9-1/2% Senior Subordinated
Notes due 2007.
"Original Owner" shall mean Xxxxxx Xxxxxx and any Permitted
Transferee.
"Oshkosh Property" shall mean the premises located at 0000 Xxxxx
Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx.
"Other Documents" shall mean the Notes and any and all other
agreements, instruments and documents, including, without limitation,
guaranties, pledges, powers of attorney, consents, and all other writings
heretofore, now or hereafter executed by Borrower and/or delivered to Agent or
any Lender in respect of the transactions contemplated by this Agreement.
"Participant" shall mean each Person who shall be granted the
right by any Lender to participate in any of the Revolving Advances and who
shall have entered into a participation agreement in form and substance
satisfactory to such Lender.
"Payment Office" shall mean initially Xxx Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000; thereafter, such other office of Agent, if any, which it may
designate by notice to Borrower and to each Lender to be the Payment Office.
"Permitted Investments" shall mean (i) any Investment in Borrower
or in a Wholly Owned Restricted Subsidiary of Borrower; (ii) any Investment in
Cash Equivalents; (iii) any Investment by Borrower or any of its Restricted
Subsidiaries in a Person if, as a result of such Investment, (a) such Person
becomes a Wholly Owned Restricted Subsidiary of Borrower or a Wholly Owned
Restricted Subsidiary or (b) such Person is merged, consolidated or amalgamated
with or into, or transfers or conveys substantially all of its assets to, or is
liquidated into, Borrower or a Wholly Owned Restricted Subsidiary of Borrower;
(iv) any Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with Section 7.1
hereof; and (v) a $2.6 million loan to CEG, as in effect on the Effective Date,
as such loan may be amended or refinanced in a manner not adverse to Borrower
or Lenders.
"Permitted Liens" shall mean (i) Liens in favor of the Agent;
(ii) Liens in favor of Borrower or any of its Restricted Subsidiaries; (iii)
Liens on property of a Person existing at the time such Person is merged into
or consolidated with Borrower or any of its Restricted Subsidiaries, provided,
that, such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with Borrower or any such Restricted Subsidiary;
(iv) Liens on property existing at the time of acquisition thereof by Borrower
or any of its Restricted
- 20 -
Subsidiaries, provided, that, such Liens were in existence prior to the
contemplation of such acquisition; (v) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (vi)
Liens on any asset of Borrower or any of its Subsidiaries (other than the
Collateral), whether now owned or hereafter acquired, to secure Indebtedness
permitted by Section 7.8 hereof, subject to compliance with Section 6.12
hereof; (vii) Liens set forth on Schedule 1.2 hereto (viii) Liens for taxes,
assessments or other governmental charges not delinquent, or, being contested
in good faith and by appropriate proceedings and with respect to which proper
reserves have been taken by Borrower; provided, that, the Lien shall have no
effect on the priority of the Liens in favor of Agent or the value of the
assets in which Agent has such a Lien and a stay of enforcement of any such
Lien shall be in effect; (ix) Liens incurred in the ordinary course of business
of Borrower or any of its Restricted Subsidiaries with respect to obligations
that do not exceed $2 million at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of advances
or credit (other than trade credit in the ordinary course of business) and (b)
do not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by Borrower or
any such Restricted Subsidiary; (x) renewals or refundings of any Liens
referred to in clauses (iii) through (ix) above provided, that, any such
renewal or refunding does not extend to any assets or secure any Indebtedness
not securing or secured by the Liens being renewed or refinanced; and (xi)
Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse Debt of
Unrestricted Subsidiaries.
"Permitted Refinancing Debt" shall mean any Indebtedness of
Borrower or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of Borrower or any such Restricted Subsidiary;
provided, that: (i) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Debt does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of reasonable expenses
incurred in connection therewith); (ii) such Permitted Refinancing Debt has a
final maturity date no earlier than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (iii) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment to the Senior Subordinated Notes, such Permitted Refinancing Debt has a
final maturity date no earlier than the final maturity date of, and is
subordinated in right of payment to, the Senior Subordinated Notes on terms at
least as favorable to the holders of Senior Subordinated Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness
is incurred only by Borrower or the Restricted Subsidiary that is the
- 21 -
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"Permitted Transferee" shall mean the spouse or children of
Xxxxxx Xxxxxx, or any trusts or custodianships established for the benefit of
one or more of any of them.
"Person" shall mean an individual, a partnership, a corporation,
a business trust, a limited liability company, a joint stock company, a trust,
an unincorporated association, a joint venture, a governmental authority or any
other entity of whatever nature.
"Plan" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA, maintained for employees of Borrower or any member of
the Controlled Group or any such Plan to which Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.
"Principals" shall mean Xxxxxx Xxxxxx, his lineal descendants and
any trust, corporation, partnership, association, limited liability company or
other entity in which Xxxxxx Xxxxxx and/or his lineal descendants hold at least
80% of the total, combined outstanding voting power or similar controlling
interest.
"Private Placement" shall mean the issuance and sale by Borrower
of the Senior Subordinated Notes pursuant to Rule 144A under the Securities Act
of 1933, as amended.
"Pro Forma Balance Sheet" shall have the meaning set forth in
Section 5.5(a) hereof.
"Pro Forma Financial Statements" shall have the meaning set forth
in Section 5.5(b) hereof.
"Projections" shall have the meaning set forth in Section 5.5(b)
hereof.
"Purchasing Lender" shall have the meaning set forth in Section
15.3 hereof.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42
U.S.C. xx.xx. 6901 et seq., as same may be amended from time to time.
"Real Property" shall mean all of Borrower's rights, title and
interest in and to the Oshkosh Property, the Three Rivers Property, the
Appleton Property and Natural Dam Property.
"Receivables" shall mean and include all of Borrower's accounts,
contract rights, instruments (including those evidencing indebtedness among
Borrower and its Affiliates), documents, chattel paper, general intangibles
relating to accounts, drafts and acceptances, and all other forms of
obligations owing to Borrower arising out of or in connection with the sale or
lease of Inventory or the rendition of services, all guarantees and other
- 22 -
security therefor, whether secured or unsecured, now existing or hereafter
created, and whether or not specifically sold or assigned to Lenders hereunder.
"Receivables Advance Rate" shall have the meaning set forth in
Section 2.1(a)(i) hereof.
"Release" shall have the meaning set forth in Section 5.7(c)(i)
hereof.
"Required Lenders" shall mean Lenders holding at least fifty-one
percent (51%) of the Revolving Advances or, if no Revolving Advances are
outstanding Lenders having Commitment Percentages aggregating at least
fifty-one percent (51%) .
"Restricted Investment" shall mean an Investment other than a
Permitted Investment.
"Restricted Payments" shall have the meaning set forth in Section
7.7 hereof.
"Restricted Subsidiary" of a Person shall mean any Subsidiary of
such Person that is not an Unrestricted Subsidiary.
"Revolving Advance Rates" shall have the meaning set forth in
Section 2.1(a) hereof.
"Revolving Advances" shall mean any advances made pursuant to
Section 2.1(a) hereof.
"Revolving Credit Notes" shall have the meaning given to it in
Section 2.1(a) hereof.
"Revolving Interest Rate" shall mean an interest rate per annum
equal to (a) the sum of the Alternate Base Rate plus one-quarter of one percent
(.25%) with respect to Domestic Rate Loans or (b) the sum of the Eurodollar
Rate plus two and one-quarter percent (2.25%) with respect to Eurodollar Rate
Loans.
"Senior Debt" of any Person shall mean (i) any Indebtedness of
such Person incurred under this Agreement, (ii) Indebtedness of a Restricted
Subsidiary formed for the sole purpose of engaging in accounts receivable
financings and (iii) any other Indebtedness permitted to be incurred by such
Person pursuant to Section 7.8 hereof, unless the instrument under which such
Indebtedness is incurred expressly provides that it is subordinated in right of
payment to any Senior Debt of such Person. Notwithstanding anything to the
contrary in the foregoing, Senior Debt will not include (a) any liability for
federal, state, local or other taxes owed or owing by such Person, (b) any
Indebtedness of such Person to any of its Subsidiaries or other Affiliates, (c)
any trade payables or (d) any Indebtedness that is incurred in violation of
this Agreement.
"Senior Debt Payments" shall mean and include all cash actually
expended by Borrower to make (a) interest payments on
- 23 -
any Revolving Advances hereunder, plus, (b) payments for all fees, commissions
and charges set forth herein and with respect to any Revolving Advances.
"Senior Subordinated Notes" shall have the meaning given to such
term in the introductory paragraph of this Agreement.
"Settlement Date" shall mean the Closing Date and thereafter
Wednesday of each week unless such day is not a Business Day in which case it
shall be the next succeeding Business Day.
"Subsidiary" shall mean, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees -thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of such
Person (or a combination thereof) and (ii) any partnership (a) the sole general
partner or the managing general partner of which is such Person or a Subsidiary
of such Person or (b) the only general partners of which are such Person or of
one or more Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantees" shall have the meaning set forth in
Section 7.12 hereof.
"Term" shall have the meaning set forth in Section 13.1 hereof.
"Termination Date" shall have the meaning set forth in Section
13.1 hereof.
"Termination Event" shall mean (i) a Reportable Event with
respect to any Plan or Multiemployer Plan; (ii) the withdrawal of either
Borrower or any member of the Controlled Group from a Plan or Multiemployer
Plan during a plan year in which such entity was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent
to terminate a Plan in a distress termination described in Section 4041(c) of
ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan or
Multiemployer Plan; (v) any event or condition (a) which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan or Multiemployer Plan, or (b) that may
result in termination of a Multiemployer Plan pursuant to Section 4041A of
ERISA; or (vi) the partial or complete withdrawal within the meaning of
Sections 4203 and 4205 of ERISA, of either Borrower or any member of the
Controlled Group from a Multiemployer Plan.
"Three Rivers Property" shall mean the premises located at 000
Xxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxx 00000.
"Toxic Substance" shall mean and include any material present on
the Real Property or the Leasehold Interests which has been shown to have
significant adverse effect on human health or
- 24 -
which is subject to regulation under the Toxic Substances Control Act (TSCA),
15 U.S.C. xx.xx. 2601 et seq., applicable state law, or any other applicable
Federal or state laws now in force or hereafter enacted relating to toxic
substances. "Toxic substance" includes but is not limited to asbestos,
polychlorinated byphenyls (PCBs) and lead-based paints.
"Transferee" shall have the meaning set forth in Section 16.3(b)
hereof.
"Transactions" shall have the meaning set forth in Section 5.5
hereof.
"Treasury Rate" shall mean the yield to maturity at the time of
the computation of United States Treasury securities with a constant maturity
(as compiled by and published in the most recent Federal Reserve Statistical
Release H.15(519)), which has become publicly available at least two Business
Days prior to the date fixed for prepayment (or, if such Statistical Release is
no longer published, any publicly available source of similar market data) most
nearly equal to the then remaining average life of the series of Senior
Subordinated Notes for which a Make-Whole Premium is being calculated;
provided, however, that if the average life of such note is not equal to the
constant maturity of the United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the average life of such Senior Subordinated Notes is
less than one year, the weekly average yield on actually traded United States
Treasury Securities adjusted to a constant maturity of one year shall be used.
"Trustee" shall mean The Bank of New York until a successor
replaces it in accordance with the applicable provisions of the Indenture and,
thereafter, means the successor serving thereunder.
"Trustee Liability Letter" shall mean a letter addressed to Agent
from the trustee of The Paper Industry Union- Management Pension Fund
("PIUMPF") regarding the liability of Borrower should Borrower withdraw from
PIUMPF.
"Undrawn Availability" at a particular date shall mean an amount
equal to (a) the sum of (i) the lesser of (x) the Formula Amount or (y) the
Maximum Revolving Advance Amount, plus (ii) the excess of (x) the Formula
Amount over (y) the Maximum Revolving Advance Amount minus (b) the sum of (i)
the outstanding amount of Revolving Advances plus (ii) all amounts due and
owing to Borrower's trade creditors which are outstanding more than sixty (60)
days after the original due date thereof.
"Unrestricted Subsidiary" shall mean any Subsidiary that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to
a Board resolution, but only to the extent that such Subsidiary (i) has no
Indebtedness other than
- 25 -
Non-Recourse Debt; (ii) is not party to any agreement, contract, arrangement or
understanding with Borrower or any of its Restricted Subsidiaries unless the
terms of any such agreement, contract, arrangement or understanding are no less
favorable to Borrower or such Restricted Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates of Borrower, (iii) is
a Person with respect to which neither Borrower nor any of its Restricted
Subsidiaries has any direct or indirect obligation (a) to subscribe for
additional Equity Interests or (b) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results, (iv) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of Borrower or any of its
Restricted Subsidiaries and (v) has at least one member of its Board of
Directors who is not a director or executive officer of Borrower or any of its
Restricted Subsidiaries and has at least one executive officer who is not a
director or executive officer of Borrower or any of its Restricted
Subsidiaries. Any such designation by the Board of Directors shall be evidenced
to the Agent by filing with the Agent a certified copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions and was permitted by
Section 7.7 hereof. If, at any time, any Unrestricted Subsidiary would fail to
meet the foregoing requirements as an Unrestricted Subsidiary, it shall
thereafter cease to be an Unrestricted Subsidiary and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of
Borrower as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 7.8 hereof, Borrower shall be in default
of such Section). The Board of Directors may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary, provided, that, such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of Borrower of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted under Section 7.8 hereof and (ii) no Default or Event
of Default would be in existence following such designation.
"Weighted Average Life to Maturity" shall mean, when applied to
any Indebtedness at any date, the number of years obtained by dividing (i) the
sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required payments
of principal, including payment at final maturity, in respect thereof, by (b)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Week" shall mean the time period commencing with the opening of
business on a Wednesday and ending on the end of business the following
Tuesday.
"Wholly Owned Restricted Subsidiary" of any Person shall mean a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which
- 26 -
(other than directors' qualifying shares) shall at the time be owned by such
Person and one or more Wholly Owned Restricted Subsidiaries of such Person.
1.3. Uniform Commercial Code Terms. All terms used herein and defined
in the Uniform Commercial Code as adopted in the State of New York shall have
the meaning given therein unless otherwise defined herein.
1.4. Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular section, paragraph or subdivision. Any pronoun
used shall be deemed to cover all genders. Wherever appropriate in the context,
terms used herein in the singular also include the plural and vice versa. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references to this
Agreement or to any of the Other Documents shall include any and all
modifications or amendments hereto or thereto and any and all extensions or
renewals hereof or thereof.
II. REVOLVING ADVANCES, PAYMENTS.
2.1. (a) Revolving Advances. Subject to the terms and conditions set
forth in this Agreement, each Lender, severally and not jointly, will make
Revolving Advances to Borrower in aggregate amounts outstanding at any time
equal to such Lender's Commitment Percentage of the lesser of (x) the Maximum
Revolving Advance Amount or (y) an amount equal to the sum of:
(i) up to 85%, subject to the provisions of Section 2.1(b)
hereof, of Eligible Receivables ("Receivables Advance Rate"),
plus
(ii) up to the lesser of (A) 60%, subject to the provisions of
Section 2.1(b) hereof ("Inventory Advance Rate"), of the value of
the Eligible Inventory (the Receivables Advance Rate and the
Inventory Advance Rate shall be referred to collectively, as the
"Revolving Advance Rates") or (B) $22,000,000 in the aggregate at
any one time, minus
(iii) such reserves as Agent may reasonably deem proper and
necessary from time to time.
The amount derived from the sum of (x) Sections 2.1(a)(y)(i) and
(ii) minus (y) Section 2.1(a)(y)(iii) at any time and from time to
time shall be referred to as the "Formula Amount". The Revolving
Advances shall be evidenced by secured promissory notes in
substantially the form attached hereto as EXHIBIT 2.1(A) executed and
delivered by Borrower to each Lender (collectively, "Revolving Credit
Notes").
- 27 -
(b) Discretionary Rights. The Revolving Advance Rates may be increased
(subject to the provisions of Section 15.2(b)(ii) of this Agreement) or
decreased by Agent at any time and from time to time in the exercise of its
reasonable discretion. Borrower consents to any such increases or decreases and
acknowledges that decreasing the Revolving Advance Rates or increasing the
reserves may limit or restrict Revolving Advances requested by Borrower.
2.2. Procedure for Revolving Advances Borrowing.
(a) Borrower may notify Agent prior to 11:00 a.m. on a Business
Day of its request to incur, on that day, a Revolving Advance hereunder. Should
any amount required to be paid as interest hereunder, or as fees or other
charges under this Agreement or any other agreement with Agent or Lenders, or
with respect to any other Obligation, become due, same shall be deemed a
request for a Revolving Advance as of the date such payment is due, in the
amount required to pay in full such interest, fee, charge or Obligation under
this Agreement or any other agreement with Agent or Lenders, and such request
shall be irrevocable.
(b) Notwithstanding the provisions of (a) above, in the event
Borrower desires to obtain a Eurodollar Rate Loan, it shall give Agent at least
three (3) Business Days' prior written notice on or before 11:00 A.M.,
specifying (i) the date of the proposed borrowing (which shall be a Business
Day), (ii) the amount on the date of such Revolving Advance to be borrowed,
which amount shall be an integral multiple of $50,000, and (iii) the duration
of the first Interest Period therefor. Interest Periods for Eurodollar Rate
Loans shall be for one, two, three or six months.
(c) Each Interest Period of a Eurodollar Rate Loan shall commence
on the date such Eurodollar Rate Loan is made and shall end on such date as
Borrower may elect as set forth in (b)(iii) above provided, that, the exact
length of each Interest Period shall be determined in accordance with the
practice of the interbank market for offshore Dollar deposits and no Interest
Period shall end after the last day of the Term.
Borrower shall elect the initial Interest Period applicable to a
Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to
Section 2.2(b) or by its notice of conversion given to Agent pursuant to
Section 2.2(d), as the case may be. Borrower shall elect the duration of each
succeeding Interest Period by giving irrevocable written notice to Agent of
such duration not less than three (3) Business Days prior to the last day of
the then current Interest Period applicable to such Eurodollar Rate Loan. If
Agent does not receive timely notice of the Interest Period elected by
Borrower, Borrower shall be deemed to have elected to convert to a Domestic
Rate Loan subject to Section 2.2(d) hereinbelow.
(d) Provided, that, no Event of Default shall have occurred and
be continuing, Borrower may, on the last Business Day of the then current
Interest Period applicable to any outstanding
- 28 -
Eurodollar Rate Loan, or on any day with respect to Domestic Rate Loans convert
any such loan into a loan of another type in the same aggregate principal
amount provided, that, any conversion of a Eurodollar Rate Loan shall be made
only on the last Business Day of the then current Interest Period applicable to
such Eurodollar Rate Loan. If Borrower desires to convert a loan, it shall give
Agent not less than three (3) Business Days' prior written notice to convert
from a Domestic Rate Loan to a Eurodollar Rate Loan or one (1) Business Days'
prior written notice to convert from a Eurodollar Rate Loan to a Domestic Rate
Loan, specifying the date of such conversion, the loans to be converted and if
the conversion is from a Domestic Rate Loan to any other type of loan, the
duration of the first Interest Period therefor. After giving effect to each
such conversion, there shall not be outstanding more than three (3) Eurodollar
Rate Loans, in the aggregate.
(e) At its option and upon ninety (90) days' prior written
notice, Borrower may prepay the Revolving Advances in whole at any time, upon
payment of the early termination fee set forth in Section 13.1 with accrued
interest on the principal being prepaid to the date of such repayment and in
the event that any prepayment of a Eurodollar Rate Loan is required or
permitted on a date other than the last Business Day of the then current
Interest Period with respect thereto, Borrower shall indemnify Agent and
Lenders therefor in accordance with Section 2.2(f) hereof.
(f) Borrower shall indemnify Agent and Lenders and hold Agent and
Lenders harmless from and against any and all losses or expenses that Agent and
Lenders may sustain or incur as a consequence of any prepayment or any default
by Borrower in the payment of the principal of or interest on any Eurodollar
Rate Loan or failure by Borrower to complete a borrowing of, a prepayment of or
conversion of or to a Eurodollar Rate Loan after notice thereof has been given,
including (but not limited to) any interest payable by Agent or Lenders to
lenders of funds obtained by it in order to make or maintain its Eurodollar
Rate Loans hereunder.
(g) Notwithstanding any other provision hereof, if any applicable
law, treaty, regulation or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for any Lender
(for purposes of this subsection (g), the term "Lender" shall include any
Lender and the office or branch where any Lender or any corporation or bank
controlling such Lender makes or maintains any Eurodollar Rate Loans, to make
or maintain its Eurodollar Rate Loans, the obligation of Lenders to make
Eurodollar Rate Loans hereunder shall forthwith be cancelled and Borrower
shall, if any affected Eurodollar Rate Loans are then outstanding, promptly
upon request from Lenders, either pay all such affected Eurodollar Rate Loans
or convert such affected Eurodollar Rate Loans into loans of another type. If
any such payment or conversion of any Eurodollar Rate Loan is made on a day
that is not applicable to such Eurodollar Rate Loan Borrower shall pay Lenders,
upon Lenders' request, such amount or amounts as may be necessary to compensate
Lenders for any loss or expense sustained or incurred by Lenders in respect of
such Eurodollar Rate Loan as a result of such payment or conversion, including
(but not
- 29 -
limited to) any interest or other amounts payable by Lenders to lenders of
funds obtained by Lenders in order to make or maintain such Eurodollar Rate
Loan. A certificate as to any additional amounts payable pursuant to the
foregoing sentence submitted by Lenders to Borrower shall be conclusive absent
manifest error.
2.3. Disbursement of Revolving Advance Proceeds. All Revolving
Advances shall be disbursed from whichever office or other place Agent may
designate from time to time and, together with any and all other Obligations of
Borrower to Agent or Lenders, shall be charged to Borrower's Account on Agent's
books. During the Term, Borrower may use the Revolving Advances by borrowing,
prepaying and reborrowing, all in accordance with the terms and conditions
hereof. The proceeds of each Revolving Advance requested by Borrower or deemed
to have been requested by Borrower under Section 2.2(a) hereof shall, with
respect to requested Revolving Advances to the extent Lenders make such
Revolving Advances, be made available to Borrower on the day so requested by
way of credit to Borrower's operating account at IBJS, or such other bank as
Borrower may designate following notification to Agent, in immediately
available federal funds or other immediately available funds or, with respect
to Revolving Advances deemed to have been requested, be disbursed to Agent to
be applied to the outstanding Obligations giving rise to such deemed request.
2.4. Intentionally Omitted.
2.5. Maximum Revolving Advances. The aggregate balance of Revolving
Advances outstanding at any time shall not exceed the lesser of (a) Maximum
Revolving Advance Amount or (b) the Formula Amount. No Lender shall be
obligated to make Revolving Advances in excess of its Maximum Revolving Loan
Commitment.
2.5.1 Lender Acknowledgment. Each Lender hereby acknowledges its
Commitment Percentage as set forth below such Lender's name on the signature
page hereof as each may be adjusted upon an assignment by a Lender pursuant to
Section 15.3(b) hereof.
2.6. Repayment of Revolving Advances.
(a) The Revolving Advances shall be due and payable in full on
the last day of the Term subject to earlier prepayment as herein provided.
(b) Borrower recognizes that the amounts evidenced by checks,
notes, drafts or any other items of payment relating to and/or proceeds of
Collateral may not be collectible by Agent on the date received. In
consideration of Agent's agreement to conditionally credit Borrower's Account
as of the Business Day on which Agent receives those items of payment, Borrower
agrees that, in computing the charges under this Agreement, all items of
payment shall be deemed applied by Agent on account of the Obligations one (1)
Business Day following the Business Day Agent receives such remittances via
wire transfer or electronic depository check from either the Blocked Account
bank, the Depository Account bank or Borrower. Agent is not, however, required
to credit Borrower's Account for the amount of any item of payment which is
unsatisfactory to Agent and Agent may charge Borrower's
- 30 -
Account for the amount of any item of payment which is returned to Agent
unpaid.
(c) All payments of principal, interest and other amounts payable
hereunder, or under any of the related agreements shall be made to Agent at the
Payment Office not later than 1:00 P.M. (New York Time) on the due date
therefor in lawful money of the United States of America in federal funds or
other funds immediately available to Agent. Agent shall have the right to
effectuate payment on any and all Obligations due and owing hereunder by
charging Borrower's Account or by making Revolving Advances as provided in
Section 2.2 hereof.
(d) Borrower shall pay principal, interest, and all other amounts
payable hereunder, or under any related agreement, without any deduction
whatsoever, including, but not limited to, any deduction for any setoff or
counterclaim.
2.7. Repayment of Excess Revolving Advances. The aggregate balance of
Revolving Advances outstanding at any time in excess of the maximum amount of
Revolving Advances permitted hereunder shall be immediately due and payable
without the necessity of any demand, at the Payment Office, whether or not a
Default or Event of Default has occurred.
2.8. Statement of Account. Agent shall maintain, in accordance with
its customary procedures, a loan account ("Borrower's Account") in the name of
Borrower in which shall be recorded the date and amount of each Revolving
Advance made by Lenders and the date and amount of each payment in respect
thereof; provided, however, the failure by Agent to record the date and amount
of any Revolving Advance shall not adversely affect Agent or any Lender. Each
month, Agent shall send to Borrower a statement showing the accounting for the
Revolving Advances made, payments made or credited in respect thereof, and
other transactions between Lenders and Borrower, during such month. The monthly
statements shall be deemed correct and binding upon Borrower in the absence of
manifest error and shall constitute an account stated between Lenders and
Borrower unless Agent receives a written statement of Borrower's specific
exceptions thereto within thirty (30) days after such statement is received by
Borrower. The records of Agent with respect to the loan account shall be
conclusive evidence absent manifest error of the amounts of Revolving Advances
and other charges thereto and of payments applicable thereto.
2.9. Additional Payments. Any sums expended by Agent or any Lender due
to Borrower's failure to perform or comply with its obligations under this
Agreement or any Other Document including, without limitation, Borrower's
obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be
charged to Borrower's Account as a Revolving Advance and added to the
Obligations.
2.10. Manner of Borrowing and Payment.
- 31 -
(a) Each borrowing of Revolving Advances shall be advanced
according to the Commitment Percentages of Lenders.
(b) Each payment (including each prepayment) by Borrower on
account of the principal on any Note, shall be applied to the Revolving
Advances pro rata according to the Commitment Percentages of Lenders. Except as
expressly provided herein, all payments (including prepayments) to be made by
Borrower on account of principal, interest and fees shall be made without
set-off or counterclaim and shall be made to Agent on behalf of Lenders to the
Payment Office, in each case on or prior to 1:00 P.M., New York time, in
Dollars and in immediately available funds.
(c) (i) Notwithstanding anything to the contrary contained in
Sections 2.10(a) and (b) hereof, commencing with the first Business Day
following the Closing Date, each borrowing of Revolving Advances shall be
advanced by Agent and each payment by Borrower on account of Revolving Advances
shall be applied first to those Revolving Advances made by Agent. On or before
1:00 P.M., New York time, on each Settlement Date commencing with the first
Settlement Date following the Closing Date, Agent and Lenders shall make
certain payments as follows: (I) if the aggregate amount of new Revolving
Advances made by Agent during the preceding Week exceeds the aggregate amount
of repayments applied to outstanding Revolving Advances during such preceding
Week, then each Lender shall provide Agent with funds in an amount equal to its
Commitment Percentage of the difference between (w) such Revolving Advances and
(x) such repayments and (II) if the aggregate amount of repayments applied to
outstanding Revolving Advances during such Week exceeds the aggregate amount of
new Revolving Advances made during such Week, then Agent shall provide each
Lender with its Commitment Percentage of the difference between (y) such
repayments and (z) such Revolving Advances.
(ii) Each Lender shall be entitled to earn interest at the
applicable Revolving Interest Rate on outstanding Revolving Advances which it
has funded.
(iii) Promptly following each Settlement Date, Agent shall
submit to each Lender a certificate with respect to payments received and
Revolving Advances made during the Week immediately preceding such Settlement
Date. Such certificate of Agent shall be conclusive in the absence of manifest
error.
(d) If any Lender or Participant (a "benefitted Lender") shall at
any time receive any payment of all or part of its Revolving Advances, or
interest thereon, or receive any Collateral in respect thereof (whether
voluntarily or involuntarily or by set-off) in a greater proportion than any
such payment to and Collateral received by any other Lender, if any, in respect
of such other Lender's Revolving Advances, or interest thereon, and such
greater proportionate payment or receipt of Collateral is not expressly
permitted hereunder, such benefitted Lender shall purchase for cash from the
other Lenders such portion of each such other Lender's Revolving Advances, or
shall provide such other Lender with the benefits of any such Collateral, or
the proceeds
- 32 -
thereof, as shall be necessary to cause such benefitted Lender to share the
excess payment or benefits of such Collateral or proceeds ratably with each of
Lenders; provided, however, that if all or any portion of such excess payment
or benefits is thereafter recovered from such benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest. Each Lender so purchasing a portion of
another Lender's Revolving Advances may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such portion
as fully as if such Lender were the direct holder of such portion.
(e) Unless Agent shall have been notified by telephone, confirmed
in writing, by any Lender that such Lender will not make the amount which would
constitute its Commitment Percentage of the Revolving Advances available to
Agent, Agent may (but shall not be obligated to) assume that such Lender shall
make such amount available to Agent and, in reliance upon such assumption, make
available to Borrower a corresponding amount. Agent will promptly notify
Borrower of its receipt of any such notice from a Lender. If such amount is
made available to Agent on a date after a Settlement Date, such Lender shall
pay to Agent on demand an amount equal to the product of (i) the daily average
federal funds rate (computed on the basis of a year of 360 days) during such
period as quoted by Agent, times (ii) such amount, times (iii) the number of
days from and including such Settlement Date to the date on which such amount
becomes immediately available to Agent. A certificate of Agent submitted to any
Lender with respect to any amounts owing under this paragraph (e) shall be
conclusive, in the absence of manifest error. If such amount is not in fact
made available to Agent by such Lender within three (3) Business Days after
such Settlement Date, Agent shall be entitled to recover such an amount, with
interest thereon at the rate per annum then applicable to Revolving Advances
hereunder, on demand from Borrower; provided, however, that Agent's right to
such recovery shall not prejudice or otherwise adversely affect Borrower's
rights (if any) against such Lender.
2.11. Mandatory Prepayments. When Borrower sells or otherwise disposes
of any Collateral other than Inventory in the ordinary course of business and
except as permitted in Section 4.3 hereof, Borrower shall repay the Revolving
Advances in an amount equal to the net proceeds of such sale (i.e., gross
proceeds less the reasonable costs of such sales or other dispositions), such
repayments to be made promptly but in no event more than one (1) Business Day
following receipt of such net proceeds, and until the date of payment, such
proceeds shall be held in trust for Agent. The foregoing shall not be deemed to
be implied consent to any such sale otherwise prohibited by the terms and
conditions hereof. Such repayments shall be applied to the Revolving Advances,
subject to Borrower's ability to reborrow Revolving Advances in accordance with
the terms hereof.
2.12. Optional Prepayment. During the period commencing on the Closing
Date to and including March 31, 1998, Borrower may, without penalty or premium
and upon five (5) Business Days' notice
- 33 -
to Agent, permanently reduce the Maximum Revolving Advance Amount in integral
multiples of $1,000,000; provided, however, such reductions shall not exceed an
amount equal to $3,000,000 in the aggregate during such period; provided,
further, the aggregate outstanding amount of Revolving Advances shall not at
any time thereafter exceed the Maximum Revolving Advance Amount as reduced.
2.13. Use of Proceeds. Borrower shall apply the proceeds of Revolving
Advances to provide for its working capital needs and general corporate
purposes (including, without limitation, capital expenditures).
III. INTEREST AND FEES.
3.1. Interest. Interest on Revolving Advances shall be payable in
arrears on the first day of each month with respect to Domestic Rate Loans and,
with respect to Eurodollar Rate Loans, at the end of each Interest Period
provided, however, if a Eurodollar Rate Loan has an Interest Period of six
months, then Interest on such Eurodollar Rate Loan shall be payable at the end
of the first three months of such Interest Period and at the end of such
Interest Period. Except as set forth below, interest charges shall be computed
on the actual principal amount of Revolving Advances outstanding during the
month (the "Monthly Advances") at a rate per annum equal to the applicable
Revolving Interest Rate. Whenever, subsequent to the date of this Agreement,
the Alternate Base Rate is increased or decreased, the applicable Revolving
Interest Rate shall be similarly changed without notice or demand of any kind
by an amount equal to the amount of such change in the Alternate Base Rate
during the time such change or changes remain in effect. Upon and after the
declaration of an Event of Default, and during the continuation thereof, the
Obligations shall bear interest at the applicable Revolving Interest Rate plus
two (2%) percent per annum (the "Default Rate").
3.2. (a) Fee Letter. Borrower shall pay to Agent all of the fees set
forth in the Fee Letter on terms and conditions set forth therein.
(b) Facility Fee. If, for any calendar quarter during the Term,
the average daily unpaid balance of the Revolving Advances for each day of such
quarter does not equal the Maximum Revolving Advance Amount, then Borrower
shall pay to Agent for the ratable benefit of Lenders a fee at a rate equal to
three-eighths of one percent (.375%) per annum on the amount by which the
Maximum Revolving Advance Amount exceeds such average daily unpaid balance.
Such fee shall be payable to Agent in arrears on the last day of each calendar
quarter.
3.3. (a) Intentionally Omitted.
(b) Collateral Monitoring Fee. Borrower shall pay to Agent on
the first day of each month following any month in which Agent performs any
collateral monitoring - namely any field examination, collateral analysis or
other business analysis, the
- 34 -
need for which is to be determined by Agent and which monitoring is undertaken
by Agent or for Agent's benefit - a collateral monitoring fee in an amount
equal to $600 per day for each person (other than Lenders' management
personnel) employed to perform such monitoring, plus all costs and
disbursements incurred by Agent in the performance of such examination or
analysis; provided, however, so long as no Event of Default shall have occurred
and is then continuing, Agent shall only perform field examinations, collateral
analysis and other business analysis under this Section 3.3(b) one time during
each 210 day business cycle and the aggregate fees incurred under this Section
3.3(b) shall not exceed $50,000 in any fiscal year; provided, further, such
$50,000 shall be pro-rated for any partial fiscal year.
3.4. Computation of Interest and Fees. Interest and fees hereunder
shall be computed on the basis of a year of 360 days and for the actual number
of days elapsed. If any payment to be made hereunder becomes due and payable on
a day other than a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and interest thereon shall be payable at the
applicable Revolving Interest Rate during such extension.
3.5. Maximum Charges. In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed hereunder would otherwise exceed
the highest rate permitted under law, such excess amount shall be first applied
to any unpaid principal balance owed by Borrower, and if the then remaining
excess amount is greater than the previously unpaid principal balance, Lenders
shall promptly refund such excess amount to Borrower and the provisions hereof
shall be deemed amended to provide for such permissible rate.
3.6. Increased Costs. In the event that any applicable law, treaty or
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
3.6, the term "Lender" shall include Agent or any Lender and any corporation or
bank controlling Agent or any Lender) and the office or branch where Agent or
any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with
any request or directive (whether or not having the force of law) from any
central bank or other financial, monetary or other authority, shall:
(a) subject Agent or any Lender to any tax of any kind whatsoever
with respect to this Agreement or any Eurodollar Rate Loan or change the basis
of taxation of payments to Agent or any Lender of principal, fees, interest or
any other amount payable hereunder or under any Other Documents (except for
changes in the rate of tax on the overall net income of Agent or any Lender by
the jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special
deposit, assessment or similar requirement against assets held by, or deposits
in or for the account of, advances or loans by, or other credit extended by,
any office of Agent or any Lender,
- 35 -
including (without limitation) pursuant to Regulation D of the Board of
Governors of the Federal Reserve System; or
(c) impose on Agent or any Lender or the London interbank
Eurodollar market any other condition with respect to this Agreement, any Other
Documents or any other Eurodollar Rate Loan;
and the result of any of the foregoing is to increase the cost to Agent or any
Lender of making, renewing or maintaining its Revolving Advances hereunder by
an amount that Agent or such Lender deems to be material or to reduce the
amount of any payment (whether of principal, interest or otherwise) in respect
of any of the Revolving Advances by an amount that Agent or such Lender deems
to be material, then, in any case Borrower shall promptly pay Agent or such
Lender, upon its demand, such additional amount as will compensate Agent or
such Lender for such additional cost or such reduction, as the case may be,
provided, that, the foregoing shall not apply to increased costs which are
reflected in the Eurodollar Rate. Agent or such Lender shall certify the amount
of such additional cost or reduced amount to Borrower, and such certification
shall be conclusive absent manifest error.
3.7. Basis For Determining Interest Rate Inadequate or Unfair. In the
event that Agent or any Lender shall have determined that:
(a) reasonable means do not exist for ascertaining the Eurodollar
Rate for any Interest Period; or
(b) Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank Eurodollar market, with
respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate
Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate
Loan,
Agent shall give Borrower prompt written, telephonic or telegraphic notice of
such determination. If such notice is given, (i) any such requested Eurodollar
Rate Loan shall be made as a Domestic Rate Loan, unless Borrower shall notify
Agent no later than 10:00 a.m. (New York City time) two (2) Business Days prior
to the date of such proposed borrowing, that its request for such borrowing
shall be cancelled or made as an unaffected type of Eurodollar Rate Loan (ii)
any Domestic Rate Loan or Eurodollar Rate Loan which was to have been converted
to an affected type of Eurodollar Rate Loan shall be continued as or converted
into a Domestic Rate Loan, or, if Borrower shall notify Agent, no later than
10:00 a.m. (New York City time) two (2) Business Days prior to the proposed
conversion, shall be maintained as an unaffected type of Eurodollar Rate, and
(iii) any outstanding affected Eurodollar Rate Loans shall be converted into a
Domestic Rate Loan, or, if Borrower shall notify Agent, no later than 10:00
a.m. (New York City time) two (2) Business Days prior to the last Business Day
of the then current Interest Period applicable to such affected Eurodollar Rate
Loan, shall be converted into an unaffected type of Eurodollar Rate Loan on the
last Business Day of the then current Interest Period for
- 36 -
such affected Eurodollar Rate Loans. Until such notice has been withdrawn,
Lenders shall have no obligation to make an affected type of Eurodollar Rate
Loan or maintain outstanding affected Eurodollar Rate Loans and Borrower shall
not have the right to convert a Domestic Rate Loan or an unaffected type of
Eurodollar Rate Loan into an affected type of Eurodollar Rate Loan.
3.8. Capital Adequacy.
(a) In the event that Agent or any Lender shall have determined
that any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by Agent or any Lender (for purposes of this Section 3.8, the term
"Lender" shall include Agent or any Lender and any corporation or bank
controlling Agent or any Lender) and the office or branch where Agent or any
Lender (as so defined) makes or maintains any Eurodollar Rate Loans 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 Agent or any Lender's
capital as a consequence of its obligations hereunder to a level below that
which Agent or such Lender could have achieved but for such adoption, change or
compliance (taking into consideration Agent's and each Lender's policies with
respect to capital adequacy) by an amount deemed by Agent or any Lender to be
material, then, from time to time, Borrower shall pay upon demand to Agent or
such Lender such additional amount or amounts as will compensate Agent or such
Lender for such reduction. In determining such amount or amounts, Agent or such
Lender may use any reasonable averaging or attribution methods. The protection
of this Section 3.9 shall be available to Agent and each Lender regardless of
any possible contention of invalidity or inapplicability with respect to the
applicable law, regulation or condition.
(b) A certificate of Agent or such Lender setting forth such
amount or amounts as shall be necessary to compensate Agent or such Lender with
respect to Section 3.8(a) hereof when delivered to Borrower shall be conclusive
absent manifest error.
IV. COLLATERAL: GENERAL TERMS
4.1. Security Interest in the Collateral. To secure the prompt payment
and performance to Agent and each Lender of the Obligations, Borrower hereby
acknowledges, confirms and agrees that Agent has and shall continue to have a
Lien upon and security interest in and to all of the Collateral heretofore
granted to Agent under the Existing Agreement, and, to the extent not otherwise
granted thereunder or under the Other Documents or otherwise granted to or held
by Agent, Borrower hereby assigns, pledges and grants to Agent for the ratable
benefit of each Lender a continuing security interest in and to all of the
Collateral, whether now owned or existing or hereafter acquired or arising and
- 37 -
wheresoever located. Borrower shall xxxx its books and records as may be
necessary or appropriate to evidence, protect and perfect Agent's security
interest and shall cause its financial statements to reflect such security
interest.
4.2. Perfection of Security Interest. Borrower shall take all action
that may be necessary or desirable, or that Agent may request, so as at all
times to maintain the validity, perfection, enforceability and priority of
Agent's security interest in the Collateral or to enable Agent to protect,
exercise or enforce its rights hereunder and in the Collateral, including, but
not limited to (i) immediately discharging all Liens other than Permitted
Liens, (ii) obtaining landlords' or mortgagees' lien waivers, (iii) delivering
to Agent, endorsed or accompanied by such instruments of assignment as Agent
may specify, and stamping or marking, in such manner as Agent may specify, any
and all chattel paper, instruments, letters of credits and advices thereof and
documents evidencing or forming a part of the Collateral, (iv) entering into
warehousing, lockbox and other custodial arrangements satisfactory to Agent,
and (v) executing and delivering financing statements, instruments of pledge,
mortgages, notices and assignments, in each case in form and substance
satisfactory to Agent, relating to the creation, validity, perfection,
maintenance or continuation of Agent's security interest under the Uniform
Commercial Code or other applicable law. Agent is hereby authorized to file
financing statements signed by Agent instead of Borrower in accordance with
Section 9-402(2) of Uniform Commercial Code as adopted in the State of New
York. All charges, expenses and fees Agent may incur in doing any of the
foregoing, and any local taxes relating thereto, shall be charged to Borrower's
Account as a Revolving Advance and added to the Obligations, or, at Agent's
option, shall be paid to Agent for the ratable benefit of Lenders immediately
upon demand.
4.3. Disposition of Collateral. Borrower will safeguard and protect
all Collateral for Agent's general account and make no disposition thereof
whether by sale, lease or otherwise except the sale of Inventory in the
ordinary course of business provided, however, Borrower may retain for its own
purposes up to $100,000 from any such disposition; provided, further, Borrower
shall not retain in excess of $100,000 from all such dispositions in any fiscal
year.
4.4. Preservation of Collateral. Following the occurrence of a Default
or Event of Default, in addition to the rights and remedies set forth in
Section 11.1 hereof, Agent: (a) may at any time take such steps as Agent deems
necessary to protect Agent's interest in and to preserve the Collateral,
including the hiring of such security guards or the placing of other security
protection measures as Agent may deem appropriate; (b) may employ and maintain
at any of Borrower's premises a custodian who shall have full authority to do
all acts necessary to protect Agent's interests in the Collateral; (c) may
lease warehouse facilities to which Agent may move all or part of the
Collateral; (d) may use any of Borrower's owned or leased lifts, hoists, trucks
and other facilities or equipment for handling or removing the Collateral; and
(e) shall have, and is hereby granted, a right of ingress and
- 38 -
egress to the places where the Collateral is located, and may proceed over and
through any of Borrower's owned or leased property. Borrower shall cooperate
fully with all of Agent's efforts to preserve the Collateral and will take such
actions to preserve the Collateral as Agent may direct. All of Agent's expenses
of preserving the Collateral, including any expenses relating to the bonding of
a custodian, shall be charged to Borrower's Account as a Revolving Advance and
added to the Obligations.
4.5. Ownership of Collateral. With respect to the Collateral, at the
time the Collateral becomes subject to Agent's security interest: (a) Borrower
shall be the sole owner of and fully authorized and able to sell, transfer,
pledge and/or grant a first security interest in each and every item of the
Collateral to Agent; and, except for Permitted Liens the Collateral and each
Fixed Asset shall be free and clear of all Liens and encumbrances whatsoever;
(b) each document and agreement executed by Borrower or delivered to Agent or
any Lender in connection with this Agreement shall be true and correct in all
respects; (c) all signatures and endorsements of Borrower that appear on such
documents and agreements shall be genuine and Borrower shall have full capacity
to execute same; and (d) Borrower's Equipment and Inventory shall be located at
any of the locations set forth on Schedule 4.5 (as amended with the prior
written consent of Agent) and shall not be removed from such location(s) to any
location not set forth on Schedule 4.5 without the prior written consent of
Agent except with respect to the sale of Equipment or sale of Inventory in the
ordinary course of business.
4.6. Defense of Agent's and Lenders' Interests. Until (a) payment and
performance in full of all of the Obligations and (b) termination of this
Agreement, Agent's interests in the Collateral shall continue in full force and
effect. During such period Borrower shall not, without Agent's prior written
consent, pledge, sell (except Inventory in the ordinary course of business,
assign, transfer, create or suffer to exist a Lien upon or encumber or allow or
suffer to be encumbered in any way except for Permitted Liens, any part of the
Collateral or any Fixed Asset. Borrower shall defend Agent's interests in the
Collateral against any and all persons whatsoever. At any time following the
occurrence and during the continuance of an Event of Default and demand by
Agent for payment of all Obligations, Agent shall have the right to take
possession of the indicia of the Collateral and the Collateral in whatever
physical form contained, including without limitation: labels, stationery,
documents, instruments and advertising materials. If Agent exercises this right
to take possession of the Collateral, Borrower shall, upon demand, assemble it
in the best manner possible and make it available to Agent at a place
reasonably convenient to Agent. In addition, with respect to all Collateral,
Agent and Lenders shall be entitled to all of the rights and remedies set forth
herein and further provided by the Uniform Commercial Code or other applicable
law. Additionally, following the occurrence and during the continuance of an
Event of Default, Borrower shall, and Agent may, at its option, instruct all
suppliers, carriers, forwarders, warehouses or others receiving or
- 39 -
holding cash, checks, Inventory, documents or instruments in which Agent holds
a security interest to deliver same to Agent and/or subject to Agent's order
and if they shall come into Borrower's possession, they, and each of them,
shall be held by Borrower in trust as Agent's trustee, and Borrower will
immediately deliver them to Agent in their original form together with any
necessary endorsement.
4.7. Books and Records. Borrower (a) shall keep proper books of record
and account in which full, true and correct entries will be made of all
dealings or transactions of or in relation to its business and affairs; (b) set
up on its books accruals with respect to all taxes, assessments, charges,
levies and claims; and (c) on a reasonably current basis set up on its books,
from its earnings, allowances against doubtful Receivables, advances and
investments and all other proper accruals (including without limitation by
reason of enumeration, accruals for premiums, if any, due on required payments
and accruals for depreciation, obsolescence, or amortization of properties),
which should be set aside from such earnings in connection with its business.
All determinations pursuant to this subsection shall be made in accordance
with, or as required by, GAAP consistently applied in the opinion of such
independent public accountant as shall then be regularly engaged by Borrower.
4.8. Financial Disclosure. Borrower hereby irrevocably authorizes and
directs all accountants and auditors employed by Borrower at any time during
the Term to exhibit and deliver to Agent and each Lender copies of any of
Borrower's financial statements, trial balances or other accounting records of
any sort in the accountant's or auditor's possession, and to disclose to Agent
and each Lender any information such accountants may have concerning Borrower's
financial status and business operations. Borrower hereby authorizes all
federal, state and municipal authorities to furnish to Agent and each Lender
copies of reports or examinations relating to Borrower, whether made by
Borrower or otherwise; however, Agent and each Lender will attempt to obtain
such information or materials directly from Borrower prior to obtaining such
information or materials from such accountants or such authorities.
4.9. Compliance with Laws. Borrower shall comply with all acts, rules,
regulations and orders of any legislative, administrative or judicial body or
official applicable to the Collateral or any part thereof or to the operation
of Borrower's business the non-compliance with which could reasonably be
expected to have a Material Adverse Effect. Borrower may, however, contest or
dispute any acts, rules, regulations, orders and directions of those bodies or
officials in any reasonable manner, provided that any related lien is inchoate
or stayed and sufficient reserves are established to the reasonable
satisfaction of Lenders to protect Agent's Lien on or security interest in the
Collateral. The Collateral and each Fixed Asset at all times shall be
maintained in accordance with the requirements of all insurance carriers which
provide insurance with respect to the Collateral or such Fixed Asset so that
such insurance shall remain in full force and effect.
- 40 -
4.10. Inspection of Premises. At all reasonable times Agent and each
Lender shall have full access to and the right to audit, check, inspect and
make abstracts and copies from Borrower's books, records, audits,
correspondence and all other papers relating to the Collateral and the
operation of Borrower's business. Agent, any Lender and their agents may enter
upon any of Borrower's premises at any time during business hours and at any
other reasonable time, and from time to time, for the purpose of inspecting the
Collateral and any and all records pertaining thereto and the operation of
Borrower's business.
4.11. Insurance. Borrower shall bear the full risk of any loss of any
nature whatsoever with respect to the Collateral and each Fixed Asset. At
Borrower's own cost and expense in amounts and with carriers acceptable to
Agent, Borrower shall (a) keep all its insurable properties and properties in
which Borrower has an interest insured against the hazards of fire, flood,
sprinkler leakage, those hazards covered by extended coverage insurance and
such other hazards, and for such amounts, as is customary in the case of
companies engaged in businesses similar to Borrower's including, without
limitation, business interruption insurance;, (b) maintain a bond in such
amounts as is customary in the case of companies engaged in businesses similar
to Borrower's insuring against larceny, embezzlement or other criminal
misappropriation of insured's officers and employees who may either singly or
jointly with others at any time have access to the assets or funds of Borrower
either directly or through authority to draw upon such funds or to direct
generally the disposition of such assets; (c) maintain public and product
liability insurance against claims for personal injury, death or property
damage suffered by others; (d) maintain all such worker's compensation or
similar insurance as may be required under the laws of any state or
jurisdiction in which Borrower is engaged in business; (e) furnish Agent with
(i) copies of all policies and evidence of the maintenance of such policies by
the renewal thereof at least thirty (30) days before any expiration date, and
(ii) appropriate loss payable endorsements in form and substance satisfactory
to Agent, naming Agent as a co-insured and loss payee as its interests may
appear with respect to all insurance coverage, with respect to the Collateral,
referred to in clauses (a) and (b) above, and providing (A) that all proceeds
thereunder shall be payable to Agent, (B) no such insurance shall be affected
by any act or neglect of the insured or owner of the property described in such
policy, and (C) that such policy and loss payable clauses may not be cancelled,
amended or terminated unless at least thirty (30) days' prior written notice is
given to Agent. In the event of any loss thereunder, the carriers named therein
hereby are directed by Agent and Borrower to make payment for such loss to
Agent and not to Borrower and Agent jointly. If any such insurance losses are
paid by check, draft or other instrument payable to Borrower and Agent jointly,
Agent may endorse Borrower's name thereon and do such other things as Agent may
deem advisable to reduce the same to cash. Agent is hereby authorized to adjust
and compromise such claims in excess of $500,000, and so long as an Event of
Default has not occurred and is continuing, Agent shall not adjust and
compromise such claims in an amount equal to or less than $500,000, under
insurance coverage referred
- 41 -
to in clauses (a) and (b) above with respect to the Collateral. All loss
recoveries received by Agent upon any such insurance with respect to the
Collateral may be applied to the Obligations, in such order as Agent in its
sole discretion shall determine. Any surplus shall be paid by Agent to Borrower
or applied as may be otherwise required by law. Any deficiency thereon shall be
paid by Borrower to Agent, on demand.
4.12. Failure to Pay Insurance. If Borrower fails to obtain insurance
as hereinabove provided, or to keep the same in force, Agent, if Agent so
elects, may obtain such insurance and pay the premium therefor for Borrower's
Account, and charge Borrower's Account therefor and such expenses so paid shall
be part of the Obligations.
4.13. Payment of Taxes. Borrower will pay, when due, all taxes,
assessments and other Charges lawfully levied or assessed upon Borrower or any
of the Collateral including, without limitation, real and personal property
taxes, assessments and charges and all franchise, income, employment, social
security benefits, withholding, and sales taxes. If any tax by any governmental
authority is or may be imposed on or as a result of any transaction between
Borrower and Agent or any Lender which Agent or any Lender may be required to
withhold or pay or if any taxes, assessments, or other Charges remain unpaid
after the date fixed for their payment, or if any claim shall be made which, in
Agent's or any Lender's opinion, may possibly create a valid Lien on the
Collateral, Agent may without notice to Borrower pay the taxes, assessments or
other Charges and Borrower hereby indemnifies and holds Agent and each Lender
harmless in respect thereof. Agent will not pay any taxes, assessments or
Charges to the extent that Borrower has contested or disputed those taxes,
assessments or Charges in good faith, by expeditious protest, administrative or
judicial appeal or similar proceeding provided that any related tax lien is
stayed and sufficient reserves are established to the reasonable satisfaction
of Agent to protect Agent's security interest in or Lien on the Collateral. The
amount of any payment by Agent under this Section 4.13 shall be charged to
Borrower's Account as a Revolving Advance and added to the Obligations and,
until Borrower shall furnish Agent with an indemnity therefor (or supply Agent
with evidence satisfactory to Agent that due provision for the payment thereof
has been made), Agent may hold without interest any balance standing to
Borrower's credit and Agent shall retain its security interest in any and all
Collateral held by Agent.
4.14. Payment of Leasehold Obligations. Borrower shall at all times
pay, when and as due, its rental obligations under all leases under which it is
a tenant, and shall otherwise comply, in all material respects, with all other
terms of such leases and keep them in full force and effect and, at Agent's
request will provide evidence of having done so.
4.15. Receivables.
- 42 -
(a) Nature of Receivables. Each of the Receivables shall be a
bona fide and valid account representing a bona fide indebtedness incurred by
the Customer therein named, for a fixed sum as set forth in the invoice
relating thereto (provided immaterial or unintentional invoice errors shall not
be deemed to be a breach hereof) with respect to an absolute sale or lease and
delivery of goods upon stated terms of Borrower, or work, labor or services
theretofore rendered by Borrower as of the date each Receivable is created.
Same shall be due and owing in accordance with Borrower's standard terms of
sale without dispute, setoff or counterclaim except as may be stated on the
accounts receivable schedules delivered by Borrower to Agent.
(b) Solvency of Customers. Each Customer, to the best of
Borrower's knowledge, as of the date each Receivable is created, is and will be
solvent and able to pay all Receivables on which the Customer is obligated in
full when due or with respect to such Customers of Borrower who are not solvent
Borrower has set up on its books and in its financial records bad debt reserves
adequate to cover such Receivables.
(c) Locations of Borrower. Borrower's chief executive office is
located at 00 Xxxxx Xxxxxx Xxxxxx, Xx. Xxxxxx, Xxxxxxx 00000. Until written
notice is given to Agent by Borrower of any other office at which it keeps its
records pertaining to Receivables, all such records shall be kept at such
executive office.
(d) Collection of Receivables. Until Borrower's authority to do
so is terminated by Agent (which notice Agent may give at any time following
the occurrence and during the continuance of an Event of Default or a Default),
Borrower will, at Borrower's sole cost and expense, but on Agent's behalf and
for Agent's account, collect as Agent's property and in trust for Agent all
amounts received on Receivables, and shall not commingle such collections with
Borrower's funds or use the same except to pay Obligations. Borrower shall,
upon request, deliver to Agent or the Blocked Account in original form and on
the date of receipt thereof, all checks, drafts, notes, money orders,
acceptances, cash and other evidences of Indebtedness.
(e) Notification of Assignment of Receivables. At any time
following the occurrence and during the continuance of an Event of Default or a
Default, Agent shall have the right to send notice of the assignment of, and
Agent's security interest in, the Receivables to any and all Customers or any
third party holding or otherwise concerned with any of the Collateral.
Thereafter, Agent shall have the sole right to collect the Receivables, take
possession of the Collateral, or both. Agent's actual collection expenses,
including, but not limited to, stationery and postage, telephone and telegraph,
secretarial and clerical expenses and the salaries of any collection personnel
used for collection, may be charged to Borrower's Account and added to the
Obligations.
(f) Power of Agent to Act on Borrower's Behalf. Agent shall have
the right to receive, endorse, assign and/or
- 43 -
deliver in the name of Agent or Borrower any and all checks, drafts and other
instruments for the payment of money relating to the Receivables, and Borrower
hereby waives notice of presentment, protest and non-payment of any instrument
so endorsed. Borrower hereby constitutes Agent or Agent's designee as
Borrower's attorney with power (i) to endorse Borrower's name upon any notes,
acceptances, checks, drafts, money orders or other evidences of payment or
Collateral; (ii) to sign Borrower's name on any invoice or xxxx of lading
relating to any of the Receivables, drafts against Customers, assignments and
verifications of Receivables; (iii) to send verifications of Receivables to any
Customer; (iv) to sign Borrower's name on all financing statements or any other
documents or instruments deemed necessary or appropriate by Agent to preserve,
protect, or perfect Agent's interest in the Collateral and to file same; (v) to
demand payment of the Receivables; (vi) to enforce payment of the Receivables
by legal proceedings or otherwise; (vii) to exercise all of Borrower's rights
and remedies with respect to the collection of the Receivables and any other
Collateral; (viii) to settle, adjust, compromise, extend or renew the
Receivables; (ix) to settle, adjust or compromise any legal proceedings brought
to collect Receivables; (x) to prepare, file and sign Borrower's name on a
proof of claim in bankruptcy or similar document against any Customer; (xi) to
prepare, file and sign Borrower's name on any notice of Lien, assignment or
satisfaction of Lien or similar document in connection with the Receivables;
and (xii) to do all other acts and things necessary to carry out this
Agreement. All acts of said attorney or designee are hereby ratified and
approved, and said attorney or designee shall not be liable for any acts of
omission or commission nor for any error of judgment or mistake of fact or of
law, unless done maliciously or with gross (not mere) negligence; this power
being coupled with an interest is irrevocable while any of the Obligations
remain unpaid. Agent shall have the right at any time following the occurrence
and during the continuance of an Event of Default or Default, to change the
address for delivery of mail addressed to Borrower to such address as Agent may
designate.
(g) No Liability. Neither Agent nor any Lender shall, under any
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or
payment of any of the Receivables or any instrument received in payment
thereof, or for any damage resulting therefrom. Following the occurrence of an
Event of Default or Default Agent may, without notice or consent from Borrower,
xxx upon or otherwise collect, extend the time of payment of, compromise or
settle for cash, credit or upon any terms any of the Receivables or any other
securities, instruments or insurance applicable thereto and/or release any
obligor thereof. Agent is authorized and empowered to accept following the
occurrence of an Event of Default or Default the return of the goods
represented by any of the Receivables, without notice to or consent by
Borrower, all without discharging or in any way affecting Borrower's liability
hereunder.
(h) Establishment of a Lockbox Account, Dominion Account. If
Undrawn Availability at any time is less than
- 44 -
$7,500,000, then all proceeds of Collateral shall, at the direction of Agent,
be deposited by Borrower into a lockbox account, dominion account or such other
"blocked account" ("Blocked Accounts") as Agent may require pursuant to an
arrangement with such bank as may be selected by Borrower and be acceptable to
Agent. Borrower shall issue to any such bank, an irrevocable letter of
instruction directing said bank to transfer such funds so deposited to Agent,
either to any account maintained by Agent at said bank or by wire transfer to
appropriate account(s) of Agent. All funds deposited in such "blocked account"
shall immediately become the property of Agent and Borrower shall obtain the
agreement by such bank to waive any offset rights against the funds so
deposited. Agent assumes no responsibility for such "blocked account"
arrangement, including without limitation, any claim of accord and satisfaction
or release with respect to deposits accepted by any bank thereunder.
Alternatively, Agent may establish depository accounts ("Depository Accounts")
in the name of Agent at a bank or banks for the deposit of such funds and
Borrower shall deposit all proceeds of Collateral or cause same to be
deposited, in kind, in such Depository Accounts of Agent in lieu of depositing
same to the Blocked Accounts.
(i) Adjustments. Borrower will not, without each Lender's
consent, compromise or adjust any Receivables (or extend the time for payment
thereof) or accept any returns of merchandise or grant any additional
discounts, allowances or credits thereon except for those compromises,
adjustments, returns, discounts, credits and allowances as have been heretofore
customary in the business of Borrower.
4.16. Inventory. All Inventory held for sale or lease has been, and
will be, produced by Borrower in accordance with the Federal Fair Labor
Standards Act of 1938, as amended, and all rules, regulations and orders
thereunder.
4.17. Maintenance of Equipment. The Equipment shall be maintained in
good operating condition and repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs thereto shall be made so that the value
and operating efficiency of the Equipment shall be maintained and preserved.
Borrower shall not use or operate the Equipment in material violation of any
law, statute, ordinance, code, rule or regulation.
4.18. Exculpation of Liability. Nothing herein contained shall be
construed to constitute Agent or any Lender as Borrower's agent for any purpose
whatsoever, nor shall Agent or any Lender be responsible or liable for any
shortage, discrepancy, damage, loss or destruction of any part of the
Collateral or any Fixed Asset wherever the same may be located and regardless
of the cause thereof. Neither Agent nor any Lender, whether by anything herein
or in any assignment or otherwise, assume any of Borrower's obligations under
any contract or agreement assigned to Agent or such Lender, and neither Agent
nor any Lender shall be responsible in any way for the performance by Borrower
of any of the terms and conditions thereof.
- 45 -
4.19. Environmental Matters. (a) Borrower will ensure that the Real
Property remains in compliance with all Environmental Laws and it will not
place or permit to be placed any Hazardous Substances on any Real Property
except as not prohibited by applicable law or appropriate governmental
authorities.
(b) Borrower will establish and maintain a system to assure and
monitor continued compliance with all applicable Environmental Laws which
system shall include periodic reviews of such compliance.
(c) Borrower will (i) employ in connection with its use of the
Real Property appropriate technology necessary to maintain compliance with any
applicable Environmental Laws and (ii) dispose of any and all Hazardous Waste
generated at the Real Property only at facilities and with carriers that
maintain valid permits under RCRA and any other applicable Environmental Laws.
Borrower shall use its best efforts to obtain certificates of disposal, such as
hazardous waste manifest receipts, from all treatment, transport, storage or
disposal facilities or operators employed by Borrower in connection with the
transport or disposal of any Hazardous Waste generated at the Real Property.
(d) In the event Borrower obtains, gives or receives notice of
any Release or threat of Release of a reportable quantity of any Hazardous
Substances at the Real Property (any such event being hereinafter referred to
as a "Hazardous Discharge") or receives any notice of violation, request for
information or notification that it is potentially responsible for
investigation or cleanup of environmental conditions at the Real Property,
demand letter or complaint, order, citation, or other written notice with
regard to any Hazardous Discharge or violation of Environmental Laws affecting
the Real Property or Borrower's interest therein (any of the foregoing is
referred to herein as an "Environmental Complaint") from any Person or entity,
including any state agency responsible in whole or in part for environmental
matters in the state in which the Real Property is located or the United States
Environmental Protection Agency (any such person or entity hereinafter the
"Authority"), then Borrower shall, within five (5) Business Days, give written
notice of same to Agent detailing facts and circumstances of which Borrower is
aware giving rise to the Hazardous Discharge or Environmental Complaint. Such
information is to be provided to allow Agent to protect its security interest
in the Collateral and is not intended to create nor shall it create any
obligation upon Agent or any Lender with respect thereto.
(e) Borrower shall promptly forward to Agent copies of any
request for information, notification of potential liability, demand letter
relating to potential responsibility with respect to the investigation or
cleanup of Hazardous Substances at any other site owned, operated or used by
Borrower to dispose of Hazardous Substances and shall continue to forward
copies of correspondence between Borrower and the Authority regarding such
claims to Agent until the claim is settled. Borrower shall promptly forward to
Agent copies of all documents and reports concerning a Hazardous Discharge at
the Real Property that Borrower
- 46 -
is required to file under any Environmental Laws. Such information is to be
provided solely to allow Agent to protect Agent's security interest in the and
the Collateral.
(f) Borrower shall respond promptly to any Hazardous Discharge
or Environmental Complaint and take all necessary action in order to safeguard
the health of any Person and to avoid subjecting the Collateral or any Fixed
Asset to any Lien. If Borrower shall fail to respond promptly to any Hazardous
Discharge or Environmental Complaint or Borrower shall fail to comply with any
of the requirements of any Environmental Laws, Agent on behalf of Lenders may,
but without the obligation to do so, for the sole purpose of protecting Agent's
interest in Collateral: (A) give such notices or (B) enter onto the Real
Property (or authorize third parties to enter onto the Real Property) and take
such actions as Agent (or such third parties as directed by Agent) deem
reasonably necessary or advisable, to clean up, remove, mitigate or otherwise
deal with any such Hazardous Discharge or Environmental Complaint. All
reasonable costs and expenses incurred by Agent and Lenders (or such third
parties) in the exercise of any such rights, including any sums paid in
connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the Default Rate for Domestic Rate Loans constituting Revolving Advances shall
be paid upon demand by Borrower, and until paid shall be added to and become a
part of the Obligations secured by the Liens created by the terms of this
Agreement or any other agreement between Agent, any Lender and Borrower.
(g) Promptly upon the written request of Agent from time to
time, Borrower shall provide Agent, at Borrower's expense, with an
environmental site assessment or environmental audit report prepared by an
environmental engineering firm acceptable in the reasonable opinion of Agent,
to assess with a reasonable degree of certainty the existence of a Hazardous
Discharge and the potential costs in connection with abatement, cleanup and
removal of any Hazardous Substances found on, under, at or within the Real
Property. Any report or investigation of such Hazardous Discharge proposed and
acceptable to an appropriate Authority that is charged to oversee the clean-up
of such Hazardous Discharge shall be acceptable to Agent. If such estimates,
individually or in the aggregate, exceed $100,000, Agent shall have the right
to require Borrower to post a bond, letter of credit or other security
reasonably satisfactory to Agent to secure payment of these costs and expenses.
(h) Borrower shall defend and indemnify Agent and Lenders and
hold Agent, Lenders and their respective employees, agents, directors and
officers harmless from and against all loss, liability, damage and expense,
claims, costs, fines and penalties, including attorney's fees, suffered or
incurred by Agent or Lenders under or on account of any Environmental Laws,
including, without limitation, the assertion of any lien thereunder, with
respect to any Hazardous Discharge, the presence of any Hazardous Substances
affecting the Real Property, whether or not the same originates or emerges from
the Real Property or any contiguous real estate,
- 47 -
including any loss of value of the Real Property as a result of the foregoing
except to the extent such loss, liability, damage and expenses is attributable
to any Hazardous Discharge resulting from actions on the part of Agent or any
Lender. Borrower's obligations under this Section 4.19 shall arise upon the
discovery of the presence of any Hazardous Substances at the Real Property,
whether or not any federal, state, or local environmental agency has taken or
threatened any action in connection with the presence of any Hazardous
Substances. Borrower's obligation and the indemnifications hereunder shall
survive the termination of this Agreement.
(i) For purposes of Section 4.19 and 5.7, all references to Real
Property shall be deemed to include all of Borrower's right, title and interest
in and to its owned and leased premises.
4.20. Except as respects the financing statements filed by Agent and
the financing statements described on Schedule 1.2, no financing statement
covering any of the Collateral or any proceeds thereof is on file in any public
office.
V. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants as follows:
5.1. Authority. Borrower has full power, authority and legal right to
enter into this Agreement and the Other Documents and perform all Obligations
hereunder and thereunder. The execution, delivery and performance hereof and of
the Other Documents (a) are within Borrower's corporate powers, have been duly
authorized, are not in contravention of law or the terms of Borrower's by-laws,
certificate of incorporation or other applicable documents relating to
Borrower's formation or to the conduct of Borrower's business or of any
material agreement or undertaking to which Borrower is a party or by which
Borrower is bound, and (b) will not conflict with nor result in any breach in
any of the provisions of or constitute a default under or result in the
creation of any Lien except Permitted Liens upon any asset of Borrower under
the provisions of any agreement, charter document, instrument, by-law, or other
instrument to which Borrower or its property is a party or by which it may be
bound.
5.2. Formation and Qualification. (a) Borrower is duly incorporated
and in good standing under the laws of the State of Delaware and is qualified
to do business and is in good standing in the states listed on Schedule 5.2
which constitute all states in which qualification and good standing are
necessary for Borrower to conduct its business and own its property except
where the failure to so qualify could not reasonably be expected to have a
Material Adverse Effect. Borrower has delivered to Agent true and complete
copies of its certificate of incorporation and by-laws and will promptly notify
Agent of any amendment or changes thereto.
- 48 -
(b) The only Subsidiaries of Borrower are listed on Schedule 5.2.
5.3. Survival of Representations and Warranties. All representations
and warranties of Borrower contained in this Agreement and the Other Documents
shall be true at the time of Borrower's execution of this Agreement and the
Other Documents, and shall survive the execution, delivery and acceptance
thereof by the parties thereto and the closing of the transactions described
therein or related thereto. Any misrepresentation or breach of any
representation or warranty whatsoever contained in this Agreement or the Other
Documents shall be deemed material.
5.4. Tax Returns. Borrower's federal tax identification number is
00-0000000 Borrower has filed all federal, state and local tax returns and
other reports it is required by law to file and has paid all taxes,
assessments, fees and other governmental charges that are reflected on such
returns to be due and payable. Federal, state and local income tax returns of
Borrower have been examined and reported upon by the appropriate taxing
authority or closed by applicable statute and satisfied for all fiscal years
prior to and including the fiscal year ending July 31, 1992. The provision for
taxes on the books of Borrower are adequate for all years not closed by
applicable statutes, and for its current fiscal year, and Borrower has no
knowledge of any deficiency or additional assessment in connection therewith
not provided for on its books.
5.5. Financial Statements.
(a) The pro forma balance sheet of Borrower (the "Pro Forma
Balance Sheet") furnished to Agent on the Effective Date reflects the
consummation of the transactions contemplated by the Private Placement, the
Senior Subordinated Notes and under this Agreement (the "Transactions") and is
accurate, complete and correct in all material respects and fairly reflects the
financial condition of Borrower as of the Effective Date after giving effect to
the Transactions, and has been prepared in accordance with GAAP, consistently
applied. The Pro Forma Balance Sheet of Borrower has been certified as
accurate, complete and correct in all material respects by the President and
Chief Financial Officer of Borrower. All financial statements referred to in
this subsection 5.5(a), including the related schedules and notes thereto, have
been prepared in accordance with GAAP, except as may be disclosed in such
financial statements.
(b) The cash flow projections of Borrower and its projected
balance sheets as of the Effective Date, copies of which are annexed hereto as
Exhibit 5.5(b) (the "Projections") were prepared by the Chief Financial Officer
of Borrower, are based on underlying assumptions which provide a reasonable
basis for the projections contained therein and reflect Borrower's judgment
based on present circumstances of the most likely set of conditions and course
of action for the projected period. The cash flow Projections together with the
Pro Forma Balance Sheet, are referred to as the "Pro Forma Financial
Statements".
- 49 -
(c) The balance sheet of Borrower as of July 31, 1996, and the
related statements of income, changes in stockholder's equity, and changes in
cash flow for the period ended on such date, all accompanied by reports thereon
containing opinions without qualification by independent certified public
accountants, copies of which have been delivered to Agent, have been prepared
in accordance with GAAP, consistently applied (except for changes in
application in which such accountants concur and present fairly the financial
position of Borrower at such date and the results of their operations for such
period. Since July 31, 1996 there has been no change in the condition,
financial or otherwise, of Borrower as shown on the balance sheet as of such
date and no change in the aggregate value of machinery, equipment and Real
Property owned by Borrower, except changes in the ordinary course of business,
none of which individually or in the aggregate has been materially adverse.
5.6. Corporate Name. Borrower has not been known by any other
corporate name in the past five years and does not sell Inventory under any
other name except as set forth on Schedule 5.6, nor has Borrower been the
surviving corporation of a merger or consolidation or acquired all or
substantially all of the assets of any Person during the preceding five (5)
years.
5.7. O.S.H.A. and Environmental Compliance.
(a) Borrower has duly complied with, and its facilities,
business, assets, property, leaseholds and Equipment are in compliance in all
material respects with, the provisions of the Federal Occupational Safety and
Health Act, the Environmental Protection Act, RCRA and all other Environmental
Laws; there have been no outstanding citations, notices or orders of
non-compliance issued to Borrower or relating to its business, assets,
property, leaseholds or equipment under any such laws, rules or regulations.
(b) Borrower has been issued all required federal, state and
local licenses, certificates or permits relating to all applicable
Environmental Laws.
(c) (i) There are no visible signs of releases, spills,
discharges, leaks or disposal (collectively referred to as "Releases") of
Hazardous Substances at, upon, under or within any Real Property or any
premises leased by Borrower; (ii) there are no underground storage tanks or
polychlorinated byphenyls on the Real Property or any premises leased by
Borrower; (iii) neither the Real Property nor any premises leased by Borrower
has ever been used as a treatment, storage or disposal facility of Hazardous
Waste; and (iv) no Hazardous Substances are present on the Real Property or any
premises leased by Borrower, excepting such quantities as are handled in
accordance with all applicable manufacturer's instructions and governmental
regulations and in proper storage containers and as are necessary for the
operation of the commercial business of Borrower or of its tenants.
- 50 -
5.8. Solvency; No Litigation, Violation, Indebtedness or Default.
(a) After giving effect to the Transactions, Borrower will be
solvent, able to pay its debts as they mature, have capital sufficient to carry
on its business and all businesses in which it is about to engage, and (i) as
of the Effective Date, the fair present saleable value of its assets,
calculated on a going concern basis, is in excess of the amount of its
liabilities and (ii) subsequent to the Effective Date, the fair saleable value
of its assets (calculated on a going concern basis) will be in excess of the
amount of its liabilities.
(b) Except as disclosed in Schedule 5.8(b) or the Pro Forma
Balance Sheet, Borrower has (i) no pending or threatened litigation,
arbitration, actions or proceedings which could reasonably be expected to have
a Material Adverse Effect, and (ii) no liabilities nor indebtedness for
borrowed money.
(c) Borrower is not in violation of any applicable statute,
regulation or ordinance in any respect which could reasonably be expected to
have a Material Adverse Effect, nor is Borrower in violation of any order of
any court, governmental authority or arbitration board or tribunal.
(d) Neither Borrower nor any member of the Controlled Group
maintains or contributes to any Plan other than those listed on Schedule 5.8(d)
hereto. Except as set forth in Schedule 5.8(d), (i) no Plan has incurred any
"accumulated funding deficiency," as defined in Section 302(a)(2) of ERISA and
Section 412(a) of the Code, whether or not waived, and Borrower and each member
of the Controlled Group has met all applicable minimum funding requirements
under Section 302 of ERISA in respect of each Plan, (ii) each Plan which is
intended to be a qualified plan under Section 401(a) of the Code as currently
in effect has been determined by the Internal Revenue Service to be qualified
under Section 401(a) of the Code and the trust related thereto is exempt from
federal income tax under Section 501(a) of the Code, (iii) neither Borrower nor
any member of the Controlled Group has incurred any liability to the PBGC other
than for the payment of premiums, and there are no premium payments which have
become due which are unpaid, (iv) no Plan has been terminated by the plan
administrator thereof or by the PBGC, and there is no occurrence which would
cause the PBGC to institute proceedings under Title IV of ERISA to terminate
any Plan, (v) at this time, the current value of the assets of each Plan
exceeds the present value of the accrued benefits and other liabilities of such
Plan and neither Borrower nor any member of the Controlled Group knows of any
facts or circumstances which would materially change the value of such assets
and accrued benefits and other liabilities, (vi) neither Borrower nor any
member of the Controlled Group has breached any of the responsibilities,
obligations or duties imposed on it by ERISA with respect to any Plan, (vii)
neither Borrower nor any member of a Controlled Group has incurred any
liability for any excise tax arising under Section 4972 or 4980B of the Code,
and no fact exists which could give rise to any such liability, (viii) neither
- 51 -
Borrower nor any member of the Controlled Group nor any fiduciary of, nor any
trustee to, any Plan, has engaged in a "prohibited transaction" described in
Section 406 of the ERISA or Section 4975 of the Code nor taken any action which
would constitute or result in a Termination Event with respect to any such Plan
which is subject to ERISA, (ix) Borrower and each member of the Controlled
Group has made all contributions due and payable with respect to each Plan, (x)
there exists no event described in Section 4043(b) of ERISA, for which the
thirty (30) day notice period contained in 29 CFR ss.2615.3 has not been
waived, (xi) neither Borrower nor any member of the Controlled Group has any
fiduciary responsibility for investments with respect to any plan existing for
the benefit of persons other than employees or former employees of Borrower and
any member of the Controlled Group, and (xii) neither Borrower nor any member
of the Controlled Group has withdrawn, completely or partially, from any
Multiemployer Plan so as to incur liability under the Multiemployer Pension
Plan Amendments Act of 1980.
5.9. Patents, Trademarks, Copyrights and Licenses. All patents, patent
applications, trademarks, trademark applications, service marks, service xxxx
applications, copyrights, copyright applications, design rights, tradenames,
assumed names, trade secrets and licenses owned or utilized by Borrower are set
forth on Schedule 5.9, are valid and have been duly registered or filed with
all appropriate governmental authorities and constitute all of the intellectual
property rights which are necessary for the operation of its business; there is
no objection to or pending challenge to the validity of any such material
patent, trademark, copyright, design rights tradename, trade secret or license
and Borrower is not aware of any grounds for any challenge, except as set forth
in Schedule 5.9 hereto. Each patent, patent application, patent license,
trademark, trademark application, trademark license, service xxxx, service xxxx
application, service xxxx license, copyright, copyright application and
copyright license owned or held by Borrower and all trade secrets used by
Borrower consists of original material or property developed by Borrower or was
lawfully acquired by Borrower from the proper and lawful owner thereof. Each of
such items has been maintained so as to preserve the value thereof from the
date of creation or acquisition thereof. With respect to all software used by
Borrower, Borrower is in possession of all source and object codes related to
each piece of software or is the beneficiary of a source code escrow agreement,
each such source code escrow agreement being listed on Schedule 5.9 hereto.
5.10. Licenses and Permits. Except as set forth in Schedule 5.10,
Borrower (a) is in compliance with and (b) has procured and is now in
possession of, all material licenses or permits required by any applicable
federal, state, or local law or regulation for the operation of its business in
each jurisdiction wherein it is now conducting or proposes to conduct business
except where the failure to so comply or to procure such licenses or permits
could not reasonably be expected to have a Material Adverse Effect.
- 52 -
5.11. Default of Indebtedness. Borrower is not in default in the
payment of the principal of or interest on any Indebtedness or under any
instrument or agreement under or subject to which any Indebtedness has been
issued and no event has occurred under the provisions of any such instrument or
agreement which with or without the lapse of time or the giving of notice, or
both, constitutes or would constitute an event of default thereunder.
5.12. No Default. Borrower is not in default in the payment or
performance of any of its contractual obligations and no Default has occurred.
5.13. No Burdensome Restrictions. Borrower is not party to any
contract or agreement the performance of which could reasonably be expected to
have a Material Adverse Effect. Borrower has not agreed or consented to cause
or permit in the future (upon the happening of a contingency or otherwise) any
of its property, whether now owned or hereafter acquired, to be subject to a
Lien which is not a Permitted Lien.
5.14. No Labor Disputes. Borrower is not involved in any labor
dispute; there are no strikes or walkouts or union organization of any of
Borrower's employees threatened or in existence and no labor contract is
scheduled to expire during the Term other than as set forth on Schedule 5.14
hereto.
5.15. Margin Regulations. Borrower is not engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U or
Regulation G of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect. No part of the proceeds of any Revolving
Advance will be used for "purchasing" or "carrying" "margin stock" as defined
in Regulation U of such Board of Governors.
5.16. Investment Company Act. Borrower is not an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is it controlled by such a company.
5.17. Disclosure. No representation or warranty made by Borrower in
this Agreement or in connection with the Private Placement, or in any financial
statement, report, certificate or any other document furnished in connection
herewith or therewith contains any untrue statement of a material fact or omits
to state any material fact necessary to make the statements herein or therein
not misleading. There is no fact known to Borrower or which reasonably should
be known to Borrower which Borrower has not disclosed to Agent in writing with
respect to the transactions contemplated by the Private Placement or this
Agreement which could reasonably be expected to have a Material Adverse Effect.
5.18. Delivery of Agreements. Agent has received complete copies of
the Mezzanine Documentation, the Additional Mezzanine
- 53 -
Documentation, the Acquisition Agreement, the Xxxxxx Purchase Agreement, the
Chesapeake Purchase Agreement, the Xxxxx River Purchase Agreement, the
Indenture, a form of a Senior Subordinated Note and the Offering Memorandum
prepared in connection with the Private Placement (including all exhibits,
schedules and disclosure letters referred to therein or delivered pursuant
thereto, if any) and all amendments thereto, waivers relating thereto and other
side letters or agreements affecting the terms thereof. None of such documents
and agreements has been amended or supplemented, nor have any of the provisions
thereof been waived, except pursuant to a written agreement or instrument which
has heretofore been delivered to Agent and consented to by Required Lenders.
5.19. Swaps. Borrower is not a party to, nor will it be a party to,
any swap agreement whereby Borrower has agreed or will agree to swap interest
rates or currencies unless same provides that damages upon termination
following an event of default thereunder are payable on an unlimited "two-way
basis" without regard to fault on the part of either party.
5.20. Conflicting Agreements. No provision of any mortgage, indenture,
contract, agreement, judgment, decree or order binding on Borrower or affecting
the Collateral or any Fixed Asset conflicts with, or requires any Consent which
has not already been obtained to, or would in any way prevent the execution,
delivery or performance of, the terms of this Agreement or the Other Documents.
5.21. Application of Certain Laws and Regulations. Neither Borrower
nor any Affiliate of Borrower is subject to any statute, rule or regulation
which regulates the incurrence of any Indebtedness, including without
limitation, statutes or regulations relative to common or interstate carriers
or to the sale of electricity, gas, steam, water, telephone, telegraph or other
public utility services.
5.22. Business and Property of Borrower. Upon and after the Effective
Date, Borrower does not propose to engage in any business other than the
manufacture of disposable paper products and activities necessary to conduct
such business. On the Effective Date, Borrower will own or lease all the
property and possess all of the rights and Consents necessary for the conduct
of the business of Borrower.
VI. AFFIRMATIVE COVENANTS.
Borrower shall, until payment in full of the Obligations and
termination of this Agreement:
6.1. Payment of Fees. Pay to Agent on demand all usual and customary
fees and expenses which Agent incurs in connection with (a) the forwarding of
Revolving Advance proceeds and (b) the establishment and maintenance of any
Blocked Accounts or Depository Accounts as provided for in Section 4.15(h).
Agent may, without making demand and upon one (1) day's notice to Borrower,
charge the account of Borrower for all such fees and expenses.
- 54 -
6.2. Conduct of Business and Maintenance of Existence and Assets. (a)
Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in
its business in good working order and condition (reasonable wear and tear
excepted and except as may be disposed of in accordance with the terms of this
Agreement), including, without limitation, all licenses, patents, copyrights,
design rights, tradenames, trade secrets and trademarks and take all actions
necessary to enforce and protect the validity of any intellectual property
right or other right included in the Collateral; (b) keep in full force and
effect its existence and comply in all material respects with the laws and
regulations governing the conduct of its business where the failure to do so
could reasonably be expected to have a Material Adverse Effect; and (c) make
all such reports and pay all such franchise and other taxes and license fees
and do all such other acts and things as may be lawfully required to maintain
its rights, licenses, leases, powers and franchises under the laws of the
United States or any political subdivision thereof.
6.3. Violations. Promptly notify Agent in writing of any violation of
any law, statute, regulation or ordinance of any governmental entity, or of any
agency thereof, applicable to Borrower which could reasonably be expected to
have a Material Adverse Effect.
6.4. Government Receivables. Take all steps necessary to protect
Agent's interest in the Collateral under the Federal Assignment of Claims Act
or other applicable state or local statutes or ordinances and deliver to Agent
appropriately endorsed, any instrument or chattel paper connected with any
Receivable arising out of contracts between Borrower and the United States, any
state or any department, agency or instrumentality of any of them.
6.5. Interest Coverage Ratio. Cause to be maintained for the period
set forth below, an Interest Coverage Ratio in an amount not less than the
amount set forth opposite such period:
Interest Coverage
Period Ratio
------ -----------------
March 1, 1997 - February 28, 1998 1.75 to 1.00
and for each twelve (12) month
period ending on the last day
of February thereafter 2.00 to 1.00
6.6. Intentionally Omitted.
6.7. Intentionally Omitted.
6.8. Execution of Supplemental Instruments. Execute and deliver to
Agent from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions
- 55 -
or documents relating to the Collateral, and such other instruments as Agent
may request, in order that the full intent of this Agreement may be carried
into effect.
6.9. Payment of Indebtedness. Pay, discharge or otherwise satisfy at
or before maturity (subject, where applicable, to specified grace periods and,
in the case of the trade payables, to normal payment practices) all its
obligations and liabilities of whatever nature, except when the failure to do
so could not reasonably be expected to have a Material Adverse Effect or when
the amount or validity thereof is currently being contested in good faith by
appropriate proceedings and Borrower shall have provided for such reserves as
Agent may reasonably deem proper and necessary, subject at all times to any
applicable subordination arrangement in favor of Lenders.
6.10. Standards of Financial Statements. Cause all financial
statements referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13 and
9.14 as to those to which GAAP is applicable fairly present the financial
condition and result set forth therein (subject, in the case of interim
financial statements, to normal year-end audit adjustments) and to be prepared
in reasonable detail and in accordance with GAAP applied consistently
throughout the periods reflected therein (except as concurred in by such
reporting accountants or officer, as the case may be, and disclosed therein).
6.11. Exercise of Rights. Enforce all of its rights under the
Acquisition Agreement, the Xxxxxx Purchase Agreement, the Chesapeake Purchase
Agreement and the Xxxxx River Purchase Agreement and pursue all remedies
available to it with diligence and in good faith in connection with the
enforcement of any such rights.
6.12. Intercreditor Agreements. Upon the creation, incurrence or
assumption of any Lien on any Fixed Asset now owned or hereafter acquired by
Borrower, deliver to Agent any intercreditor agreements requested by Agent with
respect to such Fixed Asset, in form and substance reasonably acceptable to
Agent, including, without limitation, mortgagee waivers and equipment use
agreements which shall, among other things, provide for the use or occupancy by
Agent of such Fixed Asset for a reasonable period of time for reasonable
consideration in order to enable Agent to maximize the amount to be realized
upon the Collateral.
6.13. Purchase Price Adjustment. Remit to Agent any adjustment in the
purchase price under any of the Acquisition Agreement, the Xxxxxx Purchase
Agreement, the Chesapeake Purchase Agreement or the Xxxxx River Purchase
Agreement for application to the outstanding amount of Revolving Advances.
VII. NEGATIVE COVENANTS.
Borrower shall not and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, until
- 56 -
satisfaction in full of the Obligations and termination of this Agreement:
7.1. Merger, Consolidation, Acquisition and Sale of Assets.
Consolidate or merge with, or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity, unless (i) Borrower is the surviving entity (ii) immediately after such
transaction, no Default or Event of Default exists; and (iii) except in the
case of a merger of Borrower with or into a Wholly Owned Restricted Subsidiary
of Borrower, Borrower (a) will have Consolidated Net Worth immediately after
the transaction equal to or greater than the Consolidated Net Worth of Borrower
immediately preceding the transaction and (b) will, at the time of such
transaction and after giving pro forma effect thereto as if such transaction
had occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
7.8 hereof.
7.2. Creation of Liens. Create, incur, assume or suffer to exist any
Lien on any asset now owned or hereafter acquired, or any income or profits
therefrom, or assign or convey any right to receive income therefrom, except
Permitted Liens.
7.3. Guarantees. Become liable upon the obligations of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to
Lenders) except (a) the endorsement of checks in the ordinary course of
business, (b) the obligations of a Restricted Subsidiary and (c) the guaranty
of Permitted Indebtedness.
7.4. Intentionally Omitted.
7.5. Loans. Make advances, loans or extensions of credit to any Person
except with respect to (a) the extension of commercial trade credit in
connection with the sale of Inventory in the ordinary course of its business,
(b) loans to its employees in the ordinary course of business not to exceed the
aggregate amount of $350,000 at any time outstanding and (c) a loan to CEG made
for the sole purpose of satisfying its obligations to Xxxxx River, in an amount
not to exceed the aggregate amount of $2,600,000.
7.6. Intentionally Omitted.
7.7. Restricted Payment. (i) Declare or pay any dividend or make any
other payment or distribution on account of Borrower's Equity Interests
(including, without limitation, any payment in connection with any merger or
consolidation involving Borrower) or to any direct or indirect holder of
Borrower's Equity Interests in its capacity as such, other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of
Borrower or dividends or distributions payable to Borrower or any Wholly Owned
- 57 -
Restricted Subsidiary of Borrower (ii) purchase, redeem or otherwise acquire or
retire for value any Equity Interests of Borrower or any Subsidiary or other
Affiliate of Borrower, other than any such Equity Interests owned by Borrower
or any Wholly Owned Restricted Subsidiary of Borrower, (iii) make any principal
payment on, or purchase, redeem, defease or otherwise acquire or retire for
value, prior to a scheduled mandatory sinking fund payment date or final
maturity date, any Indebtedness that is subordinated to the Senior Subordinated
Notes; or (iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively referred
to as "Restricted Payments"), unless, at the time of and after giving effect to
such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) Borrower would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted by
virtue of Borrower's pro forma Fixed Charge Coverage Ratio immediately after
giving effect to such Restricted Payment, to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
Section 7.8 hereof; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by Borrower and its Restricted Subsidiaries on or
after the date of this Agreement is less than the sum of (1) 50% of the
Consolidated Net Income of Borrower for the period (taken as one accounting
period) from February 1, 1997 to the end of Borrower's most recently ended
fiscal quarter for which financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such period is a
deficit, less 100% of such deficit), plus (2) 100% of the aggregate net cash
proceeds received by Borrower as capital contributions or from the issue or
sale since the date of this Agreement of Equity Interests of Borrower or of
debt securities of Borrower that have been converted into such Equity Interests
(other than Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus (3) to the extent that any Restricted Investment is
sold for cash or otherwise liquidated or repaid for cash, 100% of the net cash
proceeds thereof (less the cost of disposition) (but only to the extent not
included in subclause (1) of this clause(c)).
The foregoing provisions will not apply to (i) the payments and
applications of the proceeds to be received by Borrower from the issuance of
the Senior Subordinated Notes as described on Schedule 7.7 hereto; (ii) the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests held by any member of Borrower's (or any of its Restricted
Subsidiaries) management pursuant to any management equity subscription
agreement, stock option or similar employee incentive arrangement provided,
that, the aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests shall not exceed
- 58 -
$1.0 million in any twelve-month period plus the aggregate cash proceeds
received by Borrower (or any of its Restricted Subsidiaries) during any such
twelve-month period from any issuance of Equity Interests by Borrower (or any
of its Restricted Subsidiaries to members of management of Borrower (or any of
its Restricted Subsidiaries) (provided, that such proceeds are excluded from
clause (c) of the preceding paragraph); and provided, further, that such
repurchase, redemption or other acquisition or retirement may not include any
Equity Interests owned, directly or indirectly, by the Principals; (iii) the
payment of any dividend or other distribution within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Agreement; (iv) the redemption,
repurchase, retirement or other acquisition of any Equity Interests of Borrower
in exchange for, or out of the proceeds of, the substantially concurrent sale
(other than to a Subsidiary of Borrower) of other Equity Interests of Borrower
(other than any Disqualified Stock); provided, that, the amount of any such net
cash proceeds that are utilized for any such redemption, repurchase retirement
or other acquisition shall be excluded from clause (c) of the preceding
paragraph; (v) the defeasance, redemption or repurchase of subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Debt or the substantially concurrent sale (other than to a
Subsidiary of Borrower) of Equity Interests of Borrower (other than
Disqualified Stock); provided, that, the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c) of the preceding paragraph;
provided, further, that no Default or Event of Default shall have occurred and
be continuing immediately after such transaction.
The Board of Directors may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if such designation would not cause a Default or
Event of Default. For purposes of making such determination, all outstanding
Investments by Borrower and its Restricted Subsidiaries (except to the extent
repaid in cash) in the Subsidiary so designated will be deemed to be Restricted
Payments at the time of such designation and will reduce the amount available
for Restricted Payments under the first paragraph of this covenant. All such
outstanding Investments will be deemed to constitute Investments in an amount
equal to the greatest of (i) the net book value of such Investments at the time
of such designation, (ii) the fair market value of such Investments at the time
of such designation and (iii) the original fair market value of such
Investments at the time they were made. Such designation will only be permitted
if such Restricted Payment would be permitted at such time and if such
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value (evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee) on the date of the
Restricted Payment of the asset(s) proposed to be transferred by Borrower or
such Subsidiary, as the case may be, pursuant to the Restricted Payment. Not
later
- 59 -
than the date of making any Restricted Payment, Borrower shall deliver to Agent
an Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this Section
were computed, which calculations may be based upon Borrower's latest available
financial statements.
7.8. Indebtedness. Create, incur, issue, assume, guaranty or otherwise
become directly or indirectly liable, contingently or otherwise, with respect
to (collectively, "incur") any Indebtedness (including Acquired Debt);
provided, however, that, so long as no Default or Event of Default has occurred
and is continuing, Borrower and its Restricted Subsidiaries may incur
Indebtedness (including Acquired Debt) if the Fixed Charge Coverage Ratio for
Borrower's most recently ended four full fiscal quarters for which financial
statements are available immediately preceding the date on which such
additional Indebtedness is incurred would have been at least 2.0 to 1,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred at the
beginning of such four-quarter period.
The foregoing provisions will not apply to:
(i) the incurrence by Borrower of Indebtedness pursuant to this
Agreement;
(ii) the incurrence by Borrower and its Restricted Subsidiaries
of Existing Indebtedness;
(iii) the incurrence by Borrower and its Restricted Subsidiaries
of Indebtedness represented by the Senior Subordinated Notes and the
Guarantees thereof by any Restricted Subsidiary pursuant to the
provisions of the Indenture;
(iv) the incurrence by Borrower or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case
incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvement of property, plant or
equipment used in the business of Borrower or such Restricted
Subsidiary, in an aggregate principal amount not to exceed $5.0
million at any one time outstanding;
(v) the incurrence by Borrower or any of its Restricted
Subsidiaries of Indebtedness in connection with the acquisition of
assets or a new Restricted Subsidiary; provided, that, such
Indebtedness was incurred by the prior owner of such assets or such
Restricted Subsidiary prior to such acquisition by Borrower or one of
its Restricted Subsidiaries and was not incurred in connection with,
or in contemplation of, such acquisition by Borrower or one of its
Restricted Subsidiaries and provided, further, that the principal
amount (or accreted value, as applicable) of such
- 60 -
Indebtedness, together with any other outstanding Indebtedness
incurred pursuant to this clause (v), does not exceed $5.0 million;
(vi) the incurrence of intercompany Indebtedness between or among
Borrower and any of its Wholly Owned Restricted Subsidiaries;
provided, that, any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person
other than Borrower or a Wholly Owned Restricted Subsidiary of
Borrower, or any sale or other transfer of any such Indebtedness to a
Person that is neither Borrower nor a Wholly Owned Restricted
Subsidiary of Borrower, shall be deemed to constitute an incurrence of
such Indebtedness by Borrower or such Restricted Subsidiary, as the
case may be;
(vii) the incurrence by Borrower or any of its Restricted
Subsidiaries of Permitted Refinancing Debt in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace,
defease or refund Indebtedness that was permitted by this Agreement to
be incurred;
(viii) the incurrence by Borrower's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, that, if, and to the extent that, any
such Indebtedness ceases to be Non- Recourse Debt of an Unrestricted
Subsidiary, such event shall be deemed to constitute an incurrence of
Indebtedness by a Restricted Subsidiary of Borrower;
(ix) the incurrence by Borrower or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose
of fixing or hedging interest rate risk with respect to any floating
rate indebtedness that is permitted by the terms of this Agreement to
be outstanding; and
(x) the incurrence by Borrower and its Restricted Subsidiaries of
additional Indebtedness in an aggregate amount not to exceed $7.5
million at any one time outstanding.
7.9. Nature of Business. Substantially change the nature of the
business in which it is presently engaged, nor except as specifically permitted
hereby purchase or invest, directly or indirectly, in any assets or property
other than in the ordinary course of business for assets or property which are
useful in, necessary for and are to be used in its business as presently
conducted.
7.10. Transactions with Affiliates. Make payments to, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or amend any
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate
- 61 -
(each of the foregoing, an "Affiliate Transaction"), unless (i) such Affiliate
Transaction is on terms that are no less favorable to Borrower or the relevant
Restricted Subsidiary than those that would have been obtained in comparable
transaction with an unrelated Person and (ii) Borrower delivers to the Agent
(a) with respect to any Affiliate transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the
fairness to the holders of such Affiliate Transaction from a financial point of
view issued by an investment banking firm of national standing with total
assets in excess of $1.0 billion, except with respect to transactions in the
ordinary course of business and consistent with past practice between Borrower
of any of its Restricted Subsidiaries and Four M, CEG or any of their
respective subsidiaries, provided, that, (1) the Indenture of Lease dated as of
January 1, 1995, between Xxxxxx Xxxxxx, as Landlord, and Borrower, as tenant,
relating to Borrower's Jacksonville, Florida facility except for any purchases
of property by Borrower that may arise thereunder; (2) any employment agreement
entered into between any Person and Borrower or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with the past
practice of Borrower or such Restricted Subsidiary in an amount not to exceed
$500,000 per annum; (3) transactions between or among Borrower and its
Restricted Subsidiaries and (4) Restricted Payments and Permitted Investments
that are permitted by the provisions of this Agreement in each case shall not
be deemed Affiliate Transactions.
7.11. Leases. Enter as lessee into any lease arrangement for real or
personal property (unless capitalized and permitted under Section 7.6 hereof)
if after giving effect thereto, aggregate annual rental payments for all leased
property would exceed $3,750,000 in any one fiscal year.
7.12. Subsidiaries.
(a) Form, acquire or create any Subsidiary unless such newly
formed, acquired or created Subsidiary shall execute a Guarantee (a "Subsidiary
Guarantee") and deliver an opinion of counsel, each in form and substance
satisfactory to Agent and Lenders; provided, that, this covenant shall not
apply to (i) a Restricted Subsidiary formed for the sole purpose of engaging in
accounts receivable financings; and (ii) any Subsidiary that has been properly
designated as an Unrestricted Subsidiary in accordance with the Indenture for
so long as it continues to constitute an Unrestricted Subsidiary.
The Obligations (as defined in the Indenture) of each Guarantor of the
Senior Subordinated Notes shall be subordinated in right of payment to all
Obligations of such Guarantor to Agent and
- 62 -
Lenders pursuant to subordination provisions substantially similar to those
contained in the Indenture as of the Effective Date.
(b) Enter into any partnership, joint venture or similar
arrangement.
7.13. Fiscal Year and Accounting Changes. Change its fiscal year from
a 52-53 week year ending the Saturday closest to July 31 other than to a 52-53
week year ending the Saturday closest to December 31 or make any change (i) in
accounting treatment and reporting practices except as required by GAAP or (ii)
in tax reporting treatment except as required by law.
7.14. Pledge of Credit. Now or hereafter pledge any Lender's credit on
any purchases or for any purpose whatsoever or use any portion of any Revolving
Advance in or for any business other than Borrower's business as conducted on
the date of this Agreement.
7.15. Amendment of Articles of Incorporation, By-Laws. Amend, modify
or waive any term or material provision of its Articles of Incorporation or
By-Laws in a manner adverse to Lenders in their discretion.
7.16. Compliance with ERISA. (i) (x) Maintain, or permit any member of
the Controlled Group to maintain, or (y) become obligated to contribute, or
permit any member of the Controlled Group to become obligated to contribute, to
any Plan, other than those Plans disclosed on Schedule 5.8(d), (ii) engage, or
permit any member of the Controlled Group to engage, in any non-exempt
"prohibited transaction", as that term is defined in section 406 of ERISA and
Section 4975 of the Code, (iii) incur, or permit any member of the Controlled
Group to incur, any "accumulated funding deficiency", as that term is defined
in Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit
any member of the Controlled Group to terminate, any Plan where such event
could result in any liability of Borrower or any member of the Controlled Group
or the imposition of a lien on the property of Borrower or any member of the
Controlled Group pursuant to Section 4068 of ERISA, (v) assume, or permit any
member of the Controlled Group to assume, any obligation to contribute to any
Multiemployer Plan not disclosed on Schedule 5.8(d), (vi) incur, or permit any
member of the Controlled Group to incur, any withdrawal liability to any
Multiemployer Plan; (vii) fail promptly to notify Agent of the occurrence of
any Termination Event, (viii) fail to comply, or permit a member of the
Controlled Group to fail to comply, with the requirements of ERISA or the Code
or other applicable laws in respect of any Plan, (ix) fail to meet, or permit
any member of the Controlled Group to fail to meet, all minimum funding
requirements under ERISA or the Code or postpone or delay or allow any member
of the Controlled Group to postpone or delay any funding requirement with
respect of any Plan.
7.17. Senior Subordinated Notes. At any time, directly or indirectly,
pay, prepay, repurchase, redeem, retire or otherwise
- 63 -
acquire, or make any payment on account of any principal of, interest on or
premium payable in connection with the repayment or redemption of the Senior
Subordinated Notes, as the case may be, except provided, that, so long as no
Default or Event of Default exists prior to or after giving effect to such
payment, Borrower may make regularly scheduled payments of interest on the
Senior Subordinated Notes as in effect on the Effective Date.
7.18. Prepayment of Indebtedness. Except as provided in Section 7.17
and reflected on Schedule 7.7, at any time, directly or indirectly, prepay any
Indebtedness for borrowed money (other than to Lenders), or repurchase, redeem,
retire or otherwise acquire any Indebtedness for borrowed money of Borrower.
7.19. Indebtedness under Senior Subordinated Notes. Pay interest in
cash to any holder of a Senior Subordinated Note at a per annum rate in excess
of thirteen percent (13%).
7.20. Intentionally Omitted.
7.21. Amendments to Xxxxxx Purchase Agreement, Chesapeake Purchase
Agreement, Xxxxx River Purchase Agreement, Senior Subordinated Notes or
Indenture. Enter into any amendments to the Xxxxxx Purchase Agreement, the
Chesapeake Purchase Agreement, the Xxxxx River Subordinated Note, the Senior
Subordinated Notes or the Indenture, or waive any conditions of closing with
respect thereto, without the prior written consent of Required Lenders.
7.22. Issuance of Capital Stock. Transfer, convey, sell or otherwise
dispose of any Capital Stock of any Restricted Subsidiary of Borrower to any
Person (other than Borrower or a Wholly Owned Restricted Subsidiary of
Borrower), unless (a) such transfer, conveyance, sale or other disposition is
of all of the Capital Stock of such Restricted Subsidiary owned by Borrower and
its Restricted Subsidiaries and (b) such transaction is conducted in accordance
with the provisions of Section 7.1 hereof and (ii) will not permit any
Restricted Subsidiary of Borrower to issue any of its Equity Interests (other
than, if required by law, shares of its Capital Stock constituting directors'
qualifying shares) to any Person other than to Borrower or a Wholly Owned
Restricted Subsidiary of Borrower.
7.23. Contractual Restrictions. Create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions
to Borrower or any of its Restricted Subsidiaries on its (1) Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to Borrower or any of its Restricted
Subsidiaries, (ii) make loans or advances to Borrower or any of its Restricted
Subsidiaries or (iii) transfer any of its properties or assets to Borrower or
any of its Restricted Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (a) Existing Indebtedness as in
effect on the date of this Agreement or any Permitted Refinancing Debt, (b)
this Agreement, (c) the Indenture
- 64 -
and the Senior Subordinated Notes, (d) applicable law, (e) any instrument
governing Indebtedness or Capital Stock of a Person acquired by Borrower or any
of its Restricted Subsidiaries as in effect at the time of such acquisition
(except to the extent such Indebtedness was incurred in connection with or in
contemplation of such acquisition, which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, (f) by reason
of customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (g) purchase money
obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (iii) above on the
property so acquired and (h) restrictions relating to a Restricted Subsidiary
formed for the sole purpose of engaging in accounts receivable financing.
VIII. CONDITIONS PRECEDENT.
8.1. Intentionally Omitted.
8.2. Conditions to Each Revolving Advance. The agreement of Lenders to
make any Revolving Advance requested to be made on any date (including, without
limitation, its initial Revolving Advance), is subject to the satisfaction of
the following conditions precedent as of the date such Revolving Advance is
made:
(a) Representations and Warranties. Each of the representations
and warranties made by Borrower in or pursuant to this Agreement and any
related agreements to which it is a party, and each of the representations and
warranties contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this Agreement or
any related agreement shall be true and correct in all material respects on and
as of such date as if made on and as of such date;
(b) No Default. No Event of Default or Default shall have
occurred and be continuing on such date, or would exist after giving effect to
the Revolving Advances requested to be made, on such date and, in the case of
the initial Revolving Advance on the Effective Date, after giving effect to the
consummation of the transactions contemplated by the Private Placement;
provided, however, that Agent on behalf of Lenders may continue to make
Revolving Advances notwithstanding the existence of an Event of Default or
Default and that any Revolving Advances so made shall not be deemed a waiver of
any such Event of Default or Default; and
(c) Maximum Revolving Advances. In the case of any Revolving
Advances requested to be made, after giving effect thereto, the aggregate
Revolving Advances shall not exceed the maximum Revolving Advances permitted
under Section 2.1 hereof.
Each request for a Revolving Advance by Borrower hereunder shall constitute a
representation and warranty by Borrower as of the date
- 65 -
of such Revolving Advance that the conditions contained in this subsection
shall have been satisfied.
8.3. Conditions of Effectiveness. This Agreement shall become
effective only upon the satisfaction, or waiver by all Lenders, of the
following conditions precedent:
(a) Notes. Agent shall have received all necessary Revolving
Credit Notes duly executed and delivered by an authorized officer of Borrower;
(b) Filings, Registrations and Recordings. Agent shall have
received for the ratable benefit of Lenders all documents and instruments as
Lenders and their counsel deem appropriate in form and substance satisfactory
to Lenders in order to perfect Agent's first priority security interest in the
Collateral;
(c) Corporate Proceedings of Borrower. Agent shall have received
a copy of the resolutions in form and substance reasonably satisfactory to
Agent, of the Board of Directors of Borrower authorizing the execution,
delivery and performance of this Agreement and the Private Placement
(collectively the "Documents"); and, such certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded as of the date of such certificate;
(d) No Litigation. (i) No litigation, investigation or proceeding
before or by any arbitrator or governmental authority shall be continuing or
threatened against Borrower or against the officers or directors of Borrower
(A) in connection with the Documents or any of the transactions contemplated
thereby and which, in the reasonable opinion of Lenders, is deemed material or
(B) which could, in the reasonable opinion of Lenders, have a Material Adverse
Effect; and (ii) no injunction, writ, restraining order or other order of any
nature materially adverse to Borrower or the conduct of its business or
inconsistent with the due consummation of the Transactions shall have been
issued by any governmental authority;
(e) Collateral Examination. Agent shall have completed all audits
and examinations of the Collateral and received appraisals with respect
thereto, the results of which shall be satisfactory in form and substance to
Lenders;
(f) Fees. Agent shall have received all fees payable to Agent and
Lenders on or prior to the Effective Date pursuant to Article III hereof;
(g) Pro Forma Financial Statements. Agent shall have received a
copy of the Pro Forma Financial Statements which shall be satisfactory in all
respects to Lenders;
(h) Private Placement Documents. The terms and conditions of the
Senior Subordinated Notes, the Indenture and any
- 66 -
other document executed in connection with the Private Placement shall in all
respects be satisfactory to Agent;
(i) Consents. Agent shall have received any and all Consents
necessary to permit the effectuation of the transactions contemplated by the
Documents;
(j) No Adverse Material Change. (i) Since July 31, 1996 there
shall not have occurred any event, condition or state of facts which could
reasonably be expected to have a Material Adverse Effect;
(k) Contract Review. Agent shall have reviewed all material
contracts of Borrower including, without limitation, the Senior Subordinated
Notes, the Indenture and all material contracts executed in connection with the
Private Placement;
(l) Borrowing Base. Agent shall have received evidence from
Borrower that the aggregate amount of Eligible Receivables and Eligible
Inventory is sufficient in value and amount to support Revolving Advances in
the amount requested by Borrower on the Effective Date;
(m) Undrawn Availability. After giving effect to the Revolving
Advances made on the Effective Date (including, without limitation Revolving
Advances for the payment of fees, and all expenses relating to the Private
Placement, if any), Borrower shall have Undrawn Availability of at least
$10,000,000 as evidenced by a borrowing base certificate executed by Borrower,
delivered to Agent and in all respects satisfactory to Agent;
(n) Adequate Cash Flow. After giving effect to the Transactions,
Borrower will be solvent, able to pay its debts as they mature, have capital
sufficient to carry on its business and all businesses in which it is about to
engage, and the fair present saleable value of its assets, calculated on a
going concern basis, will be in excess of the amount of its liabilities;
(o) Approvals. Each Lender shall have received approval from such
Lender's credit committee with respect to the Transactions;
(p) Opinions. Agent shall have received legal opinions from any
counsel requested by Agent or its counsel, all of which shall be in form and
substance satisfactory to Agent and its counsel;
(q) Compliance with Laws. Agent shall have received evidence, in
form and substance satisfactory to Agent, that Borrower is in compliance with
all applicable federal, state and local regulations except where the failure to
be in compliance in the reasonable opinion of Agent would not have a Material
Adverse Effect;
(r) Incumbency Certificates of Borrower. Agent shall have
received a certificate of the Secretary or an Assistant
- 67 -
Secretary of Borrower, dated the Effective Date, as to the incumbency and
signature of the officers of Borrower executing this Agreement, any certificate
or other documents to be delivered by it pursuant hereto, together with
evidence of the incumbency of such Secretary or Assistant Secretary;
(s) Certificates. Agent shall have received a copy of the
Articles or Certificate of Incorporation of Borrower and all amendments
thereto, certified by the Secretary of State or other appropriate official of
its respective jurisdiction of incorporation together with copies of the By
Laws of Borrower and all agreements of Borrower's shareholders certified as
accurate and complete by the Secretary of Borrower;
(t) Good Standing Certificates. Agent shall have received good
standing certificates for Borrower dated not more than 25 days prior to the
Effective Date, issued by the Secretary of State or other appropriate official
of the jurisdiction of incorporation of Borrower, New York, Florida
Pennsylvania, Michigan, Vermont, Wisconsin and California;
(u) Private Placement. The Private Placement shall have been
completed by Borrower on terms and conditions satisfactory to Agent and Lenders
and Borrower shall have received proceeds equal to at least $75,000,000 from
the Private Placement;
(v) Additional Mezzanine and Mezzanine Debt. The Additional
Mezzanine Debt and the Mezzanine Debt shall have been paid in full in cash with
the proceeds of the Private Placement, the Additional Mezzanine Debt
Documentation and Mezzanine Debt Documentation shall have been irrevocably
terminated, the Additional Mezzanine Note and Mezzanine Note shall have been
cancelled and Borrower shall have delivered any instrument or document Agent
deems necessary in its sole discretion to evidence each of the foregoing;
(w) Prepayment Fee. Borrower shall have paid to Agent for the
ratable benefit of Lenders a Prepayment Fee equal to $134,120 which represents
one-half of one percent (1/2%) of the outstanding principal balance of Term
Loan A and Term Loan B as of the Effective Date;
(x) Repayment of Term Loans. Borrower shall have repaid Term Loan
A and Term Loan B in full;
(y) Xxxxx River Subordinated Note. The Xxxxx River Subordinated
Note shall have been satisfied in full in cash and Borrower shall have
delivered a copy of the cancelled Xxxxx River Subordinated Note to Agent.
(z) Fee Letter. Borrower shall have delivered to Agent an
executed Fee Letter which is acceptable to Agent in all respects.
IX. INFORMATION AS TO BORROWER.
- 68 -
Borrower shall, until satisfaction in full of the Obligations and the
termination of this Agreement:
9.1. Disclosure of Material Matters. Immediately upon learning
thereof, report to Agent all matters materially affecting the value,
enforceability or collectibility of any portion of the Collateral including,
without limitation, Borrower's reclamation or repossession of, or the return to
Borrower of, a material amount of goods or claims or disputes asserted by any
Customer or other obligor. Borrower will not, without Agent's consent,
compromise or adjust any Receivables (or extend the time for payment thereof)
or accept any returns of merchandise or grant any additional discounts,
allowances or credits thereon except for those compromises, adjustments,
returns, discounts, credits and allowances as have been heretofore customary in
the business of Borrower.
9.2. Schedules. Deliver to Agent on or before the fifteenth (15th) day
of each month as and for the prior month, signed by Borrower's Chief Financial
Officer, (a) accounts receivable ageings, (b) accounts payable schedules, (c)
Inventory reports and (d) borrowing base certificates. In addition, Borrower
will deliver to Agent at such intervals as Agent may require: (i) confirmatory
assignment schedules, (ii) copies of Customer's invoices, (iii) evidence of
shipment or delivery, and (iv) such further schedules, documents and/or
information regarding the Collateral as Agent may require including, without
limitation, trial balances and test verifications. Agent shall have the right
to confirm and verify all Receivables by any manner and through any medium it
considers advisable and do whatever it may deem reasonably necessary to protect
its interests hereunder. The items to be provided under this Section are to be
in form satisfactory to Agent and executed by Borrower and delivered to Agent
from time to time solely for Agent's convenience in maintaining records of the
Collateral, and Borrower's failure to deliver any of such items to Agent shall
not affect, terminate, modify or otherwise limit Agent's Lien with respect to
the Collateral.
9.3. Environmental Reports. Furnish Agent, concurrently with the
delivery of the financial statements referred to in Sections 9.7 and 9.8, with
a certificate of Borrower signed by the President of Borrower stating, to the
best of his knowledge, that Borrower is in compliance in all material respects
with all federal, state and local laws relating to environmental protection and
control and occupational safety and health. To the extent Borrower is not in
compliance with the foregoing laws, the certificate shall set forth with
specificity all areas of non-compliance and the proposed action Borrower will
implement in order to achieve full compliance.
9.4. Litigation. Promptly notify Agent in writing of any litigation,
suit or administrative proceeding affecting Borrower, whether or not the claim
is covered by insurance, and of any suit or administrative proceeding, which in
any such case could reasonably be expected to have a Material Adverse Effect.
- 69 -
9.5. Material Occurrences. Promptly notify Agent in writing upon the
occurrence of (a) any Event of Default or Default; (b) any event of default
under the Senior Subordinated Notes or the Indenture; (c) any event which with
the giving of notice or lapse of time, or both, would constitute an event of
default under the Senior Subordinated Notes or the Indenture; (d) any event,
development or circumstance whereby any financial statements or other reports
furnished to Agent fail in any material respect to present fairly, in
accordance with GAAP consistently applied, the financial condition or operating
results of Borrower as of the date of such statements; (e) any accumulated
retirement plan funding deficiency which, if such deficiency continued for two
plan years and was not corrected as provided in Section 4971 of the Internal
Revenue Code, could subject Borrower to a tax imposed by Section 4971 of the
Internal Revenue Code; (f) each and every default by Borrower which might
result in the acceleration of the maturity of any Indebtedness, including the
names and addresses of the holders of such Indebtedness with respect to which
there is a default existing or with respect to which the maturity has been or
could be accelerated, and the amount of such Indebtedness; and (g) any other
development in the business or affairs of Borrower which could reasonably be
expected to have a Material Adverse Effect; in each case describing the nature
thereof and the action Borrower proposes to take with respect thereto.
9.6. Government Receivables. Notify Agent immediately if any of its
Receivables arise out of contracts between Borrower and the United States, any
state, or any department, agency or instrumentality of any of them.
9.7. Annual Financial Statements. Furnish Agent within ninety (90)
days after the end of each fiscal year of Borrower, financial statements of
Borrower including, but not limited to, statements of income and stockholders'
equity and cash flow from the beginning of the current fiscal year to the end
of such fiscal year and the balance sheet as at the end of such fiscal year,
all prepared in accordance with GAAP applied on a basis consistent with the
prior period (except as concurred in by such reporting accountants or officers,
as the case may be, and disclosed therein), and in reasonable detail and
reported upon without qualification by an independent certified public
accounting firm selected by Borrower and satisfactory to Agent (the
"Accountants"). The report of the Accountants shall be accompanied by a
statement of the Accountants certifying that (i) they have caused this
Agreement to be reviewed, (ii) in making the examination upon which such report
was based either no information came to their attention which to their
knowledge constituted an Event of Default or a Default under this Agreement or
any related agreement or, if such information came to their attention,
specifying any such Default or Event of Default, its nature, when it occurred
and whether it is continuing, and such report shall contain or have appended
thereto calculations which set forth Borrower's compliance with the
requirements or restrictions imposed by Sections 6.5 and 7.11 hereof. In
addition, the reports shall be accompanied by a certificate of Borrower's Chief
Financial Officer which shall state that, based on an examination sufficient to
permit him to make an
- 70 -
informed statement, no Default or Event of Default exists, or, if such is not
the case, specifying such Default or Event of Default, its nature, when it
occurred, whether it is continuing and the steps being taken by Borrower with
respect to such event and, such certificate shall have appended thereto
calculations which set forth Borrower's compliance with the requirements or
restrictions imposed by Sections 6.5 and 7.11 hereof.
9.8. Quarterly Financial Statements. Furnish Agent within forty-five
(45) days after the end of each of the first three (3) fiscal quarters of any
fiscal year, an unaudited balance sheet of Borrower and unaudited statements of
income and stockholders' equity and cash flow of Borrower reflecting results of
operations from the beginning of the fiscal year to the end of such quarter and
for such quarter, prepared on a basis consistent with the prior period and in
accordance with GAAP, subject to normal year end adjustments. The reports shall
be accompanied by a certificate of Borrower's Chief Financial Officer which
shall state that, based on an examination sufficient to permit him to make an
informed statement, no Default or Event of Default exists, or, if such is not
the case, specifying such Default or Event of Default, its nature, when it
occurred, whether it is continuing and the steps being taken by Borrower with
respect to such event and, such certificate shall have appended thereto
calculations which set forth Borrower's compliance with the requirements or
restrictions imposed by Sections 6.5 and 7.11 hereof.
9.9. Monthly Financial Statements. Furnish Agent within thirty (30)
days after the end of each month, an unaudited balance sheet of Borrower and
unaudited statements of income and stockholders' equity and cash flow of
Borrower reflecting results of operations from the beginning of the fiscal year
to the end of such month and for such month, prepared on a basis consistent
with the prior period and in accordance with GAAP, subject to normal year end
adjustments. The reports shall be accompanied by a certificate of Borrower's
Chief Financial Officer which shall state that, based on an examination
sufficient to permit him to make an informed statement, no Default or Event of
Default exists, or, if such is not the case, specifying such Default or Event
of Default, its nature, when it occurred, whether it is continuing and the
steps being taken by Borrower with respect to such event and, such certificate
shall have appended thereto calculations which set forth Borrower's compliance
with the requirements or restrictions imposed by Sections 6.5 and 7.11 hereof.
9.10. Other Reports. Furnish Agent as soon as available, but in any
event within ten (10) days after the issuance thereof, (i) with copies of such
financial statements, reports and returns as Borrower shall send to its
stockholders, (ii) copies of all notices sent pursuant to the Senior
Subordinated Notes and the Indenture including, without limitation, (x) all
quarterly and annual financial information that would be required to be
contained in a filing with the Commission on forms 10-Q and 10-K if Borrower
were required to file such forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" that describes the
financial condition and results of
- 71 -
operations of Borrower and its Restricted Subsidiaries and, with respect to the
annual information only, a report thereon by Borrower's certified independent
accountants and (y) all current reports that would be required to be filed with
the Commission on form 8-K if Borrower were required to file such reports. In
addition, whether or not required by the rules and regulations of the
Commission, Borrower will file a copy of all such information and reports with
the Commission for public availability (unless the Commission will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request. In addition, Borrower has agreed that, for
so long as the Obligations remain outstanding and this Agreement remains in
effect, it will furnish to Agent upon its request, the information required to
be delivered pursuant to Rule 144A(4) under the Securities Act.
9.11. Additional Information. Furnish Agent with additional
information as Agent shall reasonably request in order to enable Agent and
Lenders to determine whether the terms, covenants, provisions and conditions of
this Agreement and the Notes have been complied with by Borrower including,
without limitation and without the necessity of any request by Agent, (a)
copies of all environmental audits and reviews, (b) at least thirty (30) days
prior thereto, notice of Borrower's opening of any new office or place of
business or Borrower's closing of any existing office or place of business, and
(c) promptly upon Borrower's learning thereof, of any labor dispute to which
Borrower may become a party, any strikes or walkouts relating to any of its
plants or other facilities, and the expiration of any labor contract to which
Borrower is a party or by which Borrower is bound.
9.12. Projected Operating Budget. Furnish Agent, on or before
September 15th of each Fiscal Year commencing with Fiscal Year 1997, a month by
month projected operating budget and cash flow of Borrower for such Fiscal Year
(including an income statement for each month and a balance sheet as at the end
of the last month in each fiscal quarter), such projections to be accompanied
by a certificate signed by Borrower's President or Chief Financial Officer to
the effect that such projections have been prepared on the basis of sound
financial planning practice consistent with past budgets and financial
statements and that such officer has no reason to question the reasonableness
of any material assumptions on which such projections were prepared.
9.13. Variances From Operating Budget. Furnish Agent, concurrently
with the delivery of the financial statements referred to in Section 9.7 and
each quarterly report, a written report summarizing all material variances from
budgets submitted by Borrower pursuant to Section 9.12 and a discussion and
analysis by management with respect to such variances.
9.14. Notice of Suits, Adverse Events. Furnish Agent with prompt
notice of (i) any lapse or other termination of any Consent issued to Borrower
by any Governmental Body or any other Person that is material to the operation
of Borrower's business, (ii) any refusal by any Governmental Body or any other
Person to renew or
- 72 -
extend any such Consent; and (iii) copies of any periodic or special reports
filed by Borrower with any Governmental Body or Person, if such reports
indicate any material change in the business, operations, affairs or condition
of Borrower, or if copies thereof are requested by Agent, and (iv) copies of
any material notices and other communications from any Governmental Body or
Person which specifically relate to Borrower.
9.15. ERISA Notices and Requests. Furnish Agent with immediate written
notice in the event that (i) Borrower or any member of the Controlled Group
knows or has reason to know that a Termination Event has occurred, together
with a written statement describing such Termination Event and the action, if
any, which Borrower or member of the Controlled Group has taken, is taking, or
proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, Department of Labor or PBGC with
respect thereto, (ii) Borrower or any member of the Controlled Group knows or
has reason to know that a prohibited transaction (as defined in Sections 406 of
ERISA and 4975 of the Internal Revenue Code) has occurred together with a
written statement describing such transaction and the action which Borrower or
any member of the Controlled Group has taken, is taking or proposes to take
with respect thereto, (iii) a funding waiver request has been filed with
respect to any Plan together with all communications received by either
Borrower or any member of the Controlled Group with respect to such request,
(iv) any increase in the benefits of any existing Plan or the establishment of
any new Plan or the commencement of contributions to any Plan to which either
Borrower or any member of the Controlled Group was not previously contributing
shall occur, (v) Borrower or any member of the Controlled Group shall receive
from the PBGC a notice of intention to terminate a Plan or to have a trustee
appointed to administer a Plan, together with copies of each such notice, (vi)
Borrower or any member of the Controlled Group shall receive any favorable or
unfavorable determination letter from the Internal Revenue Service regarding
the qualification of a Plan under Section 401(a) of the Internal Revenue Code,
together with copies of each such letter; (vii) Borrower or any member of the
Controlled Group shall receive a notice regarding the imposition of withdrawal
liability, together with copies of each such notice; (viii) Borrower or any
member of the Controlled Group shall fail to make a required installment or any
other required payment under Section 412 of the Internal Revenue Code on or
before the due date for such installment or payment; (ix) Borrower or any
member of the Controlled Group knows that (a) a Multiemployer Plan has been
terminated, (b) the administrator or plan sponsor of a Multiemploy- er Plan
intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan.
9.16. Additional Documents. Execute and deliver to Agent, upon
request, such documents and agreements as Agent may, from time to time,
reasonably request to carry out the purposes, terms or conditions of this
Agreement.
- 73 -
X. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
10.1. failure by Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay when due any other liabilities or make
any other payment, fee or charge provided for herein or in any other Document
when due;
10.2. any representation or warranty made or deemed made by Borrower
in this Agreement or any related agreement or in any certificate, document or
financial or other statement furnished at any time in connection herewith or
therewith shall prove to have been misleading in any material respect on the
date when made or deemed to have been made;
10.3. failure by Borrower to (i) furnish financial information when
due or when requested which is unremedied for a period of fifteen (15) days
following such request, or (ii) permit the inspection of its books or records;
10.4. issuance of a notice of Lien, levy, assessment, injunction or
attachment against a material portion of Borrower's property which is not
stayed or lifted within thirty (30) days;
10.5. failure or neglect of Borrower to perform, keep or observe any
term, provision, condition, covenant herein contained, or contained in any
other agreement or arrangement, now or hereafter entered into between Borrower
and Lenders, other than a failure or neglect of Borrower to perform, keep or
observe any term, provision, condition or covenant, contained in Sections 4.6,
4.7, 4.9, 4.11, 6.1, 6.3, 6.4, 9.4 or 9.6 hereof which is cured within the
earlier of (i) twenty (20) days after the occurrence of such failure or neglect
or (ii) ten (10) days after notice from Agent to Borrower of such failure or
neglect;
10.6. any judgment is rendered or judgment liens filed against
Borrower for an amount in excess of $250,000 which within forty (40) days of
such rendering or filing is not either satisfied, stayed or discharged of
record unless they are being contested in good faith and by appropriate
proceedings and with respect to which proper reserves satisfactory to Agent
have been taken by Borrower;
10.7. Borrower shall (i) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of
its property, (ii) make a general assignment for the benefit of creditors,
(iii) commence a voluntary case under any state or federal bankruptcy laws (as
now or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v)
file a petition seeking to take advantage of any other law providing for the
relief of debtors, (vi) acquiesce to, or fail to
- 74 -
have dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (vii) take any action for the
purpose of effecting any of the foregoing;
10.8. Borrower shall admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business;
10.9. any Restricted Subsidiary of Borrower shall (i) apply for,
consent to or suffer the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar fiduciary of itself or of
all or a substantial part of its property, (ii) admit in writing its inability,
or be generally unable, to pay its debts as they become due or cease operations
of its present business, (iii) make a general assignment for the benefit of
creditors, (iv) commence a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or
insolvent, (vi) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing;
10.10. any change in Borrower's condition or affairs (financial or
otherwise) which has a Material Adverse Effect;
10.11. any Lien created hereunder or provided for hereby or under any
related agreement for any reason ceases to be or is not a valid and perfected
Lien having a first priority interest (other than Permitted Liens constituting
those Liens referenced in (vi) of the definition thereof);
10.12. an event of default has occurred and been declared under the
Indenture or Senior Subordinated Notes, as the case may be, which default shall
not have been cured or waived within any applicable grace period and for which
the Trustee or any holder of the Senior Subordinated Notes is permitted to take
action under the Indenture or the Senior Subordinated Notes, as the case may
be;
10.13. Intentionally Omitted.
10.14. a default of the obligations of Borrower under any other
agreement to which it is a party shall occur which adversely affects its
condition, affairs or prospects (financial or otherwise) which default is not
cured within any applicable grace period;
10.15. any Change of Control or the occurrence of an Excess Proceeds
Offer Triggering Event under the Indenture;
10.16. any material provision of this Agreement shall, for any reason,
cease to be valid and binding on Borrower, or Borrower shall so claim in
writing to Agent;
- 75 -
10.17. (i) any Governmental Body shall (A) revoke, terminate, suspend
or adversely modify any license, permit, patent trademark or tradename of
Borrower, the continuation of which is material to the continuation of
Borrower's business, or (B) commence proceedings to suspend, revoke, terminate
or adversely modify any such license, permit, trademark, tradename or patent
and such proceedings shall not be dismissed or discharged within sixty (60)
days, or (c) schedule or conduct a hearing on the renewal of any license,
permit, trademark, tradename or patent necessary for the continuation of
Borrower's business and the staff of such Governmental Body issues a report
recommending the termination, revocation, suspension or material, adverse
modification of such license, permit, trademark, tradename or patent; (ii) any
agreement which is necessary or material to the operation of Borrower's
business shall be revoked or terminated and not replaced by a substitute
acceptable to Agent within thirty (30) days after the date of such revocation
or termination, and such revocation or termination and non-replacement would
reasonably be expected to have a Material Adverse Effect;
10.18. any portion of the Collateral or any Fixed Assets shall be
seized or taken by a Governmental Body, or Borrower or the title and rights of
Borrower or any Original Owner which is the owner of any material portion of
the Collateral or any Fixed Asset shall have become the subject matter of
litigation which might, in the opinion of Lenders, upon final determination,
result in impairment or loss of the security provided by this Agreement or the
Other Documents;
10.19. the operations of any of Borrower's manufacturing facilities
are interrupted at any time for more than a period of fifteen (15) consecutive
days (other than Borrower's manufacturing facilities located in (a) Maspeth,
New York and Jacksonville, Florida for which the period shall be thirty (30)
consecutive days and (b) Three Rivers, Michigan), unless Borrower shall (i) be
entitled to receive for such period of interruption, proceeds of business
interruption insurance sufficient to assure that its per diem cash needs during
such period is at least equal to its average per diem cash needs for the
consecutive three month period immediately preceding the initial date of
interruption and (ii) receive such proceeds in the amount described in clause
(i) preceding not later than thirty (30) days following the initial date of any
such interruption; provided, however, that notwithstanding the provisions of
clauses (i) and (ii) of this section, an Event of Default shall be deemed to
have occurred if Borrower shall be receiving the proceeds of business
interruption insurance for a period of ninety (90) consecutive days;
10.20. an event or condition specified in Sections 7.16 or 9.15 hereof
shall occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, Borrower or any
member of the Controlled Group shall incur, or in the opinion of Agent be
reasonably likely to incur, a liability to a Plan or the PBGC (or both) which,
in the reasonable judgment of Lenders, would have a Material Adverse Effect; or
- 76 -
10.21. the common or capital stock of Borrower shall be pledged by
Original Owner to a third party other than to Agent for the ratable benefit of
Lenders.
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
11.1. Rights and Remedies. Upon the occurrence of (i) an Event of
Default pursuant to Section 10.7 all Obligations shall be immediately due and
payable and this Agreement and the obligation of Lenders to make Revolving
Advances shall be deemed terminated; and, (ii) any of the other Events of
Default and at any time thereafter (such default not having previously been
cured), at the option of Required Lenders all Obligations shall be immediately
due and payable and Lenders shall have the right to terminate this Agreement
and to terminate the obligation of Lenders to make Revolving Advances and (iii)
a filing of a petition against Borrower in any involuntary case under any state
or federal bankruptcy laws the obligation of Lenders to make Revolving Advances
hereunder shall be terminated other than as may be required by an appropriate
order of the bankruptcy court having jurisdiction over Borrower. Upon the
occurrence of any Event of Default, Agent shall have the right to exercise any
and all other rights and remedies provided for herein, under the Uniform
Commercial Code and at law or equity generally, including, without limitation,
the right to foreclose the security interests granted herein and to realize
upon any Collateral by any available judicial procedure and/or to take
possession of and sell any or all of the Collateral with or without judicial
process. Agent may enter any of Borrower's premises or other premises without
legal process and without incurring liability to Borrower therefor, and Agent
may thereupon, or at any time thereafter, in its discretion without notice or
demand, take the Collateral and remove the same to such place as Agent may deem
advisable and Agent may require Borrower to make the Collateral available to
Agent at a convenient place. With or without having the Collateral at the time
or place of sale, Agent may sell the Collateral, or any part thereof, at public
or private sale, at any time or place, in one or more sales, at such price or
prices, and upon such terms, either for cash, credit or future delivery, as
Agent may elect. Except as to that part of the Collateral which is perishable
or threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Agent shall give Borrower reasonable notification of such
sale or sales, it being agreed that in all events written notice mailed to
Borrower at least five (5) days prior to such sale or sales is reasonable
notification. At any public sale Agent or any Lender may bid for and become the
purchaser, and Agent, any Lender or any other purchaser at any such sale
thereafter shall hold the Collateral sold absolutely free from any claim or
right of whatsoever kind, including any equity of redemption and such right and
equity are hereby expressly waived and released by Borrower. In connection with
the exercise of the foregoing remedies, Agent is granted permission to use all
of Borrower's (a) trademarks, trade styles, trade names, patents, patent
applications, licenses, franchises and other proprietary rights which are used
in connection with Inventory for the purpose of disposing of such
- 77 -
Inventory and (b) Equipment for the purpose of completing the manufacture of
unfinished goods. The proceeds realized from the sale of any Collateral shall
be applied as follows: first, to the reasonable costs, expenses and attorneys'
fees and expenses incurred by Agent for collection and for acquisition,
completion, protection, removal, storage, sale and delivery of the Collateral;
second, to interest due upon any of the Obligations; and, third, to the
principal of the Obligations. If any deficiency shall arise, Borrower shall
remain liable to Agent and Lenders therefor.
11.2. Agent's Discretion. Agent shall have the right in its sole
discretion to determine which rights, Liens, security interests or remedies
Agent may at any time pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto and such determination will not in any way
modify or affect any of Agent's or Lenders' rights hereunder.
11.3. Setoff. In addition to any other rights which Agent or any
Lender may have under applicable law, upon the occurrence of an Event of
Default hereunder, Agent and such Lender shall have a right to apply any of
Borrower's property held by Agent and such Lender to reduce the Obligations.
11.4. Rights and Remedies not Exclusive. The enumeration of the
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy shall not preclude the exercise of any other right or
remedies provided for herein or otherwise provided by law, all of which shall
be cumulative and not alternative.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
12.1. Waiver of Notice. Borrower hereby waives notice of non-payment
of any of the Receivables, demand, presentment, protest and notice thereof with
respect to any and all instruments, notice of acceptance hereof, notice of
loans or advances made, credit extended, Collateral received or delivered, or
any other action taken in reliance hereon, and all other demands and notices of
any description, except such as are expressly provided for herein.
12.2. Delay. No delay or omission on Agent's or any Lender's part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
12.3. Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO
OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT
OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR
- 78 -
TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1. Term. This Agreement, which shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of each
of Borrower, Agent and each Lender, shall become effective on the date hereof
and shall continue in full force and effect through March 31, 2000 ("Term")
unless sooner terminated as herein provided. Borrower may terminate this
Agreement at any time upon ninety (90) days' prior written notice (the
effective date of such termination the "Termination Date") upon payment in full
of the Obligations; provided, however, Borrower shall pay to Agent for the
ratable benefit of Lenders a fee equal to (a) two percent (2.00%) of the
Maximum Loan Amount if the Termination Date occurs from the Closing Date to and
including the date immediately preceding the second anniversary of the Closing
Date and (b) one percent (1.00%) of the Maximum Loan Amount if the Termination
Date occurs from the second anniversary of the Closing Date to and including
the date immediately preceding the third anniversary of the Closing Date.
13.2. Termination. The termination of the Agreement shall not affect
any of Borrower's, Agent's or any Lender's rights, or any of the Obligations
having their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The security interests, Liens and rights
granted to Agent and Lenders hereunder and the financing statements filed
hereunder shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that Borrower's Account may from time
to time be temporarily in a zero or credit position, until all of the
Obligations of Borrower have been paid or performed in full after the
termination of this Agreement or Borrower has furnished Agent and Lenders with
an indemnification satisfactory to Agent and Lenders with respect thereto.
Accordingly, Borrower waives any rights which it may have under Section
9-404(1) of the Uniform Commercial Code to demand the filing of termination
statements with respect to the Collateral, and Agent shall not be required to
send such termination statements to Borrower, or to file them with any filing
office, unless and until this Agreement shall have been terminated in
accordance with its terms and all Obligations paid in full in immediately
available funds. All representations, warranties, covenants, waivers and
agreements contained herein shall survive termination hereof until all
Obligations are paid or performed in full.
XIV. REGARDING AGENT.
- 79 -
14.1. Appointment. Each Lender hereby designates IBJS to act as Agent
for such Lender under this Agreement and the Other Documents. Each Lender
hereby irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto and Agent shall hold all
Collateral, payments of principal and interest, fees (except the fees set forth
in Section 3.2(a) and 3.3), charges and collections (without giving effect to
any collection days) received pursuant to this Agreement, for the ratable
benefit of Lenders. Agent may perform any of its duties hereunder by or through
its agents or employees. As to any matters not expressly provided for by this
Agreement (including without limitation, collection of the Note) Agent shall
not be required to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Required
Lenders, and such instructions shall be binding; provided, however, that Agent
shall not be required to take any action which exposes Agent to liability or
which is contrary to this Agreement or the Other Documents or applicable law
unless Agent is furnished with an indemnification reasonably satisfactory to
Agent with respect thereto.
14.2. Nature of Duties. Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement and the Other Documents.
Neither Agent nor any of its officers, directors, employees or agents shall be
(i) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross (not mere) negligence or
willful misconduct or gross (not mere) negligence, or (ii) responsible in any
manner for any recitals, statements, representations or warranties made by
Borrower or any officer thereof contained in this Agreement, or in any of the
Other Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by Agent under or in connection
with, this Agreement or any of the Other Documents or for the value, validity,
effectiveness, genuineness, due execution enforceability or sufficiency of this
Agreement, or any of the Other Documents or for any failure of Borrower to
perform its obligations hereunder. Agent shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any of
the Other Documents, or to inspect the properties, books or records of
Borrower. The duties of Agent as respects the Revolving Advances to Borrower
shall be mechanical and administrative in nature; Agent shall not have by
reason of this Agreement a fiduciary relationship in respect of any Lender; and
nothing in this Agreement, expressed or implied, is intended to or shall be so
construed as to impose upon Agent any obligations in respect of this Agreement
except as expressly set forth herein.
14.3. Lack of Reliance on Agent and Resignation. Independently and
without reliance upon Agent or any other Lender,
- 80 -
each Lender has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of Borrower in connection
with the making and the continuance of the Revolving Advances hereunder and the
taking or not taking of any action in connection herewith, and (ii) its own
appraisal of the creditworthiness of Borrower. Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any
Lender with any credit or other information with respect thereto, whether
coming into its possession before making of the Revolving Advances or at any
time or times thereafter except as shall be provided by Borrower pursuant to
the terms hereof. Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein or in
any agreement, document, certificate or a statement delivered in connection
with or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any Other
Document, or of the financial condition of Borrower, or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement, the Note, the Other Documents or
the financial condition of Borrower, or the existence of any Event of Default
or any Default.
Agent may resign on sixty (60) days' written notice to each of Lenders
and Borrower and upon such resignation, the Required Lenders will promptly
designate a successor Agent reasonably satisfactory to Borrower.
Any such successor Agent shall succeed to the rights, powers and
duties of Agent, and the term "Agent" shall mean such successor agent effective
upon its appointment, and the former Agent's rights, powers and duties as Agent
shall be terminated, without any other or further act or deed on the part of
such former Agent. After any Agent's resignation as Agent, the provisions of
this Article XIV shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement.
14.4. Certain Rights of Agent. If Agent shall request instructions
from Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled
to refrain from such act or taking such action unless and until Agent shall
have received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance
with the instructions of the Required Lenders.
Agent may consult with legal counsel selected by it in connection with
matters arising under this Agreement or any of the Other Documents and any
action taken or suffered in good faith by it in accordance with the opinion of
such counsel shall be full justification and protection to it. Agent may
exercise any of its powers and rights and perform any duty under this Agreement
or any of the Other Documents through agents or attorneys.
- 81 -
14.5. Reliance. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with
respect to all legal matters pertaining to this Agreement and the Other
Documents and its duties hereunder, upon advice of counsel selected by it.
Agent may employ agents and attorneys-in-fact and shall not be liable for the
default or misconduct of any such agents or attorneys-in-fact selected by Agent
with reasonable care.
14.6. Notice of Default. Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder or
under the Other Documents, unless Agent has received notice from a Lender or
Borrower referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that Agent receives such a notice, Agent shall give
notice thereof to Lenders. Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders; provided, that, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of Lenders.
14.7. Indemnification. To the extent Agent is not reimbursed and
indemnified by Borrower, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the Revolving Advances (or, if no
Revolving Advances are outstanding, according to its Commitment Percentage),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against Agent in performing its duties hereunder, or in any way relating to or
arising out of this Agreement or any Other Loan Document; provided that,
Lenders shall not be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent's gross (not mere) negligence or willful
misconduct or gross (not mere) negligence.
14.8. Agent in its Individual Capacity. With respect to the obligation
of Agent to lend under this Agreement, the Revolving Advances made by it shall
have the same rights and powers hereunder as any other Lender and as if it were
not performing the duties as Agent specified herein; and the term "Lender" or
any similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity as a Lender. Agent may engage in business with
Borrower as if it were not performing the duties specified herein, and may
accept fees and other consideration from Borrower for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.
- 82 -
14.9. Delivery of Documents. To the extent Agent receives documents
and information from Borrower pursuant to the terms of this Agreement, Agent
will promptly furnish such documents and information to Lenders.
14.10. Borrower's Undertaking to Agent. Without prejudice to their
respective obligations to Lenders under the other provisions of this Agreement,
Borrower hereby undertakes with Agent to pay to Agent from time to time on
demand all amounts from time to time due and payable by it for the account of
Agent or Lenders or any of them pursuant to this Agreement to the extent not
already paid. Any payment made pursuant to any such demand shall pro tanto
satisfy Borrower's obligations to make payments for the account of Lenders or
the relevant one or more of them pursuant to this Agreement.
XIV. MISCELLANEOUS.
15.1. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applied to contracts to be
performed wholly within the State of New York. Any judicial proceeding brought
by or against Borrower with respect to any of the Obligations, this Agreement
or any related agreement may be brought in any court of competent jurisdiction
in the State of New York, United States of America, and, by execution and
delivery of this Agreement, Borrower accepts for itself and in connection with
its properties, generally and unconditionally, the non-exclusive jurisdiction
of the aforesaid courts, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement. Nothing herein shall affect
the right to serve process in any manner permitted by law or shall limit the
right of Lenders to bring proceedings against Borrower in the courts of any
other jurisdiction. Borrower waives any objection to jurisdiction and venue of
any action instituted hereunder and shall not assert any defense based on lack
of jurisdiction or venue or based upon forum non conveniens. Any judicial
proceeding by Borrower against Lenders involving, directly or indirectly, any
matter or claim in any way arising out of, related to or connected with this
Agreement or any related agreement, shall be brought only in a federal or state
court located in the City of New York, State of New York.
15.2. Entire Understanding. (a) This Agreement and the documents
executed concurrently herewith contain the entire understanding between
Borrower, Agent and each Lender and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof. Any promises,
representations, warranties or guarantees not herein contained or hereafter
made shall have no force and effect unless in writing, and executed by the
party or parties making such representations, warranties or guaranties. Neither
this Agreement nor any portion or provisions hereof may be changed, modified,
amended, waived, supplemented, discharged, cancelled or terminated orally or by
any course of dealing, or in any manner other than by an agreement in writing,
signed by the party to be charged. Borrower acknowledges
- 83 -
that it has been advised by counsel in connection with the execution of this
Agreement and Other Documents and is not relying upon oral representations or
statements inconsistent with the terms and provisions of this Agreement.
(b) The Required Lenders, Agent with the consent in writing of
the Required Lenders, and Borrower may, subject to the provisions of this
Section 15.2(b), from time to time enter into written supplemental agreements
to this Agreement, the Notes or the Other Documents executed by Borrower, for
the purpose of adding or deleting any provisions or otherwise changing, varying
or waiving in any manner the rights of Lenders, Agent or Borrower thereunder or
the conditions, provisions or terms thereof or waiving any Event of Default
thereunder, but only to the extent specified in such written agreements;
provided, however, that no such supplemental agreement shall, without the
consent of all Lenders:
(i) increase the Commitment Percentage or Maximum Revolving Loan
Commitment;
(ii) increase any of the Revolving Advance Rates to in excess of (x)
85% with respect to the Receivables Advance Rate and (y) 60% with
respect to the Inventory Advance Rate and Agent acknowledges that the
limitations contained in this Section 15(b)(ii) shall apply to Section
2.1(b) hereof;
(iii) extend the maturity of any Note or the due date for any amount
payable hereunder, or decrease the rate of interest or reduce any fee
payable by Borrower to Lenders pursuant to this Agreement;
(iv) release any of the Collateral (other than permitted hereunder);
(v) alter the definition of the term Required Lenders or alter, amend
or modify this Section 15.2(b); or
(vi) change the rights and duties of Agent.
Any such supplemental agreement shall apply equally to each of
Lenders and shall be binding upon Borrower, Lenders and Agent and all
future holders of the Obligations. In the case of any waiver,
Borrower, Agent and Lenders shall be restored to their former
positions and rights, and any Event of Default waived shall be deemed
to be cured and not continuing, but no waiver of a specific Event of
Default shall extend to any subsequent Event of Default (whether or
not the subsequent Event of Default is the same as the Event of
Default which was waived), or impair any right consequent thereon.
15.3. Successors and Assigns; Participations; New Lenders.
(a) This Agreement shall be binding upon and inure to the benefit
of Borrower, Agent, each Lender, all future holders of the Note and their
respective successors and assigns, except
- 84 -
that Borrower may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of Agent and each Lender.
(b) Borrower acknowledges that in the regular course of
commercial banking business one or more Lenders may at any time and from time
to time sell participating interests in the Revolving Advances to other
financial institutions (each such transferee or purchaser of a participating
interest, a "Transferee"). Each Transferee may exercise all rights of payment
(including without limitation rights of set-off) with respect to the portion of
such Revolving Advances held by it or other Obligations payable hereunder as
fully as if such Transferee were the direct holder thereof provided, that,
Borrower shall not be required to pay to any Transferee more than the amount
which it would have been required to pay to Lender which granted an interest in
its Revolving Advances or other Obligations payable hereunder to such
Transferee had such Lender retained such interest in the Revolving Advances
hereunder or other Obligations payable hereunder and in no event shall Borrower
be required to pay any such amount arising from the same circumstances and with
respect to the same Revolving Advances or other Obligations payable hereunder
to both such Lender and such Transferee. Borrower hereby grants to any
Transferee a continuing security interest in any deposits, moneys or other
property actually or constructively held by such Transferee as security for the
Transferee's interest in the Revolving Advances.
(c) Any Lender may sell, assign or transfer all or any part of
its rights under this Agreement and the Other Documents to one or more
additional banks or financial institutions and one or more additional banks or
financial institutions may commit to make Revolving Advances hereunder (each a
"Purchasing Lender"), in minimum amounts of not less than $5,000,000, pursuant
to a Commitment Transfer Supplement, executed by a Purchasing Lender, the
transferor Lender, and Agent and delivered to Agent for recording. Upon such
execution, delivery, acceptance and recording, from and after the transfer
effective date determined pursuant to such Commitment Transfer Supplement, (i)
Purchasing Lender thereunder shall be a party hereto and, to the extent
provided in such Commitment Transfer Supplement, have the rights and
obligations of a Lender thereunder with a Commitment Percentage and Maximum
Revolving Loan Commitment as set forth therein, and (ii) the transferor Lender
thereunder shall, to the extent provided in such Commitment Transfer
Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for that purpose. Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages
and Maximum Revolving Loan Commitments arising from the purchase by such
Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this Agreement and the Other Documents. Borrower hereby
consents to the addition of such Purchasing Lender and the resulting adjustment
of the Commitment Percentages and Maximum Revolving Loan Commitments arising
from the purchase by such
- 85 -
Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this Agreement and the Other Documents, and Borrower
hereby agrees that it shall fully cooperate to effectuate the foregoing.
(d) Agent shall maintain at its address a copy of each Commitment
Transfer Supplement delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Revolving Advances owing to each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and Borrower, Agent and Lenders may treat each
Person whose name is recorded in the Register as the owner of the Revolving
Advance recorded therein for the purposes of this Agreement. The Register shall
be available for inspection by Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice. Agent shall receive a fee
in the amount of $2,500 payable by the applicable Purchasing Lender upon the
effective date of each transfer or assignment to such Purchasing Lender.
(e) Borrower authorizes each Lender to disclose to any Transferee
or Purchasing Lender and any prospective Transferee or Purchasing Lender any
and all financial information in such Lender's possession concerning Borrower
which has been delivered to such Lender by or on behalf of Borrower pursuant to
this Agreement or in connection with such Lender's credit evaluation of
Borrower.
15.4. Application of Payments. Agent shall have the continuing and
exclusive right to apply or reverse and re-apply any payment and any and all
proceeds of Collateral to any portion of the Obligations. To the extent that
Borrower makes a payment or Agent or any Lender receives any payment or
proceeds of the Collateral for Borrower's benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
to be repaid to a trustee, debtor in possession, receiver, custodian or any
other party under any bankruptcy law, common law or equitable cause, then, to
such extent, the Obligations or part thereof intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Agent or such Lender.
15.5. Indemnity. Borrower shall indemnify Agent and each Lender and
each of their respective officers, directors, employees, and agents from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, fees and disbursements of
counsel) which may be imposed on, incurred by, or asserted against Agent or any
Lender in any litigation, proceeding or investigation instituted or conducted
by any governmental agency or instrumentality or any other Person with respect
to any aspect of, or any transaction contemplated by, or referred to in, or any
matter related to, this Agreement, whether or not Agent or any Lender is a
party thereto, except to the extent that any of the foregoing arises out of the
willful misconduct of the party being indemnified.
- 86 -
15.6. Survival. The obligations of Borrower under Sections 2.2(f),
3.6, 3.7, 3.8, 4.19, 14.7 and 15.5 and of Lenders under Section 14.7 shall
survive termination of this Agreement and the Other Documents and payment in
full of the Obligations.
15.7. Notice. Any notice or request hereunder may be given to Borrower
or to Agent or any Lender at their respective addresses set forth below or at
such other address as may hereafter be specified in a notice designated as a
notice of change of address under this Section. Any notice or request hereunder
shall be given by (a) hand delivery, (b) overnight courier, (c) registered or
certified mail, return receipt requested, (d) telex or telegram, subsequently
confirmed by registered or certified mail, or (e) telecopy to the number set
out below (or such other number as may hereafter be specified in a notice
designated as a notice of change of address) with telephone communication to a
duly authorized officer of the recipient confirming its receipt as subsequently
confirmed by registered or certified mail. Any notice or other communication
required or permitted pursuant to this Agreement shall be deemed given (a) when
personally delivered to any officer of the party to whom it is addressed, (b)
on the earlier of actual receipt thereof or three (3) days following posting
thereof by certified or registered mail, postage prepaid, or (c) upon actual
receipt thereof when sent by a recognized overnight delivery service or (d)
upon actual receipt thereof when sent by telecopier to the number set forth
below with telephone communication confirming receipt and subsequently
confirmed by registered, certified or overnight mail to the address set forth
below, in each case addressed to each party at its address set forth below or
at such other address as has been furnished in writing by a party to the other
by like notice:
(A) If to Agent or IBJ Xxxxxxxx Bank & Trust Company
IBJS at: Xxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to: Xxxx & Hessen LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(B) If to a Lender other than Agent, as specified on the
signature pages hereof
(C) If to Borrower, at: The Xxxxx Group, Inc.
00 Xxxxx Xxxxxx Xxxxxx
Xx. Xxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
- 87 -
with a copy to: The Xxxxx Group, Inc.
c/o Four M Corporation
000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx,
Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
15.8. Severability. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated
thereby and shall be given effect so far as possible.
15.9. Expenses. All costs and expenses including, without limitation,
reasonable attorneys' fees and disbursements incurred by Agent, Agent on behalf
of Lenders and Lenders (a) in all efforts made to enforce payment of any
Obligation or effect collection of any Collateral, or (b) in connection with
the entering into, modification, amendment, administration and enforcement of
this Agreement or any consents or waivers hereunder and all related agreements,
documents and instruments, or (c) in instituting, maintaining, preserving,
enforcing and foreclosing on Agent's security interest in or Lien on any of the
Collateral, whether through judicial proceedings or otherwise, or (d) in
defending or prosecuting any actions or proceedings arising out of or relating
to Agent's or any Lender's transactions with Borrower, or (e) in connection
with any advice given to Agent or any Lender with respect to its rights and
obligations under this Agreement and all related agreements, may be charged to
Borrower's Account and shall be part of the Obligations.
15.10. Injunctive Relief. Borrower recognizes that, in the event
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Lenders; therefore, Agent, if Agent so requests, shall be entitled to
temporary and permanent injunctive relief in any such case without the
necessity of proving that actual damages are not an adequate remedy.
15.11. Consequential Damages. Neither Agent nor any agent or attorney
for any of them shall be liable to Borrower for consequential damages arising
from any breach of contract, tort or other wrong relating to the establishment,
administration or collection of the Obligations.
15.12. Captions. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be
interpreted as part of this Agreement.
15.13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which taken together shall constitute one and the same
instrument. Any signature delivered by a party by
- 88 -
facsimile transmission shall be deemed to be an original signature hereto.
15.14. Construction. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of this Agreement or any
amendments, schedules or exhibits thereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- 89 -
15.15. Publicity. Borrower hereby authorizes Agent to make appropriate
announcements of the financial arrangement entered into by and among Borrower,
Agent and Lenders, including, without limitation, announcements which are
commonly known as tombstones, in such publications and to such selected parties
as Agent shall in its discretion deem appropriate.
Each of the parties has signed this Agreement as of the day and year
first above written.
THE XXXXX GROUP, INC.
By:________________________________
Name:___________________________
Title:__________________________
00 Xxxxx Xxxxxx Xxxxxx
Xx. Xxxxxx, Xxxxxxx 00000
IBJ XXXXXXXX BANK & TRUST COMPANY, as Lender and
as Agent
By:_______________________________
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Xxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Commitment Percentage: 33.04198524%
NATIONAL CITY COMMERCIAL FINANCE, INC., as Lender
By:_______________________________
Name:__________________________
Title:_________________________
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Commitment Percentage: 30.00000000%
[SIGNATURES CONTINUED ON NEXT PAGE]
BTM CAPITAL CORPORATION
(F/K/A BOT FINANCIAL CORPORATION), as Lender
By:_______________________________
Name:__________________________
Title:_________________________
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Commitment Percentage: 18.00000000%
SIGNET BANK, as Lender
By:_______________________________
Name:__________________________
Title:_________________________
0 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Commitment Percentage: 18.47900738%
EXHIBITS AND SCHEDULES
----------------------
Exhibits
Exhibit 2.1(a) Form of Fourth Amended and Restated
Revolving Credit Note
Exhibit 5.5(b) Projections
Exhibit 8.1(i) Financial Condition Certificate
Exhibit 15.3 Form of Commitment Transfer Supplement
Schedules
Schedule 1.2 Permitted Liens
Schedule 4.5 Locations of Equipment and Inventory
Schedule 5.2 Qualification and Subsidiaries
Schedule 5.6 Corporate Name
Schedule 5.8(b) Pending Litigation
Schedule 5.8(d) ERISA Matters
Schedule 5.9 Patents, Trademarks, Copyrights and
Licenses
Schedule 5.10 Licenses and Permits
Schedule 5.14 Labor Disputes
Schedule 7.7 Use of Proceeds
STATE OF )
) ss.
COUNTY OF )
On this ____ day of February, 1997, before me personally came
___________________, to me known, who, being by me duly sworn, did depose and
say that he is a _______________________ of The Xxxxx Group, Inc., the
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the board of directors
of said corporation, and that he signed his name thereto by like order.
------------------------------
NOTARY PUBLIC
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this ____ day of February, 1997, before me personally came
Xxxxxx X. Xxxxxx, to me known, who, being by me duly sworn, did depose and say
that he is a Vice President of IBJ Xxxxxxxx Bank & Trust Company, the
corporation described in and which executed the foregoing instrument and that
he signed his name thereto by order of the board of directors of said
corporation.
------------------------------
NOTARY PUBLIC
STATE OF )
) ss.
COUNTY OF )
On this ____ day of February, 1997, before me personally came
______________, to me known, who, being by me duly sworn, did depose and say
that he is a ______________ of National City Commercial Finance, Inc., the
corporation described in and which executed the foregoing instrument and that
he signed his name thereto by order of the board of directors of said
corporation.
------------------------------
NOTARY PUBLIC
STATE OF )
) ss.
COUNTY OF )
On this ____ day of February, 1997, before me personally came
______________, to me known, who, being by me duly sworn, did depose and say
that he is a ______________ of BTM Capital Corporation (f/k/a/ BOT Financial
Corporation), the corporation described in and which executed the foregoing
instrument and that he signed his name thereto by order of the board of
directors of said corporation.
------------------------------
NOTARY PUBLIC
STATE OF )
) ss.
COUNTY OF )
On this ____ day of February, 1997, before me personally came
______________, to me known, who, being by me duly sworn, did depose and say
that he is a ______________ of Signet Bank, the corporation described in and
which executed the foregoing instrument and that he signed his name thereto by
order of the board of directors of said corporation.
------------------------------
NOTARY PUBLIC
TABLE OF CONTENTS
I. DEFINITIONS...........................................................................................- 2 -
1.1. Accounting Terms........................................................................- 2 -
1.2. General Terms...........................................................................- 2 -
1.3. Uniform Commercial Code Terms..........................................................- 27 -
1.4. Certain Matters of Construction........................................................- 27 -
II. REVOLVING ADVANCES, PAYMENTS.........................................................................- 27 -
2.1. (a) Revolving Advances..........................................................- 27 -
(b) Discretionary Rights........................................................- 28 -
2.2. Procedure for Revolving Advances Borrowing.............................................- 28 -
2.3. Disbursement of Revolving Advance Proceeds.............................................- 30 -
2.4. Intentionally Omitted..................................................................- 30 -
2.5. Maximum Revolving Advances.............................................................- 30 -
2.6. Repayment of Revolving Advances........................................................- 30 -
2.7. Repayment of Excess Revolving Advances.................................................- 31 -
2.8. Statement of Account...................................................................- 31 -
2.9. Additional Payments....................................................................- 31 -
2.10. Manner of Borrowing and Payment........................................................- 31 -
2.11. Mandatory Prepayments..................................................................- 33 -
2.12. Optional Prepayment....................................................................- 33 -
2.13. Use of Proceeds........................................................................- 34 -
III. INTEREST AND FEES....................................................................................- 34 -
3.1. Interest...............................................................................- 34 -
3.2. (a) Fee Letter..................................................................- 34 -
(b) Facility Fee................................................................- 34 -
3.3. (a) Intentionally Omitted.......................................................- 34 -
(b) Collateral Monitoring Fee...................................................- 34 -
3.4. Computation of Interest and Fees.......................................................- 35 -
3.5. Maximum Charges........................................................................- 35 -
3.6. Increased Costs........................................................................- 35 -
3.7. Basis For Determining Interest Rate Inadequate
or Unfair..............................................................................- 36 -
3.8. Capital Adequacy.......................................................................- 37 -
IV. COLLATERAL: GENERAL TERMS...........................................................................- 37 -
4.1. Security Interest in the Collateral....................................................- 37 -
4.2. Perfection of Security Interest........................................................- 38 -
4.3. Disposition of Collateral..............................................................- 38 -
4.4. Preservation of Collateral.............................................................- 38 -
4.5. Ownership of Collateral................................................................- 39 -
4.6. Defense of Agent's and Lenders' Interests..............................................- 39 -
4.7. Books and Records......................................................................- 40 -
4.8. Financial Disclosure...................................................................- 40 -
4.9. Compliance with Laws...................................................................- 40 -
4.10. Inspection of Premises.................................................................- 41 -
4.11. Insurance..............................................................................- 41 -
4.12. Failure to Pay Insurance...............................................................- 42 -
4.13. Payment of Taxes.......................................................................- 42 -
4.14. Payment of Leasehold Obligations.......................................................- 42 -
4.15. Receivables............................................................................- 42 -
(a) Nature of Receivables.......................................................- 43 -
(b) Solvency of Customers.......................................................- 43 -
(c) Locations of Borrower.......................................................- 43 -
(d) Collection of Receivables...................................................- 43 -
(e) Notification of Assignment of
Receivables.................................................................- 43 -
(f) Power of Agent to Act on Borrower's
Behalf......................................................................- 43 -
(g) No Liability................................................................- 44 -
(h) Establishment of a Lockbox Account,
Dominion Account............................................................- 44 -
(i) Adjustments.................................................................- 45 -
4.16. Inventory..............................................................................- 45 -
4.17. Maintenance of Equipment...............................................................- 45 -
4.18. Exculpation of Liability...............................................................- 45 -
4.19. Environmental Matters..................................................................- 46 -
V. REPRESENTATIONS AND WARRANTIES.......................................................................- 48 -
5.1. Authority..............................................................................- 48 -
5.2. Formation and Qualification............................................................- 48 -
5.3. Survival of Representations and Warranties.............................................- 49 -
5.4. Tax Returns............................................................................- 49 -
5.5. Financial Statements...................................................................- 49 -
5.6. Corporate Name.........................................................................- 50 -
5.7. O.S.H.A. and Environmental Compliance..................................................- 50 -
5.8. Solvency; No Litigation, Violation, Indebted-
ness or Default........................................................................- 51 -
5.9. Patents, Trademarks, Copyrights and Licenses...........................................- 52 -
5.10. Licenses and Permits...................................................................- 52 -
5.11. Default of Indebtedness................................................................- 53 -
5.12. No Default.............................................................................- 53 -
5.13. No Burdensome Restrictions.............................................................- 53 -
5.14. No Labor Disputes......................................................................- 53 -
5.15. Margin Regulations.....................................................................- 53 -
5.16. Investment Company Act.................................................................- 53 -
5.17. Disclosure.............................................................................- 53 -
5.18. Delivery of Agreements.................................................................- 53 -
5.19. Swaps..................................................................................- 54 -
5.20. Conflicting Agreements.................................................................- 54 -
5.21. Application of Certain Laws and Regulations............................................- 54 -
5.22. Business and Property of Borrower......................................................- 54 -
VI. AFFIRMATIVE COVENANTS................................................................................- 54 -
6.1. Payment of Fees........................................................................- 54 -
6.2. Conduct of Business and Maintenance of Exis-
tence and Assets.......................................................................- 55 -
6.3. Violations.............................................................................- 55 -
6.4. Government Receivables.................................................................- 55 -
6.5. Interest Coverage Ratio................................................................- 55 -
6.6. Intentionally Omitted..................................................................- 55 -
6.7. Intentionally Omitted..................................................................- 55 -
6.8. Execution of Supplemental Instruments..................................................- 55 -
6.9. Payment of Indebtedness................................................................- 56 -
6.10. Standards of Financial Statements......................................................- 56 -
6.11. Exercise of Rights.....................................................................- 56 -
6.12. Intercreditor Agreements...............................................................- 56 -
6.13. Purchase Price Adjustment..............................................................- 56 -
VII. NEGATIVE COVENANTS...................................................................................- 56 -
7.1. Merger, Consolidation, Acquisition and Sale of
Assets.................................................................................- 57 -
7.2. Creation of Liens......................................................................- 57 -
7.3. Guarantees.............................................................................- 57 -
7.4. Intentionally Omitted..................................................................- 57 -
7.5. Loans..................................................................................- 57 -
7.6. Intentionally Omitted..................................................................- 57 -
7.7. Restricted Payment.....................................................................- 57 -
7.9. Nature of Business.....................................................................- 61 -
7.10. Transactions with Affiliates...........................................................- 61 -
7.11. Leases.................................................................................- 62 -
7.12. Subsidiaries...........................................................................- 62 -
7.13. Fiscal Year and Accounting Changes.....................................................- 63 -
7.14. Pledge of Credit.......................................................................- 63 -
7.15. Amendment of Articles of Incorporation, By-
Laws...................................................................................- 63 -
7.16. Compliance with ERISA..................................................................- 63 -
7.17. Senior Subordinated Notes..............................................................- 63 -
7.18. Prepayment of Indebtedness.............................................................- 64 -
7.19. Indebtedness under Senior Subordinated Notes...........................................- 64 -
7.20. Intentionally Omitted..................................................................- 64 -
7.21. Amendments to Xxxxxx Purchase Agreement,
Chesapeake Purchase Agreement, Xxxxx River
Purchase Agreement, Senior Subordinated Notes
or Indenture...........................................................................- 64 -
VIII. CONDITIONS PRECEDENT.................................................................................- 65 -
8.1. Intentionally Omitted..................................................................- 65 -
8.2. Conditions to Each Revolving Advance...................................................- 65 -
(a) Representations and Warranties..............................................- 65 -
(b) No Default..................................................................- 65 -
(c) Maximum Revolving Advances..................................................- 65 -
8.3. Conditions of Effectiveness............................................................- 66 -
(a) Notes.......................................................................- 66 -
(b) Filings, Registrations and Recordings.......................................- 66 -
(c) Corporate Proceedings of Borrower...........................................- 66 -
(d) No Litigation...............................................................- 66 -
(e) Collateral Examination......................................................- 66 -
(f) Fees........................................................................- 66 -
(g) Pro Forma Financial Statements..............................................- 66 -
(h) Private Placement Documents.................................................- 66 -
(i) Consents....................................................................- 67 -
(j) No Adverse Material Change..................................................- 67 -
(k) Contract Review.............................................................- 67 -
(l) Borrowing Base..............................................................- 67 -
(m) Undrawn Availability........................................................- 67 -
(n) Adequate Cash Flow..........................................................- 67 -
(o) Approvals...................................................................- 67 -
(p) Opinions....................................................................- 67 -
(q) Compliance with Laws........................................................- 67 -
(r) Incumbency Certificates of Borrower.........................................- 67 -
(s) Certificates................................................................- 68 -
(t) Good Standing Certificates..................................................- 68 -
(u) Private Placement...........................................................- 68 -
(v) Additional Mezzanine and Mezzanine Debt.....................................- 68 -
IX. INFORMATION AS TO BORROWER...........................................................................- 68 -
9.1. Disclosure of Material Matters.........................................................- 69 -
9.2. Schedules..............................................................................- 69 -
9.3. Environmental Reports..................................................................- 69 -
9.4. Litigation.............................................................................- 69 -
9.5. Material Occurrences...................................................................- 69 -
9.6. Government Receivables.................................................................- 70 -
9.7. Annual Financial Statements............................................................- 70 -
9.8. Quarterly Financial Statements.........................................................- 71 -
9.9. Monthly Financial Statements...........................................................- 71 -
9.10. Other Reports..........................................................................- 71 -
9.11. Additional Information.................................................................- 72 -
9.12. Projected Operating Budget.............................................................- 72 -
9.13. Variances From Operating Budget........................................................- 72 -
9.14. Notice of Suits, Adverse Events........................................................- 72 -
9.15. ERISA Notices and Requests.............................................................- 73 -
9.16. Additional Documents...................................................................- 73 -
.......................................................................................- 73 -
X. EVENTS OF DEFAULT....................................................................................- 73 -
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT...........................................................- 77 -
11.1. Rights and Remedies....................................................................- 77 -
11.2. Agent's Discretion.....................................................................- 78 -
11.3. Setoff.................................................................................- 78 -
11.4. Rights and Remedies not Exclusive......................................................- 78 -
XII. WAIVERS AND JUDICIAL PROCEEDINGS.....................................................................- 78 -
12.1. Waiver of Notice.......................................................................- 78 -
12.2. Delay..................................................................................- 78 -
12.3. Jury Waiver............................................................................- 78 -
XIII. EFFECTIVE DATE AND TERMINATION.......................................................................- 79 -
13.1. Term...................................................................................- 79 -
13.2. Termination............................................................................- 79 -
XIV. REGARDING AGENT......................................................................................- 79 -
14.1. Appointment............................................................................- 80 -
14.2. Nature of Duties.......................................................................- 80 -
14.3. Lack of Reliance on Agent and Resignation..............................................- 80 -
14.4. Certain Rights of Agent................................................................- 81 -
14.5. Reliance...............................................................................- 82 -
14.6. Notice of Default......................................................................- 82 -
14.7. Indemnification........................................................................- 82 -
14.8. Agent in its Individual Capacity.......................................................- 82 -
14.9. Delivery of Documents..................................................................- 83 -
14.10. Borrower's Undertaking to Agent........................................................- 83 -
XIV. MISCELLANEOUS........................................................................................- 83 -
15.1. Governing Law..........................................................................- 83 -
15.2. Entire Understanding...................................................................- 83 -
15.3. Successors and Assigns; Participations; New
Lenders................................................................................- 84 -
15.4. Application of Payments................................................................- 86 -
15.5. Indemnity..............................................................................- 86 -
15.6. Survival...............................................................................- 87 -
15.7. Notice.................................................................................- 87 -
15.8. Severability...........................................................................- 88 -
15.9. Expenses...............................................................................- 88 -
15.10. Injunctive Relief......................................................................- 88 -
15.11. Consequential Damages..................................................................- 88 -
15.12. Captions...............................................................................- 88 -
15.13. Counterparts...........................................................................- 88 -
15.14. Construction...........................................................................- 89 -
15.15. Publicity..............................................................................- 90 -
